UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 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):
January 4,
2021
Commission
File Number: 001-37853
AzurRx BioPharma, Inc.
(Exact
name of registrant as specified in its charter.)
Delaware
(State
or other jurisdiction of incorporation or
organization)
46-4993860
(IRS
Employer Identification No.)
1615 South Congress Avenue, Suite 103
Delray Beach, Florida 33445
(Address
of principal executive offices)
646-699-7855
(Registrant's
Telephone number)
Not Applicable
(Former
Name or Former Address, if Changed Since Last Report)
Check
the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant
under any of the following provisions:
[ ]
Written communications pursuant to Rule 425 under the Securities
Act (17 CFR 230.425)
[ ]
Soliciting material pursuant to Rule 14a-12 under the Exchange Act
(17 CFR 240.14a-12)
[ ]
Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
[ ]
Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
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 [X]
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. [ ]
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 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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Item 1.01 Entry
into a Definitive Material Agreement.
Registered Direct Offering and Concurrent Private
Placement
As previously disclosed on the Company’s Current Report on
Form 8-K filed with the SEC on January 4, 2021 (the “Prior
8-K”), on December 31, 2020, AzurRx BioPharma, Inc. (the
“Company”) entered into a securities purchase agreement
(the “Investor Purchase Agreement”) with a single
institutional investor relating to the purchase and sale, in a
registered direct offering (the “Registered Direct
Offering”) and concurrent private placement (the
“Private Placement” and, together with the Registered
Direct Offering, the “Offerings”), of an aggregate of
10,666.6666 shares of Series C 9.00% Convertible Junior Preferred
Stock, par value $0.0001 per share (the “Series C Preferred
Stock”), initially convertible into up to 10,666,668 shares
of common stock, par value $0.0001 per share (the “Common
Stock”) at a conversion price of $0.75 per share, together
with related warrants to purchase up to 10,666,668 shares of Common
Stock at an exercise price of $0.80 per share. The combined
purchase price in the Offerings for one share of Series C Preferred
Stock and related warrants was $750.00.
The terms and conditions of the Offerings are described in greater
detail in the Prior 8-K, which is incorporated herein by reference.
Capitalized terms used but not defined herein have the meanings
ascribed to such terms in the Prior 8-K.
On January 6, 2021, the Offerings closed. In connection with the
closings, the investor converted all of its Series C Preferred
Stock issued in the Registered Direct Offering into 3,400,000
shares of Common Stock and Pre-funded Warrants (as defined in the
Prior 8-K) to purchase up to 1,933,334 shares of Common Stock.
Accordingly, following the closings, 853,632 shares of Common Stock
currently remain available for issuance below the Issuable Maximum
(as defined in the Prior 8-K), prior to obtaining the Stockholder
Approval (as defined in the Prior 8-K).
On January 6, 2021, the Company also issued to H.C. Wainwright
& Co., LLC and its designees certain warrants to purchase up to
746,667 shares of Common Stock, at an exercise price of $0.9375 per
share, as compensation for services as placement agent in the
Offerings. The terms and conditions of the warrants were previously
disclosed in the Prior Form 8-K and are incorporated herein by
reference. The summary of the placement agent’s
warrants is subject to, and qualified in their entirety by, the
form of such warrants, which is filed as Exhibit 4.1 hereto and
incorporated herein by reference.
Securities Purchase Agreement with First Wave Bio
On January 8, 2021, pursuant to the License Agreement by and
between the Company and First Wave Bio, Inc. (“First
Wave”), a privately-held Delaware corporation, the Company
entered into a securities purchase agreement with First Wave (the
“First Wave Purchase Agreement”). The terms and
conditions of the License Agreement are described in greater detail
in the Prior 8-K.
Pursuant to the First Wave Purchase Agreement, on January 8, 2021,
the Company issued First Wave 3,290.1960 shares of Series C
Preferred Stock, initially convertible into an aggregate of
3,290,196 shares of Common Stock, at an initial stated value of
$750.00 per share and a conversion price of $0.75 per share. The
First Wave Purchase Agreement contains demand and piggyback
registration rights with respect to the Common Stock issuable upon
conversion, subject to certain clear-market restrictions, as set
forth in the Investor Purchase Agreement and described in the Prior
Form 8-K, for a period ending at the later of (a) 30 days after the
effectiveness of a resale registration covering the securities sold
to that investor or (b) the day of the Stockholder Approval. The
issuance of the Series C Preferred Stock to First Wave occurred
simultaneously with the entrance into the First Wave Purchase
Agreement on January 8, 2021.
The First Wave Purchase Agreement contains customary
representations, warranties and agreements by the Company,
customary conditions to closing and termination provisions. The
representations, warranties and covenants contained in the First
Wave Purchase Agreement were made only for the purposes of such
agreement and as of specific dates, were solely for the benefit of
the parties to such agreement, and may be subject to limitations
agreed upon by the contracting parties.
The Series C Preferred Stock being issued pursuant to the First
Wave Purchase Agreement, together with any Common Stock issuable
upon conversion, are being issued without registration under the
Securities Act in reliance on the exemptions provided by Section
4(a)(2) of the Securities Act as transactions not involving a
public offering, and in reliance on similar exemptions under
applicable state laws.
Item 3.02 Unregistered Sales of
Equity Securities.
The
information set forth above in Item 1.01 above and in the Prior 8-K
is hereby incorporated by reference into this Item
3.02.
Item 5.03 Amendments to
Articles of Incorporation or Bylaws; Change in Fiscal
Year.
In
connection with the closings of the Offerings described in Item
1.01 above, on January 4, 2021, the Company filed with the
Secretary of State of the State of Delaware a certificate of
designations relating to the Series C Preferred Stock, which became
immediately effective.
The
terms and conditions of the Series C Preferred Stock were
previously disclosed in the Prior Form 8-K and are incorporated
herein by reference. This summary is subject to, and qualified in
their entirety by, the certificate of designations of the Series C
Preferred Stock, which is filed as Exhibit 3.1 hereto and
incorporated herein by reference.
Item 9.01 Financial Statements and
Exhibits.
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Exhibit No.
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Description
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Certificate
of the Designations, Powers, Preferences and Rights of Series C
9.00% Convertible Junior Preferred Stock
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Form of
Wainwright Warrant
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First
Wave Purchase 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.
Date:
January 8, 2021
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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 3.1
CERTIFICATE OF THE DESIGNATIONS, POWERS, PREFERENCES AND
RIGHTS
OF
SERIES C 9.00% CONVERTIBLE JUNIOR PREFERRED STOCK
OF
AZURRX BIOPHARMA, INC.
(Pursuant
to Section 151 of the
Delaware
General Corporation Law)
AzurRx
BioPharma, Inc., a corporation organized and existing under the
laws of the State of Delaware (the “Company”), hereby
certifies that, pursuant to authority vested in the Board of
Directors of the Company (the “Board of Directors”) by
Article FOURTH of the Amended and Restated Certificate of
Incorporation, as amended (the “Certificate of
Incorporation”), of the Company, the following resolutions
were adopted on December 31, 2020 by the Board of Directors
pursuant to Section 151 of the Delaware General Corporation Law
(the “DGCL”), and in accordance with the provisions of
Section 103 of the DGCL, does hereby submit the
following:
WHEREAS,
the Company’s Certificate of Incorporation authorizes the
issuance of 10,000,000 shares of preferred stock, par value $0.0001
per share (the “Preferred Stock”), from time to time in
one or more classes or series;
WHEREAS,
the Board of Directors is authorized to divide the Preferred Stock
into any number of shares and to fix the designations, relative
rights, preferences and limitations of any wholly unissued series
of preferred stock; and
WHEREAS,
it is the desire of the Board of Directors, pursuant to its
authority as aforesaid, to fix the designation and number of, and
determine the designation, relative rights, preferences, and
limitations relating to a series of the Preferred Stock, which
shall consist of up to 75,000.0000 shares of the Preferred Stock
which the Company has the authority to issue, as
follows:
“RESOLVED
that, pursuant to authority vested in the Board of Directors of the
Company by ARTICLE FOURTH of the Company’s Certificate of
Incorporation, out of the total authorized number of 10,000,000
shares of Preferred Stock, there shall be designated a series of
75,000.0000 shares which shall be issued in and constitute a single
series to be known as “Series C 9.00% Convertible Junior
Preferred Stock” (hereinafter called the “Series C
Preferred Stock”). The Board of Directors hereby resolves
that the shares of Series C Preferred Stock shall have the
designations, relative rights, preferences and the limitations
thereof, set forth below:
TERMS OF SERIES C PREFERRED STOCK
Section
1. Definitions.
For the purposes hereof, the following terms shall have the
following meanings:
“Affiliate” means any
Person that, directly or indirectly through one or more
intermediaries, controls or is controlled by or is under common
control with a Person, as such terms are used in and construed
under Rule 405 of the Securities Act.
“Alternate Consideration”
shall have the meaning set forth in Section 7(e).
“Bankruptcy Event” means
any of the following events: (a) the Company or any Significant
Subsidiary (as such term is defined in Rule 1-02(w) of Regulation
S-X) thereof commences a case or other proceeding under any
bankruptcy, reorganization, arrangement, adjustment of debt, relief
of debtors, dissolution, insolvency or liquidation or similar law
of any jurisdiction relating to the Company or any Significant
Subsidiary thereof, (b) there is commenced against the Company or
any Significant Subsidiary thereof any such case or proceeding that
is not dismissed within 60 days after commencement, (c) the Company
or any Significant Subsidiary thereof is adjudicated insolvent or
bankrupt or any order of relief or other order approving any such
case or proceeding is entered, (d) the Company or any Significant
Subsidiary thereof suffers any appointment of any custodian or the
like for it or any substantial part of its property that is not
discharged or stayed within 60 calendar days after such
appointment, (e) the Company or any Significant Subsidiary thereof
makes a general assignment for the benefit of creditors, (f) the
Company or any Significant Subsidiary thereof calls a meeting of
its creditors with a view to arranging a composition, adjustment or
restructuring of its debts, or (g) the Company or any Significant
Subsidiary thereof, by any act or failure to act, expressly
indicates its consent to, approval of or acquiescence in any of the
foregoing or takes any corporate or other action for the purpose of
effecting any of the foregoing.
“Beneficial Ownership
Limitation” shall have the meaning set forth in
Section 6(e).
“Business Day” means any
day except any Saturday, any Sunday, any day which is a federal
legal holiday in the United States or any day on which banking
institutions in the State of New York are authorized or required by
law or other governmental action to close.
“Buy-In” shall have the
meaning set forth in Section 6(d)(iv).
“Change of Control
Transaction” means the occurrence after the date
hereof of any of (a) an acquisition after the date hereof by an
individual or legal entity or “group” (as described in
Rule 13d-5(b)(1) promulgated under the Exchange Act) of effective
control (whether through legal or beneficial ownership of capital
stock of the Company, by contract or otherwise) of in excess of 50%
of the voting securities of the Company (other than by means of
conversion or exercise of Series C Preferred Stock and the
Securities issued together with the Series C Preferred Stock), (b)
the Company merges into or consolidates with any other Person, or
any Person merges into or consolidates with the Company and, after
giving effect to such transaction, the stockholders of the Company
immediately prior to such transaction own less than 50% of the
aggregate voting power of the Company or the successor entity of
such transaction, (c) the Company sells or transfers all or
substantially all of its assets to another Person and the
stockholders of the Company immediately prior to such transaction
own less than 66% of the aggregate voting power of the acquiring
entity immediately after the transaction, (d) a replacement at one
time or within a one year period of more than one-half of the
members of the Board of Directors which is not approved by a
majority of those individuals who are members of the Board of
Directors on the Original Issue Date (or by those individuals who
are serving as members of the Board of Directors on any date whose
nomination to the Board of Directors was approved by a majority of
the members of the Board of Directors who are members on the
Original Issue Date), or (e) the execution by the Company of an
agreement to which the Company is a party or by which it is bound,
providing for any of the events set forth in clauses (a) through
(d) above.
“Closing” means the
initial closing of the purchase and sale of the Series C Preferred
Stock and the Warrants pursuant to Section 2.1 of the Initial
Purchase Agreement.
“Commission” means the
United States Securities and Exchange Commission.
“Common Stock” means the
Company’s common stock, par value $0.0001 per share, and
stock of any other class of securities into which such securities
may hereafter be reclassified or changed.
“Common Stock Equivalents”
means any securities of the Company or the Subsidiaries which would
entitle the holder thereof to acquire at any time Common Stock,
including, without limitation, any debt, preferred stock, rights,
options, warrants or other instrument that is at any time
convertible into or exercisable or exchangeable for, or otherwise
entitles the holder thereof to receive, Common Stock.
“Conversion Amount” means
the sum of the Stated Value at issue.
“Conversion Date” shall
have the meaning set forth in Section 6(a).
“Conversion Price” shall
have the meaning set forth in Section 6(c).
“Conversion Shares” means,
collectively, the shares of Common Stock issuable upon conversion
of the shares of Series C Preferred Stock in accordance with the
terms hereof.
“Conversion Shares Registration
Statement” means a registration statement that
registers the resale of all of the Conversion Shares by the
Holders, which shall be named as “selling stockholders”
therein, and meets the requirements of the Registration Rights
Agreement.
“Covered Securities” means
any shares of Common Stock underlying (x) any shares of preferred
stock issuable to First Wave Bio, Inc., as consideration for the
First Wave License Agreement (if other than the Series C Preferred
Stock), (y) any warrants issuable as placement agent compensation,
as a result of with the transactions contemplated by the
Transaction Documents, and (z) any securities issuable to holders
of the exchange rights set forth in Section 8 of the Series B
Certificate of Designations, as a result of the transactions
contemplated the Transaction Documents.
“Dividend Payment Date”
shall have the meaning set forth in Section 3(a).
“Effective Date” means the
date that the Conversion Shares Registration Statement filed by the
Company pursuant to the Registration Rights Agreement is first
declared effective by the Commission.
“Exchange Act” means the
Securities Exchange Act of 1934, as amended, and the rules and
regulations promulgated thereunder.
“First Wave License
Agreement” means the License Agreement, dated as of
December 31, 2020, by and between First Wave Bio, Inc. and the
Company, as amended, modified or supplemented from time to time in
accordance with its terms.
“First Wave Purchase
Agreement” means any Securities Purchase Agreement
relating to the purchase of Series C Preferred Stock to be entered
into by and between First Wave Bio, Inc. and the Company pursuant
to the terms of the First Wave License Agreement, as amended,
modified or supplemented from time to time in accordance with its
terms.
“Fundamental Transaction”
shall have the meaning set forth in Section 7(e).
“GAAP” means United States
generally accepted accounting principles.
“Holder” shall have the
meaning given such term in Section 2.
“Initial Closing Date”
means the Trading Day on which the Investor Purchase Agreement has
been executed and delivered by the applicable parties thereto and
all conditions precedent to (i) each Holder’s obligations to
pay the Subscription Amount and (ii) the Company’s
obligations to deliver the Series C Preferred Stock and the
Warrants have been satisfied or waived.
“Investor Purchase
Agreement” means the Securities Purchase Agreement,
dated as of December 31, 2020, by and among the Company and the
original Holders signatory thereto, as amended, modified or
supplemented from time to time in accordance with its
terms.
“Issuable Maximum” shall
have the meaning set forth in Section 6(f).
“Issue Date” means, with
respect to any Purchase Agreement, the date of first issuance of
shares of the Series C Preferred Stock pursuant to such Purchase
Agreement, regardless of the number of transfers of any particular
shares of Series C Preferred Stock and regardless of the number of
certificates which may be issued to evidence such Series C
Preferred Stock.
“Junior Securities” means
the Common Stock and all other Common Stock Equivalents of the
Company other than those securities which are explicitly senior or
pari passu to the Series C Preferred
Stock in dividend rights or liquidation preference.
“Liquidation” shall have
the meaning set forth in Section 5.
“MFN Purchase Agreement”
means any agreement pursuant to which shares of Series B Preferred
Stock are exchanged for shares of Series C Preferred Stock in
accordance with the exchange rights set forth in Section 8 of the
Series B Certificate of Designations.
“New York Courts” shall
have the meaning set forth in Section 8(d).
“Notice of Conversion”
shall have the meaning set forth in Section 6(a).
“Original Issue Date”
means the date of the first issuance of any shares of the Series C
Preferred Stock regardless of the number of transfers of any
particular shares of Series C Preferred Stock and regardless of the
number of certificates which may be issued to evidence such Series
C Preferred Stock.
“Person” means an
individual or corporation, partnership, trust, incorporated or
unincorporated association, joint venture, limited liability
company, joint stock company, government (or an agency or
subdivision thereof) or other entity of any kind.
“Prefunded Warrant” means
a prefunded warrant or similar instrument, with a similar
Beneficial Ownership Limitation as specified in Section
6(e).
“Purchase Agreement” means
the Investor Purchase Agreement, the First Wave Purchase Agreement
or any MFN Purchase Agreement, as applicable.
“Rule 144” means Rule 144
promulgated by the Commission pursuant to the Securities Act, as
such Rule may be amended from time to time, or any similar rule or
regulation hereafter adopted by the Commission having substantially
the same effect as such Rule.
“Series B Preferred Stock”
means the Series B Convertible Preferred Stock, par value $0.0001
per share, of the Company.
“Series B Certificate of
Designations” means the Certificate of Designations,
Powers, Preferences and Rights of the Series B Convertible
Preferred Stock.
“Series C Preferred Stock”
shall have the meaning set forth in Section 2.
“Securities” means the
Series C Preferred Stock, the Warrants, the Warrant Shares and the
Conversion Shares.
“Securities Act” means the
Securities Act of 1933, as amended, and the rules and regulations
promulgated thereunder.
“Senior Securities” means
the Company’s Series B Preferred Stock.
“Share Delivery Date”
shall have the meaning set forth in Section 6(c\d).
“Stated Value” shall have
the meaning set forth in Section 2, as the same may be increased
pursuant to Section 3.
“Stockholder Approval”
means such approval as may be required from the stockholders of the
Company in accordance with applicable law, the applicable rules and
regulations of the Nasdaq Stock Market (or any successor entity),
the Company’s certificate of incorporation and bylaws and the
General Corporate Law of the State of Delaware with respect to the
transactions contemplated by the Transaction Documents, including
(x) an increase in the number of authorized shares of Common Stock
above 150,000,000 and (y) the issuance of any Underlying Shares or
other Covered Securities in excess of the Issuable
Maximum.
“Subscription Amount”
shall mean, as to each Holder who is a party to the Investor
Purchase Agreement, the aggregate amount to be paid for the Series
C Preferred Stock purchased pursuant to the Investor Purchase
Agreement, as specified below such Holder’s name on the
signature page of such Purchase Agreement and next to the heading
“Subscription Amount,” in United States dollars and in
immediately available funds.
“Subsidiary” means any
subsidiary of the Company as set forth on Schedule 3.1(a) of the Investor
Purchase Agreement and shall, where applicable, also include any
direct or indirect subsidiary of the Company formed or acquired
after the date of the Investor Purchase Agreement.
“Successor Entity” shall
have the meaning set forth in Section 7(e).
“Trading Day” means a day
on which the principal Trading Market is open for
business.
“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).
“Transaction Documents”
means any Purchase Agreement, the Warrants, the Registration Rights
Agreement, all exhibits and schedules thereto and hereto and any
other documents or agreements executed in connection with the
transactions contemplated pursuant to any Purchase
Agreement.
“Transfer Agent” means
Colonial Stock Transfer Company, Inc., the current transfer agent
of the Company, with a mailing address of 66 Exchange Place, 1st
Floor, Salt Lake City, Utah 84111, and any successor transfer agent
of the Company.
“Underlying Shares” means,
collectively, the shares of Common Stock issued and issuable upon
conversion of the Series C Preferred Stock, and upon exercise of
the Warrants.
“Warrants” means,
collectively, the Common Stock purchase warrants delivered to the
Holder at the Closing in accordance with Section 2.2(a) of the
Investor Purchase Agreement.
“Warrant Shares” means the
shares of Common Stock issuable upon exercise of the
Warrants.
Section
2. Designation,
Amount and Par Value. The series of preferred stock shall be
designated as its Series C 9.00% Convertible Junior Preferred Stock
(the “Series C
Preferred Stock”) and the number of shares so
designated shall be up to 75,000.0000 (which shall not be subject
to increase without the written consent of all of the holders of
the Series C Preferred Stock (each, a “Holder” and collectively,
the “Holders”)). Each share of
Series C Preferred Stock shall have a par value of $0.0001 per
share and a stated value equal to $750.00, subject to increase set
forth in Section 3 below (the “Stated
Value”).
Section
3. Dividends.
a) Accrual and Payment of
Dividends. From and after its applicable Issue Date, subject
to the rights the holders of the Senior Securities, cumulative
dividends on the Series C Preferred Stock shall accrue, whether or
not declared by the Board and whether or not there are funds
legally available for the payment of dividends, on a daily basis in
arrears at the rate of 9.00% per annum on the sum of the Stated
Value thereof plus all unpaid accrued and accumulated dividends
thereon. All accrued dividends on any Series C Preferred Stock
shall be paid in cash only when, as and if declared by the Board of
Directors out of funds legally available therefor or upon a
Liquidation in accordance with the provisions of Section 5;
provided, that to the extent not paid on the last day of March,
June, September and December of each calendar year (each such date,
a “Dividend Payment
Date”), all accrued dividends on any share shall
accumulate and compound on the applicable Dividend Payment Date
whether or not declared by the Board of Directors and shall remain
accumulated, compounding dividends until paid pursuant hereto or
converted pursuant to Section 6. All accrued and accumulated
dividends on the Series C Preferred Stock shall be prior and in
preference to any dividend on any Junior Securities and shall be
fully declared and paid before any dividends are declared and paid,
or any other distributions or redemptions are made, on any Junior
Securities, other than to (a) declare or pay any dividend or
distribution payable on the Common Stock in shares of Common Stock
or (b) repurchase Common Stock held by employees or consultants of
the Company upon termination of their employment or services
pursuant to agreements providing for such repurchase.
b) Partial Dividend Payments.
Except as otherwise provided herein, if at any time the Company
pays less than the total amount of dividends then accrued and
accumulated with respect to the Series C Preferred Stock, such
payment shall be distributed pro rata among the Holders thereof
based upon the aggregate accrued and accumulated but unpaid
dividends on the Series C Preferred Stock held by each such
Holder.
