UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of
1934
Date of Report (Date of earliest event reported): July 6,
2021
Tenax Therapeutics, Inc.
(Exact
name of registrant as specified in its charter)
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Delaware
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001-34600
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26-2593535
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(State
or other jurisdiction of incorporation)
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(CommissionFile
Number)
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(IRS
EmployerIdentification No.)
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ONE Copley Parkway, Suite 490
Morrisville, NC 27560
(Address
of principal executive offices) (Zip Code)
919-855-2100
(Registrant’s
telephone number, including area code)
N/A
(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 ☐
If an
emerging growth company, indicate by check mark if the registrant
has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided
pursuant to Section 13(a) of the Exchange Act. ☐
Item
1.01.
Entry into a Material Definitive Agreement.
On July
6, 2021, Tenax Therapeutics, Inc. (the “Company”)
entered into a securities purchase agreement (the “Purchase
Agreement”) with an institutional investor (the
“Investor”) pursuant to which the Company agreed to
sell and issue to the Investor 4,773,269 units (“Units”) in a
private placement at a purchase price
of $2.095 per Unit. Each Unit consists of one unregistered
pre-funded warrant to purchase one share of common stock, par value
$0.0001 (collectively the “Unregistered Pre-Funded
Warrants”) and one unregistered warrant to purchase one share
of common stock (collectively the “Unregistered
Warrants” and together with the Unregistered Pre-Funded
Warrants, the “Warrants”). In the aggregate,
9,546,538 shares of the Company’s common stock are underlying
the Warrants. The aggregate
gross proceeds to the Company of the Offering are expected to be
approximately $10 million.
Each
Unregistered Pre-Funded Warrant has an exercise price of $0.0001
per share of common stock, is immediately exercisable, may be
exercised at any time until exercised in full and is subject to
customary adjustments. Each Unregistered Warrant has an exercise
price of $1.97 per share of common stock, is immediately
exercisable, will expire five and one-half years from the date of
issuance and is subject to customary adjustments. The Warrants may
not be exercised if the aggregate number of shares of the
Company’s common stock beneficially owned by the holder
(together with its affiliates) would exceed 9.99% of the
Company’s outstanding common stock immediately after
exercise. However, the holder may increase (upon 61 days’
prior notice from the holder to the Company) or decrease such
percentage, provided that in no event such percentage exceeds
9.99%.
The
Company intends to use the net proceeds from the Offering to
further its clinical trials of levosimendan and imatinib for
research and development and for general corporate purposes,
including working capital and potential acquisitions.
Also on
July 6, 2021 and in connection with the private placement, the
Company entered into a registration rights agreement (the
“Registration Rights Agreement”) with the Investor,
pursuant to which the Company agreed
to register for resale the shares of the Company’s common
stock issuable upon exercise of the Warrants within 120 days
following the date of the Registration Rights
Agreement.
Under certain circumstances, including, but not limited to,
(i) if the registration statement is not filed by the earlier
of 45 days after the date of the Registration Rights Agreement or
10 days after the Company files its next Form 10-Q
(ii) if the registration statement has not been declared
effective (A) by the 120th day
after the date of the Registration Rights Agreement (or, in the
event of a “full review” by the Securities and Exchange
Commission (the “SEC”), the 150th day
after the date of the Registration Rights Agreement) or
(B) within five trading days following the date the Company is
notified by the SEC that the registration statement will not be
reviewed or is no longer subject to further review and comments
then the Company has agreed to pay the Investor, as partial
liquidated damages, an amount equal to 1.0% of the Investor’s
aggregate subscription amount paid pursuant to the Purchase
Agreement.
H.C.
Wainwright & Co., LLC (“HCW) is entitled to fees related
to the Offering under a tail provision in an engagement letter with
the Company that relates to HCW’s assistance as a Placement
Agent in a prior offering in July 2020 between the Investor and the
Company (the “Tail Provision”). Pursuant to the Tail
Provision, the Company will pay HCW a cash fee equal to 7.5% of the
gross proceeds received by the Company in the Offering, totaling
approximately $750,000. In addition, the Company has agreed to
issue to HCW or its designees warrants to purchase up to
357,995 shares of
common stock (representing 7.5% of the aggregate number of shares
of common stock equivalents sold in the Offering) (the “HCW
Warrants”). The HCW Warrants have substantially the same
terms as the Unregistered, except that the HCW Warrants have an
exercise price equal to $2.46, or 125% of the offering price per
share of common stock, and will be exercisable for five years from
the effective date of the Offering.
The
issuance and sale of the Units, the Unregistered Warrants, the HCW
Warrants and the shares of common stock issuable upon exercise of
the Warrants and the HCW Warrants are not being registered under
the Securities Act of 1933, as amended (the “Securities
Act”), are not being offered pursuant to the registration
statement and are being offered pursuant to the exemption provided
in Section 4(a)(2) under the Securities Act and Rule 506(b)
promulgated thereunder.
The
Purchase Agreement and the Registration Rights Agreement include
customary representations, warranties and covenants by the Company.
The foregoing descriptions of the Units, the Warrants, the HCW
Warrants, the shares of common stock issuable upon exercise of the
Warrants and the HCW Warrants, the Purchase Agreement and the
Registration Rights Agreement do not purport to be complete and are
qualified by reference to the full text of such agreements, which
are attached to this Current Report on Form 8-K as Exhibits 4.1,
4.2, 10.1 and 10.2, respectively, and are incorporated herein by
reference.
Item
3.02.
Unregistered Sales of Equity Securities.
The
information in Item 1.01 related to the private placement of the
Units, the issuance of the Warrants and HCW Warrants and the shares
of common stock issuable upon exercise of the Warrants and HCW
Warrants is incorporated by reference into this Item
3.02.
Item
5.02
Departure of Directors or Certain Officers; Election of Directors;
Appointment of Certain Officers; Compensatory Arrangements of
Certain Officers.
Retirement of CEO
On July
13, 2021, Anthony A. DiTonno will retire as the Chief Executive
Officer of the Company and as a member of the Company’s Board
of Directors (the “Board”) effective as of July 13,
2021 (the “Effective Separation Date”). In connection
with his retirement, Mr. DiTonno entered into a Separation and
General Release Agreement with the Company (the “Separation
Agreement”), dated July 6, 2021. The terms of the Separation
Agreement provide that Mr. DiTonno has the right to revoke the
Separation Agreement until July 22, 2021.
Under
the Separation Agreement, Mr. DiTonno is entitled to receive
severance in an amount equal to one year of his current base annual
salary, and a pro-rated amount of his annual bonus that would have
been received had 100% of his annual goals been achieved (less
applicable taxes and withholdings), payable in a lump sum on the
60th day following the Effective Separation Date. The Company will
also reimburse COBRA premiums for coverage of Mr. DiTonno and his
eligible dependents for up to 18 months if Mr. DiTonno timely and
properly elects continuation coverage. The foregoing payments are
contingent on Mr. DiTonno’s standard release of employment
claims. In connection with his retirement and in order to ensure a
smooth transition to the new CEO, Mr. DiTonno has received a stock
option grant for 50,000 shares of common stock. All of Mr.
DiTonno’s outstanding stock options for common stock of the
Company will accelerate upon the Effective Separation Date,
becoming fully vested, and shall be exercisable until the earlier
of: (i) the original expiration date of each option under such
option’s respective option agreement; or (ii) July 13, 2026.
The Company is additionally reimbursing Mr. DiTonno for up to
$5,000 in legal expenses related to the Separation Agreement. The
Separation Agreement also contains such non-competition,
non-solicitation, and confidentiality provisions and other terms
and conditions as are usual and customary for agreements of this
type. All of Mr. DiTonno’s obligations under his Employee
Non-Disclosure, Inventions Assignment, and Competitive Business
Activities Agreement, dated June 1, 2018, regarding confidentiality
and proprietary information will continue.
The
foregoing description of the Separation Agreement does not purport
to be complete and is qualified in its entirety by reference to the
full text of the Separation Agreement, a copy of which is filed as
Exhibit 10.3 to this Current Report on Form 8-K and is incorporated
herein by reference.
Appointment of CEO and Member of the Board
On July
6, 2021, the Board appointed
Christopher T. Giordano as the Company’s Chief Executive
Officer and a member of its Board of Directors, effective July 14,
2021. From July 6, 2021
through July 14, 2021, Mr. Giordano will serve as an employee of
the Company to assist with the smooth transition of Mr.
DiTonno’s duties as CEO to Mr. Giordano.
Mr.
Giordano, age 47, brings more than 20 years of experience in the
clinical research industry. He most recently served as President of
IQVIA Biotech and IQVIA MedTech (formerly Novella Clinical), where
he led an executive team that executed a clinical trial portfolio
that grew from 250 to 400 active projects during his three years of
leadership commencing March 2018 through his departure in April
2021 and saw double-digit annual growth in sales each year of his
tenure. Mr. Giordano has been involved in the pharmaceutical
development industry since 1998. In January 2001, he joined PPD,
another global clinical research organization, in a sales role.
Over the next seven years, he grew into increasing operational
responsibility, and in August 2008 transitioned to Quintiles as a
Vice President, where he oversaw all consulting, regulatory,
commercial, and clinical development services (including
early-phase pharmacology through phase IV registry and safety
studies) offered to his clients in the oncology, auto-immune, CNS,
cardiovascular, and renal disease areas. He served in roles of
increasing responsibility at Quintiles, being appointed Global Vice
President of the cardiovascular, renal, and metabolic group in
February 2016, a position he held until his appointment as
President of IQVIA Biotech and IQVIA MedTech.
Effective
July 6, 2021, the Company entered into an executive employment
agreement with Mr. Giordano (the “Employment
Agreement”). Under the Employment Agreement, Mr. Giordano
will receive an annual base salary of $375,000. Mr. Giordano will
also receive participation in medical insurance, dental insurance,
and other benefit plans on the same basis as the Company’s
other officers. Under the Employment Agreement, Mr. Giordano will
also receive an annual cash bonus consisting of 50% of his base
salary, based on 100% achievement of annual goals (with no cap on
the bonus for greater than 100% achievement of goals). The
Employment Agreement also provides for the grant of the following
employment inducement stock options: (i) a one-time stock option
grant of 250,000 shares of common stock with four-year
straight-line vesting; and (ii) a one-time stock option grant of
100,000 shares of common stock with 50% vesting upon the
achievement of certain performance metrics related to the clinical
trials of the Company. These grants are to be made pursuant to the
Company’s newly-adopted Plan for Employee Inducement Grants,
described in further detail below and filed as Exhibit 10.3 to this
Current Report on Form 8-K. The Company is further reimbursing Mr.
Giordano for up to $10,000 of legal expenses related to the
Employment Agreement.
The
Employment Agreement is effective for a one-year term, and
automatically renews for additional one-year terms, unless the
Employment Agreement is terminated in advance of renewal or either
party gives notice at least 90 days prior to the end of the then
current term of an intention not to renew. If Mr. Giordano is
terminated without cause, if he terminates his employment for good
reason, or if the Company elects not to renew the Employment
Agreement, Mr. Giordano would be entitled to receive (i) one-year
of base salary, (ii) a pro-rated amount of the annual bonus that he
would have received had 100% of goals been achieved, and (iii)
one-year of COBRA reimbursements or benefits payments, as
applicable. Mr. Giordano’s entitlement to these payments is
conditioned upon execution of a release of claims.
For
purposes of the Employment Agreement: (i) “cause”
includes (a) a willful material breach of the Agreement by Mr.
Giordano, (b) material misappropriation of Company property, (c)
material failure to comply with Company policies, (d) abuse of
illegal drugs or abuse of alcohol in a manner that interferes with
the performance of Mr. Giordano’s duties, (e) dishonest or
illegal action that is materially detrimental to the Company, (f)
failure to cooperate with internal investigations or law
enforcement and regulatory investigations, and (g) failure to
disclose material conflicts of interest and (ii) “good
reason” includes (a) a material reduction in base salary, (b)
a material reduction of Mr. Giordano’s authority, duties or
responsibility, (c) certain changes in geographic location of Mr.
Giordano’s employment, or (d) a material breach of the
Employment Agreement or other written agreement with Mr. Giordano
by the Company.
In connection with Mr. Giordano’s appointment as CEO, on July
6, 2021, the Compensation Committee of the Board adopted the Plan
for Employee Inducement Stock Option Grants (the
“Plan”). The Plan provides for the grant of
equity-based awards in the form of incentive stock options and
non-qualified stock options. The Plan was adopted by the
Compensation Committee of the Board without stockholder approval
pursuant to Rule 5635(c)(4) of the Nasdaq Listing
Rules.
The Board has reserved up to 350,000 shares of the Company’s
common stock for issuance pursuant to awards granted under the
Plan, and the Plan will be administered by the Compensation
Committee of the Board. In accordance with Rule 5635(c)(4) of the
Nasdaq Listing Rules, awards under the Plan may only be made to an
employee who has not previously been an employee or member of the
Board or any parent or subsidiary, or following a bona fide period
of non-employment by the Company or a parent or
subsidiary, if he or she is granted such award in connection with
his or her commencement of employment with the Company or a
subsidiary and such grant is an inducement material to his or her
entering into employment with the Company or such
subsidiary.
The
foregoing descriptions of the Employment Agreement and the Plan do
not purport to be complete and is qualified in its entirety by
reference to the full text of the Employment Agreement and the Plan
(including the form of stock option agreement to be used under the
Plan), copies of which is filed as Exhibits 10.4 and 10.5,
respectively to this Current Report on Form 8-K and are
incorporated herein by reference.
Item
7.01.
Regulation FD Disclosure.
On July
6, 2020, the Company issued a press release announcing the
Offering, Mr. DiTonno’s retirement as CEO, Mr.
Giordano’s appointment as CEO and the issuance of employment
inducement stock options to Mr. Giordano. A copy of the press
release is attached to this Current Report on Form 8-K as Exhibits
99.1 and is incorporated herein by reference.
In
accordance with General Instruction B.2 of Form 8-K, the
information in this Item 7.01, including Exhibit 99.1 attached
hereto, shall be deemed “furnished” and shall not be
deemed “filed” for purposes of Section 18 of the
Securities Exchange Act of 1934, as amended (the “Exchange
Act”), nor shall such information be deemed incorporated by
reference in any filing under the Securities Act or the Exchange
Act, except as shall be expressly set forth by specific reference
in such a filing.
Item
9.01
Financial Statements and Exhibits.
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Exhibit No.
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Description
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Form of
Unregistered Pre-Funded Warrant (2021)
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Form of
Unregistered Warrant (2021)
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Form of
HCW Warrant (2021)
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Securities
Purchase Agreement for Unregistered Pre-Funded Warrant, dated as of
July 6, 2021 by and between the Company and the
Investor
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Registration
Rights Agreement dated as of July 6, 2021 by and between the
Company and the Investor
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Separation
and General Release Agreement with Anthony A. DiTonno dated July 6,
2021.
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Executive
Employment Agreement with Christopher T. Giordano dated July 6,
2021.
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Plan
for Employee Inducement Stock Options adopted July 6, 2021 with
Form of Stock Option Agreement
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Press
Release dated July 7, 2021.
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SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf
by the undersigned hereunto duly authorized.
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Date: July 8,
2021
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Tenax Therapeutics, Inc.
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By: /s/ Michael B. Jebsen
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Michael
B. Jebsen
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Chief
Financial Officer
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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.
PRE-FUNDED COMMON STOCK PURCHASE WARRANT
TENAX THERAPEUTICS, INC.
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Warrant Shares:
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Issue Date: July
___, 2021
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Initial Exercise
Date: July ___, 2021
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THIS
PRE-FUNDED COMMON STOCK PURCHASE WARRANT (the “Warrant”) certifies that,
for value received, _________________ or its 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
set forth above as the Initial Exercise Date (the
“Initial Exercise
Date”) and until this Warrant is exercised in full
(the “Termination
Date”) but not thereafter, to subscribe for and
purchase from Tenax Therapeutics, Inc., a Delaware corporation (the
“Company”), up to
____________ shares (as subject to adjustment hereunder, the
“Warrant
Shares”) of the Company’s 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).
Section 1. Definitions. Capitalized terms
used and not otherwise defined herein shall have the meanings set
forth in that certain Securities Purchase Agreement for Units (the
“Purchase
Agreement”), dated July 6, 2021, 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
facsimile copy or PDF copy submitted by e-mail (or e-mail
attachment) of the Notice of Exercise in the form annexed hereto
(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 Warrant 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 aggregate
exercise price of this Warrant, except for a nominal exercise price
of $0.0001 per Warrant Share, was pre-funded to the Company on or
prior to the Initial Exercise Date and, consequently, no additional
consideration (other than the nominal exercise price of $0.0001 per
Warrant Share) shall be required to be paid by the Holder to any
Person to effect any exercise of this Warrant. The Holder shall not
be entitled to the return or refund of all, or any portion, of such
pre-paid aggregate exercise price under any circumstance or for any
reason whatsoever, including in the event this Warrant shall not
have been exercised prior to the Termination Date. The remaining
unpaid exercise price per share of Common Stock under this Warrant
shall be $0.0001, subject to adjustment hereunder (the
“Exercise
Price”).
c) Cashless Exercise. 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.
“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 (based on the
underlying Warrant Shares) 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 (based on the
underlying Warrant Shares) and reasonably acceptable to the
Company, the fees and expenses of which shall be paid by the
Company.
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
registered characteristics of the Warrants being
exercised. The Company agrees not to take any position
contrary to this Section 2(c).
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) this Warrant is being exercised via 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, (ii) one (1) Trading Day
after delivery of the aggregate Exercise Price to the Company and
(iii) the number of Trading Days comprising the Standard Settlement
Period after the delivery to the Company of the Notice of Exercise
(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 by the Warrant Share Delivery Date. 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. 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
Exercise.
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 was entitled to receive 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; provided, however, that, under this
clause (B), the Holder shall not be entitled to both (i) require
the reinstatement of the portion of the Warrant and the equivalent
Warrant Shares for which such exercise was not honored and (ii)
receive the number of shares of Common Stock that would have been
issued if the Company had timely complied with its delivery
requirements 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 actual 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 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) Holder’s Exercise
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 (1) 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 9.99% 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.
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) 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).
c) Pro
Rata Distributions. During such time as this Warrant is
outstanding, if the Company shall declare or make any dividend or
other distribution of its assets (or rights to acquire its assets)
to holders of shares of Common Stock, by way of return of capital
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 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).
d) Fundamental Transaction. If, at
any time while this Warrant 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, 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) 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) 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. 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 (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 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.
e) 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.
f) 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 facsimile or 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 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 facsimile or email to the Holder at its last facsimile
number or email 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 (or less
than 20 calendar days if sent concurrently upon the notice sent to
the Company’s stockholders or public disclosure by the
Company of such events), 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 and to the provisions of Section
4.1 of the Purchase Agreement, 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 an assignment form to the
Company assigning this Warrant in full. The Warrant, if
properly assigned in accordance herewith, may be exercised by a new
holder for the purchase of Warrant Shares without having a new
Warrant issued.
b) 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 Issue Date of this Warrant 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, comply with the provisions of
Section 5.7 of the Purchase Agreement.
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.
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 the rights of a Holder to receive Warrant
Shares on a “cashless exercise,” and to receive the
cash payments contemplated pursuant to Sections 2(d)(i) and
2(d)(iv), in no event will 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 determined in accordance
with the provisions of the Purchase Agreement.
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, notwithstanding the fact that the right to exercise this
Warrant terminates on the Termination Date. Without limiting any
other provision of this Warrant or the Purchase Agreement, 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 in accordance with the
notice provisions of the Purchase Agreement.
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 holders of Warrants holding
at least a majority of the then outstanding Warrants (based on
underlying Warrant Shares), provided that any modification or
amendment that disproportionately and materially adversely affects
the Holder relative to other holders of Warrants shall require the
consent of 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.
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TENAX
THERAPEUTICS, INC.
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By:
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/s/
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Name
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Title
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NOTICE OF EXERCISE
TO:
TENAX
THERAPEUTICS, 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) The time of day
this Notice of Exercise is being executed is:
_______________________________
(5) 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:
________________________________________________________________________________________
EXHIBIT B
ASSIGNMENT FORM
(To assign the foregoing Warrant, execute this
form and supply required information. Do not use this form to
exercise the Warrant to purchase shares.)
FOR
VALUE RECEIVED, the foregoing Warrant and all rights evidenced
thereby are hereby assigned to
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Name:
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______________________________________
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(Please Print)
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Address:
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______________________________________
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(Please
Print)
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Phone
Number:
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Email Address:
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______________________________________
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Dated: _______________ __, ______
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Holder’s
Signature:
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Holder’s
Address:
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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.
SERIES A COMMON STOCK PURCHASE WARRANT
TENAX THERAPEUTICS, INC.
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Warrant Shares:
___________________
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Issue Date: July
___, 2021
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Initial Exercise
Date: July ___, 2021
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THIS
SERIES A COMMON STOCK PURCHASE WARRANT (the “Warrant”) certifies that,
for value received, _______________ or its 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
set forth above as the Initial Exercise Date (the
“Initial Exercise
Date”) and on or prior to 5:00 p.m. (New York City
time) on January ___, 2027, (the “Termination Date”) but
not thereafter, to subscribe for and purchase from Tenax
Therapeutics, Inc., a Delaware corporation (the “Company”), up to
_________ shares (as subject to adjustment hereunder, the
“Warrant
Shares”) of the Company’s 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).
Section
1. Definitions.
Capitalized terms used and not otherwise defined herein shall have
the meanings set forth in that certain Securities Purchase
Agreement for Units (the “Purchase Agreement”),
dated July 6, 2021, 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
facsimile copy or PDF copy submitted by e-mail (or e-mail
attachment) of the Notice of Exercise in the form annexed hereto
(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 Warrant 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 $1.97,
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 either the issuance or resale of the Warrant Shares
to or 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.
“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 (based on the
underlying Warrant Shares) 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 (based on the
underlying Warrant Shares) and reasonably acceptable to the
Company, the fees and expenses of which shall be paid by the
Company.
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).
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, (ii) one (1) Trading Day after delivery of
the aggregate Exercise Price to the Company and (iii) the number of
Trading Days comprising the Standard Settlement Period after the
delivery to the Company of the Notice of Exercise (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 by the Warrant Share Delivery Date. 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. 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
Exercise.
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 was entitled to receive 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; provided, however, that, under this
clause (B), the Holder shall not be entitled to both (i) require
the reinstatement of the portion of the Warrant and the equivalent
Warrant Shares for which such exercise was not honored and (ii)
receive the number of shares of Common Stock that would have been
issued if the Company had timely complied with its delivery
requirements 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 actual 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 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) Holder’s Exercise
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 (1) 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 9.99% 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.
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) 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).
c) Pro
Rata Distributions. During such time as this Warrant is
outstanding, if the Company shall declare or make any dividend or
other distribution of its assets (or rights to acquire its assets)
to holders of shares of Common Stock, by way of return of capital
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 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).
d) Fundamental Transaction. If, at
any time while this Warrant 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, 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) 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) 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, 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
providing consideration to the Holder in an amount 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, that such
consideration shall be the same type or form of consideration (and
in the same proportion) 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, (for purposes of
clarity, if the holders of Common Stock are given the choice to
receive from among alternative forms of consideration in connection
with the Fundamental Transaction the Holder shall have the same
choice); provided,
further, that if
holders of Common Stock of the Company are not offered or paid any
consideration in such Fundamental Transaction, such holders of
Common Stock will be deemed to have received common stock of the
Successor Entity (which Entity may be the Company following such
Fundamental Transaction) in such Fundamental Transaction.
“Black Scholes
Value” means the value of this Warrant based on the
Black and 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 greater of 100% and the 30
day volatility obtained from the HVT function on Bloomberg 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 (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 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.
e) 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.
f) 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 facsimile or 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 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 facsimile or email to the Holder at its last facsimile
number or email 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 (or less
than 20 calendar days if sent concurrently upon the notice sent to
the Company’s stockholders or public disclosure by the
Company of such events), 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.
g) Voluntary Adjustment By
Company. Subject to the rules and regulations of the Trading
Market, the Company may at any time during the term of this Warrant
reduce the then current Exercise Price to any amount and for any
period of time deemed appropriate by the Board of Directors of the
Company.
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 and to the provisions of Section
4.1 of the Purchase Agreement, 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 an assignment form to the
Company assigning this Warrant in full. The Warrant, if
properly assigned in accordance herewith, may be exercised by a new
holder for the purchase of Warrant Shares without having a new
Warrant issued.
b) 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 Issue Date of this Warrant 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, comply with the provisions of
Section 5.7 of the Purchase Agreement.
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 the rights of a Holder to receive Warrant
Shares on a “cashless exercise,” and to receive the
cash payments contemplated pursuant to Sections 2(d)(i) and
2(d)(iv), in no event will 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 determined in accordance
with the provisions of the Purchase Agreement.
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, notwithstanding the fact that the right to exercise this
Warrant terminates on the Termination Date. Without limiting any
other provision of this Warrant or the Purchase Agreement, 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 in accordance with the
notice provisions of the Purchase Agreement.
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 holders of Warrants holding
at least a majority of the then outstanding Warrants (based on
underlying Warrant Shares), provided that any modification or
amendment that disproportionately and materially adversely affects
the Holder relative to other holders of Warrants shall require the
consent of 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.
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TENAX THERAPEUTICS, INC.
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By:__________________________________________
Name:
Title:
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NOTICE OF EXERCISE
TO:
TENAX
THERAPEUTICS, 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) The time of day
this Notice of Exercise is being executed is:
_______________________________
(5) 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:
________________________________________________________________________________________
EXHIBIT B
ASSIGNMENT FORM
(To assign the foregoing Warrant, execute
this form and supply required information. Do not use this form to
exercise the Warrant to purchase shares.)
FOR
VALUE RECEIVED, the foregoing Warrant and all rights evidenced
thereby are hereby assigned to
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Name:
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(Please Print)
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Address:
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Phone Number:
Email Address:
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(Please
Print)
______________________________________
______________________________________
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Dated: _______________ __, ______
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Holder’s
Signature:
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Holder’s
Address:
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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.
TAIL FEE COMMON STOCK PURCHASE WARRANT
TENAX THERAPEUTICS, INC.
Warrant Shares:
_________
Issue Date: July
___, 2021
Initial Exercise
Date: July ____, 2021
THIS
TAIL FEE COMMON STOCK PURCHASE WARRANT (the “Warrant”) certifies that,
for value received, __________ or its 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
set forth above as the Initial Exercise Date (the
“Initial Exercise
Date”) and on or prior to 5:00 p.m. (New York City
time) on July ____, 2026 (the “Termination Date”) but
not thereafter, to subscribe for and purchase from Tenax
Therapeutics, Inc., a Delaware corporation (the “Company”), up to
_________ shares (as subject to adjustment hereunder, the
“Warrant
Shares”) of the Company’s 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 issued pursuant to that certain engagement
letter, dated as of July 5, 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 for Units (the “Purchase Agreement”),
dated July 6, 20201, 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
facsimile copy or PDF copy submitted by e-mail (or e-mail
attachment) of the Notice of Exercise in the form annexed hereto
(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 Warrant 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 $2.46,
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 either the issuance or resale of the Warrant Shares
to or 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.
“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 (based on the
underlying Warrant Shares) 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 (based on the
underlying Warrant Shares) and reasonably acceptable to the
Company, the fees and expenses of which shall be paid by the
Company.
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).
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, (ii) one (1) Trading Day after delivery of
the aggregate Exercise Price to the Company and (iii) the number of
Trading Days comprising the Standard Settlement Period after the
delivery to the Company of the Notice of Exercise (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 by the Warrant Share Delivery Date. 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. 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
Exercise.
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 was entitled to receive 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; provided, however, that, under this
clause (B), the Holder shall not be entitled to both (i) require
the reinstatement of the portion of the Warrant and the equivalent
Warrant Shares for which such exercise was not honored and (ii)
receive the number of shares of Common Stock that would have been
issued if the Company had timely complied with its delivery
requirements 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 actual 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 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) Holder’s Exercise
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 (1) 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.