Section
4. Voting
Rights. Except as otherwise provided herein or as otherwise
required by law, the Series C Preferred Stock shall have no voting
rights. However, as long as any shares of Series C Preferred Stock
are outstanding, the Company shall not, without the affirmative
vote of the Holders of a majority of the then outstanding shares of
the Series C Preferred Stock, (a) alter or change adversely the
powers, preferences or rights given to the Series C Preferred Stock
or alter or amend this Certificate of Designation, (b) authorize or
create any class of stock ranking as to dividends, redemption or
distribution of assets upon a Liquidation (as defined in Section 5)
senior to, or otherwise pari passu with, the Series C
Preferred Stock, (c) amend its certificate of incorporation or
other charter documents in any manner that adversely affects any
rights of the Holders, (d) increase the number of authorized shares
of Series C Preferred Stock, or (e) enter into any agreement with
respect to any of the foregoing.
Section
5. Liquidation.
Upon any liquidation, dissolution or winding-up of the Company,
whether voluntary or involuntary (a “Liquidation”), after
payment in full of any liquidation preference to the holders of the
Senior Securities, the Holders shall be entitled to receive out of
the assets, whether capital or surplus, of the Company an amount
equal to the Stated Value, plus any accrued and unpaid dividends
thereon and any other fees or liquidated damages then due and owing
thereon under this Certificate of Designation, for each share of
Series C Preferred Stock before any distribution or payment shall
be made to the holders of any Junior Securities, and if the assets
of the Company shall be insufficient to pay in full such amounts,
then the entire assets to be distributed to the Holders shall be
ratably distributed among the Holders in accordance with the
respective amounts that would be payable on such shares if all
amounts payable thereon were paid in full. A Fundamental
Transaction or Change of Control Transaction shall be deemed a
Liquidation for purposed of this Section 5. The Company shall mail
written notice of any such Liquidation, not less than 45 days prior
to the payment date stated therein, to each Holder.
Section
6. Conversion.
a) Conversions at Option of
Holder. Each share of Series C Preferred Stock shall be
convertible, at any time and from time to time at the option of the
Holder thereof, into that number of shares of Common Stock (subject
to the limitations set forth in Section 6(e), except to the extent
the Company makes reasonable provision for the issuance of
Prefunded Warrants in lieu of Common Stock, and Section 6(f))
determined by dividing (x) the sum of (i) the Stated Value of such
share of Series C Preferred Stock and (ii) all accrued and
accumulated and unpaid dividends on such share of Series C
Preferred Stock to be converted by (y) the Conversion Price.
Holders shall effect conversions by providing the Company with the
form of conversion notice attached hereto as Annex A (a “Notice of Conversion”).
Each Notice of Conversion shall specify the number of shares of
Series C Preferred Stock to be converted, the number of shares of
Series C Preferred Stock owned prior to the conversion at issue,
the number of shares of Series C Preferred Stock owned subsequent
to the conversion at issue and the date on which such conversion is
to be effected, which date may not be prior to the date the
applicable Holder delivers such Notice of Conversion to the Company
pursuant to Section 8(a) (such date,
the “Conversion
Date”). If no Conversion Date is specified in a Notice
of Conversion, the Conversion Date shall be the date that such
Notice of Conversion to the Company is deemed delivered hereunder.
No ink-original Notice of Conversion shall be required, nor shall
any medallion guarantee (or other type of guarantee or
notarization) of any Notice of Conversion form be
required. The
calculations and entries set forth in the Notice of Conversion
shall control in the absence of manifest or mathematical error. To
effect conversions of shares of Series C Preferred Stock, a Holder
shall not be required to surrender the certificate(s) representing
the shares of Series C Preferred Stock to the Company unless all of
the shares of Series C Preferred Stock represented thereby are so
converted, in which case such Holder shall deliver the certificate
representing such shares of Series C Preferred Stock promptly
following the Conversion Date at issue. Shares of Series C
Preferred Stock converted into Common Stock (or Prefunded Warrants,
as applicable) or redeemed in accordance with the terms hereof
shall be canceled and shall not be reissued.
b) Conversions at Option of
Company. Each share of Series C Preferred Stock shall be
convertible, at any time and from time to time at the option of the
Company, into that number of shares of Common Stock (subject to the
limitations set forth in Section 6(e), except to the extent the
Company makes reasonable provision for the issuance of Prefunded
Warrants in lieu of Common Stock, and Section 6(f)) determined by
dividing (x) the sum of (i) the Stated Value of such share of
Series C Preferred Stock and (ii) all accrued and accumulated
and unpaid dividends on such share of Series C Preferred Stock to
be converted by (y) the Conversion Price. The Company shall send
each Holder written notice of such event and of the date of
effectiveness thereof. Promptly after receipt of such notice, each
Holder shall surrender any certificate or certificates representing
such shares of Series C Preferred Stock to the Company at its
principal office (or such other office or agency of the Company as
the Company may designate by notice in writing to the holder or
holders of the Series C Preferred Stock), together with a properly
completed statement of the name or names (with address), subject to
compliance with applicable laws to the extent such designation
shall involve a transfer, in which the certificate or certificates
for shares of Common Stock (or Prefunded Warrants, as applicable)
shall be issued, at any time during its usual business hours, as of
the date set forth in such notice.
c) Conversion Price. The
conversion price for the Series C Preferred Stock shall equal
$0.75, subject to adjustment herein (the “Conversion
Price”).
d)
Mechanics of
Conversion.
i. Delivery of Conversion Shares Upon
Conversion. Not later than the earlier of (i) two (2)
Trading Days and (ii) the number of Trading Days comprising the
Standard Settlement Period (as defined below) after each Conversion
Date (the “Share
Delivery Date”), the Company shall deliver, or cause
to be delivered, to the converting Holder the number of Conversion
Shares being acquired upon the conversion of the Series C Preferred
Stock which, if (A) there is an effective registration statement
permitting the issuance of the Conversion Shares to or resale of
the Conversion Shares by such Holder or (B) the Conversion Shares
are eligible for resale by the Holder without volume or
manner-of-sale limitations pursuant to Rule 144, shall be free of
restrictive legends and trading restrictions (other than those
which may then be required by any Purchase Agreement). If (A) there
is an effective registration statement permitting the issuance of
the Conversion Shares to or resale of the Conversion Shares by such
Holder following a conversion of Series C Preferred Stock or (B)
the Conversion Shares issuable upon a conversion of Series C
Preferred Stock are eligible for resale by the Holder without
volume or manner-of-sale limitations pursuant to Rule 144, the
Company shall deliver the Conversion Shares required to be
delivered by the Company under this Section 6 electronically
through the Depository Trust Company or another established
clearing corporation performing similar functions. As used herein,
“Standard Settlement
Period” means the standard settlement period,
expressed in a number of Trading Days, on the Company’s
primary Trading Market with respect to the Common Stock as in
effect on the date of delivery of the Notice of
Conversion.
ii. Failure to Deliver Conversion
Shares. If, in the case of any Notice of Conversion, such
Conversion Shares are not delivered to or as directed by the
applicable Holder by the Share Delivery Date, the Holder shall be
entitled to elect by written notice to the Company at any time on
or before its receipt of such Conversion Shares, to rescind such
Conversion, in which event the Company shall promptly return to the
Holder any original Series C Preferred Stock certificate delivered
to the Company and the Holder shall promptly return to the Company
the Conversion Shares issued to such Holder pursuant to the
rescinded Conversion Notice.
iii. Obligation
Absolute; Partial Liquidated Damages. The Company’s
obligation to issue and deliver the Conversion Shares upon
conversion of Series C Preferred Stock in accordance with the terms
hereof are absolute and unconditional, irrespective of any action
or inaction by a Holder to enforce the same, any waiver or consent
with respect to any provision hereof, the recovery of any judgment
against any Person or any action to enforce the same, or any
setoff, counterclaim, recoupment, limitation or termination, or any
breach or alleged breach by such Holder or any other Person of any
obligation to the Company or any violation or alleged violation of
law by such Holder or any other person, and irrespective of any
other circumstance which might otherwise limit such obligation of
the Company to such Holder in connection with the issuance of such
Conversion Shares; provided, however, that such delivery
shall not operate as a waiver by the Company of any such action
that the Company may have against such Holder. In the event a
Holder shall elect to convert any or all of the Stated Value of its
Series C Preferred Stock, the Corporation may not refuse conversion
based on any claim that such Holder or any one associated or
affiliated with such Holder has been engaged in any violation of
law, agreement or for any other reason, unless an injunction from a
court, on notice to Holder, restraining and/or enjoining conversion
of all or part of the Series C Preferred Stock of such Holder shall
have been sought and obtained, and the Corporation posts a surety
bond for the benefit of such Holder in the amount of 150% of the
Stated Value of Series C Preferred Stock which is subject to the
injunction, which bond shall remain in effect until the completion
of arbitration/litigation of the underlying dispute and the
proceeds of which shall be payable to such Holder to the extent it
obtains judgment. In the absence of such injunction, the
Corporation shall issue Conversion Shares upon a properly noticed
conversion. If the Company fails to deliver to a Holder such
Conversion Shares pursuant to Section 6(d)(i) by the Share Delivery
Date applicable to such conversion, the Company shall pay to such
Holder, in cash, as liquidated damages and not as a penalty, for
each $5,000 of Stated Value of Series C Preferred Stock being
converted, $50 per Trading Day (increasing to $100 per Trading Day
on the third Trading Day and increasing to $200 per Trading Day on
the sixth Trading Day after such damages begin to accrue) for each
Trading Day after the Share Delivery Date until such Conversion
Shares are delivered or Holder rescinds such conversion. Nothing
herein shall limit a Holder’s right to pursue actual damages
for the Company’s failure to deliver Conversion Shares within
the period specified herein and such Holder shall have the right to
pursue all remedies available to it hereunder, at law or in equity
including, without limitation, a decree of specific performance
and/or injunctive relief. The exercise of any such rights shall not
prohibit a Holder from seeking to enforce damages pursuant to any
other Section hereof or under applicable law.
iv. Compensation for Buy-In on Failure to
Timely Deliver Conversion Shares Upon Conversion. In
addition to any other rights available to the Holder, if the
Company fails for any reason to deliver to a Holder the applicable
Conversion Shares by the Share Delivery Date pursuant to Section
6(d)(i), and if after such Share Delivery Date such Holder is
required by its brokerage firm to purchase (in an open market
transaction or otherwise), or the Holder’s brokerage firm
otherwise purchases, shares of Common Stock to deliver in
satisfaction of a sale by such Holder of the Conversion Shares
which such Holder was entitled to receive upon the conversion
relating to such Share Delivery Date (a “Buy-In”), then the
Company shall (A) pay in cash to such Holder (in addition to any
other remedies available to or elected by such Holder) the amount,
if any, by which (x) such Holder’s total purchase price
(including any brokerage commissions) for the Common Stock so
purchased exceeds (y) the product of (1) the aggregate number of
shares of Common Stock that such Holder was entitled to receive
from the conversion at issue multiplied by (2) the actual sale
price at which the sell order giving rise to such purchase
obligation was executed (including any brokerage commissions) and
(B) at the option of such Holder, either reissue (if surrendered)
the shares of Series C Preferred Stock equal to the number of
shares of Series C Preferred Stock submitted for conversion (in
which case, such conversion shall be deemed rescinded) or deliver
to such Holder the number of shares of Common Stock that would have
been issued if the Company had timely complied with its delivery
requirements under Section 6(d)(i). For example, if a Holder
purchases shares of Common Stock having a total purchase price of
$11,000 to cover a Buy-In with respect to an attempted conversion
of shares of Series C Preferred Stock with respect to which the
actual sale price of the Conversion Shares (including any brokerage
commissions) giving rise to such purchase obligation was a total of
$10,000 under clause (A) of the immediately preceding sentence, the
Company shall be required to pay such Holder $1,000. The Holder
shall provide the Company written notice indicating the amounts
payable to such Holder in respect of the Buy-In and, upon request
of the Company, evidence of the amount of such loss. Nothing herein
shall limit a Holder’s right to pursue any other remedies
available to it hereunder, at law or in equity including, without
limitation, a decree of specific performance and/or injunctive
relief with respect to the Company’s failure to timely
deliver the Conversion Shares upon conversion of the shares of
Series C Preferred Stock as required pursuant to the terms
hereof.
v. Reservation of Shares Issuable Upon
Conversion. The Company covenants that it will at all times
reserve and keep available out of its authorized and unissued
shares of Common Stock for the sole purpose of issuance upon
conversion of the Series C Preferred Stock, free from preemptive
rights or any other actual contingent purchase rights of Persons
other than the Holder (and the other holders of the Series C
Preferred Stock), not less than such aggregate number of shares of
the Common Stock as shall (subject to the terms and conditions set
forth in any Purchase Agreement) be issuable (taking into account
the adjustments and restrictions of Sections 6(f) and 7) upon the
conversion of the then outstanding shares of Series C Preferred
Stock, including all accrued and accumulated dividends. The Company
covenants that all shares of Common Stock that shall be so issuable
shall, upon issue, be duly authorized, validly issued, fully paid
and nonassessable.
vi. Fractional Shares. No
fractional shares or scrip representing fractional shares of Common
Stock (or Prefunded Warrants to purchase fractional shares of
Common Stock, as applicable) shall be issued upon the conversion of
the Series C Preferred Stock. As to any fraction of a share of
Common Stock which the Holder would otherwise be entitled to
purchase upon such conversion, the Company shall at its election,
either pay a cash adjustment in respect of such final fraction in
an amount equal to such fraction multiplied by the Conversion Price
or round up to the next whole share.
vii. Transfer
Taxes and Expenses. The issuance of Conversion Shares on
conversion of this Series C Preferred Stock shall be made without
charge to any Holder for any documentary stamp or similar taxes
that may be payable in respect of the issue or delivery of such
Conversion Shares, provided that the Company shall not be required
to pay any tax that may be payable in respect of any transfer
involved in the issuance and delivery of any such Conversion Shares
upon conversion in a name other than that of the Holders of such
shares of Series C Preferred Stock and the Company shall not be
required to issue or deliver such Conversion Shares unless or until
the Person or Persons requesting the issuance thereof shall have
paid to the Company the amount of such tax or shall have
established to the satisfaction of the Company that such tax has
been paid. The Company shall pay all Transfer Agent fees required
for same-day processing of any Notice of Conversion and all fees to
the Depository Trust Company (or another established clearing
corporation performing similar functions) required for same-day
electronic delivery of the Conversion Shares.
e) Beneficial
Ownership Limitation. The Company shall not effect any
conversion of the Series C Preferred Stock, and a Holder shall not
have the right to convert any portion of the Series C Preferred
Stock, to the extent that, after giving effect to the conversion
set forth on the applicable Notice of Conversion, such Holder
(together with such Holder’s Affiliates, and any Persons
acting as a group together with such Holder or any of such
Holder’s Affiliates (such Persons, “Attribution Parties”))
would beneficially own in excess of the Beneficial Ownership
Limitation (as defined below). For purposes of the foregoing
sentence, the number of shares of Common Stock beneficially owned
by such Holder and its Affiliates and Attribution Parties shall
include the number of shares of Common Stock issuable upon
conversion of the Series C Preferred Stock with respect to which
such determination is being made, but shall exclude the number of
shares of Common Stock which are issuable upon (i) conversion of
the remaining, unconverted Series C Preferred Stock beneficially
owned by such Holder or any of its Affiliates or Attribution
Parties and (ii) exercise or conversion of the unexercised or
unconverted portion of any other securities of the Company subject
to a limitation on conversion or exercise analogous to the
limitation contained herein (including, without limitation, the
Series C Preferred Stock or the Warrants) beneficially owned by
such Holder or any of its Affiliates or Attribution Parties.
Except as set forth in the preceding sentence, for purposes of this
Section 6(e), beneficial ownership shall be calculated in
accordance with Section 13(d) of the Exchange Act and the rules and
regulations promulgated thereunder. To the extent that the
limitation contained in this Section 6(e) applies, the
determination of whether the Series C Preferred Stock is
convertible (in relation to other securities owned by such Holder
together with any Affiliates and Attribution Parties) and of how
many shares of Series C Preferred Stock are convertible shall be in
the sole discretion of such Holder, and the submission of a Notice
of Conversion shall be deemed to be such Holder’s
determination of whether the shares of Series C Preferred Stock may
be converted (in relation to other securities owned by such Holder
together with any Affiliates and Attribution Parties) and how many
shares of the Series C Preferred Stock are convertible, in each
case subject to the Beneficial Ownership Limitation. To ensure
compliance with this restriction, each Holder will be deemed to
represent to the Company each time it delivers a Notice of
Conversion that such Notice of Conversion has not violated the
restrictions set forth in this paragraph and the Company shall have
no obligation to verify or confirm the accuracy of such
determination. In addition, a
determination as to any group status as contemplated above shall be
determined in accordance with Section 13(d) of the Exchange
Act and the rules and regulations promulgated
thereunder. For purposes of
this Section 6(e), in determining the number of outstanding shares
of Common Stock, a Holder may rely on the number of outstanding
shares of Common Stock as stated in the most recent of the
following: (i) the Company’s most recent periodic or annual
report filed with the Commission, as the case may be, (ii) a more
recent public announcement by the Company or (iii) a more recent
written notice by the Company or the Transfer Agent setting forth
the number of shares of Common Stock outstanding. Upon the
written or oral request of a Holder, the Company shall within two
Trading Days confirm orally and in writing to such Holder the
number of shares of Common Stock then outstanding. In any
case, the number of outstanding shares of Common Stock shall be
determined after giving effect to the conversion or exercise of
securities of the Company, including the Series C Preferred Stock,
by such Holder or its Affiliates or Attribution Parties since the
date as of which such number of outstanding shares of Common Stock
was reported. The “Beneficial Ownership
Limitation” shall be 4.99% of the number of shares of
the Common Stock outstanding immediately after giving effect to the
issuance of shares of Common Stock issuable upon conversion of
Series C Preferred Stock held by the applicable Holder. A Holder,
upon notice to the Company, may increase or decrease the Beneficial
Ownership Limitation provisions of this Section 6(e) applicable to
its Series C Preferred Stock provided that the Beneficial Ownership
Limitation in no event exceeds 9.99% of the number of shares of the
Common Stock outstanding immediately after giving effect to the
issuance of shares of Common Stock upon conversion of this Series C
Preferred Stock held by the Holder and the provisions of this
Section 6(e) shall continue to apply. Any such increase in the
Beneficial Ownership Limitation will not be effective until the
61st day
after such notice is delivered to the Company and shall only apply
to such Holder and no other Holder. The provisions of this
paragraph shall be construed and implemented in a manner otherwise
than in strict conformity with the terms of this Section 6(e) to
correct this paragraph (or any portion hereof) which may be
defective or inconsistent with the intended Beneficial Ownership
Limitation contained herein or to make changes or supplements
necessary or desirable to properly give effect to such
limitation.
The
limitations contained in this paragraph shall apply to a successor
holder of Series C Preferred
Stock.
f) Issuance Limitations.
Notwithstanding anything herein to the contrary, except to the
extent the Company has previously obtained effective Stockholder
Approval, the Company may not issue, upon conversion of the Series
C Preferred Stock, a number of shares of Common Stock (or Prefunded
Warrants covering a number of shares of Common Stock, as
applicable) which would exceed 6,186,966 shares of Common Stock in
the aggregate, subject to adjustment for forward and reverse stock
splits, recapitalizations and the like (such number of shares, the
“Issuable
Maximum”).
Section
7. Certain
Adjustments.
a) Stock Dividends and Stock
Splits. If the Company, at any time while this Series C
Preferred Stock is outstanding: (i) pays a stock dividend or
otherwise makes a distribution or distributions payable in shares
of Common Stock on shares of Common Stock or any other Common Stock
Equivalents (which, for avoidance of doubt, shall not include any
shares of Common Stock issued by the Company upon conversion of, or
payment of a dividend on, this Series C Preferred Stock), (ii)
subdivides outstanding shares of Common Stock into a larger number
of shares, (iii) combines (including by way of a reverse stock
split) outstanding shares of Common Stock into a smaller number of
shares, or (iv) issues, in the event of a reclassification of
shares of the Common Stock, any shares of capital stock of the
Company, then the Conversion Price shall be multiplied by a
fraction of which the numerator shall be the number of shares of
Common Stock (excluding any treasury shares of the Company)
outstanding immediately before such event, and of which the
denominator shall be the number of shares of Common Stock
outstanding immediately after such event. Any adjustment made
pursuant to this Section 7(a) shall become effective immediately
after the record date for the determination of stockholders
entitled to receive such dividend or distribution and shall become
effective immediately after the effective date in the case of a
subdivision, combination or re-classification.
b) [Intentionally
Omitted].
c) Subsequent Rights Offerings. In
addition to any adjustments pursuant to Section 7(a) above, if at
any time the Company grants, issues or sells any Common Stock
Equivalents or rights to purchase stock, warrants, securities or
other property pro rata to the record holders of any class of
shares of Common Stock (the “Purchase Rights”), then
each Holder of Series C Preferred Stock will be entitled to
acquire, upon the terms applicable to such Purchase Rights, the
aggregate Purchase Rights which the Holder could have acquired if
the Holder had held the number of shares of Common Stock acquirable
upon complete conversion of such Holder’s Series C Preferred
Stock (without regard to any limitations on exercise hereof,
including without limitation, the Beneficial Ownership Limitation)
immediately before the date on which a record is taken for the
grant, issuance or sale of such Purchase Rights, or, if no such
record is taken, the date as of which the record holders of shares
of Common Stock are to be determined for the grant, issue or sale
of such Purchase Rights (provided, however, to the extent that the
Holder’s right to participate in any such Purchase Right
would result in the Holder exceeding the Beneficial Ownership
Limitation, then the Holder shall not be entitled to participate in
such Purchase Right to such extent (or beneficial ownership of such
shares of Common Stock as a result of such Purchase Right to such
extent) and such Purchase Right to such extent shall be held in
abeyance for the Holder until such time, if ever, as its right
thereto would not result in the Holder exceeding the Beneficial
Ownership Limitation).
d) Pro Rata Distributions. During
such time as this Series C Preferred Stock is outstanding, if the
Company declares or makes any dividend or other distribution of its
assets (or rights to acquire its assets) to holders of shares of
Common Stock, by way of return of capital or otherwise (including,
without limitation, any distribution of cash, stock or other
securities, property or options by way of a dividend, spin off,
reclassification, corporate rearrangement, scheme of arrangement or
other similar transaction) (a “Distribution”), at any
time after the issuance of this Series C Preferred Stock, then, in
each such case, the Holder shall be entitled to participate in such
Distribution to the same extent that the Holder would have
participated therein if the Holder had held the number of shares of
Common Stock acquirable upon complete conversion of this Series C
Preferred Stock (without regard to any limitations on conversion
hereof, including without limitation, the Beneficial Ownership
Limitation) immediately before the date of which a record is taken
for such Distribution, or, if no such record is taken, the date as
of which the record holders of shares of Common Stock are to be
determined for the participation in such Distribution (provided, however, to the extent that the
Holder's right to participate in any such Distribution would result
in the Holder exceeding the Beneficial Ownership Limitation, then
the Holder shall not be entitled to participate in such
Distribution to such extent (or in the beneficial ownership of any
shares of Common Stock as a result of such Distribution to such
extent) and the portion of such Distribution shall be held in
abeyance for the benefit of the Holder until such time, if ever, as
its right thereto would not result in the Holder exceeding the
Beneficial Ownership Limitation).
e) Fundamental Transaction. If, at
any time while this Series C Preferred Stock is outstanding, (i)
the Company, directly or indirectly, in one or more related
transactions effects any merger or consolidation of the Company
with or into another Person, (ii) the Company, directly or
indirectly, effects any sale, lease, license, assignment, transfer,
conveyance or other disposition of all or substantially all of its
assets in one or a series of related transactions, (iii) any,
direct or indirect, purchase offer, tender offer or exchange offer
(whether by the Company or another Person) is completed pursuant to
which holders of Common Stock are permitted to sell, tender or
exchange their shares for other securities, cash or property and
has been accepted by the holders of 50% or more of the outstanding
Common Stock, (iv) the Company, directly or indirectly, in one or
more related transactions effects any reclassification,
reorganization or recapitalization of the Common Stock or any
compulsory share exchange pursuant to which the Common Stock is
effectively converted into or exchanged for other securities, cash
or property, or (v) the Company, directly or indirectly, in one or
more related transactions consummates a stock or share purchase
agreement or other business combination (including, without
limitation, a reorganization, recapitalization, spin-off or scheme
of arrangement) with another Person whereby such other Person
acquires more than 50% of the outstanding shares of Common Stock
(not including any shares of Common Stock held by the other Person
or other Persons making or party to, or associated or affiliated
with the other Persons making or party to, such stock or share
purchase agreement or other business combination) (each a
“Fundamental
Transaction”), then, upon any subsequent conversion of
this Series C Preferred Stock, the Holders shall have the right to
receive, for each Conversion Share that would have been issuable
upon such conversion immediately prior to the occurrence of such
Fundamental Transaction (without regard to any limitation in
Section 6(e) and Section 6(f) on the conversion of this Series C
Preferred Stock), the number of shares of Common Stock of the
successor or acquiring corporation or of the Company, if it is the
surviving corporation, and any additional consideration (the
“Alternate
Consideration”) receivable as a result of such
Fundamental Transaction by a holder of the number of shares of
Common Stock for which this Series C Preferred Stock is convertible
immediately prior to such Fundamental Transaction (without regard
to any limitation in Section 6(e) and Section 6(f) on the
conversion of this Series C Preferred Stock). For purposes of any
such conversion, the determination of the Conversion Price shall be
appropriately adjusted to apply to such Alternate Consideration
based on the amount of Alternate Consideration issuable in respect
of one share of Common Stock in such Fundamental Transaction, and
the Company shall apportion the Conversion Price among the
Alternate Consideration in a reasonable manner reflecting the
relative value of any different components of the Alternate
Consideration. If holders of Common Stock are given any choice as
to the securities, cash or property to be received in a Fundamental
Transaction, then the Holders shall be given the same choice as to
the Alternate Consideration it receives upon any conversion of this
Series C Preferred Stock following such Fundamental Transaction. To
the extent necessary to effectuate the foregoing provisions, any
successor to the Company or surviving entity in such Fundamental
Transaction shall file a new Certificate of Designation with the
same terms and conditions and issue to the Holders new preferred
stock consistent with the foregoing provisions and evidencing the
Holders’ right to convert such preferred stock into Alternate
Consideration. The Company shall cause any successor entity in a
Fundamental Transaction in which the Company is not the survivor
(the “Successor
Entity”) to assume in writing all of the obligations
of the Company under this Certificate of Designation and the other
Transaction Documents in accordance with the provisions of this
Section 7(e) pursuant to written agreements in form and substance
reasonably satisfactory to the Holders and approved by the Holders
(without unreasonable delay) prior to such Fundamental Transaction
and shall, at the option of the holder of this Series C Preferred
Stock, deliver to the Holders in exchange for this Series C
Preferred Stock a security of the Successor Entity evidenced by a
written instrument substantially similar in form and substance to
this Series C Preferred Stock which is convertible for a
corresponding number of shares of capital stock of such Successor
Entity (or its parent entity) equivalent to the shares of Common
Stock acquirable and receivable upon conversion of this Series C
Preferred Stock (without regard to any limitations on the
conversion of this Series C Preferred Stock) prior to such
Fundamental Transaction, and with a conversion price which applies
the conversion price hereunder to such shares of capital stock (but
taking into account the relative value of the shares of Common
Stock pursuant to such Fundamental Transaction and the value of
such shares of capital stock, such number of shares of capital
stock and such conversion price being for the purpose of protecting
the economic value of this Series C Preferred Stock immediately
prior to the consummation of such Fundamental Transaction), and
which is reasonably satisfactory in form and substance to the
Holders. Upon the occurrence of any such Fundamental Transaction,
the Successor Entity shall succeed to, and be substituted for (so
that from and after the date of such Fundamental Transaction, the
provisions of this Certificate of Designation and the other
Transaction Documents referring to the “Company” shall
refer instead to the Successor Entity), and may exercise every
right and power of the Company and shall assume all of the
obligations of the Company under this Certificate of Designation
and the other Transaction Documents with the same effect as if such
Successor Entity had been named as the Company herein.
f) Calculations. All calculations
under this Section 7 shall be made to the nearest cent or the
nearest 1/100th of a share, as the case may be. For purposes of
this Section 7, the number of shares of Common Stock deemed to be
issued and outstanding as of a given date shall be the sum of the
number of shares of Common Stock (excluding any treasury shares of
the Company) issued and outstanding.
g) Notice to the
Holders.
i. Adjustment to Conversion Price.
Whenever the Conversion Price is adjusted pursuant to any provision
of this Section 7, the Company shall promptly deliver to each
Holder a notice pursuant to Section 8(a) setting forth
the Conversion Price after such adjustment and setting forth a
brief statement of the facts requiring such
adjustment.
ii. Notice to Allow Conversion by
Holder. If (A) the Company shall declare a dividend (or any
other distribution in whatever form) on the Common Stock, (B) the
Company shall declare a special nonrecurring cash dividend on or a
redemption of the Common Stock, (C) the Company shall authorize the
granting to all holders of the Common Stock of rights or warrants
to subscribe for or purchase any shares of capital stock of any
class or of any rights, (D) the approval of any stockholders of the
Company shall be required in connection with any reclassification
of the Common Stock, any consolidation or merger to which the
Company is a party, any sale or transfer of all or substantially
all of the assets of the Company, or any compulsory share exchange
whereby the Common Stock is converted into other securities, cash
or property or (E) the Company shall
authorize the voluntary or involuntary dissolution, liquidation or
winding up of the affairs of the Company, then, in each case, the
Company shall cause to be filed at each office or agency maintained
for the purpose of conversion of this Series C Preferred Stock, and shall cause to be
delivered by to each Holder at its
last e-mail address or address as it shall appear upon the
stock books of the Company, at least
twenty (20) calendar days prior to the applicable record or
effective date hereinafter specified, a notice stating (x)
the date on which a record is to be taken for the purpose of such
dividend, distribution, redemption, rights or warrants, or if a
record is not to be taken, the date as of which the holders of the
Common Stock of record to be entitled to such dividend,
distributions, redemption, rights or warrants are to be determined
or (y) the date on which such reclassification, consolidation,
merger, sale, transfer or share exchange 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 of the Common Stock for securities, cash or other
property deliverable upon such reclassification, consolidation,
merger, sale, transfer or share exchange; provided that the failure
to deliver such notice or any defect therein or in the delivery
thereof shall not affect the validity of the corporate action
required to be specified in such notice. To the extent that any
notice provided hereunder constitutes, or contains, material,
non-public information regarding the Company or any of the
Subsidiaries, the Company shall simultaneously file such notice
with the Commission pursuant to a Current Report on Form 8-K. The
Holder shall remain entitled to convert the Conversion Amount of
this Series C Preferred Stock (or any part hereof) during the
20-day period commencing on the date of such notice through the
effective date of the event triggering such notice except as may
otherwise be expressly set forth herein.
Section
8.
Miscellaneous.
a) Notices. Any and all notices or
other communications or deliveries to be provided by the Holders
hereunder including, without limitation, any Notice of Conversion,
shall be in writing and delivered personally or by e-mail
attachment, or sent by a nationally recognized overnight courier
service, addressed to the Company, at the address set forth above
Attention: Chief Financial Officer, e-mail address dschneiderman@azurrx.com,
or such other e-mail address or address as the Company may specify
for such purposes by notice to the Holders delivered in accordance
with this Section 8. Any and all notices or other communications or
deliveries to be provided by the Company hereunder shall be in
writing and delivered personally, by or e-mail attachment, or sent
by a nationally recognized overnight courier service addressed to
each Holder at the e-mail address or address of such Holder
appearing on the books of the Company, or if no such e-mail address
or address appears on the books of the Company, at the principal
place of business of such Holder, as set forth in the Purchase
Agreement applicable to such Holder. Any notice or other
communication or deliveries hereunder shall be deemed given and
effective on the earliest of (i) the date of transmission, if such
notice or communication is delivered via e-mail attachment at the
e-mail address set forth in this Section prior to 5:30 p.m. (New
York City time) on any date, (ii) the next Trading Day after the
date of transmission, if such notice or communication is delivered
via e-mail attachment at the e-mail address set forth in this
Section on a day that is not a Trading Day or later than 5:30 p.m.
(New York City time) on any Trading Day, (iii) the second Trading
Day following the date of mailing, if sent by U.S. nationally
recognized overnight courier service, or (iv) upon actual receipt
by the party to whom such notice is required to be
given.
b) Absolute Obligation. Except as
expressly provided herein, no provision of this Certificate of
Designation shall alter or impair the obligation of the Company,
which is absolute and unconditional, to pay liquidated damages,
accrued dividends and accrued interest, as applicable, on the
shares of Series C Preferred Stock at the time, place, and rate,
and in the coin or currency, herein prescribed.
c) Lost or Mutilated Preferred Stock
Certificate. If a Holder’s Series C Preferred Stock
certificate shall be mutilated, lost, stolen or destroyed, the
Company shall execute and deliver, in exchange and substitution for
and upon cancellation of a mutilated certificate, or in lieu of or
in substitution for a lost, stolen or destroyed certificate, a new
certificate for the shares of Series C Preferred Stock so
mutilated, lost, stolen or destroyed, but only upon receipt of
evidence of such loss, theft or destruction of such certificate,
and of the ownership hereof reasonably satisfactory to the
Company.
d) Governing Law. All questions
concerning the construction, validity, enforcement and
interpretation of this Certificate of Designation shall be governed
by and construed and enforced in accordance with the internal laws
of the State of Delaware, without regard to the principles of
conflict of laws thereof. Each party agrees that all legal
proceedings concerning the interpretation, enforcement and defense
of the transactions contemplated by this Certificate of Designation
and any of the Transaction Documents (whether brought against a
party hereto or its respective Affiliates, directors, officers,
stockholders, employees or agents) shall be commenced in the state
and federal courts sitting in the City of New York, Borough of
Manhattan (the “New
York Courts”). Each party hereto hereby irrevocably
submits to the exclusive jurisdiction of the New York Courts for
the adjudication of any dispute hereunder or in connection herewith
or with any transaction contemplated hereby or discussed herein
(including with respect to the enforcement of this Certificate of
Designation any of the Transaction Documents), and hereby
irrevocably waives, and agrees not to assert in any suit, action or
proceeding, any claim that it is not personally subject to the
jurisdiction of such New York Courts, or such New York Courts are
improper or inconvenient venue for such proceeding. Each party
hereby irrevocably waives personal service of process and consents
to process being served in any such suit, action or proceeding by
mailing a copy thereof via registered or certified mail or
overnight delivery (with evidence of delivery) to such party at the
address in effect for notices to it under this Certificate of
Designation and agrees that such service shall constitute good and
sufficient service of process and notice thereof. Nothing contained
herein shall be deemed to limit in any way any right to serve
process in any other manner permitted by applicable law. Each party
hereto hereby irrevocably waives, to the fullest extent permitted
by applicable law, any and all right to trial by jury in any legal
proceeding arising out of or relating to this Certificate of
Designation or the transactions contemplated hereby. If any party
shall commence an action or proceeding to enforce any provisions of
this Certificate of Designation, then the prevailing party in such
action or proceeding shall be reimbursed by the other party for its
attorneys’ fees and other costs and expenses incurred in the
investigation, preparation and prosecution of such action or
proceeding.
e) Waiver. Any waiver by the
Company or a Holder of a breach of any provision of this
Certificate of Designation shall not operate as or be construed to
be a waiver of any other breach of such provision or of any breach
of any other provision of this Certificate of Designation or a
waiver by any other Holders. The failure of the Company or a Holder
to insist upon strict adherence to any term of this Certificate of
Designation on one or more occasions shall not be considered a
waiver or deprive that party (or any other Holder) of the right
thereafter to insist upon strict adherence to that term or any
other term of this Certificate of Designation on any other
occasion. Any waiver by the Company or a Holder must be in
writing.
f) Severability. If any provision
of this Certificate of Designation is invalid, illegal or
unenforceable, the balance of this Certificate of Designation shall
remain in effect, and if any provision is inapplicable to any
Person or circumstance, it shall nevertheless remain applicable to
all other Persons and circumstances. If it shall be found that any
interest or other amount deemed interest due hereunder violates the
applicable law governing usury, the applicable rate of interest due
hereunder shall automatically be lowered to equal the maximum rate
of interest permitted under applicable law.
g) Next Business Day. Whenever any
payment or other obligation hereunder shall be due on a day other
than a Business Day, such payment shall be made on the next
succeeding Business Day.
h) Headings. The headings
contained herein are for convenience only, do not constitute a part
of this Certificate of Designation and shall not be deemed to limit
or affect any of the provisions hereof.
i) Status of Converted or Redeemed
Preferred Stock. If any shares of Series C Preferred Stock
shall be converted, redeemed or reacquired by the Company, such
shares shall resume the status of authorized but unissued shares of
preferred stock and shall no longer be designated as Series C 9.00%
Convertible Junior Preferred Stock.
j) Fractional Shares. Series C
Preferred Stock may not be issued in fractional shares or scrip
representing fractional shares of more than four decimal places. As
to any fraction of a share of Series C Preferred Stock to be issued
pursuant to any provision hereof, the Company shall at its
election, either pay a cash adjustment in respect of such final
fraction in an amount equal to such fraction multiplied by the
Stated Value or round up to the next ten-thousandth of a
share.
*********************
RESOLVED,
FURTHER, that the Chairman, the president or any vice-president,
and the secretary or any assistant secretary, of the Company be and
they hereby are authorized and directed to prepare and file this
Certificate of Designation of Preferences, Rights and Limitations
in accordance with the foregoing resolution and the provisions of
Delaware law.
IN
WITNESS WHEREOF, the undersigned have executed this Certificate
this 4th
day of January, 2021.
|
/s/
James Sapirstein
Name:
James Sapirstein
Title:
Chief Executive Officer
|
|
ANNEX A
NOTICE
OF CONVERSION
(TO BE
EXECUTED BY THE REGISTERED HOLDER IN ORDER TO CONVERT SHARES OF
SERIES C PREFERRED STOCK)
The
undersigned hereby elects to convert the number of shares of Series
C 9.00% Convertible Junior Preferred Stock indicated below into
shares of common stock, par value $0.0001 per share (the
“Common
Stock”), of AzurRx BioPharma, Inc., a Delaware
corporation (the “Company”), according to
the conditions hereof, as of the date written below. If shares of
Common Stock are to be issued in the name of a Person other than
the undersigned, the undersigned will pay all transfer taxes
payable with respect thereto and is delivering herewith such
certificates and opinions as may be required by the Company in
accordance with the applicable Purchase Agreement. No fee will be
charged to any Holder for any conversion, except for any such
transfer taxes.
Conversion
calculations:
|
Date to
Effect Conversion:
____________________________________________________
|
|
Number
of shares of Series C Preferred Stock owned prior to Conversion:
_______________
|
|
Number
of shares of Series C Preferred Stock to be Converted:
________________________
|
|
Stated
Value of shares of Series C Preferred Stock to be Converted:
____________________
|
|
Number
of shares of Common Stock to be Issued:
__________________________________
|
|
Applicable
Conversion
Price:___________________________________________________
|
|
Number
of shares of Preferred Stock subsequent to Conversion:
_______________________
|
|
Address
for Delivery: ______________________
or
DWAC
Instructions:
Broker
no: _________
Account
no: ___________
|
|
[HOLDER]
By:___________________________________
Name:
Title:
|
|
Exhibit 4.1
NEITHER
THIS SECURITY NOR THE SECURITIES FOR WHICH THIS SECURITY IS
EXERCISABLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE
COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE
UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE “SECURITIES ACT”), AND,
ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR
PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT
SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND
IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS. THIS SECURITY
AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS SECURITY MAY BE
PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN
SECURED BY SUCH SECURITIES.
PLACEMENT AGENT COMMON STOCK PURCHASE WARRANT
AZURRX BIOPHARMA, INC.
|
Warrant Shares:
__________
|
Initial Exercise
Date: January 6, 2021
|
THIS
PLACEMENT AGENT COMMON STOCK PURCHASE WARRANT (the
“Warrant”) certifies that,
for value received, ______ or his assigns (the “Holder”) is entitled,
upon the terms and subject to the limitations on exercise and the
conditions hereinafter set forth, at any time on or after the date
hereof (the “Initial
Exercise Date”) and on or prior to 5:00 p.m. (New York
City time) on December 31, 2025 (the “Termination Date”) but
not thereafter, to subscribe for and purchase from AzurRx
Biopharma, Inc., a Delaware corporation (the “Company”), up to _____
shares (as subject to adjustment hereunder, the “Warrant Shares”) of
Common Stock. The purchase price of one share of Common Stock under
this Warrant shall be equal to the Exercise Price, as defined in
Section 2(b). This Warrant is being used pursuant to that certain
engagement letter, dated as of October 13, 2020, by and between the
Company and H.C. Wainwright & Co., LLC.
Section
1. Definitions.
Capitalized terms used and not otherwise defined herein shall have
the meanings set forth in that certain Securities Purchase
Agreement (the “Purchase Agreement”),
dated December 31, 2020, among the Company and the purchasers
signatory thereto.
Section
2. Exercise.
a) Exercise
of Warrant. Exercise of the purchase rights represented by
this Warrant may be made, in whole or in part, at any time or times
on or after the Initial Exercise Date and on or before the
Termination Date by delivery to the Company of a duly executed PDF
copy submitted by e-mail (or e-mail attachment) of the Notice of
Exercise in the form attached hereto as Annex A (the
“Notice of
Exercise”). Within the earlier of (i) two (2) Trading
Days and (ii) the number of Trading Days comprising the Standard
Settlement Period (as defined in Section 2(d)(i) herein) following
the date of exercise as aforesaid, the Holder shall deliver the
aggregate Exercise Price for the shares specified in the applicable
Notice of Exercise by wire transfer or cashier’s check drawn
on a United States bank unless the cashless exercise procedure
specified in Section 2(c) below is specified in the applicable
Notice of Exercise. No
ink-original Notice of Exercise shall be required, nor shall any
medallion guarantee (or other type of guarantee or notarization) of
any Notice of Exercise be required. Notwithstanding anything herein
to the contrary, the Holder shall not be required to physically
surrender this Warrant to the Company until the Holder has
purchased all of the Warrant Shares available hereunder and the
Warrant has been exercised in full, in which case, the Holder shall
surrender this Warrant to the Company for cancellation within three
(3) Trading Days of the date on which the final Notice of Exercise
is delivered to the Company. Partial exercises of this Warrant
resulting in purchases of a portion of the total number of Warrant
Shares available hereunder shall have the effect of lowering the
outstanding number of Warrant Shares purchasable hereunder in an
amount equal to the applicable number of Warrant Shares purchased.
The Holder and the Company shall maintain records showing the
number of Warrant Shares purchased and the date of such purchases.
The Company shall deliver any objection to any Notice of Exercise
within one (1) Trading Day of receipt of such notice. The Holder and any assignee, by acceptance of
this Warrant, acknowledge and agree that, by reason of the
provisions of this paragraph, following the purchase of a portion
of the Warrant Shares hereunder, the number of Warrant Shares
available for purchase hereunder at any given time may be less than
the amount stated on the face hereof.
b) Exercise Price. The exercise
price per share of Common Stock under this Warrant shall be
$0.9375, subject to adjustment hereunder (the “Exercise
Price”).
c) Cashless Exercise. If at the
time of exercise hereof there is no effective registration
statement registering, or the prospectus contained therein is not
available for the resale of the Warrant Shares by the Holder, then
this Warrant may also be exercised, in whole or in part, at such
time by means of a “cashless exercise” in which the
Holder shall be entitled to receive a number of Warrant Shares
equal to the quotient obtained by dividing [(A-B) (X)] by (A),
where:
(A) =
as applicable: (i) the VWAP on the Trading Day immediately
preceding the date of the applicable Notice of Exercise if such
Notice of Exercise is (1) both executed and delivered pursuant to
Section 2(a) hereof on a day that is not a Trading Day or (2) both
executed and delivered pursuant to Section 2(a) hereof on a Trading
Day prior to the opening of “regular trading hours” (as
defined in Rule 600(b)(68) of Regulation NMS promulgated under the
federal securities laws) on such Trading Day, (ii) at the option of
the Holder, either (y) the VWAP on the Trading Day immediately
preceding the date of the applicable Notice of Exercise or (z) the
Bid Price of the Common Stock on the principal Trading Market as
reported by Bloomberg L.P. as of the time of the Holder’s
execution of the applicable Notice of Exercise if such Notice of
Exercise is executed during “regular trading hours” on
a Trading Day and is delivered within two (2) hours thereafter
(including until two (2) hours after the close of “regular
trading hours” on a Trading Day) pursuant to Section 2(a)
hereof or (iii) the VWAP on the date of the applicable Notice of
Exercise if the date of such Notice of Exercise is a Trading Day
and such Notice of Exercise is both executed and delivered pursuant
to Section 2(a) hereof after the close of “regular trading
hours” on such Trading Day;
(B) =
the Exercise Price of this Warrant, as adjusted hereunder;
and
(X) =
the number of Warrant Shares that would be issuable upon exercise
of this Warrant in accordance with the terms of this Warrant if
such exercise were by means of a cash exercise rather than a
cashless exercise.