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) 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).
c) Pro
Rata Distributions. During such time as this Warrant is
outstanding, if the Company shall declare or make any dividend or
other distribution of its assets (or rights to acquire its assets)
to holders of shares of Common Stock, by way of return of capital
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 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).
d) Fundamental Transaction. If, at
any time while this Warrant 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, 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) 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) 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, 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
providing consideration to the Holder in an amount 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, that such
consideration shall be the same type or form of consideration (and
in the same proportion) 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, (for purposes of
clarity, if the holders of Common Stock are given the choice to
receive from among alternative forms of consideration in connection
with the Fundamental Transaction the Holder shall have the same
choice); provided,
further, that if
holders of Common Stock of the Company are not offered or paid any
consideration in such Fundamental Transaction, such holders of
Common Stock will be deemed to have received common stock of the
Successor Entity (which Entity may be the Company following such
Fundamental Transaction) in such Fundamental Transaction.
“Black Scholes
Value” means the value of this Warrant based on the
Black and 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 greater of 100% and the 30
day volatility obtained from the HVT function on Bloomberg 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 (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 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.
e) 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.
f) 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 facsimile or 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 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 facsimile or email to the Holder at its last facsimile
number or email 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 (or less
than 20 calendar days if sent concurrently upon the notice sent to
the Company’s stockholders or public disclosure by the
Company of such events), 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.
g) Voluntary Adjustment By
Company. Subject to the rules and regulations of the Trading
Market, the Company may at any time during the term of this Warrant
reduce the then current Exercise Price to any amount and for any
period of time deemed appropriate by the Board of Directors of the
Company.
Section
4. Transfer
of Warrant.
a) Transferability. Neither this
Warrant nor any Warrant Shares issued upon exercise of this Warrant
shall be sold, transferred, assigned, pledged or hypothecated, or
be the subject of any hedging, short sale, derivative, put or call
transaction that would result in the effective economic disposition
of the securities by any person for a period of 180 days
immediately following the date of effectiveness or commencement of
sales of the offering pursuant to which this Warrant is being
issued, except the transfer of any security:
i.
by operation of law
or by reason of reorganization of the Company;
ii.
to any FINRA member
firm participating in the offering and the officers and partners
thereof, if all securities so transferred remain subject to the
lock-up restriction in this Section 4(a) for the remainder of the
time period;
iii.
if the aggregate
amount of the securities of the Company held by the placement agent
or related persons do not exceed 1% of the securities being
offered;
iv.
that is
beneficially owned on a pro-rata basis by all equity owners of an
investment fund, provided that no participating member manages or
otherwise directs investments by the fund, and participating
members in the aggregate do not own more than 10% of the equity in
the fund; or
v.
the exercise or
conversion of any security, if all securities received remain
subject to the lock-up restriction in this Section 4(a) for the
remainder of the time period.
Subject
to the foregoing restriction and 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 an assignment form to the
Company assigning this Warrant in full. The Warrant, if
properly assigned in accordance herewith, may be exercised by a new
holder for the purchase of Warrant Shares without having a new
Warrant issued.
b) 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 Issue Date of this Warrant 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 selected by the Holder 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 Warrant
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 the rights of a Holder to receive Warrant
Shares on a “cashless exercise,” and to receive the
cash payments contemplated pursuant to Sections 2(d)(i) and
2(d)(iv), in no event will 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 determined in accordance
with the provisions of the Purchase Agreement.
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, notwithstanding the fact that the right to exercise this
Warrant terminates on the Termination Date. Without limiting any
other provision of this Warrant or the Purchase Agreement, 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 of 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 holders of Warrants holding
at least a majority of the then outstanding Warrants (based on
underlying Warrant Shares), provided that any modification or
amendment that disproportionately and materially adversely affects
the Holder relative to other holders of Warrants shall require the
consent of 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.
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TENAX THERAPEUTICS, INC.
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By:__________________________________________
Name:
Title:
|
NOTICE OF EXERCISE
TO:
TENAX
THERAPEUTICS, 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) The time of day
this Notice of Exercise is being executed is:
_______________________________
(5) 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:
________________________________________________________________________________________
EXHIBIT B
ASSIGNMENT FORM
(To assign the foregoing Warrant, execute this form and
supply required information. Do not use this form to exercise the
Warrant to purchase shares.)
FOR
VALUE RECEIVED, the foregoing Warrant and all rights evidenced
thereby are hereby assigned to
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Name:
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(Please Print)
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Address:
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Phone Number:
Email Address:
|
(Please
Print)
______________________________________
______________________________________
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Dated: _______________ __, ______
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Holder’s
Signature:
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Holder’s
Address:
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SECURITIES
PURCHASE AGREEMENT FOR UNITS
This
Securities Purchase Agreement for Units (this “Agreement”) is dated as
of July 6, 2021, between Tenax Therapeutics, Inc., a Delaware
corporation (the “Company”), and each
purchaser identified on the signature pages hereto (each, including
its successors and assigns, a “Purchaser” and
collectively the “Purchasers”).
WHEREAS, subject to
the terms and conditions set forth in this Agreement and pursuant
to Section 4(a)(2) of the Securities Act of 1933, as amended (the
“Securities
Act”), and Rule 506 promulgated thereunder, the
Company desires to issue and sell to each Purchaser, and each
Purchaser, severally and not jointly, desires to purchase from the
Company, securities of the Company as more fully described in this
Agreement.
NOW,
THEREFORE, IN CONSIDERATION of the mutual covenants contained in
this Agreement, and for other good and valuable consideration, the
receipt and adequacy of which are hereby acknowledged, the Company
and each Purchaser agree as follows:
ARTICLE I.
DEFINITIONS
1.1 Definitions.
In addition to the terms defined elsewhere in this Agreement, for
all purposes of this Agreement, the following terms have the
meanings set forth in this Section 1.1:
“Acquiring
Person” shall have the
meaning ascribed to such term in Section 4.5.
“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 other than Saturday, Sunday or other day on which commercial
banks in The City of New York are authorized or required by law to
remain closed; provided, however, for clarification,
commercial banks shall not be deemed to be authorized or required
by law to remain closed due to “stay at home”,
“shelter-in-place”, “non-essential
employee” or any other similar orders or restrictions
or the closure of any physical branch locations at the direction of
any governmental authority so long as the electronic funds transfer
systems (including for wire transfers) of commercial banks in The
City of New York are generally are open for use by customers on
such day.
“Closing” means the
closing of the purchase and sale of the Securities pursuant to
Section 2.1.
“Closing Date” means the
Trading Day on which all of the Transaction Documents have been
executed and delivered by the applicable parties thereto, and all
conditions precedent to (i) the Purchasers’ obligations to
pay the Subscription Amount and (ii) the Company’s
obligations to deliver the Securities, in each case, have been
satisfied or waived.
“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
K&L Gates LLP, with offices located at 4350 Lassiter at North
Hills Avenue, Suite 300, Raleigh, North Carolina
27609.
“Disclosure Schedules”
means the Disclosure Schedules of the Company delivered
concurrently herewith.
“Disclosure Time” means,
(i) if this Agreement is signed on a day that is not a Trading Day
or after 9:00 a.m. (New York City time) and before midnight (New
York City time) on any Trading Day, 9:01 a.m. (New York City time)
on the Trading Day immediately following the date hereof, unless
otherwise instructed as to an earlier time by the Lead Purchaser,
and (ii) if this Agreement is signed between midnight (New York
City time) and 9:00 a.m. (New York City time) on any Trading Day,
no later than 9:01 a.m. (New York City time) on the date hereof,
unless otherwise instructed as to an earlier time by the Lead
Purchaser.
“Effective Date” means the
earliest of the date that (a) the initial Registration Statement
has been declared effective by the Commission, (b) all of the
Shares and Warrant Shares have been sold pursuant to Rule 144 or
may be sold pursuant to Rule 144 without the requirement for the
Company to be in compliance with the current public information
required under Rule 144 and without volume or manner-of-sale
restrictions, (c) following the one year anniversary of the Closing
Date provided that a holder of Warrant Shares is not an Affiliate
of the Company, or (d) all of the Warrant Shares may be sold
pursuant to an exemption from registration under Section 4(a)(1) of
the Securities Act without volume or manner-of-sale restrictions
and Company Counsel has delivered to such holders a standing
written unqualified opinion that resales may then be made by such
holders of the Warrant Shares pursuant to such exemption which
opinion shall be in form and substance reasonably acceptable to
such holders.
“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.
“Exempt Issuance” means
the issuance of (a) shares of Common Stock or options to employees,
officers or directors of the Company pursuant to any stock or
option plan duly adopted for such purpose, by a majority of the
non-employee members of the Board of Directors or a majority of the
members of a committee of non-employee directors established for
such purpose for services rendered to the Company, (b) securities
upon the exercise or exchange of or conversion of any Securities
issued hereunder and/or other securities exercisable or
exchangeable for or convertible into shares of Common Stock issued
and outstanding on the date of this Agreement, provided that such
securities have not been amended since the date of this Agreement
to increase the number of such securities or to decrease the
exercise price, exchange price or conversion price of such
securities (other than in connection with stock splits or
combinations) or to extend the term of such securities, and (c)
securities issued pursuant to acquisitions or strategic
transactions approved by a majority of the disinterested directors
of the Company, provided that such securities are issued as
“restricted securities” (as defined in Rule 144) and
carry no registration rights that require or permit the filing of
any registration statement in connection therewith during the
prohibition period in Section 4.12(a) herein, and provided that any
such issuance shall only be to a Person (or to the equityholders of
a Person) which is, itself or through its subsidiaries, an
operating company or an owner of an asset in a business synergistic
with the business of the Company and shall provide to the Company
additional benefits in addition to the investment of funds, but
shall not include a transaction in which the Company is issuing
securities primarily for the purpose of raising capital or to an
entity whose primary business is investing in
securities.
“FCPA” means the Foreign
Corrupt Practices Act of 1977, as amended.
“FDA” shall have the
meaning ascribed to such term in Section 3.1(kk).
“FDCA” shall have the
meaning ascribed to such term in Section 3.1(kk).
“GAAP” shall have the
meaning ascribed to such term in Section 3.1(h).
“HCW” means H.C.
Wainwright & Co., LLC, the Company’s placement agent in
connection with the financing consummated by the Company in July
2020, and which is entitled to the HCW Tail Fee in connection with
the transaction contemplated by this Agreement.
“HCW Tail Fee” means (i)
the payment to HCW of a cash fee equal to 7.5% of the gross
proceeds received by the Company in the offering contemplated by
this Agreement and (ii) the issuance to HCW or its designees
warrants to purchase up to a number of shares of Common Stock equal
to 7.5% of the aggregate number of Common Stock Equivalents sold in
the offering contemplated by this Agreement.
“Indebtedness” shall have
the meaning ascribed to such term in Section 3.1(bb).
“Intellectual Property
Rights” shall have the meaning ascribed to such term
in Section 3.1(p).
“Lead Purchaser” means the
Purchaser purchasing the largest number of Securities at the
Closing.
“Legend Removal Date”
shall have the meaning ascribed to such term in Section
4.1(c).
“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).
“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(jj).
“Pre-Funded Warrants”
means, collectively, the Pre-Funded Common Stock purchase warrants
delivered to the Purchasers at the Closing in accordance with
Section 2.2(a) hereof, which Pre-Funded Warrants shall be
exercisable immediately and shall expire when exercised in full, in
the form of Exhibit
A-2 attached hereto.
“Pre-Funded Warrant
Shares” means the shares of Common Stock issuable upon
exercise of the Pre-Funded Warrants.
“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.
“Public Information
Failure” shall have the meaning ascribed to such term
in Section 4.2(b).
“Public Information Failure
Payments” shall have the meaning ascribed to such term
in Section 4.2(b).
“Purchaser Party” shall
have the meaning ascribed to such term in Section 4.8.
“Registration Rights
Agreement” means the Registration Rights Agreement,
dated on or about the date hereof, among the Company and the
Purchasers, in the form of Exhibit B attached
hereto.
“Registration Statement”
means a registration statement meeting the requirements set forth
in the Registration Rights Agreement and covering the resale by the
Purchasers of the Shares and the Warrant Shares.
“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
Shares, the Units, the Warrants and the Warrant
Shares.
“Securities Act” means the
Securities Act of 1933, as amended, and the rules and regulations
promulgated thereunder.
“Series A Warrants” means,
collectively, the Series A Common Stock purchase warrants delivered
to the Purchasers at the Closing in accordance with Section 2.2(a)
hereof, which Series A Warrants shall be exercisable immediately
upon issuance and have a term of exercise equal to five and
one-half (5.5) years following the initial exercise date, in the
form of Exhibit A-1 attached hereto.
“Series A Warrant Shares”
means the shares of Common Stock issuable upon exercise of the
Series A Warrants.
“Short Sales” means all
“short sales” as defined in Rule 200 of Regulation SHO
under the Exchange Act (but shall not be deemed to include locating
and/or borrowing shares of Common Stock).
“Subscription Amount”
means, as to each Purchaser, the aggregate amount to be paid for
the Units purchased hereunder as specified below such
Purchaser’s name on the signature page of this Agreement and
next to the heading “Subscription Amount,” in United
States dollars and in immediately available funds.
“Subsidiary”
means any subsidiary of the Company as set forth on Schedule 3.1(a), and shall,
where applicable, also include any direct or indirect subsidiary of
the Company formed or acquired after the date hereof.
“Trading Day” means a day
on which the principal Trading Market is open for
trading.
“Trading Market” means any
of the following markets or exchanges on which the Common Stock is
listed or quoted for trading on the date in question: the NYSE
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, 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 hereunder.
“Transfer Agent” means
Issuer Direct Corporation, with offices located at 500 Perimeter
Park Drive, Suite D, Morrisville, North Carolina 27560, and any
successor transfer agent of the Company.
“Units” means each unit
consisting of (a) one Pre-Funded Warrant to initially purchase one
Pre-Funded Warrant Share, and (b) one Series A Warrant to purchase
one Series A Warrant Share.
“Unit Purchase Price”
equals $2.095 per each Unit, 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 and prior to the Closing Date.
“Variable Rate
Transaction” shall have the meaning ascribed to such
term in Section 4.12(b).
“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 Purchasers of a
majority in interest of the Securities then outstanding and
reasonably acceptable to the Company, the fees and expenses of
which shall be paid by the Company.
“Warrants” means,
collectively, the Series A Warrants and the Pre-Funded
Warrants.
“Warrant Shares” means,
collectively, the Series A Warrant Shares and the Pre-Funded
Warrant Shares.
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 Purchasers,
severally and not jointly, agree to purchase, up to an aggregate of
$9,999,998.56 of Units as determined pursuant to Section 2.2(a).