If Warrant Shares are issued in such a cashless exercise, the
parties acknowledge and agree that in accordance with Section
3(a)(9) of the Securities Act, the Warrant Shares shall take on the
characteristics of the Warrants being exercised, and the holding
period of the Warrant Shares being issued may be tacked on to the
holding period of this Warrant. The Company agrees not
to take any position contrary to this Section 2(c).
“Bid Price” means, for any
date, the price determined by the first of the following clauses
that applies: (a) if the Common Stock is then listed or quoted on a
Trading Market, the bid price of the Common Stock for the time in
question (or the nearest preceding date) on the Trading Market on
which the Common Stock is then listed or quoted as reported by
Bloomberg L.P. (based on a Trading Day from 9:30 a.m. (New York
City time) to 4:02 p.m. (New York City time)), (b) if OTCQB
or OTCQX is not a Trading Market, the volume weighted average price
of the Common Stock for such date (or the nearest preceding date)
on OTCQB or OTCQX as applicable, (c) if the Common Stock is not
then listed or quoted for trading on OTCQB or OTCQX and if prices
for the Common Stock are then reported on The Pink Open Market (or
a similar organization or agency succeeding to its functions of
reporting prices), the most recent bid price per share of the
Common Stock so reported, or (d) in all other cases, the fair
market value of a share of Common Stock as determined by an
independent appraiser selected in good faith by the Holders of a
majority in interest of the Warrants then outstanding and
reasonably acceptable to the Company, the fees and expenses of
which shall be paid by the Company.
“VWAP” means, for any
date, the price determined by the first of the following clauses
that applies: (a) if the Common Stock is then listed or quoted on a
Trading Market, the daily volume weighted average price of the
Common Stock for such date (or the nearest preceding date) on the
Trading Market on which the Common Stock is then listed or quoted
as reported by Bloomberg L.P. (based on a Trading Day from 9:30
a.m. (New York City time) to 4:02 p.m. (New York City time)),
(b) if OTCQB or OTCQX is not a Trading Market, the volume
weighted average price of the Common Stock for such date (or the
nearest preceding date) on OTCQB or OTCQX as applicable, (c) if the
Common Stock is not then listed or quoted for trading on OTCQB or
OTCQX and if prices for the Common Stock are then reported on The
Pink Open Market (or a similar organization or agency succeeding to
its functions of reporting prices), the most recent bid price per
share of the Common Stock so reported, or (d) in all other
cases, the fair market value of a share of Common Stock as
determined by an independent appraiser selected in good faith by
the Holders of a majority in interest of the Warrants then
outstanding and reasonably acceptable to the Company, the fees and
expenses of which shall be paid by the Company.
Notwithstanding
anything herein to the contrary, on the Termination Date, this
Warrant shall be automatically exercised via cashless exercise
pursuant to this Section 2(c).
d) Mechanics of
Exercise.
i. Delivery of Warrant Shares Upon
Exercise. The Company shall cause the Warrant Shares
purchased hereunder to be transmitted by the Transfer Agent to the
Holder by crediting the account of the Holder’s or its
designee’s balance account with The Depository Trust Company
through its Deposit or Withdrawal at Custodian system
(“DWAC”) if the Company is
then a participant in such system and either (A) there is an
effective registration statement permitting the issuance of the
Warrant Shares to or resale of the Warrant Shares by the Holder or
(B) the Warrant Shares are eligible for resale by the Holder
without volume or manner-of-sale limitations pursuant to Rule 144
(assuming cashless exercise of the Warrants), and otherwise by
physical delivery of a certificate, registered in the
Company’s share register in the name of the Holder or its
designee, for the number of Warrant Shares to which the Holder is
entitled pursuant to such exercise to the address specified by the
Holder in the Notice of Exercise by the date that is the earliest
of (i) two (2) Trading Days after the delivery to the Company of
the Notice of Exercise and (ii) one (1) Trading Day after delivery
of the aggregate Exercise Price to the Company (such date, the
“Warrant Share
Delivery Date”). Upon delivery of the Notice of
Exercise, the Holder shall be deemed for all corporate purposes to
have become the holder of record of the Warrant Shares with respect
to which this Warrant has been exercised, irrespective of the date
of delivery of the Warrant Shares, provided that payment of the
aggregate Exercise Price (other than in the case of a cashless
exercise) is received within two (2) Trading Days following
delivery of the Notice of Exercise. If the Company fails for any
reason to deliver to the Holder the Warrant Shares subject to a
Notice of Exercise by the Warrant Share Delivery Date, the Company
shall pay to the Holder, in cash, as liquidated damages and not as
a penalty, for each $1,000 of Warrant Shares subject to such
exercise (based on the VWAP of the Common Stock on the date of the
applicable Notice of Exercise), $10 per Trading Day (increasing to
$20 per Trading Day on the fifth Trading Day after such liquidated
damages begin to accrue) for each Trading Day after such Warrant
Share Delivery Date until such Warrant Shares are delivered or
Holder rescinds such exercise. The Company agrees to maintain a
transfer agent that is a participant in the FAST program so long as
this Warrant remains outstanding and exercisable.
ii. Delivery of New Warrants Upon
Exercise. If this Warrant shall have been exercised in part,
the Company shall, at the request of a Holder and upon surrender of
this Warrant certificate, at the time of delivery of the Warrant
Shares, deliver to the Holder a new Warrant evidencing the rights
of the Holder to purchase the unpurchased Warrant Shares called for
by this Warrant, which new Warrant shall in all other respects be
identical with this Warrant.
iii. Rescission
Rights. If the Company fails to cause the Transfer Agent to
transmit to the Holder the Warrant Shares pursuant to Section
2(d)(i) by the Warrant Share Delivery Date, then the Holder will
have the right to rescind such exercise.
iv. Compensation for Buy-In on Failure to
Timely Deliver Warrant Shares Upon Exercise. In addition to
any other rights available to the Holder, if the Company fails to
cause the Transfer Agent to transmit to the Holder the Warrant
Shares in accordance with the provisions of Section 2(d)(i) above
pursuant to an exercise on or before the Warrant Share Delivery
Date, and if after such date the Holder is required by its broker
to purchase (in an open market transaction or otherwise) or the
Holder’s brokerage firm otherwise purchases, shares of Common
Stock to deliver in satisfaction of a sale by the Holder of the
Warrant Shares which the Holder anticipated receiving upon such
exercise (a “Buy-In”), then the
Company shall (A) pay in cash to the Holder the amount, if any, by
which (x) the Holder’s total purchase price (including
brokerage commissions, if any) for the shares of Common Stock so
purchased exceeds (y) the amount obtained by multiplying (1) the
number of Warrant Shares that the Company was required to deliver
to the Holder in connection with the exercise at issue times (2)
the price at which the sell order giving rise to such purchase
obligation was executed, and (B) at the option of the Holder,
either reinstate the portion of the Warrant and equivalent number
of Warrant Shares for which such exercise was not honored (in which
case such exercise shall be deemed rescinded) or deliver to the
Holder the number of shares of Common Stock that would have been
issued had the Company timely complied with its exercise and
delivery obligations hereunder. For example, if the Holder
purchases Common Stock having a total purchase price of $11,000 to
cover a Buy-In with respect to an attempted exercise of shares of
Common Stock with an aggregate sale price giving rise to such
purchase obligation of $10,000, under clause (A) of the immediately
preceding sentence the Company shall be required to pay the Holder
$1,000. The Holder shall provide the Company written notice
indicating the amounts payable to the Holder in respect of the
Buy-In and, upon request of the Company, evidence of the amount of
such loss. Nothing herein shall limit a Holder’s right to
pursue any other remedies available to it hereunder, at law or in
equity including, without limitation, a decree of specific
performance and/or injunctive relief with respect to the
Company’s failure to timely deliver shares of Common Stock
upon exercise of the Warrant as required pursuant to the terms
hereof.
v. No Fractional Shares or Scrip.
No fractional shares or scrip representing fractional shares shall
be issued upon the exercise of this Warrant. As to any fraction of
a share which the Holder would otherwise be entitled to purchase
upon such exercise, the Company shall, at its election, either pay
a cash adjustment in respect of such final fraction in an amount
equal to such fraction multiplied by the Exercise Price or round up
to the next whole share.
vi. Charges, Taxes and Expenses.
Issuance of Warrant Shares shall be made without charge to the
Holder for any issue or transfer tax or other incidental expense in
respect of the issuance of such Warrant Shares, all of which taxes
and expenses shall be paid by the Company, and such Warrant Shares
shall be issued in the name of the Holder or in such name or names
as may be directed by the Holder; provided, however, that, in the event
that Warrant Shares are to be issued in a name other than the name
of the Holder, this Warrant when surrendered for exercise shall be
accompanied by the assignment form attached hereto as Annex B (the
“Assignment
Form”) duly executed by the Holder, and the Company
may require, as a condition thereto, the payment of a sum
sufficient to reimburse it for any transfer tax incidental thereto.
The Company shall pay all Transfer Agent fees required for same-day
processing of any Notice of Exercise and all fees to the Depository
Trust Company (or another established clearing corporation
performing similar functions) required for same-day electronic
delivery of the Warrant Shares.
vii. Closing
of Books. The Company will not close its stockholder books
or records in any manner which prevents the timely exercise of this
Warrant, pursuant to the terms hereof.
e) Beneficial
Ownership Limitations. The Company shall not effect any
exercise of this Warrant, and a Holder shall not have the right to
exercise any portion of this Warrant, pursuant to Section 2 or
otherwise, to the extent that after giving effect to such issuance
after exercise as set forth on the applicable Notice of Exercise,
the Holder (together with the Holder’s Affiliates, and any
other Persons acting as a group together with the Holder or any of
the Holder’s Affiliates (such Persons, “Attribution Parties”)),
would beneficially own in excess of the Beneficial Ownership
Limitation (as defined below). For purposes of the foregoing
sentence, the number of shares of Common Stock beneficially owned
by the Holder and its Affiliates and Attribution Parties shall
include the number of shares of Common Stock issuable upon exercise
of this Warrant with respect to which such determination is being
made, but shall exclude the number of shares of Common Stock which
would be issuable upon (i) exercise of the remaining, nonexercised
portion of this Warrant beneficially owned by the Holder or any of
its Affiliates or Attribution Parties and (ii) exercise or
conversion of the unexercised or nonconverted portion of any other
securities of the Company (including, without limitation, any other
Common Stock Equivalents) subject to a limitation on conversion or
exercise analogous to the limitation contained herein beneficially
owned by the Holder or any of its Affiliates or Attribution
Parties. Except as set forth in the preceding sentence, for
purposes of this Section 2(e), beneficial ownership shall be
calculated in accordance with Section 13(d) of the Exchange Act and
the rules and regulations promulgated thereunder, it being
acknowledged by the Holder that the Company is not representing to
the Holder that such calculation is in compliance with Section
13(d) of the Exchange Act and the Holder is solely responsible for
any schedules required to be filed in accordance therewith. To the
extent that the limitation contained in this Section 2(e) applies,
the determination of whether this Warrant is exercisable (in
relation to other securities owned by the Holder together with any
Affiliates and Attribution Parties) and of which portion of this
Warrant is exercisable shall be in the sole discretion of the
Holder, and the submission of a Notice of Exercise shall be deemed
to be the Holder’s determination of whether this Warrant is
exercisable (in relation to other securities owned by the Holder
together with any Affiliates and Attribution Parties) and of which
portion of this Warrant is exercisable, in each case subject to the
Beneficial Ownership Limitation, and the Company shall have no
obligation to verify or confirm the accuracy of such determination.
In addition, a determination as to any group status as contemplated
above shall be determined in accordance with Section 13(d) of the
Exchange Act and the rules and regulations promulgated thereunder.
For purposes of this Section 2(e), in determining the number of
outstanding shares of Common Stock, a Holder may rely on the number
of outstanding shares of Common Stock as reflected in (A) the
Company’s most recent periodic or annual report filed with
the Commission, as the case may be, (B) a more recent public
announcement by the Company or (C) a more recent written notice by
the Company or the Transfer Agent setting forth the number of
shares of Common Stock outstanding. Upon the written or oral
request of a Holder, the Company shall within one Trading Day
confirm orally and in writing to the Holder the number of shares of
Common Stock then outstanding. In any case, the number of
outstanding shares of Common Stock shall be determined after giving
effect to the conversion or exercise of securities of the Company,
including this Warrant, by the Holder or its Affiliates or
Attribution Parties since the date as of which such number of
outstanding shares of Common Stock was reported. The
“Beneficial
Ownership Limitation” shall be 4.99% of the number of
shares of the Common Stock outstanding immediately after giving
effect to the issuance of shares of Common Stock issuable upon
exercise of this Warrant. The Holder, upon notice to the Company,
may increase or decrease the Beneficial Ownership Limitation
provisions of this Section 2(e), provided that the Beneficial
Ownership Limitation in no event exceeds 9.99% of the number of
shares of the Common Stock outstanding immediately after giving
effect to the issuance of shares of Common Stock upon exercise of
this Warrant held by the Holder and the provisions of this Section
2(e) shall continue to apply. Any increase in the Beneficial
Ownership Limitation will not be effective until the 61st day after such
notice is delivered to the Company. The provisions of this
paragraph shall be construed and implemented in a manner otherwise
than in strict conformity with the terms of this Section 2(e) to
correct this paragraph (or any portion hereof) which may be
defective or inconsistent with the intended Beneficial Ownership
Limitation herein contained or to make changes or supplements
necessary or desirable to properly give effect to such limitation.
The limitations contained in this paragraph shall apply to a
successor holder of this Warrant.
f) Issuance
Limitations. Notwithstanding anything herein to the
contrary, if the Company has not obtained Stockholder Approval (as
defined in the Purchase Agreement), then the Company may not issue,
upon the exercise of this Warrant, any shares of Common
Stock.
Section
3. Certain
Adjustments.
a) Stock Dividends and Splits. If
the Company, at any time while this Warrant is outstanding: (i)
pays a stock dividend or otherwise makes a distribution or
distributions on shares of its Common Stock or any other equity or
equity equivalent securities payable in shares of Common Stock
(which, for avoidance of doubt, shall not include any shares of
Common Stock issued by the Company upon exercise of this Warrant),
(ii) subdivides outstanding shares of Common Stock into a larger
number of shares, (iii) combines (including by way of reverse stock
split) outstanding shares of Common Stock into a smaller number of
shares, or (iv) issues by reclassification of shares of the Common
Stock any shares of capital stock of the Company, then in each case
the Exercise Price shall be multiplied by a fraction of which the
numerator shall be the number of shares of Common Stock (excluding
treasury shares, if any) outstanding immediately before such event
and of which the denominator shall be the number of shares of
Common Stock outstanding immediately after such event, and the
number of shares issuable upon exercise of this Warrant shall be
proportionately adjusted such that the aggregate Exercise Price of
this Warrant shall remain unchanged. Any adjustment made pursuant
to this Section 3(a) shall become effective immediately after the
record date for the determination of stockholders entitled to
receive such dividend or distribution and shall become effective
immediately after the effective date in the case of a subdivision,
combination or re-classification.
b) [RESERVED]
c) Subsequent Rights Offerings.
In addition to any adjustments
pursuant to Section 3(a) above, if at any time the Company grants,
issues or sells any Common Stock Equivalents or rights to purchase
stock, warrants, securities or other property pro rata to the
record holders of any class of shares of Common Stock (the
“Purchase
Rights”), then the Holder
will be entitled to acquire, upon the terms applicable to such
Purchase Rights, the aggregate Purchase Rights which the Holder
could have acquired if the Holder had held the number of shares of
Common Stock acquirable upon complete exercise of this Warrant
(without regard to any limitations on exercise hereof, including
without limitation, the Beneficial Ownership Limitation)
immediately before the date on which a record is taken for the
grant, issuance or sale of such Purchase Rights, or, if no such
record is taken, the date as of which the record holders of shares
of Common Stock are to be determined for the grant, issue or sale
of such Purchase Rights (provided,
however,
that, to the extent that the Holder’s right to participate in
any such Purchase Right would result in the Holder exceeding the
Beneficial Ownership Limitation, then the Holder shall not be
entitled to participate in such Purchase Right to such extent (or
beneficial ownership of such shares of Common Stock as a result of
such Purchase Right to such extent) and such Purchase Right to such
extent shall be held in abeyance for the Holder until such time, if
ever, as its right thereto would not result in the Holder exceeding
the Beneficial Ownership Limitation).
d) Pro
Rata Distributions. During such time as this Warrant is
outstanding, if the Company shall declare or make any dividend
(other than cash) or other distribution of its assets (or rights to
acquire its assets) to holders of shares of Common Stock, by way of
return of capital or otherwise (including, without limitation, any
distribution of stock or other securities, property or options by
way of a dividend, spin off, reclassification, corporate
rearrangement, scheme of arrangement or other similar transaction)
(a “Distribution”), at any
time after the issuance of this Warrant, then, in each such case,
the Holder shall be entitled to participate in such Distribution to
the same extent that the Holder would have participated therein if
the Holder had held the number of shares of Common Stock acquirable
upon complete exercise of this Warrant (without regard to any
limitations on exercise hereof, including without limitation, the
Beneficial Ownership Limitation) immediately before the date of
which a record is taken for such Distribution, or, if no such
record is taken, the date as of which the record holders of shares
of Common Stock are to be determined for the participation in such
Distribution (provided, however, that, to the extent
that the Holder's right to participate in any such Distribution
would result in the Holder exceeding the Beneficial Ownership
Limitation, then the Holder shall not be entitled to participate in
such Distribution to such extent (or in the beneficial ownership of
any shares of Common Stock as a result of such Distribution to such
extent) and the portion of such Distribution shall be held in
abeyance for the benefit of the Holder until such time, if ever, as
its right thereto would not result in the Holder exceeding the
Beneficial Ownership Limitation).
e) Fundamental Transaction. If, at
any time while this Warrant is outstanding, (i) the Company (and
all of its Subsidiaries, taken as a whole), directly or indirectly,
in one or more related transactions effects any merger or
consolidation of the Company with or into another Person, (ii) the
Company, directly or indirectly, effects any sale, lease, license,
assignment, transfer, conveyance or other disposition of all or
substantially all of its assets in one or a series of related
transactions, (iii) any, direct or indirect, purchase offer, tender
offer or exchange offer (whether by the Company or another Person)
is completed pursuant to which holders of Common Stock are
permitted to sell, tender or exchange their shares for other
securities, cash or property and has been accepted by the holders
of 50% or more of the outstanding Common Stock, (iv) the Company,
directly or indirectly, in one or more related transactions effects
any reclassification, reorganization or recapitalization of the
Common Stock or any compulsory share exchange pursuant to which the
Common Stock is effectively converted into or exchanged for other
securities, cash or property, or (v) the Company, directly or
indirectly, in one or more related transactions consummates a stock
or share purchase agreement or other business combination
(including, without limitation, a reorganization, recapitalization,
spin-off, merger or scheme of arrangement) with another Person or
group of Persons whereby such other Person or group acquires more
than 50% of the outstanding shares of Common Stock (not including
any shares of Common Stock held by the other Person or other
Persons making or party to, or associated or affiliated with the
other Persons making or party to, such stock or share purchase
agreement or other business combination) (each a
“Fundamental
Transaction”), then, upon any subsequent exercise of
this Warrant, the Holder shall have the right to receive, for each
Warrant Share that would have been issuable upon such exercise
immediately prior to the occurrence of such Fundamental
Transaction, at the option of the Holder (without regard to any
limitation in Section 2(e) and Section 2(f) on the exercise of this
Warrant), the number of shares of Common Stock of the successor or
acquiring corporation or of the Company, if it is the surviving
corporation, and any additional consideration (the
“Alternate
Consideration”) receivable as a result of such
Fundamental Transaction by a holder of the number of shares of
Common Stock for which this Warrant is exercisable immediately
prior to such Fundamental Transaction (without regard to any
limitation in Section 2(e) and Section 2(f) on the exercise of this
Warrant). For purposes of any such exercise, the determination of
the Exercise Price shall be appropriately adjusted to apply to such
Alternate Consideration based on the amount of Alternate
Consideration issuable in respect of one share of Common Stock in
such Fundamental Transaction, and the Company shall apportion the
Exercise Price among the Alternate Consideration in a reasonable
manner reflecting the relative value of any different components of
the Alternate Consideration. If holders of Common Stock are given
any choice as to the securities, cash or property to be received in
a Fundamental Transaction, then the Holder shall be given the same
choice as to the Alternate Consideration it receives upon any
exercise of this Warrant following such Fundamental Transaction.
Notwithstanding anything to the contrary, in the event of a
Fundamental Transaction (other than (x) any stock split or reverse
stock split, (y) any transaction effected solely for the purpose of
changing the jurisdiction of incorporation of the Company, or (z)
any holding company reorganization or parent-subsidiary merger not
requiring stockholder approval pursuant to Sections 251(g) or 253
of the Delaware General Corporation Law (or any successor
provisions thereof)), the Company or any Successor Entity (as
defined below) shall, at the Holder’s option, exercisable at
any time concurrently with, or within 30 days after, the
consummation of the Fundamental Transaction (or, if later, the date
of the public announcement of the applicable Fundamental
Transaction), purchase this Warrant from the Holder by paying to
the Holder an amount of cash equal to the Black Scholes Value of
the remaining unexercised portion of this Warrant on the date of
the consummation of such Fundamental Transaction; provided, however, if the Fundamental
Transaction is not within the Company's control, including not
approved by the Company's Board of Directors, Holder shall only be
entitled to receive from the Company or any Successor Entity, as of
the date of consummation of such Fundamental Transaction, the same
type or form of consideration (and in the same proportion), at the
Black Scholes Value (as defined below) of the unexercised portion
of this Warrant, that is being offered and paid to the holders of
Common Stock of the Company in connection with the Fundamental
Transaction, whether that consideration be in the form of cash,
stock or any combination thereof, or whether the holders of Common
Stock are given the choice to receive from among alternative forms
of consideration in connection with the Fundamental Transaction.
“Black Scholes
Value” means the value of this Warrant based on the
Black-Scholes Option Pricing Model obtained from the
“OV” function on Bloomberg, L.P. (“Bloomberg”) determined as
of the day of consummation of the applicable Fundamental
Transaction for pricing purposes and reflecting (A) a risk-free
interest rate corresponding to the U.S. Treasury rate for a period
equal to the time between the date of the public announcement of the
applicable Fundamental Transaction and the Termination Date, (B) an
expected volatility equal to the 100 day volatility obtained from
the HVT function on Bloomberg (determined utilizing a 365 day
annualization factor) as of the Trading Day immediately following
the public announcement of the applicable Fundamental Transaction,
(C) the underlying price per share used in such calculation shall
be the greater of (i) the sum of the price per share being offered
in cash, if any, plus the value of any non-cash consideration, if
any, being offered in such Fundamental Transaction and (ii) the
greater of (x) the last VWAP immediately prior to the public
announcement of such Fundamental Transaction and (y) the last VWAP
immediately prior to the consummation of such Fundamental
Transaction and (D) a remaining option time equal to the time
between the date of the public announcement of the applicable
Fundamental Transaction and the Termination Date. The payment of
the Black Scholes Value will be made by wire transfer of
immediately available funds within five Trading Days of the
Holder’s election (or, if later, on the effective date of the
Fundamental Transaction). The Company shall cause any successor
entity in a Fundamental Transaction in which the Company is not the
survivor (the “Successor Entity”) to
assume in writing all of the obligations of the Company under this
Warrant and the other Transaction Documents in accordance with the
provisions of this Section 3(e) pursuant to written agreements in
form and substance reasonably satisfactory to the Holder and
approved by the Holder (without unreasonable delay) prior to such
Fundamental Transaction and shall, at the option of the Holder,
deliver to the Holder in exchange for this Warrant a security of
the Successor Entity evidenced by a written instrument
substantially similar in form and substance to this Warrant which
is exercisable for a corresponding number of shares of capital
stock of such Successor Entity (or its parent entity) equivalent to
the shares of Common Stock acquirable and receivable upon exercise
of this Warrant (without regard to any limitations on the exercise
of this Warrant) prior to such Fundamental Transaction, and with an
exercise price which applies the exercise price hereunder to such
shares of capital stock (but taking into account the relative value
of the shares of Common Stock pursuant to such Fundamental
Transaction and the value of such shares of capital stock, such
number of shares of capital stock and such exercise price being for
the purpose of protecting the economic value of this Warrant
immediately prior to the consummation of such Fundamental
Transaction), and which is reasonably satisfactory in form and
substance to the Holder. Upon the occurrence of any such
Fundamental Transaction, the Successor Entity shall succeed to, and
be substituted for the Company (so that from and after the date of
such Fundamental Transaction, the provisions of this Warrant and
the other Transaction Documents referring to the
“Company” shall refer instead to the Successor Entity),
and the Successor Entity may exercise every right and power of the
Company and shall assume all of the obligations of the Company
under this Warrant and the other Transaction Documents with the
same effect as if such Successor Entity had been named as the
Company herein.
f) Calculations. All calculations
under this Section 3 shall be made to the nearest cent or the
nearest 1/100th of a share, as the case may be. For purposes of
this Section 3, the number of shares of Common Stock deemed to be
issued and outstanding as of a given date shall be the sum of the
number of shares of Common Stock (excluding treasury shares, if
any) issued and outstanding.
g) Notice to Holder.
i. Adjustment to Exercise Price.
Whenever the Exercise Price is adjusted pursuant to any provision
of this Section 3, the Company shall promptly deliver to the Holder
by email a notice setting forth the Exercise Price after such
adjustment and any resulting adjustment to the number of Warrant
Shares and setting forth a brief statement of the facts requiring
such adjustment.
ii. Notice to Allow Exercise by
Holder. If (A) the Company shall declare a dividend (or any
other distribution in whatever form) on the Common Stock, (B) the
Company shall declare a special nonrecurring cash dividend on or a
redemption of the Common Stock, (C) the Company shall authorize the
granting to all holders of the Common Stock rights or warrants to
subscribe for or purchase any shares of capital stock of any class
or of any rights, (D) the approval of any stockholders of the
Company shall be required in connection with any reclassification
of the Common Stock, any consolidation or merger to which the
Company (and all of its Subsidiaries, taken as a whole) is a party,
any sale or transfer of all or substantially all of the assets of
the Company, or any compulsory share exchange whereby the Common
Stock is converted into other securities, cash or property, or (E)
the Company shall authorize the voluntary or involuntary
dissolution, liquidation or winding up of the affairs of the
Company, then, in each case, the Company shall cause to be
delivered by email to the Holder at its last email or other address
as it shall appear upon the Warrant Register of the Company, at
least 20 calendar days prior to the applicable record or effective
date hereinafter specified, a notice stating (x) the date on which
a record is to be taken for the purpose of such dividend,
distribution, redemption, rights or warrants, or if a record is not
to be taken, the date as of which the holders of the Common Stock
of record to be entitled to such dividend, distributions,
redemption, rights or warrants are to be determined or (y) the date
on which such reclassification, consolidation, merger, sale,
transfer or share exchange 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
of the Common Stock for securities, cash or other property
deliverable upon such reclassification, consolidation, merger,
sale, transfer or share exchange; provided that the failure to
deliver such notice or any defect therein or in the delivery
thereof shall not affect the validity of the corporate action
required to be specified in such notice. To the extent that any
notice provided in this Warrant constitutes, or contains, material,
non-public information regarding the Company or any of the
Subsidiaries, the Company shall simultaneously file such notice
with the Commission pursuant to a Current Report on Form 8-K. The
Holder shall remain entitled to exercise this Warrant during the
period commencing on the date of such notice to the effective date
of the event triggering such notice except as may otherwise be
expressly set forth herein.
Section
4. Transfer
of Warrant.
a) Transferability. Subject to
compliance with any applicable securities laws and the conditions
set forth in Section 4(d) hereof, this Warrant and all rights
hereunder (including, without limitation, any registration rights)
are transferable, in whole or in part, upon surrender of this
Warrant at the principal office of the Company or its designated
agent, together with a written assignment of this Warrant
substantially in the form attached hereto duly executed by the
Holder or its agent or attorney and funds sufficient to pay any
transfer taxes payable upon the making of such transfer. Upon such
surrender and, if required, such payment, the Company shall execute
and deliver a new Warrant or Warrants in the name of the assignee
or assignees, as applicable, and in the denomination or
denominations specified in such instrument of assignment, and shall
issue to the assignor a new Warrant evidencing the portion of this
Warrant not so assigned, and this Warrant shall promptly be
cancelled. Notwithstanding anything
herein to the contrary, the Holder shall not be required to
physically surrender this Warrant to the Company unless the Holder
has assigned this Warrant in full, in which case, the Holder shall
surrender this Warrant to the Company within three (3) Trading Days
of the date on which the Holder delivers a duly executed Assignment
Form to the Company assigning this Warrant in
full. The Warrant,
if properly assigned in accordance herewith, may be exercised by a
new holder for the purchase of Warrant Shares without having a new
Warrant issued.
b) New Warrants. This Warrant may
be divided or combined with other Warrants upon presentation hereof
at the aforesaid office of the Company, together with a written
notice specifying the names and denominations in which new Warrants
are to be issued, signed by the Holder or its agent or attorney.
Subject to compliance with Section 4(a), as to any transfer which
may be involved in such division or combination, the Company shall
execute and deliver a new Warrant or Warrants in exchange for the
Warrant or Warrants to be divided or combined in accordance with
such notice. All Warrants issued on transfers or exchanges shall be
dated the Initial Exercise Date and shall be identical with this
Warrant except as to the number of Warrant Shares issuable pursuant
thereto.
c) Warrant Register. The Company
shall register this Warrant, upon records to be maintained by the
Company for that purpose (the “Warrant Register”), in
the name of the record Holder hereof from time to time. The Company
may deem and treat the registered Holder of this Warrant as the
absolute owner hereof for the purpose of any exercise hereof or any
distribution to the Holder, and for all other purposes, absent
actual notice to the contrary.
d) Transfer
Restrictions. If, at the
time of the surrender of this Warrant
in connection with any transfer of this Warrant, the transfer of
this Warrant shall not be either (i) registered pursuant to an
effective registration statement under the Securities Act and
under applicable state securities or
blue sky laws or (ii) eligible for resale without volume or
manner-of-sale restrictions or current public information
requirements pursuant to Rule 144, the Company may require, as a
condition of allowing such transfer, that the Holder or transferee
of this Warrant, as the case may be, provide to the Company an
opinion of counsel, the form and substance of which opinion shall
be reasonably satisfactory to the Company, to the effect that the
transfer of this Warrant does not require registration under the
Securities Act.
e) Representation by the Holder.
The Holder, by the acceptance hereof, represents and warrants that
it is acquiring this Warrant and, upon any exercise hereof, will
acquire the Warrant Shares issuable upon such exercise, for its own
account and not with a view to or for distributing or reselling
such Warrant Shares or any part thereof in violation of the
Securities Act or any applicable state securities law, except
pursuant to sales registered or exempted under the Securities
Act.
Section
5. Miscellaneous.
a) No Rights as Stockholder Until
Exercise; No Settlement in Cash. This Warrant does not
entitle the Holder to any voting rights, dividends or other rights
as a stockholder of the Company prior to the exercise hereof as set
forth in Section 2(d)(i), except as expressly set forth in Section
3. Without limiting any rights of a Holder to receive Warrant
Shares on a “cashless exercise” pursuant to Section
2(c) or to receive cash payments pursuant to Section 2(d)(i) and
Section 2(d)(iv) herein, in no event shall the Company be required
to net cash settle an exercise of this Warrant.
b) Loss, Theft, Destruction or Mutilation
of Warrant. The Company covenants that upon receipt by the
Company of evidence reasonably satisfactory to it of the loss,
theft, destruction or mutilation of this Warrant or any stock
certificate relating to the Warrant Shares, and in case of loss,
theft or destruction, of indemnity or security reasonably
satisfactory to it (which, in the case of the Warrant, shall not
include the posting of any bond), and upon surrender and
cancellation of such Warrant or stock certificate, if mutilated,
the Company will make and deliver a new Warrant or stock
certificate of like tenor and dated as of such cancellation, in
lieu of such Warrant or stock certificate.
c) Saturdays, Sundays, Holidays,
etc. If the last or appointed day for the taking of any
action or the expiration of any right required or granted herein
shall not be a Trading Day, then such action may be taken or such
right may be exercised on the next succeeding Trading
Day.
d) Authorized Shares.
The
Company covenants that, during the period the Warrant is
outstanding, it will reserve from its authorized and unissued
Common Stock a sufficient number of shares to provide for the
issuance of the Warrant Shares upon the exercise of any purchase
rights under this Warrant. The Company further covenants that its
issuance of this Warrant shall constitute full authority to its
officers who are charged with the duty of issuing the necessary
Warrant Shares upon the exercise of the purchase rights under this
Warrant. The Company will take all such reasonable action as may be
necessary to assure that such Warrant Shares may be issued as
provided herein without violation of any applicable law or
regulation, or of any requirements of the Trading Market upon which
the Common Stock may be listed. The Company covenants that all
Warrant Shares which may be issued upon the exercise of the
purchase rights represented by this Warrant will, upon exercise of
the purchase rights represented by this Warrant and payment for
such Warrant Shares in accordance herewith, be duly authorized,
validly issued, fully paid and nonassessable and free from all
taxes, liens and charges created by the Company in respect of the
issue thereof (other than taxes in respect of any transfer
occurring contemporaneously with such issue).
Except
and to the extent as waived or consented to by the Holder, the
Company shall not by any action, including, without limitation,
amending its certificate of incorporation or through any
reorganization, transfer of assets, consolidation, merger,
dissolution, issue or sale of securities or any other voluntary
action, avoid or seek to avoid the observance or performance of any
of the terms of this Warrant, but will at all times in good faith
assist in the carrying out of all such terms and in the taking of
all such actions as may be necessary or appropriate to protect the
rights of Holder as set forth in this Warrant against impairment.
Without limiting the generality of the foregoing, the Company will
(i) not increase the par value of any Warrant Shares above the
amount payable therefor upon such exercise immediately prior to
such increase in par value, (ii) take all such action as may be
necessary or appropriate in order that the Company may validly and
legally issue fully paid and nonassessable Warrant Shares upon the
exercise of this Warrant and (iii) use commercially reasonable
efforts to obtain all such authorizations, exemptions or consents
from any public regulatory body having jurisdiction thereof, as may
be, necessary to enable the Company to perform its obligations
under this Warrant.
Before
taking any action which would result in an adjustment in the number
of Warrant Shares for which this Warrant is exercisable or in the
Exercise Price, the Company shall obtain all such authorizations or
exemptions thereof, or consents thereto, as may be necessary from
any public regulatory body or bodies having jurisdiction
thereof.
e) Jurisdiction. All questions
concerning the construction, validity, enforcement and
interpretation of this Warrant shall be governed by and construed
and enforced in accordance with the internal laws of the State of
New York, without regard to the principles of conflicts of law
thereof. Each party agrees that all legal proceedings concerning
the interpretations, enforcement and defense of the transactions
contemplated by this Warrant (whether brought against a party
hereto or their respective affiliates, directors, officers,
shareholders, partners, members, employees or agents) shall be
commenced exclusively in the state and federal courts sitting in
the City of New York. Each party hereby irrevocably submits to the
exclusive jurisdiction of the state and federal courts sitting in
the City of New York, Borough of Manhattan for the adjudication of
any dispute hereunder or in connection herewith or with any
transaction contemplated hereby or discussed herein, and hereby
irrevocably waives, and agrees not to assert in any suit, action or
proceeding, any claim that it is not personally subject to the
jurisdiction of any such court, that such suit, action or
proceeding is improper or is an inconvenient venue for such
proceeding. Each party hereby irrevocably waives personal service
of process and consents to process being served in any such suit,
action or proceeding by mailing a copy thereof via registered or
certified mail or overnight delivery (with evidence of delivery) to
such party at the address in effect for notices to it under this
Warrant and agrees that such service shall constitute good and
sufficient service of process and notice thereof. Nothing contained
herein shall be deemed to limit in any way any right to serve
process in any other manner permitted by law. If either party shall
commence an action, suit or proceeding to enforce any provisions of
this Warrant, the prevailing party in such action, suit or
proceeding shall be reimbursed by the other party for their
reasonable attorneys’ fees and other costs and expenses
incurred with the investigation, preparation and prosecution of
such action or proceeding.
f) Restrictions. The Holder
acknowledges that the Warrant Shares acquired upon the exercise of
this Warrant, if not registered, and the Holder does not utilize
cashless exercise, will have restrictions upon resale imposed by
state and federal securities laws.
g) Nonwaiver and Expenses. No
course of dealing or any delay or failure to exercise any right
hereunder on the part of Holder shall operate as a waiver of such
right or otherwise prejudice the Holder’s rights, powers or
remedies. Without limiting any other provision of this Warrant, if
the Company willfully and knowingly fails to comply with any
provision of this Warrant, which results in any material damages to
the Holder, the Company shall pay to the Holder such amounts as
shall be sufficient to cover any costs and expenses including, but
not limited to, reasonable attorneys’ fees, including those
of appellate proceedings, incurred by the Holder in collecting any
amounts due pursuant hereto or in otherwise enforcing any of its
rights, powers or remedies hereunder.
h) Notices. Any notice, request or
other document required or permitted to be given or delivered to
the Holder by the Company shall be delivered to the address for the
Holder in the Warrant Register.
i) Limitation of Liability. No
provision hereof, in the absence of any affirmative action by the
Holder to exercise this Warrant to purchase Warrant Shares, and no
enumeration herein of the rights or privileges of the Holder, shall
give rise to any liability of the Holder for the purchase price of
any Common Stock or as a stockholder of the Company, whether such
liability is asserted by the Company or by creditors of the
Company.
j) Remedies. The Holder, in
addition to being entitled to exercise all rights granted by law,
including recovery of damages, will be entitled to specific
performance of its rights under this Warrant. The Company agrees
that monetary damages would not be adequate compensation for any
loss incurred by reason of a breach by it of the provisions of this
Warrant and hereby agrees to waive and not to assert the defense in
any action for specific performance that a remedy at law would be
adequate.
k) Successors and Assigns. Subject
to applicable securities laws, this Warrant and the rights and
obligations evidenced hereby shall inure to the benefit of and be
binding upon the successors and permitted assigns of the Company
and the successors and permitted assigns of Holder. The provisions
of this Warrant are intended to be for the benefit of any Holder
from time to time of this Warrant and shall be enforceable by the
Holder or holder of Warrant Shares.
l) Amendment. This Warrant may be
modified or amended or the provisions hereof waived with the
written consent of the Company and the
Holder.
m) Severability. Wherever
possible, each provision of this Warrant shall be interpreted in
such manner as to be effective and valid under applicable law, but
if any provision of this Warrant shall be prohibited by or invalid
under applicable law, such provision shall be ineffective to the
extent of such prohibition or invalidity, without invalidating the
remainder of such provisions or the remaining provisions of this
Warrant.
n) Headings. The headings used in
this Warrant are for the convenience of reference only and shall
not, for any purpose, be deemed a part of this
Warrant.
********************
(Signature Page Follows)
IN
WITNESS WHEREOF, the Company has caused this Warrant to be executed
by its officer thereunto duly authorized as of the date first above
indicated.
|
AZURRX BIOPHARMA, INC.
|
|
By:__________________________________________
Name:
Title:
|
Annex A
NOTICE OF EXERCISE
TO:
AZURRX BIOPHARMA,
INC.
(1) The undersigned
hereby elects to purchase ________ Warrant Shares of the Company
pursuant to the terms of the attached Warrant (only if exercised in
full), and tenders herewith payment of the exercise price in full,
together with all applicable transfer taxes, if any.
(2) Payment shall take
the form of (check applicable box):
[ ] in
lawful money of the United States; or
[ ] [if
permitted the cancellation of such number of Warrant Shares as is
necessary, in accordance with the formula set forth in subsection
2(c), to exercise this Warrant with respect to the maximum number
of Warrant Shares purchasable pursuant to the cashless exercise
procedure set forth in subsection 2(c).
(3) Please issue said
Warrant Shares in the name of the undersigned or in such other name
as is specified below:
_______________________________
The
Warrant Shares shall be delivered to the following DWAC Account
Number:
_______________________________
_______________________________
_______________________________
(4)
Accredited
Investor. The undersigned is an “accredited
investor” as defined in Regulation D promulgated under the
Securities Act of 1933, as amended.
[SIGNATURE
OF HOLDER]
Name of
Investing Entity:
________________________________________________________________________
Signature of Authorized Signatory of Investing
Entity:
_________________________________________________
Name of
Authorized Signatory:
___________________________________________________________________
Title
of Authorized Signatory:
____________________________________________________________________
Date:
________________________________________________________________________________________
Annex B
ASSIGNMENT FORM
(To assign the foregoing Warrant, execute this form and
supply required information. Do not use this form to purchase
shares.)
FOR
VALUE RECEIVED, the foregoing Warrant and all rights evidenced
thereby are hereby assigned to
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Address:
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Phone Number:
Email Address:
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______________________________________
______________________________________
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Dated: _______________ __, ______
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Holder’s
Signature:
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Holder’s
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Exhibit 10.1
SECURITIES PURCHASE AGREEMENT
This
Securities Purchase Agreement (this “Agreement”) is dated as
of January 8, 2021, between AzurRx BioPharma, Inc., a Delaware
corporation (the “Company”), and First Wave
Bio, Inc. (including its successors and assigns, the
“Purchaser”).
WHEREAS, the
Purchaser and the Company have entered into that certain license
agreement, dated as of December 31, 2020 (the “License Agreement”),
pursuant to which the Purchaser is granting the Company a license
to use certain patented and proprietary oral and rectal
formulations of niclosamide for the treatment of immune checkpoint
inhibitor-associated colitis and COVID-19 related gastrointestinal
infections, as set forth in greater detail therein;
WHEREAS, as equity
consideration for entering into the License Agreement, Section 6.2
of the License Agreement requires the Company to issue to the
Purchaser an aggregate of $3,000,000 of convertible junior
preferred stock of the Company, to be converted into shares of
Common Stock (as defined below) immediately following the receipt
of Stockholder Approval (as defined herein);
WHEREAS, the
License Agreement requires such convertible junior preferred stock
to have a dividend rate of 8.0% per annum, payable quarterly in
cash or in kind until conversion, and to have an issue price, an
initial stated value and an initial conversion price equal to the
volume-weighted average price for a share of Common Stock for the
five-day period immediately preceding the date of execution of the
License Agreement, or $0.9118 per share, and to be convertible into
shares of Common Stock on a 1-to-1 basis (the “Original
Terms”);
WHEREAS, pursuant
to the Original Terms, $3,000,000 of junior convertible preferred
stock would initially be convertible into an aggregate of 3,290,196
shares of Common Stock;
WHEREAS, the
Certificate of Designations (as defined below) provides for a
dividend rate of 9.0% per annum, payable in cash upon declaration
by the Board of Directors (as defined below) and accumulating and
compounding quarterly, and for an issue price and an initial stated
value of $750.00 and an initial conversion price of $0.75 per
share, and for each share of Preferred Stock to be convertible into
shares of Common Stock on a 1-to-1,000 basis (the
“Series C
Terms”);
WHEREAS, pursuant
to the Series C Terms, the amount of Preferred Stock that would
initially be convertible into an aggregate of 3,290,196 shares of
Common Stock is $2,467,647of Preferred Stock;
WHEREAS, in light
of the differences between the Original Terms and the Series C
Terms, the Company desires to sell, and the Purchaser desires to
purchase, an aggregate of $2,467,647 of Preferred Stock upon the
Series C Terms, in lieu of an aggregate of $3,000,000 of
junior convertible preferred stock upon the Original Terms, in full
satisfaction of the obligations of the Company and the Purchaser
pursuant to Section 6.2 of the License Agreement; and
WHEREAS, subject to
the terms and conditions set forth in this Agreement and pursuant
to an exemption from the registration requirements of
Section 5 of the Securities Act of 1933, as amended (the
“Securities
Act”) contained in Section 4(a)(2) thereof and
Rule 506 promulgated thereunder, the Company desires to issue and
sell to the Purchaser, and the Purchaser desires to accept from the
Company, securities of the Company as more fully described in this
Agreement.
NOW,
THEREFORE, IN CONSIDERATION of the mutual covenants contained in
this Agreement, and for other good and valuable consideration, the
receipt and adequacy of which are hereby acknowledged, the Company
and the Purchaser agree as follows:
ARTICLE I.
DEFINITIONS
1.1 Definitions.
In addition to the terms defined elsewhere in this Agreement, for
all purposes of this Agreement, the following terms have the
meanings set forth in this Section 1.1:
“Action” shall have the
meaning ascribed to such term in Section 3.1(j).
“Affiliate” means any
Person that, directly or indirectly through one or more
intermediaries, controls or is controlled by or is under common
control with a Person, as such terms are used in and construed
under Rule 405 under the Securities Act.
“Board of Directors” means
the board of directors of the Company.
“Business Day” means any
day except any Saturday, any Sunday, any day which is a federal
legal holiday in the United States or any day on which banking
institutions in the State of New York are authorized or required by
law or other governmental action to close.