Each Purchaser shall deliver to the Company, via wire transfer or a
certified check, immediately available funds equal to such
Purchaser’s Subscription Amount as set forth on the signature
page hereto executed by such Purchaser, and the Company shall
deliver to each Purchaser its respective Pre-Funded Warrants and
Series A Warrants, as determined pursuant to Section 2.2(a), and
the Company and each Purchaser shall deliver the other items set
forth in Section 2.2 at the Closing. Upon satisfaction of the
covenants and conditions set forth in Sections 2.2 and 2.3, the
Closing shall occur at the offices of the Company or such other
location as the parties shall mutually agree.
2.2 Deliveries.
(a) On
or prior to the Closing Date, the Company shall deliver or cause to
be delivered to each Purchaser the following:
(i) this Agreement duly
executed by the Company;
(ii) a
legal opinion of Company Counsel, in a form reasonably acceptable
to the Purchasers;
(iii) a
Pre-Funded Warrant registered in the name of such Purchaser to
purchase up to a number of shares of Common Stock equal to such
Purchaser’s Subscription Amount divided by the Unit Purchase
Price, with an exercise price equal to $0.0001, subject to
adjustment therein;
(iv) a
Series A Warrant registered in the name of each such Purchaser to
purchase up to a number of shares of Common Stock equal to 100% of
the aggregate number of Pre-Funded Warrant Shares underlying the
Pre-Funded Warrants initially issuable on the date hereof, if any,
purchased by such Purchaser with an exercise price equal to $1.97,
subject to adjustment therein
(v) the Company shall
have provided each Purchaser with the Company’s wire
instructions, on Company letterhead and executed by the Chief
Executive Officer or Chief Financial Officer; and
(vi) the
Registration Rights Agreement duly executed by the
Company.
(a) On or prior to the
Closing Date, each Purchaser shall deliver or cause to be delivered
to the Company the following:
(i) this Agreement duly
executed by such Purchaser;
(ii) such
Purchaser’s Subscription Amount with regard to the Pre-Funded
Warrants purchased by such Purchaser by wire transfer to the
account specified in writing by the Company; and
(iii) the
Registration Rights Agreement duly executed by such
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 Purchasers contained herein (unless as of a
specific date therein in which case they shall be accurate as of
such date);
(ii) all
obligations, covenants and agreements of each Purchaser required to
be performed at or prior to the Closing Date shall have been
performed; and
(iii) the
delivery by each Purchaser of the items set forth in Section 2.2(b)
of this Agreement.
(b) The respective
obligations of the Purchasers hereunder in connection with the
Closing are subject to the following conditions being
met:
(i) the accuracy in all
material respects (or, to the extent representations or warranties
are qualified by materiality or Material Adverse Effect, in all
respects) when made and on the Closing Date of the representations
and warranties of the Company contained herein (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;
(iii) the
delivery by the Company of the items set forth in Section 2.2(a) of
this Agreement;
(iv) there
shall have been no Material Adverse Effect with respect to the
Company since the date hereof; and
(v) from the date
hereof to the Closing Date, trading in the Common Stock shall not
have been suspended by the Commission or the Company’s
principal Trading Market, and, at any time prior to the Closing
Date, trading in securities generally as reported by Bloomberg L.P.
shall not have been suspended or limited, or minimum prices shall
not have been established on securities whose trades are reported
by such service, or on any Trading Market, nor shall a banking
moratorium have been declared either by the United States or New
York State authorities nor shall there have occurred any material
outbreak or escalation of hostilities or other national or
international calamity of such magnitude in its effect on, or any
material adverse change in, any financial market which, in each
case, in the reasonable judgment of such Purchaser, makes it
impracticable or inadvisable to purchase the Securities at the
Closing.
ARTICLE III.
REPRESENTATIONS
AND WARRANTIES
3.1 Representations
and Warranties of the Company.
Except as set forth in the Disclosure Schedules, which Disclosure
Schedules shall be deemed a part hereof and shall qualify any
representation or otherwise made herein to the extent of the
disclosure contained in the corresponding section of the Disclosure
Schedules, the Company hereby makes the following representations
and warranties to each Purchaser:
(a) Subsidiaries.
All of the direct and indirect subsidiaries of the Company are set
forth on Schedule
3.1(a). The Company owns, directly or indirectly, all of the
capital stock or other equity interests of each Subsidiary free and
clear of any Liens, and all of the issued and outstanding shares of
capital stock of each Subsidiary are validly issued and are fully
paid, non-assessable and free of preemptive and similar rights to
subscribe for or purchase securities. If the Company has no
subsidiaries, all other references to the Subsidiaries or any of
them in the Transaction Documents shall be
disregarded.
(b) Organization and Qualification.
The Company and each of the Subsidiaries is an entity duly
incorporated or otherwise organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation or
organization, with the requisite power and authority to own and use
its properties and assets and to carry on its business as currently
conducted. Neither the Company nor any Subsidiary is in violation
nor default of any of the provisions of its respective certificate
or articles of incorporation, bylaws or other organizational or
charter documents. Each of the Company and the Subsidiaries is duly
qualified to conduct business and is in good standing as a foreign
corporation or other entity in each jurisdiction in which the
nature of the business conducted or property owned by it makes such
qualification necessary, except where the failure to be so
qualified or in good standing, as the case may be, would not have
or reasonably be expected to result in: (i) a material adverse
effect on the legality, validity or enforceability of any
Transaction Document, (ii) a material adverse effect on the results
of operations, assets, business, 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 any Transaction Document (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 each of the other Transaction Documents to which it
is a party and otherwise to carry out its obligations hereunder and
thereunder. The execution and delivery of this Agreement and each
of the other Transaction Documents by the Company and the
consummation by it of the transactions contemplated hereby and
thereby have been duly authorized by all necessary action on the
part of the Company and no further action is required by the
Company, the Board of Directors or the Company’s stockholders
in connection herewith or therewith other than in connection with
the Required Approvals. This Agreement and each other Transaction
Document to which it is a party has been (or upon delivery will
have been) duly executed by the Company and, when delivered in
accordance with the terms hereof and thereof, will constitute the
valid and binding obligation of the Company enforceable against the
Company in accordance with its terms, except (i) as limited by
general equitable principles and applicable bankruptcy, insolvency,
reorganization, moratorium and other laws of general application
affecting enforcement of creditors’ rights generally, (ii) as
limited by laws relating to the availability of specific
performance, injunctive relief or other equitable remedies and
(iii) insofar as indemnification and contribution provisions may be
limited by applicable law.
(d) No Conflicts. The execution,
delivery and performance by the Company of this Agreement and the
other Transaction Documents to which it is a party, the issuance
and sale of the Securities and the consummation by it of the
transactions contemplated hereby and thereby do not and will not
(i) conflict with or violate any provision of the Company’s
or any Subsidiary’s certificate or articles of incorporation,
bylaws or other organizational or charter documents, 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 the Transaction Documents, other than: (i) the filings
required pursuant to Section 4.4 of this Agreement, (ii) the
filings with the Commission pursuant to the Registration Rights
Agreement, (iii) the notice and/or application(s) to each
applicable Trading Market for the issuance and sale of the
Securities and the listing of the Warrant Shares for trading
thereon in the time and manner required thereby, and (iv) the
filing of Form D with the Commission and such filings as are
required to be made under applicable state securities laws
(collectively, the “Required
Approvals”).
(f) Issuance of the Securities. The
Securities are duly authorized and, when issued and paid for in
accordance with the applicable Transaction Documents, will be duly
and validly issued, fully paid and nonassessable, free and clear of
all Liens imposed by the Company. The Warrant Shares, when issued
in accordance with the terms of the Transaction Documents, will be
validly issued, fully paid and nonassessable, free and clear of all
Liens imposed by the Company. 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
Warrants.
(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, other than
pursuant to the exercise of employee stock options under the
Company’s stock option plans, the issuance of shares of
Common Stock to employees pursuant to the Company’s employee
stock purchase plans and pursuant to the conversion and/or exercise
of Common Stock Equivalents outstanding as of the date of the most
recently filed periodic report under the Exchange Act. No Person
has any right of first refusal, preemptive right, right of
participation, or any similar right to participate in the
transactions contemplated by the Transaction Documents. Except as a
result of the purchase and sale of the Securities or as set forth
on 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. 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 Purchasers
and HCW). Except as set forth on 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. 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, 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 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 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 at least
one (1) Trading Day prior to the date that this representation is
made.
(j) Litigation. There is no action,
suit, inquiry, notice of violation, proceeding or investigation
pending or, to the knowledge of the Company, threatened against or
affecting the Company, any Subsidiary or any of their respective
properties before or by any court, arbitrator, governmental or
administrative agency or regulatory authority (federal, state,
county, local or foreign) (collectively, an “Action”) which (i)
adversely affects or challenges the legality, validity or
enforceability of any of the Transaction Documents 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 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 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 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.
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 material compliance.
(p) Intellectual Property. The
Company and the Subsidiaries have, or have rights to use, all
patents, patent applications, trademarks, trademark applications,
service marks, trade names, trade secrets, inventions, copyrights,
licenses and other intellectual property rights and similar rights
necessary or required for use in connection with their respective
businesses as described in the SEC Reports and which the failure to
so have would have a Material Adverse Effect (collectively, the
“Intellectual
Property Rights”). None of, and neither the Company
nor any Subsidiary has received a notice (written or otherwise)
that any of, the Intellectual Property Rights has expired,
terminated or been abandoned, or is expected to expire or terminate
or be abandoned, within two (2) years from the date of this
Agreement. Neither the Company nor any Subsidiary has received,
since the date of the latest audited financial statements included
within the 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. The Company has no knowledge of any facts that
would preclude it from having valid license rights or clear title
to the Intellectual Property Rights. The Company has no knowledge
that it lacks or will be unable to obtain any rights or licenses to
use all Intellectual Property Rights that are necessary to conduct
its business.
(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 for the
HCW Tail Fee, no brokerage or finder’s fees or commissions
are or will be payable by the Company or any Subsidiary to any
broker, financial advisor or consultant, finder, placement agent,
investment banker, bank or other Person with respect to the
transactions contemplated by the Transaction Documents. The
Purchasers shall have no obligation with respect to any fees or
with respect to any claims made by or on behalf of other Persons
for fees of a type contemplated in this Section that may be due in
connection with the transactions contemplated by the Transaction
Documents.
(u) Private Placement. Assuming the
accuracy of the Purchasers’ representations and warranties
set forth in Section 3.2, no registration under the Securities Act
is required for the offer and sale of the Securities by the Company
to the Purchasers as contemplated hereby. The issuance and sale of
the Securities hereunder does not contravene the rules and
regulations of the Trading Market.
(v) Investment Company. The Company
is not, and is not an Affiliate of, and immediately after receipt
of payment for the Securities, will not be or be an Affiliate of,
an “investment company” within the meaning of the
Investment Company Act of 1940, as amended. The Company shall
conduct its business in a manner so that it will not become an
“investment company” subject to registration under the
Investment Company Act of 1940, as amended.
(w) Registration Rights.
Other than each of the Purchasers and
the parties to that certain Registration Rights Agreement, dated as
of July 5, 2020, by and among the Company and the Purchasers named
therein,
no Person has any right to cause the Company or any Subsidiary to
effect the registration under the Securities Act of any securities
of the Company or any Subsidiary.
(x) Listing and Maintenance
Requirements. The Common Stock is registered pursuant to
Section 12(b) or 12(g) of the Exchange Act, and the Company has
taken no action designed to, or which to its knowledge is likely to
have the effect of, terminating the registration of the Common
Stock under the Exchange Act nor has the Company received any
notification that the Commission is contemplating terminating such
registration. The Company has not, in the 12 months preceding the
date hereof, received notice from any Trading Market on which the
Common Stock is or has been listed or quoted to the effect that the
Company is not in compliance with the listing or maintenance
requirements of such Trading Market. 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.
(y) Application of Takeover
Protections. Other than with respect to Section 203 of the
General Corporation Law of Delaware, the Company and the Board of
Directors have taken all necessary action, if any, in order to
render inapplicable any control share acquisition, business
combination, poison pill (including any distribution under a rights
agreement) or other similar anti-takeover provision under the
Company’s certificate of incorporation (or similar charter
documents) or the laws of its state of incorporation that is or
could become applicable to the Purchasers as a result of the
Purchasers and the Company fulfilling their obligations or
exercising their rights under the Transaction Documents, including
without limitation as a result of the Company’s issuance of
the Securities and the Purchasers’ ownership of the
Securities.
(z) Disclosure. Except with respect
to the material terms and conditions of the transactions
contemplated by the Transaction Documents, the Company confirms
that neither it nor any other Person acting on its behalf has
provided any of the Purchasers or their agents or counsel with any
information that the Company believes constitutes or would
reasonably be expected to constitute material, non-public
information. The Company understands and confirms that the
Purchasers will rely on the foregoing representation in effecting
transactions in securities of the Company. All of the disclosure
furnished by or on behalf of the Company to the Purchasers
regarding the Company and its Subsidiaries, their respective
businesses and the transactions contemplated hereby, including the
Disclosure Schedules to this Agreement, is true and correct and
does not contain any untrue statement of a material fact or omit to
state any material fact necessary in order to make the statements
made therein, in the light of the circumstances under which they
were made, not misleading. The press releases disseminated by the
Company during the twelve months preceding the date of this
Agreement taken as a whole do not contain any untrue statement of a
material fact or omit to state a material fact required to be
stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they were
made and when made, not misleading. The Company acknowledges and
agrees that no Purchaser makes or has made any representations or
warranties with respect to the transactions contemplated hereby
other than those specifically set forth in Section 3.2
hereof.
(aa) No
Integrated Offering. Assuming the accuracy of the
Purchasers’ representations and warranties set forth in
Section 3.2, neither the Company, nor any of its Affiliates, nor
any Person acting on its or their behalf has, directly or
indirectly, made any offers or sales of any security or solicited
any offers to buy any security, under circumstances that would
cause this offering of the Securities to be integrated with prior
offerings by the Company for purposes of (i) the Securities Act
which would require the registration of any such securities under
the Securities Act, or (ii) any applicable shareholder approval
provisions of any Trading Market on which any of the securities of
the Company are listed or designated.
(bb) 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(bb) 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 $50,000 (other than trade accounts payable incurred in
the ordinary course of business), (y) all guaranties, endorsements
and other contingent obligations in respect of indebtedness 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.
(cc) 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.