“Certificate of
Designations” means the Certificate of Designations
filed prior to the Closing by the Company with the Secretary of
State of Delaware, in the form of Exhibit A attached
hereto.
“Clear Market Requirement”
means the obligations of the Company not to file any registration
statement during the period specified in Section 4.11(a) of
the Financing Agreement.
“Closing” means the
closing of the purchase and sale of the Securities pursuant to
Section 2.1.
“Closing Date” means the
Trading Day on which all conditions precedent set forth in
Sections 2.2
and 2.3 have been
satisfied or waived.
“Commission” means the
United States Securities and Exchange Commission.
“Common Stock” means the
common stock of the Company, par value $0.0001 per share, and any
other class of securities into which such securities may hereafter
be reclassified or changed.
“Common Stock Equivalents”
means any securities of the Company or the Subsidiaries which would
entitle the holder thereof to acquire at any time Common Stock,
including, without limitation, any debt, preferred stock, right,
option, warrant or other instrument that is at any time convertible
into or exercisable or exchangeable for, or otherwise entitles the
holder thereof to receive, Common Stock.
“Company Counsel” means
Lowenstein Sandler LLP, One Lowenstein Drive, Roseland, New Jersey
07068.
“Conversion Shares” means
the shares of Common Stock issuable upon conversion of the
Preferred Stock, in accordance with the terms of the Certificate of
Designations.
“Demand Registration
Statement” means any registration statement filed by
the Company with the Commission pursuant to Section 4.2(a), to
register resales by the Purchaser of Registrable
Securities.
“Disclosure Schedules”
means the Disclosure Schedules of the Company delivered
concurrently herewith.
“Evaluation Date” shall
have the meaning ascribed to such term in Section 3.1(s).
“Exchange Act” means the
Securities Exchange Act of 1934, as amended, and the rules and
regulations promulgated thereunder.
“FCPA” means the Foreign
Corrupt Practices Act of 1977, as amended.
“FDA” shall have the
meaning ascribed to such term in Section 3.1(ff).
“FDCA” shall have the
meaning ascribed to such term in Section 3.1(ff).
“Financing Agreement”
means the Securities Purchase Agreement dated December 31, 2020, by
and between the Company and the investor signatory
thereto.
“Financing Registration
Statement” means any registration statement filed by
the Company pursuant to the Registration Rights Agreement dated
December 31, 2020, by and between the Company and the investor
signatory to the Financing Agreement.
“GAAP” shall have the
meaning ascribed to such term in Section 3.1(h).
“Indebtedness” shall have
the meaning ascribed to such term in Section 3.1(z).
“Intellectual Property
Rights” shall have the meaning ascribed to such term
in Section 3.1(p).
“Liens” means a lien,
charge pledge, security interest, encumbrance, right of first
refusal, preemptive right or other restriction.
“Material Adverse Effect”
shall have the meaning assigned to such term in Section 3.1(b).
“Material Permits” shall
have the meaning ascribed to such term in Section 3.1(n).
“Per Preferred Purchase
Price” equals $750.00 per share of Preferred Stock,
subject to adjustment for reverse and forward stock splits, stock
dividends, stock combinations and other similar transactions of the
Common Stock that occur after the date of this
Agreement.
“Person” means an
individual or corporation, partnership, trust, incorporated or
unincorporated association, joint venture, limited liability
company, joint stock company, government (or an agency or
subdivision thereof) or other entity of any kind.
“Pharmaceutical Product”
shall have the meaning ascribed to such term in Section
3.1(kk).
“Piggyback Registration
Statement” means any registration statement filed by
the Company with the Commission pursuant to Section 4.2(b), to
register resales by the Purchaser of Registrable
Securities.
“Preferred Stock” means
the Series C 9.00% Convertible Junior Preferred Stock of the
Company, par value $0.0001, issued pursuant to the terms of the
Certificate of Designations and sold to the Purchaser
hereunder.
“Proceeding” means an
action, claim, suit, investigation or proceeding (including,
without limitation, an informal investigation or partial
proceeding, such as a deposition), whether commenced or
threatened.
“Registerable Securities”
means, as of any date of determination, (i) the Conversion
Shares and (ii) any securities issued or then issuable upon
any stock split, dividend or other distribution, recapitalization
or similar event with respect to the foregoing; provided, however, that any such Registrable
Securities shall cease to be Registrable Securities (and the
Company shall not be required to maintain the effectiveness of any,
or file another, Registration Statement hereunder with respect
thereto) for so long as (x) such Registrable Securities have
been disposed of by the Purchaser in accordance with such effective
Registration Statement, (y) such Registrable Securities have
been previously sold in accordance with Rule 144 promulgated under
the Securities Act (“Rule 144”), or (z) such
securities become eligible for resale without volume
or manner-of-sale restrictions and without current public
information pursuant to Rule 144, as reasonably determined by the
Company upon the advice of counsel to the Company.
“Registration Statement”
means a Demand Registration Statement or a Piggyback Registration
Statement, as the case may be.
“Required Approvals” shall
have the meaning ascribed to such term in Section 3.1(e).
“Rule 144” means Rule 144
promulgated by the Commission pursuant to the Securities Act, as
such Rule may be amended or interpreted from time to time, or any
similar rule or regulation hereafter adopted by the Commission
having substantially the same purpose and effect as such
Rule.
“SEC Reports” shall have
the meaning ascribed to such term in Section 3.1(h).
“Securities” means the
Preferred Stock and the Conversion Shares.
“Securities Act” means the
Securities Act of 1933, as amended, and the rules and regulations
promulgated thereunder.
“Stockholder Approval”
shall have the meaning ascribed to such term in the Certificate of
Designations.
“Subscription Amount”
means the aggregate amount to be paid for Preferred Stock purchased
hereunder as specified below the Purchaser’s name on the
signature page of this Agreement and next to the heading
“Subscription Amount,” in United States dollars and in
immediately available funds.
“Subsidiary” means any
subsidiary of the Company as set forth in the SEC Reports and
shall, where applicable, also include any direct or indirect
subsidiary of the Company formed or acquired after the date
hereof.
“Trading Day” means a day
on which the principal Trading Market is open for
trading.
“Trading Market” means any
of the following markets or exchanges on which the Common Stock is
listed or quoted for trading on the date in question: the NYSE
American, the Nasdaq Capital Market, the Nasdaq Global Market, the
Nasdaq Global Select Market, the New York Stock Exchange, OTCQB or
OTCQX (or any successors to any of the foregoing).
“Transaction Documents”
means this Agreement, all exhibits and schedules thereto and hereto
and any other documents or agreements executed in connection with
the transactions contemplated hereunder.
“Transfer Agent” means
Colonial Stock Transfer Company, Inc., the current transfer agent
of the Company, with a mailing address of 66 Exchange Place,
1st Floor,
Salt Lake City, Utah 84111, and any successor transfer agent of the
Company.
“Underlying Shares” means
the shares of Common Stock issued and issuable upon conversion of
the Series C Preferred Stock.
ARTICLE II.
PURCHASE AND SALE
2.1 Closing.
On the Closing Date, upon the terms and subject to the conditions
set forth herein, the Company agrees to sell, and the Purchaser
agrees to purchase, an aggregate stated value of $2,467,647 of
Preferred Stock, as equity consideration pursuant to Section 6.2 of
the License Agreement and, in light of the differences between the
Original Terms and the Series C Terms, in full satisfaction of all
of the obligations of the Company and the Purchaser pursuant to
Section 6.2 thereunder. Upon satisfaction of the covenants and
conditions set forth in Sections 2.2
and 2.3, the Closing shall occur at the offices of the
Company Counsel or such other location as the parties shall
mutually agree. The shares of Preferred Stock will be issued in a
private placement pursuant to an exemption from the registration
requirements of Section 5 of the Securities Act contained in
Section 4(a)(2) thereof and Rule 506 promulgated thereunder. Unless
otherwise directed, on the Closing Date, the Company shall issue
the Preferred Stock registered in the Purchaser‘s name and
address in book entry form.
2.2 Deliveries.
(a) On or prior to the
Closing Date, the Company shall deliver or cause to be delivered to
the Purchaser the following:
(i) this Agreement duly
executed by the Company;
(ii) subject
to the last sentence of Section 2.1, a copy of the
irrevocable instructions to the Transfer Agent instructing the
Transfer Agent to deliver on an expedited basis, a copy of an
account statement issued by the Transfer Agent evidencing a book
entry notification in the name of the Purchaser evidencing a number
of shares of Preferred Stock equal to the Purchaser’s
Subscription Amount divided by the Per Preferred Purchase Price,
registered in the name of the Purchaser; and
(iii) evidence
of the filing and acceptance of the Certificate of Designations
from the Secretary of State of Delaware.
(b) On or prior to the
Closing Date, the Purchaser shall deliver or cause to be delivered
to the Company this Agreement duly executed by the
Purchaser.
2.3 Closing
Conditions.
(a) The
obligations of the Company hereunder in connection with the Closing
are subject to the following conditions being
met:
(i) the accuracy in all
material respects (or, to the extent representations or warranties
are qualified by materiality or Material Adverse Effect, in all
respects) when made and on the Closing Date of the representations
and warranties of the Purchaser contained herein (unless as of a
specific date therein in which case they shall be accurate as of
such date);
(ii) all
obligations, covenants and agreements of the Purchaser required to
be performed at or prior to the Closing Date shall have been
performed; and
(iii) the
delivery by the Purchaser of the items set forth in Section 2.2(b).
(c) The respective
obligations of the Purchaser hereunder in connection with the
Closing are subject to the following conditions being
met:
(i) the accuracy in all
material respects (or, to the extent representations or warranties
are qualified by materiality or Material Adverse Effect, in all
respects) when made and on the Closing Date of the representations
and warranties of the Company contained herein (unless as of a
specific date therein in which case they shall be accurate as of
such date);
(ii) all
obligations, covenants and agreements of the Company required to be
performed at or prior to the Closing Date shall have been
performed; and
(iii) the
delivery by the Company of the items set forth in Section 2.2(a).
ARTICLE III.
REPRESENTATIONS AND WARRANTIES
3.1 Representations
and Warranties of the Company.
Except as set forth in the Disclosure Schedules, which Disclosure
Schedules shall be deemed a part hereof and shall qualify any
representation or otherwise made herein to the extent of the
disclosure contained in the corresponding section of the Disclosure
Schedules, or as set forth in the SEC Reports, the Company hereby
makes the following representations and warranties to the
Purchaser:
(a) Subsidiaries. All of the direct
and indirect subsidiaries of the Company are set forth in the
Disclosure Schedules. The Company owns, directly or indirectly, all
of the capital stock or other equity interests of each Subsidiary
free and clear of any Liens, and all of the issued and outstanding
shares of capital stock of each Subsidiary are validly issued and
are fully paid, non-assessable and free of preemptive and similar
rights to subscribe for or purchase securities. If the Company has
no subsidiaries, all other references to the Subsidiaries or any of
them in this Agreement shall be disregarded.
(b) Organization and Qualification.
The Company and each of the Subsidiaries is an entity duly
incorporated or otherwise organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation or
organization, with the requisite power and authority to own and use
its properties and assets and to carry on its business as currently
conducted. Neither the Company nor any Subsidiary is in violation
nor default of any of the provisions of its respective certificate
or articles of incorporation, bylaws or other organizational or
charter documents. Each of the Company and the Subsidiaries is duly
qualified to conduct business and is in good standing as a foreign
corporation or other entity in each jurisdiction in which the
nature of the business conducted or property owned by it makes such
qualification necessary, except where the failure to be so
qualified or in good standing, as the case may be, would not have
or reasonably be expected to result in: (i) a material adverse
effect on the legality, validity or enforceability of this
Agreement, (ii) a material adverse effect on the results of
operations, assets, business, prospects or condition (financial or
otherwise) of the Company and the Subsidiaries, taken as a whole,
or (iii) a material adverse effect on the Company’s ability
to perform in any material respect on a timely basis its
obligations under this Agreement (any of (i), (ii) or (iii), a
“Material Adverse
Effect”) and no Proceeding has been instituted in any
such jurisdiction revoking, limiting or curtailing or seeking to
revoke, limit or curtail such power and authority or
qualification.
(c) Authorization; Enforcement. The
Company has the requisite corporate power and authority to enter
into and to consummate the transactions contemplated by this
Agreement and otherwise to carry out its obligations hereunder and
thereunder. The execution and delivery of this Agreement by the
Company and the consummation by it of the transactions contemplated
hereby and thereby have been duly authorized by all necessary
action on the part of the Company and no further action is required
by the Company, the Board of Directors or the Company’s
stockholders in connection herewith or therewith other than in
connection with the Required Approvals. This Agreement has been (or
upon delivery will have been) duly executed by the Company and,
when delivered in accordance with the terms hereof and thereof,
will constitute the valid and binding obligation of the Company
enforceable against the Company in accordance with its terms,
except (i) as limited by general equitable principles and
applicable bankruptcy, insolvency, reorganization, moratorium and
other laws of general application affecting enforcement of
creditors’ rights generally, (ii) as limited by laws relating
to the availability of specific performance, injunctive relief or
other equitable remedies and (iii) insofar as indemnification and
contribution provisions may be limited by applicable
law.
(d) No Conflicts. The execution,
delivery and performance by the Company of this Agreement, the
issuance and sale of the Securities and the consummation by it of
the transactions contemplated hereby and thereby do not and will
not (i) conflict with or violate any provision of the
Company’s or any Subsidiary’s certificate or articles
of incorporation, bylaws or other organizational or charter
documents, or (ii) conflict with, or constitute a default (or an
event that with notice or lapse of time or both would become a
default) under, result in the creation of any Lien upon any of the
properties or assets of the Company or any Subsidiary, or give to
others any rights of termination, amendment, anti-dilution or
similar adjustments, acceleration or cancellation (with or without
notice, lapse of time or both) of, any agreement, credit facility,
debt or other instrument (evidencing a Company or Subsidiary debt
or otherwise) or other understanding to which the Company or any
Subsidiary is a party or by which any property or asset of the
Company or any Subsidiary is bound or affected, or (iii) subject to
the Required Approvals, conflict with or result in a violation of
any law, rule, regulation, order, judgment, injunction, decree or
other restriction of any court or governmental authority to which
the Company or a Subsidiary is subject (including federal and state
securities laws and regulations), or by which any property or asset
of the Company or a Subsidiary is bound or affected; except in the
case of each of clauses (ii) and (iii), such as would not have or
reasonably be expected to result in a Material Adverse
Effect.
(e) Filings, Consents and
Approvals. The Company is not required to obtain any
consent, waiver, authorization or order of, give any notice to, or
make any filing or registration with, any court or other federal,
state, local or other governmental authority or other Person in
connection with the execution, delivery and performance by the
Company of this Agreement, other than: application(s) to each
applicable Trading Market for the listing of the Conversion Shares
for trading thereon in the time and manner required thereby, (iv)
the filing of Form D with the Commission, (v) the filing of a
Registration Statement with the Commission pursuant to Section 4.2, and (vi) such
filings as are required to be made under applicable state
securities laws (collectively, the “Required
Approvals”).
(f) Issuance of the Securities. The
Preferred Stock is duly authorized and, when issued and paid for in
accordance with this Agreement, will be duly and validly issued,
fully paid and nonassessable, free and clear of all Liens imposed
by the Company. The Conversion Shares, when converted, will be
issued in accordance with the Certificate of Designations and will
be validly issued, fully paid and nonassessable, free and clear of
all Liens imposed by the Company. The Company has reserved from its
duly authorized capital stock the maximum number of shares of
Common Stock issuable pursuant to this Agreement and the
Certificate of Designations.
(g) Capitalization. The
capitalization of the Company as of the date hereof is as set forth
on Schedule 3.1(g), which
Schedule 3.1(g) shall also
include the number of shares of Common Stock owned beneficially,
and of record, by Affiliates of the Company as of the date hereof.
The Company has not issued any capital stock since its most recently filed periodic report under the
Exchange Act, except as reflected in Schedule 3.1(g), and
pursuant to the exercise of employee stock options under the
Company’s stock option plans, the issuance of shares of
Common Stock to employees pursuant to the Company’s employee
stock purchase plans and pursuant to the conversion and/or exercise
of Common Stock Equivalents outstanding as of the date of the most
recently filed periodic report under the Exchange Act. No Person
has any right of first refusal, preemptive right, right of
participation, or any similar right to participate in the
transactions contemplated by this Agreement. Except as a result of
the purchase and sale of the Securities or as set forth in
Schedule 3.1(g), there are
no outstanding options, warrants, scrip rights to subscribe to,
calls or commitments of any character whatsoever relating to, or
securities, rights or obligations convertible into or exercisable
or exchangeable for, or giving any Person any right to subscribe
for or acquire, any shares of Common Stock or the capital stock of
any Subsidiary, or contracts, commitments, understandings or
arrangements by which the Company or any Subsidiary is or may
become bound to issue additional shares of Common Stock or Common
Stock Equivalents or capital stock of any Subsidiary. Except as set
forth in Schedule 3.1(g), the
issuance and sale of the Securities will not obligate the Company
or any Subsidiary to issue shares of Common Stock or other
securities to any Person (other than the Purchaser). Except as set
forth in Schedule 3.1(g), there are
no outstanding securities or instruments of the Company or any
Subsidiary with any provision that adjusts the exercise,
conversion, exchange or reset price of such security or instrument
upon an issuance of securities by the Company or any Subsidiary.
There are no outstanding securities or instruments of the Company
or any Subsidiary that contain any redemption or similar
provisions, and there are no contracts, commitments, understandings
or arrangements by which the Company or any Subsidiary is or may
become bound to redeem a security of the Company or such
Subsidiary. The Company does not have any stock appreciation rights
or “phantom stock” plans or agreements or any similar
plan or agreement. All of the outstanding shares of capital stock
of the Company are duly authorized, validly issued, fully paid and
nonassessable, have been issued in compliance with all federal and
state securities laws, and none of such outstanding shares was
issued in violation of any preemptive rights or similar rights to
subscribe for or purchase securities. Other than the Stockholder
Approval, no further approval or authorization of any stockholder,
the Board of Directors or others is required for the issuance and
sale of the Securities. There are no stockholders agreements,
voting agreements or other similar agreements with respect to the
Company’s capital stock to which the Company is a party or,
to the knowledge of the Company, between or among any of the
Company’s stockholders.
(h) SEC Reports; Financial
Statements. The Company has filed all reports, schedules,
forms, statements and other documents required to be filed by the
Company under the Securities Act and the Exchange Act, including
pursuant to Section 13(a) or 15(d) thereof, for the two years
preceding the date hereof (or such shorter period as the Company
was required by law or regulation to file such material) (the
foregoing materials, including the exhibits thereto and documents
incorporated by reference therein, together with the Prospectus and
the Prospectus Supplement, being collectively referred to herein as
the “SEC
Reports”) on a timely basis or has received a valid
extension of such time of filing and has filed any such SEC Reports
prior to the expiration of any such extension. As of their
respective dates, the SEC Reports complied in all material respects
with the requirements of the Securities Act and the Exchange Act,
as applicable, and none of the SEC Reports, when filed, contained
any untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary in order
to make the statements therein, in the light of the circumstances
under which they were made, not misleading. The Company has never
been an issuer subject to Rule 144(i) under the Securities Act. The
financial statements of the Company included in the SEC Reports
comply in all material respects with applicable accounting
requirements and the rules and regulations of the Commission with
respect thereto as in effect at the time of filing. Such financial
statements have been prepared in accordance with United States
generally accepted accounting principles applied on a consistent
basis during the periods involved (“GAAP”), except as may be
otherwise specified in such financial statements or the notes
thereto and except that unaudited financial statements may not
contain all footnotes required by GAAP, and fairly present in all
material respects the financial position of the Company and its
consolidated Subsidiaries as of and for the dates thereof and the
results of operations and cash flows for the periods then ended,
subject, in the case of unaudited statements, to normal,
immaterial, year-end audit adjustments.
(i) Material Changes; Undisclosed Events,
Liabilities or Developments. Since the date of the latest
audited financial statements included within the SEC Reports,
except as set forth in the SEC Reports or on Schedule 3.1(i), (i) there
has been no event, occurrence or development that has had or that
would reasonably be expected to result in a Material Adverse
Effect, (ii) the Company has not incurred any liabilities
(contingent or otherwise) other than (A) trade payables and accrued
expenses incurred in the ordinary course of business consistent
with past practice and (B) liabilities not required to be reflected
in the Company’s financial statements pursuant to GAAP or
disclosed in filings made with the Commission, (iii) the Company
has not altered its method of accounting, (iv) the Company has not
declared or made any dividend or distribution of cash or other
property to its stockholders or purchased, redeemed or made any
agreements to purchase or redeem any shares of its capital stock
and (v) the Company has not issued any equity securities to any
officer, director or Affiliate, except pursuant to existing Company
stock option plans. The Company does not have pending before the
Commission any request for confidential treatment of information.
Except for the issuance of the Securities contemplated by this
Agreement or as set forth on Schedule 3.1(i), no
material event, liability, fact, circumstance, occurrence or
development has occurred or exists or is reasonably expected to
occur or exist with respect to the Company or its Subsidiaries or
their respective businesses, prospects, properties, operations,
assets or financial condition that would be required to be
disclosed by the Company under applicable securities laws at the
time this representation is made or deemed made that has not been
publicly disclosed prior to the date that this representation is
made.
(j) Litigation. Except as disclosed
the SEC Reports or on Schedule 3.1(j), there is
no action, suit, inquiry, notice of violation, proceeding or
investigation pending or, to the knowledge of the Company,
threatened against or affecting the Company, any Subsidiary or any
of their respective properties before or by any court, arbitrator,
governmental or administrative agency or regulatory authority
(federal, state, county, local or foreign) (collectively, an
“Action”) which (i)
adversely affects or challenges the legality, validity or
enforceability of this Agreement or the Securities or (ii) would,
if there were an unfavorable decision, have or reasonably be
expected to result in a Material Adverse Effect. Neither the
Company nor any Subsidiary, nor any director or officer (in his or
her capacity as such) thereof, is or has been the subject of any
Action involving a claim of violation of or liability under federal
or state securities laws or a claim of breach of fiduciary duty.
There has not been, and to the knowledge of the Company, there is
not pending or contemplated, any investigation by the Commission
involving the Company or any current or former director or officer
(in his or her capacity as such). of the Company. The Commission
has not issued any stop order or other order suspending the
effectiveness of any registration statement filed by the Company or
any Subsidiary under the Exchange Act or the Securities
Act.