(dd) No
General Solicitation. Neither the Company nor any Person
acting on behalf of the Company has offered or sold any of the
Securities by any form of general solicitation or general
advertising. The Company has offered the Securities for sale only
to the Purchasers and certain other “accredited
investors” within the meaning of Rule 501 under the
Securities Act.
(ee) 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.
(ff) Accountants.
The Company’s independent registered public accounting firm
is CHERRY BEKAERT LLP. 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, 2021.
(gg) Acknowledgment
Regarding Purchasers’ Purchase of Securities. The
Company acknowledges and agrees that each of the Purchasers is
acting solely in the capacity of an arm’s length purchaser
with respect to the Transaction Documents and the transactions
contemplated thereby. The Company further acknowledges that no
Purchaser is acting as a financial advisor or fiduciary of the
Company (or in any similar capacity) with respect to the
Transaction Documents and the transactions contemplated thereby and
any advice given by any Purchaser or any of their respective
representatives or agents in connection with the Transaction
Documents and the transactions contemplated thereby is merely
incidental to the Purchasers’ purchase of the Securities. The
Company further represents to each Purchaser that the
Company’s decision to enter into this Agreement and the other
Transaction Documents has been based solely on the independent
evaluation of the transactions contemplated hereby by the Company
and its representatives.
(hh) Acknowledgment
Regarding Purchaser’s Trading Activity. Anything in this Agreement or elsewhere herein
to the contrary notwithstanding (except for Sections 3.2(g) and
4.14 hereof), it is understood and acknowledged by the Company
that: (i) none of the Purchasers has been asked by the Company to
agree, nor has any Purchaser agreed, to desist from purchasing or
selling, long and/or short, securities of the Company, or
“derivative” securities based on securities issued by
the Company or to hold the Securities for any specified term, (ii) past or future open
market or other transactions by any Purchaser, specifically
including, without limitation, Short Sales or
“derivative” transactions, before or after the closing
of this or future private placement transactions, may negatively
impact the market price of the Company’s publicly-traded
securities; (iii) any Purchaser, and counter-parties in
“derivative” transactions to which any such Purchaser
is a party, directly or indirectly, presently may have a
“short” position in the Common Stock, and (iv) each
Purchaser shall not be deemed to have any affiliation with or
control over any arm’s length counter-party in any
“derivative” transaction. The Company further
understands and acknowledges that (y) one or more Purchasers may
engage in hedging activities at various times during the period
that the Securities are outstanding, including, without limitation,
during the periods that the value of the Warrant Shares deliverable
with respect to Securities are being determined, and (z) such
hedging activities (if any) could reduce the value of the existing
stockholders’ equity interests in the Company at and after
the time that the hedging activities are being conducted.
Subject to compliance with Section 3.2(e) and 4.14 hereof, the
Company acknowledges that such aforementioned hedging activities do
not constitute a breach of any of the Transaction
Documents.
(ii) Regulation
M Compliance. The Company has not, and to its
knowledge no one acting on its behalf has, (i) taken, directly or
indirectly, any action designed to cause or to result in the
stabilization or manipulation of the price of any security of the
Company to facilitate the sale or resale of any of the Securities,
(ii) sold, bid for, purchased, or paid any compensation for
soliciting purchases of, any of the Securities, or (iii) paid or
agreed to pay to any Person any compensation for soliciting another
to purchase any other securities of the Company during the 180 days
prior to the date hereof, other than, in the case of clauses (ii)
and (iii), the HCW Tail Fee.
(jj) FDA.
As to each product subject to the jurisdiction of the U.S. Food and
Drug Administration (“FDA”) under the Federal
Food, Drug and Cosmetic Act, as amended, and the regulations
thereunder (“FDCA”) that is
manufactured, packaged, labeled, tested, distributed, sold, and/or
marketed by the Company or any of its Subsidiaries (each such
product, a “Pharmaceutical Product”),
such Pharmaceutical Product is being manufactured, packaged,
labeled, tested, distributed, sold and/or marketed by the Company
in compliance with all applicable requirements under FDCA and
similar laws, rules and regulations relating to registration,
investigational use, premarket clearance, licensure, or application
approval, good manufacturing practices, good laboratory practices,
good clinical practices, product listing, quotas, labeling,
advertising, record keeping and filing of reports, except where the
failure to be in compliance would not have a Material Adverse
Effect. There is no pending, completed or, to the Company’s
knowledge, threatened, action (including any lawsuit, arbitration,
or legal or administrative or regulatory proceeding, charge,
complaint, or investigation) against the Company or any of its
Subsidiaries, and none of the Company or any of its Subsidiaries
has received any notice, warning letter or other communication from
the FDA or any other governmental entity, which (i) contests the
premarket clearance, licensure, registration, or approval of, the
uses of, the distribution of, the manufacturing or packaging of,
the testing of, the sale of, or the labeling and promotion of any
Pharmaceutical Product, (ii) withdraws its approval of, requests
the recall, suspension, or seizure of, or withdraws or orders the
withdrawal of advertising or sales promotional materials relating
to, any Pharmaceutical Product, (iii) imposes a clinical hold on
any clinical investigation by the Company or any of its
Subsidiaries, (iv) enjoins production at any facility of the
Company or any of its Subsidiaries, (v) enters or proposes to enter
into a consent decree of permanent injunction with the Company or
any of its Subsidiaries, or (vi) otherwise alleges any violation of
any laws, rules or regulations by the Company or any of its
Subsidiaries, and which, either individually or in the aggregate,
would have a Material Adverse Effect. The properties, business and
operations of the Company have been and are being conducted in all
material respects in accordance with all applicable laws, rules and
regulations of the FDA. The Company has not been informed by
the FDA that the FDA will prohibit the marketing, sale, license or
use in the United States of any product proposed to be developed,
produced or marketed by the Company nor has the FDA expressed any
concern as to approving or clearing for marketing any product being
developed or proposed to be developed by the Company.
(kk) Stock
Option Plans. Each stock option granted by the Company under
the Company’s 2016 Stock Incentive Plan was granted (i) in
accordance with the terms of the Company’s 2016 Stock
Incentive 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 2016 Stock
Incentive 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.
(ll) 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”).
(mm) U.S.
Real Property Holding Corporation. The Company is not and,
to the Company’s knowledge, has never been a U.S. real
property holding corporation within the meaning of Section 897 of
the Internal Revenue Code of 1986, as amended, and the Company
shall so certify upon Purchaser’s reasonable
request.
(nn) Bank
Holding Company Act. Neither the Company nor any of its
Subsidiaries or Affiliates is subject to the Bank Holding Company
Act of 1956, as amended (the “BHCA”) and to regulation
by the Board of Governors of the Federal Reserve System (the
“Federal
Reserve”). Neither the Company nor any of its
Subsidiaries or Affiliates owns or controls, directly or
indirectly, five percent (5%) or more of the outstanding shares of
any class of voting securities or twenty-five percent (25%) or more
of the total equity of a bank or any entity that is subject to the
BHCA and to regulation by the Federal Reserve. Neither the Company
nor any of its Subsidiaries or Affiliates exercises a controlling
influence over the management or policies of a bank or any entity
that is subject to the BHCA and to regulation by the Federal
Reserve.
(oo) 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.
(pp) 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”)
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 Purchasers a copy of any disclosures provided
thereunder.
(qq) Other
Covered Persons. Except as set forth on Schedule 3.2(qq), other than
HCW, 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.
(rr) Notice
of Disqualification Events. The Company will notify the
Purchasers 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, reasonably be
expected to become a Disqualification Event relating to any Issuer
Covered Person, in each case of which it is aware.
3.2 Representations
and Warranties of the Purchasers. Each Purchaser, for itself and for no other
Purchaser, hereby represents and warrants as of the date hereof and
as of the Closing Date to the Company as follows (unless as of a
specific date therein, in which case they shall be accurate as of
such date):
(a) Organization;
Authority. Such Purchaser is
either an individual or an entity duly incorporated or formed,
validly existing and in good standing under the laws of the
jurisdiction of its incorporation or formation with full right,
corporate, partnership, limited liability company or similar power
and authority to enter into and to consummate the transactions
contemplated by the Transaction Documents and otherwise to carry
out its obligations hereunder and thereunder. The execution and
delivery of the Transaction Documents and performance by such
Purchaser of the transactions contemplated by the Transaction
Documents have been duly authorized by all necessary corporate,
partnership, limited liability company or similar action, as
applicable, on the part of such Purchaser. Each Transaction
Document to which it is a party has been duly executed by such
Purchaser, and when delivered by such Purchaser in accordance with
the terms hereof, will constitute the valid and legally binding
obligation of such Purchaser, enforceable against it in accordance
with its terms, except (i) as limited by general equitable
principles and applicable bankruptcy, insolvency, reorganization,
moratorium and other laws of general application affecting
enforcement of creditors’ rights generally, (ii) as limited
by laws relating to the availability of specific performance,
injunctive relief or other equitable remedies and (iii) insofar as
indemnification and contribution provisions may be limited by
applicable law.
(b) Own
Account. Such Purchaser
understands that the Securities are “restricted
securities” and have not been registered under the Securities
Act or any applicable state securities law and is acquiring the
Securities as principal for 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 (this representation and warranty not limiting such
Purchaser’s right to sell the Securities pursuant to the
Registration Statement or otherwise in compliance with applicable
federal and state securities laws). Such Purchaser is acquiring the
Securities hereunder in the ordinary course of its
business.
(c) Purchaser
Status. At the time such
Purchaser was offered the Securities, it was, and as of the date
hereof it is, and on each date on which it exercises any Warrants,
it will be either: (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 Such Purchaser. Such
Purchaser, either alone or together with its representatives, has
such knowledge, sophistication and experience in business and
financial matters so as to be capable of evaluating the merits and
risks of the prospective investment in the Securities, and has so
evaluated the merits and risks of such investment. Such Purchaser
is able to bear the economic risk of an investment in the
Securities and, at the present time, is able to afford a complete
loss of such investment.
(e) General
Solicitation. Such Purchaser is
not, to such Purchaser’s knowledge, 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 such Purchaser,
any other general solicitation or general
advertisement.
(f) Access
to Information. Such Purchaser
acknowledges that it has had the opportunity to review the
Transaction Documents (including all exhibits and schedules
thereto) and the SEC Reports and has been afforded, (i) the
opportunity to ask such questions as it has deemed necessary of,
and to receive answers from, representatives of the Company
concerning the terms and conditions of the offering of the
Securities and the merits and risks of investing in the Securities;
(ii) access to information about the Company and its financial
condition, results of operations, business, properties, management
and prospects sufficient to enable it to evaluate its investment;
and (iii) the opportunity to obtain such additional information
that the Company possesses or can acquire without unreasonable
effort or expense that is necessary to make an informed investment
decision with respect to the investment.
(g) Certain
Transactions and Confidentiality. Other than consummating the transactions
contemplated hereunder, such Purchaser has not, nor has any Person
acting on behalf of or pursuant to any understanding with such
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 such Purchaser first
received a term sheet (written or oral) from the Company or any
other Person representing the Company setting forth the material
terms of the transactions contemplated hereunder and ending
immediately prior to the execution hereof. Notwithstanding the foregoing, in the case of a
Purchaser that is a multi-managed investment vehicle whereby
separate portfolio managers manage separate portions of such
Purchaser’s assets and the portfolio managers have no direct
knowledge of the investment decisions made by the portfolio
managers managing other portions of such Purchaser’s assets,
the representation set forth above shall only apply with respect to
the portion of assets managed by the portfolio manager that made
the investment decision to purchase the Securities covered by this
Agreement. Other than to other Persons party to this Agreement or
to such Purchaser’s representatives, including, without
limitation, its officers, directors, partners, legal and other
advisors, employees, agents and Affiliates who have needed to know
such information in connection with this transaction, such
Purchaser has maintained the confidentiality of all disclosures
made to it in connection with this transaction (including the
existence and terms of this transaction). Notwithstanding the
foregoing, for the avoidance of doubt, nothing contained herein
shall constitute a representation or warranty, or preclude any
actions, with respect to locating or borrowing shares in order to
effect Short Sales or similar transactions in the
future.
The
Company acknowledges and agrees that the representations contained
in this Section 3.2 shall not modify, amend or affect such
Purchaser’s right to rely on the Company’s
representations and warranties contained in this Agreement or any
representations and warranties contained in any other Transaction
Document or any other document or instrument executed and/or
delivered in connection with this Agreement or the consummation of
the transactions contemplated hereby. 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.
ARTICLE IV.
OTHER
AGREEMENTS OF THE PARTIES
4.1 Transfer
Restrictions.
(a) The Securities may
only be disposed of in compliance with state and federal securities
laws. In connection with any transfer of Securities other than
pursuant to an effective registration statement or Rule 144, to the
Company or to an Affiliate of a 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
Securities under the Securities Act. As a condition of transfer,
any such transferee shall agree in writing to be bound by the terms
of this Agreement and the Registration Rights Agreement and shall
have the rights and obligations of a Purchaser under this Agreement
and the Registration Rights Agreement.
(b) The
Purchasers agree to the imprinting, so long as is required by this
Section 4.1, of a legend on any of the Securities in the following
form:
NEITHER THIS SECURITY NOR THE SECURITIES INTO WHICH THIS SECURITY
IS EXERCISABLE 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 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.
(a) The Company
acknowledges and agrees that a Purchaser may from time to time
pledge pursuant to a bona fide margin agreement with a registered
broker-dealer or grant a security interest in some or all of the
Securities to a financial institution that is an “accredited
investor” as defined in Rule 501(a) under the Securities Act
and, if required under the terms of such arrangement, such
Purchaser may transfer pledged or secured Securities to the
pledgees or secured parties. Such a pledge or transfer would not be
subject to approval of the Company and no legal opinion of legal
counsel of the pledgee, secured party or pledgor shall be required
in connection therewith. Further, no notice shall be required of
such pledge. At the appropriate Purchaser’s expense, the
Company will execute and deliver such reasonable documentation as a
pledgee or secured party of Securities may reasonably request in
connection with a pledge or transfer of the
Securities.
(b) Certificates
evidencing the Warrant Shares shall not contain any legend
(including the legend set forth in Section 4.1(b) hereof), (i)
while a registration statement (including the Registration
Statement) covering the resale of such security is effective under
the Securities Act, (ii) following any sale of such Warrant Shares
pursuant to Rule 144 (assuming cashless exercise of the Warrants),
(iii) if such Warrant Shares are eligible for sale under Rule 144
(assuming cashless exercise of the Warrants), or (iv) if such
legend is not required under applicable requirements of the
Securities Act (including judicial interpretations and
pronouncements issued by the staff of the Commission). The Company
shall use reasonable best efforts to cause its counsel to issue a
legal opinion to the Transfer Agent promptly after the Effective
Date if required by the Transfer Agent to effect the removal of the
legend hereunder. Upon reasonable request by the Company or its
counsel with a form letter of representations, the Purchaser shall
deliver a customary representation letter to the Company or its
counsel in connection with an opinion related to Rule 144
hereunder. If all or any portion of a Warrant is exercised at a
time when there is an effective registration statement to cover the
resale of the Warrant Shares, or if such Warrant Shares may be sold
under Rule 144 (assuming cashless exercise of the Warrants), or if
such legend is not otherwise required under applicable requirements
of the Securities Act (including judicial interpretations and
pronouncements issued by the staff of the Commission) then such
Warrant Shares shall be issued free of all legends. The Company
agrees that following the Effective Date or at such time as such
legend is no longer required under this Section 4.1(c), the Company
will, no 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) following the delivery by a Purchaser to
the Company or the Transfer Agent of a certificate representing
Warrant Shares issued with a restrictive legend, together with any
representation letter required to issue an opinion to remove such
legend in form and substance satisfactory to the Company’s
counsel (such date, the “Legend Removal Date”),
deliver or cause to be delivered to such Purchaser a certificate
representing such shares that is free from all restrictive and
other legends. The Company may not make any notation on its records
or give instructions to the Transfer Agent that enlarge the
restrictions on transfer set forth in this Section 4. Certificates
for Securities subject to legend removal hereunder shall be
transmitted by the Transfer Agent to the Purchaser by crediting the
account of the Purchaser’s prime broker with the Depository
Trust Company System as directed by such Purchaser. 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 a certificate representing
Warrant Shares issued with a restrictive legend.
(c) In addition to such
Purchaser’s other available remedies, the Company shall pay
to a Purchaser, in cash, (i) as partial liquidated damages and not
as a penalty, for each $1,000 of Warrant Shares (based on the VWAP
of the Common Stock on the date such Securities are submitted to
the Transfer Agent) delivered for removal of the restrictive legend
and subject to Section 4.1(c), $10 per Trading Day (increasing to
$20 per Trading Day five (5) Trading Days after such damages have
begun to accrue) for each Trading Day after the Legend Removal Date
until such certificate is delivered without a legend and (ii) if
the Company fails to (a) issue and deliver (or cause to be
delivered) to a Purchaser by the Legend Removal Date a certificate
representing the Securities so delivered to the Company by such
Purchaser that is free from all restrictive and other legends and
(b) if after the Legend Removal Date such Purchaser purchases (in
an open market transaction or otherwise) shares of Common Stock to
deliver in satisfaction of a sale by such Purchaser of all or any
portion of the number of shares of Common Stock, or a sale of a
number of shares of Common Stock equal to all or any portion of the
number of shares of Common Stock that such Purchaser anticipated
receiving from the Company without any restrictive legend, then, an
amount equal to the excess of such Purchaser’s total purchase
price (including brokerage commissions and other out-of-pocket
expenses, if any) for the shares of Common Stock so purchased
(including brokerage commissions and other out-of-pocket expenses,
if any) (the “Buy-In
Price”) over the product of (A) such number of Warrant
Shares that the Company was required to deliver to such Purchaser
by the Legend Removal Date multiplied by (B) the lowest closing
sale price of the Common Stock on any Trading Day during the period
commencing on the date of the delivery by such Purchaser to the
Company of the applicable Warrant Shares and ending on the date of
such delivery and payment under this clause (ii).
(d) Each Purchaser,
severally and not jointly with the other Purchasers, agrees with
the Company that such 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 Furnishing
of Information; Public Information.
(a) Until the earlier
of the time that (i) no Purchaser owns Securities or (ii) the
Warrants have expired, the Company covenants to maintain the
registration of the Common Stock under Section 12(b) or 12(g) of
the Exchange Act and to timely file (or obtain extensions in
respect thereof and file within the applicable grace period) all
reports required to be filed by the Company after the date hereof
pursuant to the Exchange Act even if the Company is not then
subject to the reporting requirements of the Exchange
Act.
(b) At any time during
the period commencing from the six (6) month anniversary of the
date hereof and ending at such time that all of the Warrant Shares
(assuming cashless exercise) may be sold without the requirement
for the Company to be in compliance with Rule 144(c)(1) (including,
without limitation, the availability of an effective registration
statement relating to the Warrant Shares) and otherwise without
restriction or limitation pursuant to Rule 144, if the Company
shall fail for any reason to satisfy the current public information
requirement under Rule 144(c) for a period of more than thirty (30)
consecutive days (a “Public Information
Failure”) then, in addition to such Purchaser’s
other available remedies, the Company shall pay to a Purchaser, in
cash, as partial liquidated damages and not as a penalty, by reason
of any such delay in or reduction of its ability to sell the
Warrant Shares, an amount in cash equal to one percent (1.0%) of
the aggregate Subscription Amount paid by such Purchaser and on
every thirtieth (30th) day (pro-rated for periods totaling less
than thirty days) thereafter until the earlier of (a) the date such
Public Information Failure is cured and (b) such time that such
public information is no longer required for the Purchasers to
transfer the Warrant Shares pursuant to Rule 144. The payments to
which a Purchaser shall be entitled pursuant to this Section 4.2(b)
are referred to herein as “Public Information Failure
Payments.” Public Information Failure Payments shall
be paid on the earlier of (i) the last day of the calendar month
during which such Public Information Failure Payments are incurred
and (ii) the third (3rd) Business Day after the event or failure
giving rise to the Public Information Failure Payments is cured. In
the event the Company fails to make Public Information Failure
Payments in a timely manner, such Public Information Failure
Payments shall bear interest at the rate of 1.5% per month
(prorated for partial months) until paid in full. Nothing herein
shall limit such Purchaser’s right to pursue actual damages
for the Public Information Failure, and such Purchaser shall have
the right to pursue all remedies available to it at law or in
equity including, without limitation, a decree of specific
performance and/or injunctive relief.
4.3 Integration.
The Company shall not sell, offer for sale or solicit offers to buy
or otherwise negotiate in respect of any security (as defined in
Section 2 of the Securities Act) that would be integrated with the
offer or sale of the Securities in a manner that would require the
registration under the Securities Act of the sale of the Securities
or that would be integrated with the offer or sale of the
Securities for purposes of the rules and regulations of any Trading
Market such that it would require shareholder approval prior to the
closing of such other transaction unless shareholder approval is
obtained before the closing of such subsequent
transaction.
4.4 Securities
Laws Disclosure; Publicity. The
Company shall (a) by the Disclosure Time, issue a press release
disclosing the material terms of the transactions contemplated
hereby, and (b) file a Current Report on Form 8-K, including the
Transaction Documents as exhibits thereto, with the Commission
within the time required by the Exchange Act. From and after the
issuance of such press release, the Company represents to the
Purchasers that it shall have publicly disclosed all material,
non-public information delivered to any of the Purchasers by the
Company or any of its Subsidiaries, or any of their respective
officers, directors, employees or agents in connection with the
transactions contemplated by the Transaction Documents. In
addition, effective upon the issuance of such press release, the
Company acknowledges and agrees that any and all confidentiality or
similar obligations under any agreement, whether written or oral,
between the Company, any of its Subsidiaries or any of their
respective officers, directors, agents, employees or Affiliates on
the one hand, and any of the Purchasers or any of their Affiliates
on the other hand, shall terminate. The Company and each Purchaser
shall consult with each other in issuing any other press releases
with respect to the transactions contemplated hereby, and neither
the Company nor any Purchaser shall issue any such press release
nor otherwise make any such public statement without the prior
consent of the Company, with respect to any press release of any
Purchaser, or without the prior consent of each Purchaser, with
respect to any press release of the Company, which consent shall
not unreasonably be withheld or delayed, except if such disclosure
is required by law, in which case the disclosing party shall
promptly provide the other party with prior notice of such public
statement or communication. Notwithstanding the foregoing, the
Company shall not publicly disclose the name of any Purchaser, or
include the name of any Purchaser in any filing with the Commission
or any regulatory agency or Trading Market, without the prior
written consent of such Purchaser, except (a) as required by
federal securities law in connection with (i) any registration
statement contemplated by the Registration Rights Agreement and
(ii) the filing of final Transaction Documents with the Commission
and (b) to the extent such disclosure is required by law or Trading
Market regulations, in which case the Company shall use
commercially reasonable efforts to provide the Purchasers with
prior notice of such disclosure permitted under this clause (b) in
compliance with applicable law.
4.5 Shareholder
Rights Plan. No claim will be
made or enforced by the Company or, with the consent of the
Company, any other Person, that any Purchaser is an
“Acquiring
Person” under any control
share acquisition, business combination, poison pill (including any
distribution under a rights agreement) or similar anti-takeover
plan or arrangement in effect or hereafter adopted by the Company,
or that any Purchaser could be deemed to trigger the provisions of
any such plan or arrangement, by virtue of receiving Securities
under the Transaction Documents or under any other agreement
between the Company and the Purchasers.
4.6 Non-Public
Information. Except with
respect to the material terms and conditions of the transactions
contemplated by the Transaction Documents, which shall be disclosed
pursuant to Section 4.4, the Company covenants and agrees that
neither it, nor any other Person acting on its behalf will provide
any Purchaser or its agents or counsel with any information that
constitutes, or the Company reasonably believes constitutes,
material non-public information, unless prior thereto such
Purchaser shall have consented to the receipt of such information
and agreed with the Company to keep such information confidential.
The Company understands and confirms that each Purchaser shall be
relying on the foregoing covenant in effecting transactions in
securities of the Company. To the extent that the Company delivers
any material, non-public information to a Purchaser without such
Purchaser’s consent, the Company hereby covenants and agrees
that such Purchaser shall not have any duty of confidentiality to
the Company, any of its Subsidiaries, or any of their respective
officers, directors, agents, employees or Affiliates, or a duty to
the Company, any of its Subsidiaries or any of their respective
officers, directors, agents, employees or Affiliates not to trade
on the basis of, such material, non-public information, provided
that the Purchaser shall remain subject to applicable law. To the
extent that any notice provided pursuant to any Transaction
Document constitutes, or contains, material, non-public information
regarding the Company or any Subsidiaries, the Company shall
simultaneously file such notice with the Commission pursuant to a
Current Report on Form 8-K. The Company understands and confirms
that each Purchaser shall be relying on the foregoing covenant in
effecting transactions in securities of the
Company.
4.7 Use of
Proceeds. Except as set forth
on Schedule 4.7
attached hereto, the Company shall use
the net proceeds from the sale of the Securities hereunder for
working capital purposes and shall not use such proceeds: (a) for
the satisfaction of any portion of the Company’s debt (other
than payment of trade payables in the ordinary course of the
Company’s business and prior practices), (b) for the
redemption of any Common Stock or Common Stock Equivalents, (c) for
the settlement of any outstanding litigation or (d) in violation of
FCPA or OFAC regulations.
4.8 Indemnification
of Purchasers. Subject to the
provisions of this Section 4.8, the Company will indemnify and hold
each Purchaser and its directors, officers, shareholders, members,
partners, employees and agents (and any other Persons with a
functionally equivalent role of a Person holding such titles
notwithstanding a lack of such title or any other title), each
Person who controls such Purchaser (within the meaning of Section
15 of the Securities Act and Section 20 of the Exchange Act), and
the directors, officers, shareholders, agents, members, partners or
employees (and any other Persons with a functionally equivalent
role of a Person holding such titles notwithstanding a lack of such
title or any other title) of such controlling persons (each, a
“Purchaser
Party”) harmless from any
and all losses, liabilities, obligations, claims, contingencies,
damages, costs and expenses, including all judgments, amounts paid
in settlements, court costs and reasonable attorneys’ fees
and costs of investigation that any such Purchaser Party may suffer
or incur as a result of or relating to (a) any breach of any of the
representations, warranties, covenants or agreements made by the
Company in this Agreement or in the other Transaction Documents or
(b) any action instituted against the Purchaser Parties in any
capacity, or any of them or their respective Affiliates, by any
stockholder of the Company who is not an Affiliate of such
Purchaser Party, with respect to any of the transactions
contemplated by the Transaction Documents (unless such action is
based upon a breach of such Purchaser Party’s
representations, warranties or covenants under the Transaction
Documents or any agreements or understandings such Purchaser Party
may have with any such stockholder or any violations by such
Purchaser Party of state or federal securities laws or any conduct
by such Purchaser Party which is judicially determined to
constitute fraud, gross negligence or willful misconduct). If any
action shall be brought against any Purchaser Party in respect of
which indemnity may be sought pursuant to this Agreement, such
Purchaser Party shall promptly notify the Company in writing, and
the Company shall have the right to assume the defense thereof with
counsel of its own choosing reasonably acceptable to the Purchaser
Party. Any Purchaser Party shall have the right to employ separate
counsel in any such action and participate in the defense thereof,
but the fees and expenses of such counsel shall be at the expense
of such Purchaser Party except to the extent that (i) the
employment thereof has been specifically authorized by the Company
in writing, (ii) the Company has failed after a reasonable period
of time to assume such defense and to employ counsel or (iii) in
such action there is, in the reasonable opinion of counsel, a
material conflict on any material issue between the position of the
Company and the position of such Purchaser Party, in which case the
Company shall be responsible for the reasonable and documented fees
and expenses of no more than one such separate counsel. The Company
will not be liable to any Purchaser Party under this Agreement (1)
for any settlement by a Purchaser Party effected without the
Company’s prior written consent, which shall not be
unreasonably withheld or delayed; or (2) to the extent, but only to
the extent that a loss, claim, damage or liability is attributable
to any Purchaser Party’s breach of any of the
representations, warranties, covenants or agreements made by such
Purchaser Party in this Agreement or in the other Transaction
Documents. The indemnification required by this Section 4.8 shall
be made by periodic payments of the amount thereof during the
course of the investigation or defense, as and when bills are
received or are incurred. The indemnity agreements contained herein
shall be in addition to any cause of action or similar right of any
Purchaser Party against the Company or others and any liabilities
the Company may be subject to pursuant to law.