(k) Labor Relations. No labor
dispute exists or, to the knowledge of the Company, is imminent
with respect to any of the employees of the Company, which would
reasonably be expected to result in a Material Adverse Effect. None
of the Company’s or its Subsidiaries’ employees is a
member of a union that relates to such employee’s
relationship with the Company or such Subsidiary, and neither the
Company nor any of its Subsidiaries is a party to a collective
bargaining agreement, and the Company and its Subsidiaries believe
that their relationships with their employees are good. To the
knowledge of the Company, no executive officer of the Company or
any Subsidiary is, or is now expected to be, in violation of any
material term of any employment contract, confidentiality,
disclosure or proprietary information agreement or non-competition
agreement, or any other contract or agreement or any restrictive
covenant in favor of any third party, and the continued employment
of each such executive officer does not subject the Company or any
of its Subsidiaries to any liability with respect to any of the
foregoing matters. The Company and its Subsidiaries are in
compliance with all U.S. federal, state, local and foreign laws and
regulations relating to employment and employment practices, terms
and conditions of employment and wages and hours, except where the
failure to be in compliance would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse
Effect.
(l) Compliance.
Except as disclosed on the SEC Reports or on Schedule 3.1(l), neither
the Company nor any Subsidiary: (i) is in default under or in
violation of (and no event has occurred that has not been waived
that, with notice or lapse of time or both, would result in a
default by the Company or any Subsidiary under), nor has the
Company or any Subsidiary received notice of a claim that it is in
default under or that it is in violation of, any indenture, loan or
credit agreement or any other agreement or instrument to which it
is a party or by which it or any of its properties is bound
(whether or not such default or violation has been waived), (ii) is
in violation of any judgment, decree, or order of any court,
arbitrator or other governmental authority or (iii) is or has been
in violation of any statute, rule, ordinance or regulation of any
governmental authority, including without limitation all foreign,
federal, state and local laws relating to taxes, environmental
protection, occupational health and safety, product quality and
safety and employment and labor matters, except in each case as
would not have or reasonably be expected to result in a Material
Adverse Effect.
(m) Environmental Laws. The
Company and its Subsidiaries (i) are in compliance with all
federal, state, local and foreign laws relating to pollution or
protection of human health or the environment (including ambient
air, surface water, groundwater, land surface or subsurface
strata), including laws relating to emissions, discharges, releases
or threatened releases of chemicals, pollutants, contaminants, or
toxic or hazardous substances or wastes (collectively,
“Hazardous
Materials”) into the environment, or otherwise
relating to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport or handling of Hazardous
Materials, as well as all authorizations, codes, decrees, demands,
or demand letters, injunctions, judgments, licenses, notices or
notice letters, orders, permits, plans or regulations, issued,
entered, promulgated or approved thereunder (“Environmental Laws”);
(ii) have received all permits licenses or other approvals required
of them under applicable Environmental Laws to conduct their
respective businesses; and (iii) are in compliance with all terms
and conditions of any such permit, license or approval where in
each clause (i), (ii) and (iii), the failure to so comply would be
reasonably expected to have, individually or in the aggregate, a
Material Adverse Effect.
(n) Regulatory Permits. The Company
and the Subsidiaries possess all certificates, authorizations and
permits issued by the appropriate federal, state, local or foreign
regulatory authorities necessary to conduct their respective
businesses as described in the SEC Reports, except where the
failure to possess such permits would not reasonably be expected to
result in a Material Adverse Effect (“Material Permits”), and
neither the Company nor any Subsidiary has received any notice of
proceedings relating to the revocation or modification of any
Material Permit.
(o) Title to Assets. The Company
and the Subsidiaries have good and marketable title in fee simple
to all real property owned by them and good and marketable title in
all personal property owned by them that is material to the
business of the Company and the Subsidiaries, in each case free and
clear of all Liens, except for (i) Liens as do not materially
affect the value of such property and do not materially interfere
with the use made and proposed to be made of such property by the
Company and the Subsidiaries and (ii) Liens for the payment of
federal, state or other taxes, for which appropriate reserves have
been made therefor in accordance with GAAP and the payment of which
is neither delinquent nor subject to penalties. Any real property
and facilities held under lease by the Company and the Subsidiaries
are held by them under valid, subsisting and enforceable leases
with which the Company and the Subsidiaries are in
compliance.
(p) Intellectual Property. To the
knowledge of the Company, the Company and the Subsidiaries have, or
have rights to use, all patents, patent applications, trademarks,
trademark applications, service marks, trade names, trade secrets,
inventions, copyrights, licenses and other intellectual property
rights and similar rights necessary or required for use in
connection with their respective businesses as described in the SEC
Reports and which the failure to so have would have a Material
Adverse Effect (collectively, the “Intellectual Property
Rights”). None of, and neither the Company nor any
Subsidiary has received a written notice that any of, the
Intellectual Property Rights has expired, terminated or been
abandoned, or is expected to expire or terminate or be abandoned,
within two (2) years from the date of this Agreement for which the
expiration, termination or abandonment could have a Material
Adverse Effect. Neither the Company nor any Subsidiary has
received, since the date of the latest audited financial statements
included within the SEC Reports, a written notice of a claim or
otherwise has any knowledge that the Intellectual Property Rights
violate or infringe upon the rights of any Person, except as would
not have or reasonably be expected to not have a Material Adverse
Effect. To the knowledge of the Company, all such Intellectual
Property Rights are enforceable and there is no existing
infringement by another Person of any of the Intellectual Property
Rights. The Company and its Subsidiaries have taken reasonable
security measures to protect the secrecy, confidentiality and value
of all of their intellectual properties, except where failure to do
so would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect.
(q) Insurance. The Company and the
Subsidiaries are insured by insurers of recognized financial
responsibility against such losses and risks and in such amounts as
are prudent and customary in the businesses in which the Company
and the Subsidiaries are engaged, including, but not limited to,
directors and officers insurance coverage at least equal to the
aggregate Subscription Amount. Neither the Company nor any
Subsidiary has any reason to believe that it will not be able to
renew its existing insurance coverage as and when such coverage
expires or to obtain similar coverage from similar insurers as may
be necessary to continue its business without a significant
increase in cost.
(r) Transactions with Affiliates and
Employees. Except as set forth on Schedule 3.1(r), none of
the officers or directors of the Company or any Subsidiary and, to
the knowledge of the Company, none of the employees of the Company
or any Subsidiary is presently a party to any transaction with the
Company or any Subsidiary (other than for services as employees,
officers and directors), including any contract, agreement or other
arrangement providing for the furnishing of services to or by,
providing for rental of real or personal property to or from,
providing for the borrowing of money from or lending of money to or
otherwise requiring payments to or from any officer, director or
such employee or, to the knowledge of the Company, any entity in
which any officer, director, or any such employee has a substantial
interest or is an officer, director, trustee, stockholder, member
or partner, in each case in excess of $120,000 other than for (i)
payment of salary or consulting fees for services rendered, (ii)
reimbursement for expenses incurred on behalf of the Company and
(iii) other employee benefits, including stock option agreements
under any stock option plan of the Company.
(s) Sarbanes-Oxley; Internal Accounting
Controls. The Company and the Subsidiaries are in compliance
in all material respects with any and all applicable requirements
of the Sarbanes-Oxley Act of 2002 that are effective as of the date
hereof, and any and all applicable rules and regulations
promulgated by the Commission thereunder that are effective as of
the date hereof and as of the Closing Date. The Company and the Subsidiaries maintain a system
of internal accounting controls sufficient to provide reasonable
assurance that: (i) transactions are executed in accordance with
management’s general or specific authorizations, (ii)
transactions are recorded as necessary to permit preparation of
financial statements in conformity with GAAP and to maintain asset
accountability, (iii) access to assets is permitted only in
accordance with management’s general or specific
authorization, and (iv) the recorded accountability for assets is
compared with the existing assets at reasonable intervals and
appropriate action is taken with respect to any differences. The
Company and the Subsidiaries have established disclosure controls
and procedures (as defined in Exchange Act Rules 13a-15(e) and
15d-15(e)) for the Company and the Subsidiaries and designed such
disclosure controls and procedures to ensure that information
required to be disclosed by the Company in the reports it files or
submits under the Exchange Act is recorded, processed, summarized
and reported, within the time periods specified in the
Commission’s rules and forms. The Company’s certifying
officers have evaluated the effectiveness of the disclosure
controls and procedures of the Company and the Subsidiaries as of
the end of the period covered by the most recently filed periodic
report under the Exchange Act (such date, the
“Evaluation
Date”). The Company
presented in its most recently filed periodic report under the
Exchange Act the conclusions of the certifying officers about the
effectiveness of the disclosure controls and procedures based on
their evaluations as of the Evaluation Date. Since the Evaluation
Date, there have been no changes in the internal control over
financial reporting (as such term is defined in the Exchange Act)
of the Company and its Subsidiaries that have materially affected,
or is reasonably likely to materially affect, the internal control
over financial reporting of the Company and its
Subsidiaries.
(t) Certain Fees. Except as set
forth on Schedule 3.1(t), no
brokerage or finder’s fees or commissions are or will be
payable by the Company or any Subsidiary to any broker, financial
advisor or consultant, finder, placement agent, investment banker,
bank or other Person with respect to the transactions contemplated
by this Agreement. The Purchaser shall have no obligation with
respect to any fees or with respect to any claims made by or on
behalf of other Persons for fees of a type contemplated in this
Section that may be due in connection with the transactions
contemplated by this Agreement.
(u) Private Placement. Assuming the
accuracy of the Purchaser’s representations and warranties
set forth in Section 3.2, no
registration under the Securities Act is required for the offer and
sale of the Preferred Stock or the Conversion Shares by the Company
to the Purchaser as contemplated hereby.
(v) Investment Company. The Company
is not, and is not an Affiliate of, and immediately after receipt
of payment for the Securities, will not be or be an Affiliate of,
an “investment company” within the meaning of the
Investment Company Act of 1940, as amended. The Company shall
conduct its business in a manner so that it will not become an
“investment company” subject to registration under the
Investment Company Act of 1940, as amended.
(w) Listing and Maintenance
Requirements. The Common Stock is registered pursuant to
Section 12(b) or 12(g) of the Exchange Act, and the Company has
taken no action designed to, or which to its knowledge is likely to
have the effect of, terminating the registration of the Common
Stock under the Exchange Act nor has the Company received any
notification that the Commission is contemplating terminating such
registration. Except as disclosed in the SEC Reports or on
Schedule 3.1(w), the
Company has not, in the 12 months preceding the date hereof,
received notice from any Trading Market on which the Common Stock
is or has been listed or quoted to the effect that the Company is
not in compliance with the listing or maintenance requirements of
such Trading Market. Except as set forth in the SEC Reports or on
Schedule 3.1(w), the
Company is, and has no reason to believe that it will not in the
foreseeable future continue to be, in compliance with all such
listing and maintenance requirements. The Common Stock is currently
eligible for electronic transfer through the Depository Trust
Company or another established clearing corporation and the Company
is current in payment of the fees to the Depository Trust Company
(or such other established clearing corporation) in connection with
such electronic transfer.
(x) Application of Takeover
Protections. The Company and the Board of Directors have
taken all necessary action, if any, in order to render inapplicable
any control share acquisition, business combination, poison pill
(including any distribution under a rights agreement) or other
similar anti-takeover provision under the Company’s
certificate of incorporation (or similar charter documents) or the
laws of its state of incorporation that is or would become
applicable to the Purchaser as a result of the Purchaser and the
Company fulfilling their obligations or exercising their rights
under this Agreement, including without limitation as a result of
the Company’s issuance of the Securities and the
Purchaser’s ownership of the Securities.
(y) No Integrated Offering.
Assuming the accuracy of the Purchaser’s representations and
warranties set forth in Section 3.2, neither the
Company, nor any of its Affiliates, nor any Person acting on its or
their behalf has, directly or indirectly, made any offers or sales
of any security or solicited any offers to buy any security, under
circumstances that would cause this offering of the Securities to
be integrated with prior offerings by the Company for purposes of
(i) the Securities Act which would require the registration of any
such securities under the Securities Act, or (ii) any applicable
shareholder approval provisions of any Trading Market on which any
of the securities of the Company are listed or
designated.
(z) Solvency. Based on the
consolidated financial condition of the Company as of the Closing
Date, after giving effect to the receipt by the Company of the
proceeds from the sale of the Securities hereunder, (i) the fair
saleable value of the Company’s assets exceeds the amount
that will be required to be paid on or in respect of the
Company’s existing debts and other liabilities (including
known contingent liabilities) as they mature, (ii) the
Company’s assets do not constitute unreasonably small capital
to carry on its business as now conducted and as proposed to be
conducted including its capital needs taking into account the
particular capital requirements of the business conducted by the
Company, consolidated and projected capital requirements and
capital availability thereof, and (iii) the current cash flow of
the Company, together with the proceeds the Company would receive,
were it to liquidate all of its assets, after taking into account
all anticipated uses of the cash, would be sufficient to pay all
amounts on or in respect of its liabilities when such amounts are
required to be paid. The Company does not intend to incur debts
beyond its ability to pay such debts as they mature (taking into
account the timing and amounts of cash to be payable on or in
respect of its debt). The Company has no knowledge of any facts or
circumstances which lead it to believe that it will file for
reorganization or liquidation under the bankruptcy or
reorganization laws of any jurisdiction within one year from the
Closing Date. Schedule 3.1(z) sets forth
as of the date hereof all outstanding secured and unsecured
Indebtedness of the Company or any Subsidiary, or for which the
Company or any Subsidiary has commitments. For the purposes of this
Agreement, “Indebtedness” means (x)
any liabilities for borrowed money or amounts owed in excess of
$100,000 (other than trade accounts payable incurred in the
ordinary course of business), (y) all guaranties, endorsements and
other contingent obligations in respect of indebtedness of others,
whether or not the same are or should be reflected in the
Company’s consolidated balance sheet (or the notes thereto),
except guaranties by endorsement of negotiable instruments for
deposit or collection or similar transactions in the ordinary
course of business; and (z) the present value of any lease payments
in excess of $50,000 due under leases required to be capitalized in
accordance with GAAP. Neither the Company nor any Subsidiary is in
default with respect to any Indebtedness.
(aa) Tax
Status. Except for matters that would not, individually or
in the aggregate, have or reasonably be expected to result in a
Material Adverse Effect, the Company and its Subsidiaries each (i)
has made or filed all United States federal, state and local income
and all foreign income and franchise tax returns, reports and
declarations required by any jurisdiction to which it is subject,
(ii) has paid all taxes and other governmental assessments and
charges that are material in amount, shown or determined to be due
on such returns, reports and declarations and (iii) has set aside
on its books provision reasonably adequate for the payment of all
material taxes for periods subsequent to the periods to which such
returns, reports or declarations apply. There are no unpaid taxes
in any material amount claimed to be due by the taxing authority of
any jurisdiction, and the officers of the Company or of any
Subsidiary know of no basis for any such claim.
(bb) No
General Solicitation. Neither the Company nor any Person
acting on behalf of the Company has offered or sold any of the
Preferred Stock, or the Conversion Shares by any form of general
solicitation or general advertising. The Company has offered the
Preferred Stock and the Conversion Shares for sale only to the
Purchaser.
(cc) Foreign
Corrupt Practices. Neither the Company nor any Subsidiary,
nor to the knowledge of the Company or any Subsidiary, any agent or
other person acting on behalf of the Company or any Subsidiary, has
(i) directly or indirectly, used any funds for unlawful
contributions, gifts, entertainment or other unlawful expenses
related to foreign or domestic political activity, (ii) made any
unlawful payment to foreign or domestic government officials or
employees or to any foreign or domestic political parties or
campaigns from corporate funds, (iii) failed to disclose fully any
contribution made by the Company or any Subsidiary (or made by any
person acting on its behalf of which the Company is aware) which is
in violation of law or (iv) violated in any material respect any
provision of FCPA.
(dd) Accountants.
The Company’s accounting firm is set forth in the SEC
Reports. To the knowledge and belief of the Company, such
accounting firm (i) is a registered public accounting firm as
required by the Exchange Act and (ii) shall express its opinion
with respect to the financial statements to be included in the
Company’s Annual Report for the fiscal year ending December
31, 2020.
(ee) No
Disagreements with Accountants and Lawyers. There are no
disagreements of any kind presently existing, or reasonably
anticipated by the Company to arise, between the Company and the
accountants and lawyers formerly or presently employed by the
Company and the Company is current with respect to any fees owed to
its accountants and lawyers which could affect the Company’s
ability to perform any of its obligations under this
Agreement.
(ff) FDA.
As to each product subject to the jurisdiction of the U.S. Food and
Drug Administration (“FDA”) under the Federal
Food, Drug and Cosmetic Act, as amended, and the regulations
thereunder (“FDCA”) that is
manufactured, packaged, labeled, tested, distributed, sold, and/or
marketed by the Company or any of its Subsidiaries (each such
product, a “Pharmaceutical Product”),
such Pharmaceutical Product is being manufactured, packaged,
labeled, tested, distributed, sold and/or marketed by the Company
in compliance with all applicable requirements under FDCA and
similar laws, rules and regulations, except where the failure to be
in compliance would not have a Material Adverse Effect. There is no
pending, completed or, to the Company's knowledge, threatened,
action (including any lawsuit, arbitration, or legal or
administrative or regulatory proceeding, charge, complaint, or
investigation) against the Company or any of its Subsidiaries, and
none of the Company or any of its Subsidiaries has received any
notice, warning letter or other communication from the FDA or any
other governmental entity, which (i) imposes a clinical hold on any
clinical investigation by the Company or any of its Subsidiaries,
(ii) enjoins production at any facility of the Company or any of
its Subsidiaries, (iii) enters or proposes to enter into a consent
decree of permanent injunction with the Company or any of its
Subsidiaries, or (iv) otherwise alleges any violation of any laws,
rules or regulations by the Company or any of its Subsidiaries, and
which, either individually or in the aggregate, would have a
Material Adverse Effect. The properties, business and operations of
the Company have been and are being conducted in all material
respects in accordance with all applicable laws, rules and
regulations of the FDA. The Company has not been informed by
the FDA that the FDA will prohibit the marketing, sale, license or
use in the United States of any product proposed to be developed,
produced or marketed by the Company.
(gg) Stock
Option Plans. Each stock option granted by the Company under
the Company’s stock option plan was granted (i) in accordance
with the terms of the Company’s stock option plan and (ii)
with an exercise price at least equal to the fair market value of
the Common Stock on the date such stock option would be considered
granted under GAAP and applicable law. No stock option granted
under the Company’s stock option plan has been backdated. The
Company has not knowingly granted, and there is no and has been no
Company policy or practice to knowingly grant, stock options prior
to, or otherwise knowingly coordinate the grant of stock options
with, the release or other public announcement of material
information regarding the Company or its Subsidiaries or their
financial results or prospects.
(hh) Office
of Foreign Assets Control. Neither the Company nor any
Subsidiary nor, to the Company's knowledge, any director, officer,
agent, employee or affiliate of the Company or any Subsidiary is
currently subject to any U.S. sanctions administered by the Office
of Foreign Assets Control of the U.S. Treasury Department
(“OFAC”).
(ii) U.S.
Real Property Holding Corporation. The Company is not and
has never been a U.S. real property holding corporation within the
meaning of Section 897 of the Internal Revenue Code of 1986, as
amended, and the Company shall so certify upon the
Purchaser’s request.
(jj) Bank
Holding Company Act. Neither the Company nor any of its
Subsidiaries or Affiliates is subject to the Bank Holding Company
Act of 1956, as amended (the “BHCA”) and to regulation
by the Board of Governors of the Federal Reserve System (the
“Federal
Reserve”). Neither the Company nor any of its
Subsidiaries or Affiliates owns or controls, directly or
indirectly, five percent (5%) or more of the outstanding shares of
any class of voting securities or twenty-five percent or more of
the total equity of a bank or any entity that is subject to the
BHCA and to regulation by the Federal Reserve. Neither the Company
nor any of its Subsidiaries or Affiliates exercises a controlling
influence over the management or policies of a bank or any entity
that is subject to the BHCA and to regulation by the Federal
Reserve.
(kk) Money
Laundering. The operations of the Company and its
Subsidiaries are and have been conducted at all times in compliance
with applicable financial record-keeping and reporting requirements
of the Currency and Foreign Transactions Reporting Act of 1970, as
amended, applicable money laundering statutes and applicable rules
and regulations thereunder (collectively, the “Money Laundering Laws”),
and no Action or Proceeding by or before any court or governmental
agency, authority or body or any arbitrator involving the Company
or any Subsidiary with respect to the Money Laundering Laws is
pending or, to the knowledge of the Company or any Subsidiary,
threatened.
(ll) No
Disqualification Events. With respect to the
Securities to be offered and sold hereunder in reliance on Rule 506
under the Securities Act, 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” and, together, “Issuer Covered Persons”)
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. The Company has complied, to the extent
applicable, with its disclosure obligations under Rule 506(e), and
has furnished to the Purchaser a copy of any disclosures provided
thereunder.
(mm) Other
Covered Persons. The Company is not aware of any person
(other than any Issuer Covered Person) that has been or will be
paid (directly or indirectly) remuneration for solicitation of
purchasers in connection with the sale of any
Securities.
(nn) Notice
of Disqualification Events. The Company will notify the
Purchaser in writing, prior to the Closing Date of (i) any
Disqualification Event relating to any Issuer Covered Person and
(ii) any event that would, with the passage of time, become a
Disqualification Event relating to any Issuer Covered
Person.
3.2 Representations
and Warranties of the Purchaser. The Purchaser hereby represents and warrants as
of the date hereof and as of the Closing Date to the Company as
follows:
(a) Organization;
Authority. The Purchaser is
either an individual or an entity duly incorporated or formed,
validly existing and in good standing under the laws of the
jurisdiction of its incorporation or formation with full right,
corporate, partnership, limited liability company or similar power
and authority to enter into and to consummate the transactions
contemplated by this Agreement and otherwise to carry out its
obligations hereunder and thereunder. The execution and delivery of
this Agreement and performance by the Purchaser of the transactions
contemplated by this Agreement have been duly authorized by all
necessary corporate, partnership, limited liability company or
similar action, as applicable, on the part of the Purchaser. This
Agreement has been duly executed by the Purchaser, and when
delivered by the Purchaser in accordance with the terms hereof,
will constitute the valid and legally binding obligation of the
Purchaser, enforceable against it in accordance with its terms,
except: (i) as limited by general equitable principles and
applicable bankruptcy, insolvency, reorganization, moratorium and
other laws of general application affecting enforcement of
creditors’ rights generally, (ii) as limited by laws relating
to the availability of specific performance, injunctive relief or
other equitable remedies and (iii) insofar as indemnification and
contribution provisions may be limited by applicable
law.
(b) Understandings
or Arrangements. The Purchaser
is acquiring the Securities as principal for its own account and
has no direct or indirect arrangement or understandings with any
other persons to distribute or regarding the distribution of such
Securities (this representation and warranty not limiting the
Purchaser’s right to sell the Securities in compliance with
applicable federal and state securities laws). The Purchaser is
acquiring the Securities hereunder in the ordinary course of its
business. The Purchaser understands that the Preferred Stock and
the Conversion Shares are “restricted securities” and
have not been registered under the Securities Act or any applicable
state securities law and is acquiring such Securities as principal
for his, her or its own account and not with a view to or for
distributing or reselling such Securities or any part thereof in
violation of the Securities Act or any applicable state securities
law, has no present intention of distributing any of such
Securities in violation of the Securities Act or any applicable
state securities law and has no direct or indirect arrangement or
understandings with any other persons to distribute or regarding
the distribution of such Securities in violation of the Securities
Act or any applicable state securities law.
(c) Purchaser
Status. At the time the
Purchaser was offered the Securities, it was, and as of the date
hereof it is: (i) an “accredited investor” as defined
in Rule 501(a)(1), (a)(2), (a)(3), (a)(7) or (a)(8) under the
Securities Act or (ii) a “qualified institutional
buyer” as defined in Rule 144A(a) under the Securities
Act.
(d) Experience
of the Purchaser. The
Purchaser, either alone or together with its representatives, has
such knowledge, sophistication and experience in business and
financial matters so as to be capable of evaluating the merits and
risks of the prospective investment in the Securities, and has so
evaluated the merits and risks of such investment. The Purchaser is
able to bear the economic risk of an investment in the Securities
and, at the present time, is able to afford a complete loss of such
investment.
(e) Access
to Information. The Purchaser
acknowledges that it has had the opportunity to review this
Agreement (including all exhibits and schedules thereto) and the
SEC Reports and has been afforded, (i) the opportunity to ask such
questions as it has deemed necessary of, and to receive answers
from, representatives of the Company concerning the terms and
conditions of the offering of the Securities and the merits and
risks of investing in the Securities; (ii) access to information
about the Company and its financial condition, results of
operations, business, properties, management and prospects
sufficient to enable it to evaluate its investment; and (iii) the
opportunity to obtain such additional information that the Company
possesses or can acquire without unreasonable effort or expense
that is necessary to make an informed investment decision with
respect to the investment.
(f) Certain
Transactions and Confidentiality. Other than consummating the transactions
contemplated hereunder, the Purchaser has not, nor has any Person
acting on behalf of or pursuant to any understanding with the
Purchaser, directly or indirectly executed any purchases or sales,
including Short Sales, of the securities of the Company during
the period commencing as of the time that the Purchaser first
received a term sheet (written or oral) from the Company or any
other Person representing the Company setting forth the material
terms of the transactions contemplated hereunder and ending
immediately prior to the execution hereof. Notwithstanding the foregoing, if the Purchaser
is a multi-managed investment vehicle whereby separate portfolio
managers manage separate portions of the Purchaser’s assets
and the portfolio managers have no direct knowledge of the
investment decisions made by the portfolio managers managing other
portions of the Purchaser’s assets, the representation set
forth above shall only apply with respect to the portion of assets
managed by the portfolio manager that made the investment decision
to purchase the Securities covered by this Agreement. Other than to
other Persons party to this Agreement or to the Purchaser’s
representatives, including, without limitation, its officers,
directors, partners, legal and other advisors, employees, agents
and Affiliates, the Purchaser has maintained the confidentiality of
all disclosures made to it in connection with this transaction
(including the existence and terms of this transaction).
Notwithstanding the foregoing, for the avoidance of doubt, nothing
contained herein shall constitute a representation or warranty, or
preclude any actions, with respect to locating or borrowing shares
in order to effect Short Sales or similar transactions in the
future.
(g) General
Solicitation. The Purchaser is
not purchasing the Securities as a result of any advertisement,
article, notice or other communication regarding the Securities
published in any newspaper, magazine or similar media or broadcast
over television or radio or presented at any seminar or, to the
knowledge of the Purchaser, any other general solicitation or
general advertisement.
ARTICLE IV.
OTHER AGREEMENTS OF THE PARTIES
4.1 Restrictive
Legends.
(a) The
Preferred Stock and the Conversion Shares may only be disposed of
in compliance with state and federal securities laws. In connection
with any transfer of Preferred Stock or Conversion Shares, other
than pursuant to an effective registration statement or Rule 144,
to the Company or to an Affiliate of the Purchaser or in connection
with a pledge as contemplated in Section 4.1(b),
the Company may require the transferor thereof to provide to the
Company an opinion of counsel selected by the transferor and
reasonably acceptable to the Company, the form and substance of
which opinion shall be reasonably satisfactory to the Company, to
the effect that such transfer does not require registration of such
transferred Preferred Stock or Conversion Shares under the
Securities Act.
(b) The
Purchaser agrees to the imprinting, so long as is required by
this Section 4.1,
of a legend on any of the Preferred Stock or Conversion Shares
substantially in the following form:
(c) NEITHER
THIS SECURITY NOR THE SECURITIES INTO WHICH THIS SECURITY IS
EXERCISABLE OR CONVERTIBLE HAS BEEN REGISTERED WITH THE SECURITIES
AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE
IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES
ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A
TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES
LAWS. THIS SECURITY AND THE SECURITIES ISSUABLE UPON EXERCISE OR
CONVERSION OF THIS SECURITY MAY BE PLEDGED IN CONNECTION WITH A
BONA FIDE MARGIN ACCOUNT WITH A REGISTERED BROKER-DEALER OR OTHER
LOAN WITH A FINANCIAL INSTITUTION THAT IS AN “ACCREDITED
INVESTOR” AS DEFINED IN RULE 501(a) UNDER THE SECURITIES ACT
OR OTHER LOAN SECURED BY SUCH SECURITIES.
(d) The
Purchaser agrees with the Company that the Purchaser will sell any
Securities pursuant to either the registration requirements of the
Securities Act, including any applicable prospectus delivery
requirements, or an exemption therefrom, and that if Securities are
sold pursuant to a Registration Statement, they will be sold in
compliance with the plan of distribution set forth therein, and
acknowledges that the removal of the restrictive legend from
certificates representing Securities as set forth in this
Section 4.1
is predicated upon the Company’s
reliance upon this understanding.
4.2 Registration
Rights.
(a) Demand Registration Rights.
Except to the extent such any such filing may conflict with the
Clear Market Obligations of the Company, the Purchaser has the
right to make a demand for the Company to file a registration
statement on Form S-3, or if Form S-3 is not available to the
Company, on Form S-1, covering the resale by the Purchaser of all
of the Registrable Securities under and in accordance with the
provisions of the Securities Act. In addition to the above demand
rights, at any time the Company is eligible to use Form S-3 with
respect to the resale of the Registrable Securities, except to the
extent such any such filing may conflict with the Clear Market
Obligations of the Company, the Purchaser will have also the right
to make up to an additional two (2) demands within any twelve (12)
month period for the Company to file a registration statement on
Form S-3 covering the resale by the Purchaser of all of the
Registerable Securities, by written notice to the Company, signed
by Purchaser (the “Demand Notice”) under and
in accordance with the provisions of the Securities Act. The
Company will use its commercially reasonable efforts to file the
Demand Registration Statement within sixty (60) days of the receipt
of the Demand Notice; provided, however, that, if the Demand Notice is
given within the sixty (60) days after the end of a fiscal year of
the Company, then the Company will use its reasonably commercial
efforts to file the Demand Registration Statement within one
hundred and twenty (120) days following such fiscal year end. The
Company shall use its commercially reasonable efforts to cause the
Demand Registration Statement to be declared effective under the
Securities Act as promptly as practicable after the filing thereof
and to keep the Demand Registration Statement continuously
effective under the Securities Act during the Effectiveness Period.
A demand for registration shall not be deemed made for purposes of
this Section 4.2(a) until such
time as the applicable Demand Registration Statement has been
declared effective by the Commission, unless the Purchaser
withdraws its request for such registration and elects not to pay
the registration expenses therefor, in which case the Purchaser
will forfeit its right to one Demand Registration Statement
pursuant to this Section 4.2(a).
(b) Piggyback Registration Rights.
If, at any time following the Closing there is not an effective
Registration Statement covering all of the Registrable Securities,
and the Company shall determine to prepare and file with the
Commission a registration statement (other than the Financing
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 the
Purchaser a written notice of such determination and, if within
fifteen (15) days after the date of the delivery of such notice,
the Purchaser shall so request in writing, the Company shall
include in such registration statement all or any part of such
Registrable Securities that the Purchaser may request to be
registered, or such amount as otherwise shall be permitted to be
included thereon in accordance with applicable rules, regulations
and interpretations of the Commission, so as to permit the resale
of such Registrable Securities by the Purchaser 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 4.2(b) that are
the subject of a then effective Registration
Statement.
(c) Registration
Procedures.
(i) In connection with
the Company’s registration obligations hereunder, the Company
shall, as promptly as reasonably possible under the circumstances
taking into account the Company’s good faith assessment of
any adverse consequences to the Company and its stockholders of the
premature disclosure of such event, prepare a supplement or
amendment, including a post-effective amendment, to any
Registration Statement or a supplement to the related prospectus or
any document incorporated or deemed to be incorporated therein by
reference, and file any other required document so that, as
thereafter delivered, neither a registration statement nor such
prospectus will contain an untrue statement of a material fact or
omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. If the
Company notifies the Purchaser to suspend the use of any prospectus
until the requisite changes to such prospectus have been made, then
the Purchaser shall suspend use of such prospectus.
(ii) The
Company may require the Purchaser to furnish to the Company a
certified statement as to the number of shares of Common Stock
beneficially owned by the Purchaser and, to the extent applicable,
the natural persons thereof that have voting and dispositive
control over the shares, as well as such other information about
the Purchaser as may reasonably be requested by the Company to
facilitate such registration.
(iii) As
long as the Purchaser owns Registrable Securities, the Company
covenants to timely file (or obtain extensions in respect thereof
and file within the applicable grace period) all reports required
to be filed by the Company after the date hereof pursuant to the
Exchange Act even if the Company is not then subject to the
reporting requirements of the Exchange Act.
(iv) To
the extent the Purchaser includes any Registrable Securities in a
registration statement pursuant to the terms hereof, the Purchaser
will indemnify and hold harmless the Company, its directors and
officers and any controlling person from and against, and will
reimburse the Company, its directors and officers and any
controlling person with respect to, any and all loss, damage,
liability, cost, or expense to which the Company, its directors and
officers or such controlling person may become subject under the
Securities Act or otherwise, insofar as such losses, damages,
liabilities, costs, or expenses are caused by any untrue statement
or alleged untrue statement of any material fact contained in such
registration statement, any prospectus contained therein or any
amendment or supplement thereto, or arise out of or are based upon
the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements
therein, in light of the circumstances in which they were made, not
misleading, in each case to the extent, but only to the extent,
that such untrue statement or alleged untrue statement or omission
or alleged omission was so made in reliance upon and in conformity
with information furnished by or on behalf of the Purchaser
specifically for use in the preparation thereof, and provided
further that the maximum amount that may be recovered from
Purchaser shall be limited to the amount of proceeds received by
the Purchaser from the sale of such Registrable
Securities.
4.3 No
Conversion Prior to Stockholder Approval. Notwithstanding any provisions to the contrary in
the Certificate of Designations, the Purchaser agrees not to
convert any shares of Preferred Stock into shares of Common Stock
or Pre-Funded Warrants (as defined in the Certificate of
Designation) until after the Company has obtained the Stockholder
Approval.
ARTICLE V.
MISCELLANEOUS
5.1 Termination.
This Agreement may be terminated by the Purchaser by written notice
to the other party, if the Closing has not been consummated on or
before the fifth (5th)
Trading Day following the date hereof; provided,
however,
that no such termination will affect the right of any party to sue
for any breach by any other party (or parties).
5.2 Fees
and Expenses. Each party shall
pay the fees and expenses of its advisers, counsel, accountants and
other experts, if any, and all other expenses incurred by such
party incident to the negotiation, preparation, execution, delivery
and performance of this Agreement. The Company shall pay all
Transfer Agent fees (including, without limitation, any fees
required for same-day processing of any instruction letter
delivered by the Company and any exercise notice delivered by the
Purchaser), stamp taxes and other taxes and duties levied in
connection with the delivery of any Securities to the
Purchaser.
5.3 Entire
Agreement. This Agreement,
together with the exhibits and schedules thereto (including the
Disclosure Schedules), contains the entire understanding of the
parties with respect to the subject matter hereof and thereof and
supersede all prior agreements and understandings, oral or written,
with respect to such matters, which the parties acknowledge have
been merged into such documents, exhibits and schedules. Without
limiting the foregoing, the Company and the Purchaser agree that
the Original Terms set forth in Section 6.2 of the License
Agreement are hereby amended and superseded in all respects by the
Series C Terms set forth herein and in the Certificate of
Designations; and that, in light of the differences between the
Original Terms and the Series C Terms, the purchase and sale of
Preferred Stock hereunder shall satisfy in full all obligations of
the Company and the Purchaser pursuant to Section 6.2 of the
License Agreement.
5.4 Notices.
Any and all notices or other communications or deliveries required
or permitted to be provided hereunder shall be in writing and shall
be deemed given and effective on the earliest of: (a) the time of
transmission, if such notice or communication is delivered via
email attachment at the email address as set forth on the signature
pages attached hereto at or prior to 5:30 p.m. (New York City time)
on a Trading Day, (b) the next Trading Day after the time of
transmission, if such notice or communication is delivered via
email attachment at the email address as set forth on the signature
pages attached hereto on a day that is not a Trading Day or later
than 5:30 p.m. (New York City time) on any Trading Day, (c) the
second (2nd)
Trading Day following the date of mailing, if sent by U.S.
nationally recognized overnight courier service or (d) upon actual
receipt by the party to whom such notice is required to be given.
The address for such notices and communications shall be as set
forth on the signature pages attached hereto.
5.5 Amendments;
Waivers. No provision of this
Agreement may be waived, modified, supplemented or amended except
in a written instrument signed, in the case of an amendment, by the
Company and the Purchaser. No waiver of any default with respect to
any provision, condition or requirement of this Agreement shall be
deemed to be a continuing waiver in the future or a waiver of any
subsequent default or a waiver of any other provision, condition or
requirement hereof, nor shall any delay or omission of any party to
exercise any right hereunder in any manner impair the exercise of
any such right. Any amendment effected in accordance with
this Section 5.5
shall be binding upon the Purchaser
and holder of Securities and the Company.
5.6 Headings.
The headings herein are for convenience only, do not constitute a
part of this Agreement and shall not be deemed to limit or affect
any of the provisions hereof.
5.7 Successors
and Assigns. This Agreement
shall be binding upon and inure to the benefit of the parties and
their successors and permitted assigns. Neither party to this
Agreement may assign this Agreement or any rights or obligations
hereunder without the prior written consent of the other party
(other than by merger); provided, however, that Purchaser may
assign this Agreement or its rights or obligations hereunder,
without the prior written consent of the Company, in connection
with a merger, or a sale of all or substantially all of the assets
or outstanding securities of, the Purchaser; provided that the
transferee or surviving entity agrees in writing to be bound by
Purchaser's obligations under this Agreement.
5.8 No
Third-Party Beneficiaries. This
Agreement is intended for the benefit of the parties hereto and
their respective successors and permitted assigns and is not for
the benefit of, nor may any provision hereof be enforced by, any
other Person.
5.9 Governing
Law. All questions concerning
the construction, validity, enforcement and interpretation of this
Agreement shall be governed by and construed and enforced in
accordance with the internal laws of the State of Delaware, without
regard to the principles of conflicts of law thereof. Each party
agrees that all legal Proceedings concerning the interpretations,
enforcement and defense of the transactions contemplated by this
Agreement (whether brought against a party hereto or its respective
affiliates, directors, officers, shareholders, partners, members,
employees or agents) shall be commenced exclusively in the state
and federal courts sitting in the City of Wilmington, County of New
Castle (the “Delaware
Courts”). Each party
hereby irrevocably submits to the exclusive jurisdiction of the
Delaware Courts for the adjudication of any dispute hereunder or in
connection herewith or with any transaction contemplated hereby,
and hereby irrevocably waives, and agrees not to assert in any
Action or Proceeding, any claim that it is not personally subject
to the jurisdiction of any such court, that such Action or
Proceeding is improper or is an inconvenient venue for such
Proceeding. Each party hereby irrevocably waives personal service
of process and consents to process being served in any such Action
or Proceeding by mailing a copy thereof via registered or certified
mail or overnight delivery (with evidence of delivery) to such
party at the address in effect for notices to it under this
Agreement and agrees that such service shall constitute good and
sufficient service of process and notice thereof. Nothing contained
herein shall be deemed to limit in any way any right to serve
process in any other manner permitted by law. If any party shall
commence an Action or Proceeding to enforce any provisions of this
Agreement, then the prevailing party in such Action or Proceeding
shall be reimbursed by the non-prevailing party for its reasonable
attorneys’ fees and other costs and expenses incurred with
the investigation, preparation and prosecution of such Action or
Proceeding.
5.10 Survival.
The representations and warranties contained herein shall survive
the Closing and the delivery of the Securities.
5.11 Execution.
This Agreement may be executed in two or more counterparts, all of
which when taken together shall be considered one and the same
agreement and shall become effective when counterparts have been
signed by each party and delivered to each other party, it being
understood that the parties need not sign the same counterpart. In
the event that any signature is delivered by e-mail delivery of a
“.pdf” format data file, such signature shall create a
valid and binding obligation of the party executing (or on whose
behalf such signature is executed) with the same force and effect
as if such “.pdf” signature page were an original
thereof.
5.12 Severability.
If any term, provision, covenant or restriction of this Agreement
is held by a court of competent jurisdiction to be invalid,
illegal, void or unenforceable, the remainder of the terms,
provisions, covenants and restrictions set forth herein shall
remain in full force and effect and shall in no way be affected,
impaired or invalidated, and the parties hereto shall use their
commercially reasonable efforts to find and employ an alternative
means to achieve the same or substantially the same result as that
contemplated by such term, provision, covenant or restriction. It
is hereby stipulated and declared to be the intention of the
parties that they would have executed the remaining terms,
provisions, covenants and restrictions without including any of
such that may be hereafter declared invalid, illegal, void or
unenforceable.
5.13 Replacement
of Securities. If any
certificate or instrument evidencing any Securities is mutilated,
lost, stolen or destroyed, the Company shall issue or cause to be
issued in exchange and substitution for and upon cancellation
thereof (in the case of mutilation), or in lieu of and substitution
therefor, a new certificate or instrument, but only upon receipt of
evidence reasonably satisfactory to the Company of such loss, theft
or destruction. The applicant for a new certificate or instrument
under such circumstances shall also pay any reasonable third-party
costs (including customary indemnity) associated with the issuance
of such replacement Securities.
5.14 Remedies.
In addition to being entitled to exercise all rights provided
herein or granted by law, including recovery of damages, the
Purchaser and the Company will be entitled to specific performance
under this Agreement. The parties agree that monetary damages may
not be adequate compensation for any loss incurred by reason of any
breach of obligations contained in this Agreement and hereby agree
to waive and not to assert in any Action for specific performance
of any such obligation the defense that a remedy at law would be
adequate.
5.15 Payment
Set Aside. To the extent that
the Company makes a payment or payments to the Purchaser pursuant
this Agreement or the Purchaser enforces or exercises its rights
thereunder, and such payment or payments or the proceeds of such
enforcement or exercise or any part thereof are subsequently
invalidated, declared to be fraudulent or preferential, set aside,
recovered from, disgorged by or are required to be refunded, repaid
or otherwise restored to the Company, a trustee, receiver or any
other Person under any law (including, without limitation, any
bankruptcy law, state or federal law, common law or equitable cause
of action), then to the extent of any such restoration the
obligation or part thereof originally intended to be satisfied
shall be revived and continued in full force and effect as if such
payment had not been made or such enforcement or setoff had not
occurred.
5.16 Saturdays,
Sundays, Holidays, etc.. If the
last or appointed day for the taking of any action or the
expiration of any right required or granted herein shall not be a
Business Day, then such action may be taken or such right may be
exercised on the next succeeding Business Day.
5.17 Construction.
The parties agree that each of them and/or their respective counsel
have reviewed and had an opportunity to revise this Agreement and,
therefore, the normal rule of construction to the effect that any
ambiguities are to be resolved against the drafting party shall not
be employed in the interpretation of this Agreement or any
amendments thereto. In addition, each and every reference to share
prices and shares of Common Stock in this Agreement shall be
subject to adjustment for reverse and forward stock splits, stock
dividends, stock combinations and other similar transactions of the
Common Stock that occur after the date of this
Agreement.
5.18 WAIVER
OF JURY TRIAL.
IN ANY
ACTION, SUIT, OR PROCEEDING IN ANY JURISDICTION BROUGHT BY ANY
PARTY AGAINST ANY OTHER PARTY, THE PARTIES EACH KNOWINGLY AND
INTENTIONALLY, TO THE GREATEST EXTENT PERMITTED BY APPLICABLE LAW,
HEREBY ABSOLUTELY, UNCONDITIONALLY, IRREVOCABLY AND EXPRESSLY
WAIVES FOREVER TRIAL BY JURY.
(Signature Pages Follow)
IN
WITNESS WHEREOF, the parties hereto have caused this Securities
Purchase Agreement to be duly executed by their respective
authorized signatories as of the date first indicated
above.
|
AZURRX BIOPHARMA, INC.
|
Address
for Notice:
|
|
By:/s/
James Sapirstein
Name:
James
Sapirstein
Title:
Chief Executive Officer
With a
copy to (which shall not constitute notice):
|
Email:
Fax:
|
|
|
|
[REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK
SIGNATURE
PAGE FOR PURCHASER FOLLOWS]
[PURCHASER
SIGNATURE PAGES TO AZRX SECURITIES PURCHASE AGREEMENT]
IN
WITNESS WHEREOF, the undersigned have caused this Securities
Purchase Agreement to be duly executed by their respective
authorized signatories as of the date first indicated
above.
Name of
Purchaser: First Wave Bio, Inc.
Signature of Authorized Signatory of
Purchaser: /s/ Gary Glick
Name of
Authorized Signatory: Gary
Glick
Title
of Authorized Signatory: President and CEO
Email
Address of Authorized Signatory:
__________________________
Address
for Notice to Purchaser:
Address
for Delivery of Securities to Purchaser (if not same as address for
notice):
Shares
of Preferred Stock: 3,290.1960
EIN
Number: _______________________