4.9 Reservation
of Common Stock. As of the date
hereof, the Company has reserved and the Company shall continue to
reserve and keep available at all times, free of preemptive rights,
a sufficient number of shares of Common Stock for the purpose of
enabling the Company to issue Warrant Shares pursuant to any
exercise of the Warrants.
4.10 Listing
of Common Stock. The Company
hereby agrees to use reasonable best efforts to maintain the
listing or quotation of the Common Stock on the Trading Market on
which it is currently listed, and concurrently with the Closing,
the Company shall apply to list or quote all of the Warrant Shares
on such Trading Market and promptly secure the listing of all of
the Warrant Shares on such Trading Market. The Company further
agrees, if the Company applies to have the Common Stock traded on
any other Trading Market, it will then include in such application
all of the Warrant Shares, and will take such other action as is
reasonably necessary to cause all of the Warrant Shares to be
listed or quoted on such other Trading Market as promptly as
possible. The Company will then take all action reasonably
necessary to continue the listing and trading of its Common Stock
on a Trading Market and will comply in all material respects with
the Company’s reporting, filing and other obligations under
the bylaws or rules of the Trading Market. The Company agrees to
use its reasonable best efforts to maintain the eligibility of the
Common Stock for electronic transfer through the Depository Trust
Company or another established clearing corporation, including,
without limitation, by timely payment of fees to the Depository
Trust Company or such other established clearing corporation in
connection with such electronic transfer.
4.11 [RESERVED].
4.12 Subsequent
Equity Sales.
(a) From the date
hereof until 30 days after the Effective Date (the
“Lock-Up
Period”), neither the Company nor any Subsidiary shall
(i) issue, enter into any agreement to issue or announce the
issuance or proposed issuance of any shares of Common Stock or
Common Stock Equivalents or (ii) file any registration statement or
any amendment or supplement thereto, in each case other than as
contemplated pursuant to the Registration Rights
Agreement.
(b) From the date
hereof until the first year anniversary of the Closing Date, the
Company shall be prohibited from effecting or entering into an
agreement to effect any issuance by the Company or any of its
Subsidiaries of Common Stock or Common Stock Equivalents (or a
combination of units thereof) involving a Variable Rate
Transaction. “Variable Rate
Transaction” means a transaction in which the Company
(i) issues or sells any debt or equity securities that are
convertible into, exchangeable or exercisable for, or include the
right to receive, additional shares of Common Stock either (A) at a
conversion price, exercise price or exchange rate or other price
that is based upon, and/or varies with, the trading prices of or
quotations for the shares of Common Stock at any time after the
initial issuance of such debt or equity securities or (B) with a
conversion, exercise or exchange price that is subject to being
reset at some future date after the initial issuance of such debt
or equity security or upon the occurrence of specified or
contingent events directly or indirectly related to the business of
the Company or the market for the Common Stock or (ii) enters into,
or effects a transaction under, any agreement, including, but not
limited to, an equity line of credit, whereby the Company may issue
securities at a future determined price. Notwithstanding the
foregoing, the Company may enter into and effect sales pursuant to
an at-the-market offering facility following the Lock-Up Period.
Any Purchaser shall be entitled to obtain injunctive relief against
the Company to preclude any such issuance, which remedy shall be in
addition to any right to collect damages.
(c) Notwithstanding the
foregoing, this Section 4.12 shall not apply in respect of an
Exempt Issuance, except that no Variable Rate Transaction shall be
an Exempt Issuance.
4.13 Equal
Treatment of Purchasers. No
consideration (including any modification of any Transaction
Document) shall be offered or paid to any Person to amend or
consent to a waiver or modification of any provision of the
Transaction Documents unless the same consideration is also offered
to all of the parties to the Transaction Documents. For
clarification purposes, this provision constitutes a separate right
granted to each Purchaser by the Company and negotiated separately
by each Purchaser, and is intended for the Company to treat the
Purchasers as a class and shall not in any way be construed as the
Purchasers acting in concert or as a group with respect to the
purchase, disposition or voting of Securities or
otherwise.
4.14 Certain
Transactions and Confidentiality. Each Purchaser, severally and not jointly with
the other Purchasers, covenants that neither it, nor any Affiliate
acting on its behalf or pursuant to any understanding with it will
execute any purchases or sales, including Short Sales of any of the
Company’s securities during the period commencing with the
execution of this Agreement and ending at such time that the
transactions contemplated by this Agreement are first publicly
announced pursuant to the initial press release as described in
Section 4.4. Each Purchaser, severally and not jointly with
the other Purchasers, covenants that until such time as the
transactions contemplated by this Agreement are publicly disclosed
by the Company pursuant to the initial press release as described
in Section 4.4, such Purchaser will maintain the confidentiality of
the existence and terms of this transaction and the information
included in the Disclosure Schedules. Notwithstanding the
foregoing and notwithstanding anything contained in this Agreement
to the contrary, the Company expressly acknowledges and agrees that
(i) no Purchaser makes any representation, warranty or covenant
hereby that it will not engage in effecting transactions in any
securities of the Company after the time that the transactions
contemplated by this Agreement are first publicly announced
pursuant to the initial press release as described in Section 4.4,
(ii) no Purchaser shall be restricted or prohibited from effecting
any transactions in any securities of the Company in accordance
with applicable securities laws from and after the time that the
transactions contemplated by this Agreement are first publicly
announced pursuant to the initial press release as described in
Section 4.4 and (iii) no Purchaser shall have any duty of
confidentiality or duty not to trade in the securities of the
Company to the Company or its Subsidiaries after the issuance of
the initial press release as described in Section 4.4.
Notwithstanding the foregoing, in the case of a Purchaser that is a
multi-managed investment vehicle whereby separate portfolio
managers manage separate portions of such Purchaser’s assets
and the portfolio managers have no direct knowledge of the
investment decisions made by the portfolio managers managing other
portions of such Purchaser’s assets, the covenant set forth
above shall only apply with respect to the portion of assets
managed by the portfolio manager that made the investment decision
to purchase the Securities covered by this
Agreement.
4.15 Exercise
Procedures. The form of Notice
of Exercise included in the Pre-Funded Warrants set forth the
totality of the procedures required of the Purchasers in order to
exercise the Warrants. No additional legal opinion, other
information or instructions shall be required of the Purchasers to
exercise their Warrants. Without limiting the preceding sentences,
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 form be required in order to exercise the
Warrants. The Company shall honor exercises of the Warrants and
shall deliver Warrant Shares in accordance with the terms,
conditions and time periods set forth in the Transaction
Documents.
4.16 Form
D; Blue Sky Filings. The
Company agrees to timely file a Form D with respect to the
Securities as required under Regulation D. The Company shall take
such action as the Company shall reasonably determine is necessary
in order to obtain an exemption for, or to qualify the Securities
for, sale to the Purchasers at the Closing under applicable
securities or “Blue Sky” laws of the states of the
United States, and shall provide evidence of such actions promptly
upon request of any Purchaser.
ARTICLE V.
MISCELLANEOUS
5.1 Termination.
This Agreement may be terminated by any Purchaser, as to such
Purchaser’s obligations hereunder only and without any effect
whatsoever on the obligations between the Company and the other
Purchasers, by written notice to the other parties, if the Closing
has not been consummated on or before 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. Except as
expressly set forth in the Transaction Documents to the contrary,
each party shall pay the fees and expenses of its advisers,
counsel, accountants and other experts, if any, and all other
expenses incurred by such party incident to the negotiation,
preparation, execution, delivery and performance of this Agreement.
The Company shall pay all Transfer Agent fees (including, without
limitation, any fees required for same-day processing of any
instruction letter delivered by the Company and any exercise notice
delivered by a Purchaser), stamp taxes and other taxes and duties
levied in connection with the delivery of any Securities to the
Purchasers.
5.3 Entire
Agreement. The Transaction
Documents, together with the exhibits and schedules thereto,
contain the entire understanding of the parties with respect to the
subject matter hereof and thereof and supersede all prior
agreements and understandings, oral or written, with respect to
such matters, which the parties acknowledge have been merged into
such documents, exhibits and schedules.
5.4 Notices.
Any and all notices or other communications or deliveries required
or permitted to be provided hereunder shall be in writing and shall
be deemed given and effective on the earliest of: (a) the time of
transmission, if such notice or communication is delivered via
facsimile at the facsimile number or 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 facsimile at the facsimile number or
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 Purchasers which purchased (or prior to the Closing
Date, agreed to purchase) at least 50.1% in interest of the
Pre-Funded Warrants based on the initial Subscription Amounts
hereunder or, in the case of a waiver, by the party against whom
enforcement of any such waived provision is sought, provided that
if any amendment, modification or waiver disproportionately and
adversely impacts a Purchaser (or group of Purchasers), the consent
of such disproportionately impacted Purchaser (or group of
Purchasers) shall also be required. No waiver of any default with
respect to any provision, condition or requirement of this
Agreement shall be deemed to be a continuing waiver in the future
or a waiver of any subsequent default or a waiver of any other
provision, condition or requirement hereof, nor shall any delay or
omission of any party to exercise any right hereunder in any manner
impair the exercise of any such right. Any proposed amendment or
waiver that disproportionately, materially and adversely affects
the rights and obligations of any Purchaser relative to the
comparable rights and obligations of the other Purchasers shall
require the prior written consent of such adversely affected
Purchaser. Any amendment effected in accordance with this Section
5.5 shall be binding upon each Purchaser and holder of Securities
and the Company.
5.6 Headings.
The headings herein are for convenience only, do not constitute a
part of this Agreement and shall not be deemed to limit or affect
any of the provisions hereof.
5.7 Successors
and Assigns. This Agreement
shall be binding upon and inure to the benefit of the parties and
their successors and permitted assigns. The Company may not assign
this Agreement or any rights or obligations hereunder without the
prior written consent of each Purchaser (other than by merger). Any
Purchaser may assign any or all of its rights under this Agreement
to any Person to whom such Purchaser assigns or transfers any
Securities, provided that such transferee agrees in writing to be
bound, with respect to the transferred Securities, by the
provisions of the Transaction Documents that apply to the
“Purchasers.”
5.8 No
Third-Party Beneficiaries. This
Agreement is intended for the benefit of the parties hereto and
their respective successors and permitted assigns and is not for
the benefit of, nor may any provision hereof be enforced by, any
other Person, except as otherwise set forth in Section 4.8 and this
Section 5.8.
5.9 Governing
Law. All questions concerning
the construction, validity, enforcement and interpretation of the
Transaction Documents shall be governed by and construed and
enforced in accordance with the internal laws of the State of New
York, without regard to the principles of conflicts of law thereof.
Each party agrees that all legal Proceedings concerning the
interpretations, enforcement and defense of the transactions
contemplated by this Agreement and any other Transaction Documents
(whether brought against a party hereto or its respective
affiliates, directors, officers, shareholders, partners, members,
employees or agents) shall be commenced exclusively in the state
and federal courts sitting in the City of New York. Each party
hereby irrevocably submits to the exclusive jurisdiction of the
state and federal courts sitting in the City of New York, Borough
of Manhattan for the adjudication of any dispute hereunder or in
connection herewith or with any transaction contemplated hereby or
discussed herein (including with respect to the enforcement of any
of the Transaction Documents), and hereby irrevocably waives, and
agrees not to assert in any 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 the Transaction Documents, then, in addition to
the obligations of the Company under Section 4.8, 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 facsimile transmission
or by e-mail delivery of a “.pdf” format data file,
such signature shall create a valid and binding obligation of the
party executing (or on whose behalf such signature is executed)
with the same force and effect as if such facsimile or
“.pdf” signature page were an original
thereof.
5.12 Severability.
If any term, provision, covenant or restriction of this Agreement
is held by a court of competent jurisdiction to be invalid,
illegal, void or unenforceable, the remainder of the terms,
provisions, covenants and restrictions set forth herein shall
remain in full force and effect and shall in no way be affected,
impaired or invalidated, and the parties hereto shall use their
commercially reasonable efforts to find and employ an alternative
means to achieve the same or substantially the same result as that
contemplated by such term, provision, covenant or restriction. It
is hereby stipulated and declared to be the intention of the
parties that they would have executed the remaining terms,
provisions, covenants and restrictions without including any of
such that may be hereafter declared invalid, illegal, void or
unenforceable.
5.13 Rescission
and Withdrawal Right.
Notwithstanding anything to the contrary contained in (and without
limiting any similar provisions of) any of the other Transaction
Documents, whenever any Purchaser exercises a right, election,
demand or option under a Transaction Document and the Company does
not timely perform its related obligations within the periods
therein provided, then such Purchaser may rescind or withdraw, in
its sole discretion from time to time upon written notice to the
Company, any relevant notice, demand or election in whole or in
part without prejudice to its future actions and rights; provided,
however, that in the case of a rescission of an exercise of a
Warrant, the applicable Purchaser shall be required to return any
shares of Common Stock subject to any such rescinded exercise
notice concurrently with the return to such Purchaser of the
aggregate exercise price paid to the Company for such shares and
the restoration of such Purchaser’s right to acquire such
shares pursuant to such Purchaser’s Warrant (including,
issuance of a replacement warrant certificate evidencing such
restored right).
5.14 Replacement
of Securities. If any
certificate or instrument evidencing any Securities is mutilated,
lost, stolen or destroyed, the Company shall issue or cause to be
issued in exchange and substitution for and upon cancellation
thereof (in the case of mutilation), or in lieu of and substitution
therefor, a new certificate or instrument, but only upon receipt of
evidence reasonably satisfactory to the Company of such loss, theft
or destruction. The applicant for a new certificate or instrument
under such circumstances shall also pay any reasonable third-party
costs (including customary indemnity) associated with the issuance
of such replacement Securities.
5.15 Remedies.
In addition to being entitled to exercise all rights provided
herein or granted by law, including recovery of damages, each of
the Purchasers and the Company will be entitled to specific
performance under the Transaction Documents. The parties agree that
monetary damages may not be adequate compensation for any loss
incurred by reason of any breach of obligations contained in the
Transaction Documents and hereby agree to waive and not to assert
in any Action for specific performance of any such obligation the
defense that a remedy at law would be adequate.
5.16 Payment
Set Aside. To the extent that
the Company makes a payment or payments to any Purchaser pursuant
to any Transaction Document or a Purchaser enforces or exercises
its rights thereunder, and such payment or payments or the proceeds
of such enforcement or exercise or any part thereof are
subsequently invalidated, declared to be fraudulent or
preferential, set aside, recovered from, disgorged by or are
required to be refunded, repaid or otherwise restored to the
Company, a trustee, receiver or any other Person under any law
(including, without limitation, any bankruptcy law, state or
federal law, common law or equitable cause of action), then to the
extent of any such restoration the obligation or part thereof
originally intended to be satisfied shall be revived and continued
in full force and effect as if such payment had not been made or
such enforcement or setoff had not occurred.
5.17 Independent
Nature of Purchasers’ Obligations and
Rights. The obligations of each
Purchaser under any Transaction Document are several and not joint
with the obligations of any other Purchaser, and no Purchaser shall
be responsible in any way for the performance or non-performance of
the obligations of any other Purchaser under any Transaction
Document. Nothing contained herein or in any other Transaction
Document, and no action taken by any Purchaser pursuant hereto or
thereto, shall be deemed to constitute the Purchasers as a
partnership, an association, a joint venture or any other kind of
entity, or create a presumption that the Purchasers are in any way
acting in concert or as a group with respect to such obligations or
the transactions contemplated by the Transaction Documents. Each
Purchaser shall be entitled to independently protect and enforce
its rights including, without limitation, the rights arising out of
this Agreement or out of the other Transaction Documents, and it
shall not be necessary for any other Purchaser to be joined as an
additional party in any Proceeding for such purpose. Each Purchaser
has been represented by its own separate legal counsel in its
review and negotiation of the Transaction Documents. The Company
has elected to provide all Purchasers with the same terms and
Transaction Documents for the convenience of the Company and not
because it was required or requested to do so by any of the
Purchasers. It is expressly understood and agreed that each
provision contained in this Agreement and in each other Transaction
Document is between the Company and a Purchaser, solely, and not
between the Company and the Purchasers collectively and not between
and among the Purchasers.
5.18 Liquidated
Damages. The Company’s
obligations to pay any partial liquidated damages or other amounts
owing under the Transaction Documents is a continuing obligation of
the Company and shall not terminate until all unpaid partial
liquidated damages and other amounts have been paid notwithstanding
the fact that the instrument or security pursuant to which such
partial liquidated damages or other amounts are due and payable
shall have been canceled.
5.19 Saturdays,
Sundays, Holidays, etc. If the last or appointed day for the taking of any
action or the expiration of any right required or granted herein
shall not be a Business Day, then such action may be taken or such
right may be exercised on the next succeeding Business
Day.
5.20 Construction.
The parties agree that each of them and/or their respective counsel
have reviewed and had an opportunity to revise the Transaction
Documents and, therefore, the normal rule of construction to the
effect that any ambiguities are to be resolved against the drafting
party shall not be employed in the interpretation of the
Transaction Documents or any amendments thereto. In addition, each
and every reference to share prices and shares of Common Stock in
any Transaction Document shall be subject to adjustment for reverse
and forward stock splits, stock dividends, stock combinations and
other similar transactions of the Common Stock that occur after the
date of this Agreement.
5.21 WAIVER
OF JURY TRIAL.
IN ANY
ACTION, SUIT, OR PROCEEDING IN ANY JURISDICTION BROUGHT BY ANY
PARTY AGAINST ANY OTHER PARTY, THE PARTIES EACH KNOWINGLY AND
INTENTIONALLY, TO THE GREATEST EXTENT PERMITTED BY APPLICABLE LAW,
HEREBY ABSOLUTELY, UNCONDITIONALLY, IRREVOCABLY AND EXPRESSLY
WAIVES FOREVER TRIAL BY JURY.
(Signature Pages Follow)
IN
WITNESS WHEREOF, the parties hereto have caused this Securities
Purchase Agreement for Units to be duly executed by their
respective authorized signatories as of the date first indicated
above.
|
TENAX THERAPEUTICS, INC.
|
Address
for Notice:
Nancy
Hecox
|
|
By:
_/s/ Michael
Jebsen______
Name:
Michael Jebsen
Title:
Chief Financial Officer
|
Email:
n.hecox@tenaxthera.com
Fax:
(919) 855-2133
ONE
Copley Parkway, Suite 490
Morrisville,
NC 27560
|
|
|
|
[REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK
SIGNATURE
PAGE FOR PURCHASER FOLLOWS]
[PURCHASER
SIGNATURE PAGES TO SECURITIES PURCHASE AGREEMENT FOR
UNITS]
IN
WITNESS WHEREOF, the undersigned have caused this Securities
Purchase Agreement for Pre-Funded Warrants to be duly executed by
their respective authorized signatories as of the date first
indicated above.
Name of
Purchaser: Armistice
Capital Master Fund Ltd.
Signature of Authorized Signatory of
Purchaser: _/s/
Steven Boyd_____________
Name of
Authorized Signatory: _Steven
Boyd_________________
Title
of Authorized Signatory: CIO of Armistice Capital, LLC, the
Investment Manager_
Email
Address of Authorized Signatory: _sboyd@armisticecapital.com____________
With
copy to: smiller@armisticecapital.com
Address
for Notice to Purchaser:
c/o
Armistice Capital, LLC
510
Madison Avenue, 7th Floor
New
York, NY 10022
Address
for Delivery of Securities to Purchaser (if not same as address for
notice):
Scott
Miller
220
East 65th Street, Apt. 20A
New
York, NY 10065
Subscription
Amount: $9,999,998.56
Units:
4,773,269
Pre-Funded
Warrants: 4,773,269
Series
A Warrant Shares: 4,773,269
REGISTRATION RIGHTS AGREEMENT
This
Registration Rights Agreement (this “Agreement”) is made and
entered into as of July 6, 2021, between Tenax Therapeutics, Inc.,
a Delaware corporation (the “Company”), and each of
the several purchasers signatory hereto (each such purchaser, a
“Purchaser” and,
collectively, the “Purchasers”).
This
Agreement is made pursuant to the Securities Purchase Agreement for
Units, dated as of the date hereof, between the Company and each
Purchaser (the “Purchase
Agreement”).
The
Company and each Purchaser hereby agrees as follows:
Capitalized
terms used and not otherwise defined herein that are defined in the
Purchase Agreement shall have the meanings given such terms in the
Purchase Agreement. As used in this Agreement, the following
terms shall have the following meanings:
“Advice”
shall have the meaning set forth in Section 6(c).
“Effectiveness Date”
means, with respect to the Initial Registration Statement required
to be filed hereunder, the 120th calendar day
following the date hereof (or, in the event of a “full
review” by the Commission, the 150th calendar day
following the date hereof) and with respect to any additional
Registration Statements which may be required pursuant to Section
2(c) or Section 3(c), the 120th calendar day
following the date on which an additional Registration Statement is
required to be filed hereunder (or, in the event of a “full
review” by the Commission, the 150th calendar day
following the date such additional Registration Statement is
required to be filed hereunder); provided, however, that in the event the
Company is notified by the Commission that one or more of the above
Registration Statements will not be reviewed or is no longer
subject to further review and comments, the Effectiveness Date as
to such Registration Statement shall be the fifth Trading Day
following the date on which the Company is so notified if such date
precedes the dates otherwise required above, provided, further, if
such Effectiveness Date falls on a day that is not a Trading Day,
then the Effectiveness Date shall be the next succeeding Trading
Day.
“Effectiveness Period”
shall have the meaning set forth in Section 2(a).
“Event” shall have the
meaning set forth in Section 2(d).
“Event Date” shall have
the meaning set forth in Section 2(d).
“Filing Date” means, with
respect to the Initial Registration Statement required hereunder,
the earlier of (a) the 45th calendar day
following the date hereof or (b) the 10th calendar day
following the next date upon which the Company files a quarterly
report with the SEC on Form 10-Q pursuant to the Exchange Act and,
with respect to any additional Registration Statements which may be
required pursuant to Section 2(c) or Section 3(c), the earliest
practical date on which the Company is permitted by SEC Guidance to
file such additional Registration Statement related to the
Registrable Securities.
“Holder” or
“Holders” means the holder
or holders, as the case may be, from time to time of Registrable
Securities.
“Indemnified Party” shall
have the meaning set forth in Section 5(c).
“Indemnifying Party” shall
have the meaning set forth in Section 5(c).
“Initial Registration
Statement” means the initial Registration Statement
filed pursuant to this Agreement.
“Losses” shall have the
meaning set forth in Section 5(a).
“Plan of Distribution”
shall have the meaning set forth in Section 2(a).
“Prospectus” means the
prospectus included in a Registration Statement (including, without
limitation, a prospectus that includes any information previously
omitted from a prospectus filed as part of an effective
registration statement in reliance upon Rule 430A promulgated by
the Commission pursuant to the Securities Act), as amended or
supplemented by any prospectus supplement, with respect to the
terms of the offering of any portion of the Registrable Securities
covered by a Registration Statement, and all other amendments and
supplements to the Prospectus, including post-effective amendments,
and all material incorporated by reference or deemed to be
incorporated by reference in such Prospectus.
“Registrable Securities”
means, as of any date of determination, (a) all Warrant Shares then
issued and issuable upon exercise of the Warrants (assuming on such
date the Warrants are exercised in full without regard to any
exercise limitations therein) and (b) 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 (a) a Registration
Statement with respect to the sale of such Registrable Securities
is declared effective by the Commission under the Securities Act
and such Registrable Securities have been disposed of by the Holder
in accordance with such effective Registration Statement, (b) such
Registrable Securities have been previously sold in accordance with
Rule 144, or (c) such securities become eligible for resale without
volume or manner-of-sale restrictions and without current public
information pursuant to Rule 144 as set forth in a written opinion
letter to such effect, addressed, delivered and acceptable to the
Transfer Agent and the affected Holders (assuming that such
securities and any securities issuable upon exercise, conversion or
exchange of which, or as a dividend upon which, such securities
were issued or are issuable, were at no time held by any Affiliate
of the Company, and all Warrants are exercised by “cashless
exercise” as provided in each of such Registrable Securities,
as reasonably determined by the Company, upon the advice of counsel
to the Company.
“Registration Statement”
means any registration statement required to be filed hereunder
pursuant to Section 2(a) and any additional registration statements
contemplated by Section 2(c) or Section 3(c), including (in each
case) the Prospectus, amendments and supplements to any such
registration statement or Prospectus, including pre- and
post-effective amendments, all exhibits thereto, and all material
incorporated by reference or deemed to be incorporated by reference
in any such registration statement.
“Rule
415” means Rule 415 promulgated by the Commission
pursuant to the Securities Act, as such Rule may be amended or
interpreted from time to time, or any similar rule or regulation
hereafter adopted by the Commission having substantially the same
purpose and effect as such Rule.
“Rule 424” means Rule 424
promulgated by the Commission pursuant to the Securities Act, as
such Rule may be amended or interpreted from time to time, or any
similar rule or regulation hereafter adopted by the Commission
having substantially the same purpose and effect as such
Rule.
“Selling Stockholder
Questionnaire” shall have the meaning set forth in
Section 3(a).
“SEC Guidance” means (i)
any publicly-available written or oral guidance of the Commission
staff, or any comments, requirements or requests of the Commission
staff and (ii) the Securities Act.
(a) On or prior to each
Filing Date, the Company shall prepare and file with the Commission
a Registration Statement covering the resale of all of the
Registrable Securities that are not then registered on an effective
Registration Statement for an offering to be made on a continuous
basis pursuant to Rule 415. Each Registration Statement filed
hereunder shall be on Form S-3 (except if the Company is not then
eligible to register for resale the Registrable Securities on Form
S-3, in which case such registration shall be on another
appropriate form in accordance herewith, subject to the provisions
of Section 2(e)) and shall contain (unless otherwise directed by at
least 85% in interest of the Holders) substantially the
“Plan of
Distribution” attached hereto as Annex A and substantially the
“Selling
Stockholder” section attached hereto as Annex B; provided, however, that no Holder shall
be required to be named as an “underwriter” without
such Holder’s express prior written consent. Subject to the
terms of this Agreement, the Company shall use its best efforts to
cause a Registration Statement filed under this Agreement
(including, without limitation, under Section 3(c)) to be declared
effective under the Securities Act as promptly as possible after
the filing thereof, but in any event no later than the applicable
Effectiveness Date, and shall use its best efforts to keep such
Registration Statement continuously effective under the Securities
Act until the date that all Registrable Securities covered by such
Registration Statement (i) have been sold, thereunder or pursuant
to Rule 144, or (ii) may be sold without volume or manner-of-sale
restrictions pursuant to Rule 144 and without the requirement for
the Company to be in compliance with the current public information
requirement under Rule 144, as determined by the counsel to the
Company pursuant to a written opinion letter to such effect,
addressed and acceptable to the Transfer Agent and the affected
Holders (the “Effectiveness Period”).
The Company shall telephonically request effectiveness of a
Registration Statement as of 5:00 p.m. (New York City time) on a
Trading Day. The Company shall immediately notify the Holders via
facsimile or by e-mail of the effectiveness of a Registration
Statement on the same Trading Day that the Company telephonically
confirms effectiveness with the Commission, which shall be the date
requested for effectiveness of such Registration Statement. The
Company shall, by 9:30 a.m. (New York City time) on the Trading Day
after the effective date of such Registration Statement, file a
final Prospectus with the Commission as required by Rule 424.
Failure to so notify the Holder within one (1) Trading Day of such
notification of effectiveness or failure to file a final Prospectus
as foresaid shall be deemed an Event under Section
2(d).
(b) Notwithstanding
the registration obligations set forth in Section 2(a), if the
Commission informs the Company that all of the Registrable
Securities cannot, as a result of the application of Rule 415, be
registered for resale as a secondary offering on a single
registration statement, the Company agrees to promptly inform each
of the Holders thereof and use its commercially reasonable efforts
to file amendments to the Initial Registration Statement as
required by the Commission, covering the maximum number of
Registrable Securities permitted to be registered by the
Commission, on Form S-3 or such other form available to register
for resale the Registrable Securities as a secondary offering,
subject to the provisions of Section 2(e); with respect to filing
on Form S-3 or other appropriate form, and subject to the
provisions of Section 2(d) with respect to the payment of
liquidated damages; provided, however, that prior to filing
such amendment, the Company shall be obligated to use diligent
efforts to advocate with the Commission for the registration of all
of the Registrable Securities in accordance with the SEC Guidance,
including without limitation, Compliance and Disclosure
Interpretation 612.09.
(c) Notwithstanding
any other provision of this Agreement and subject to the payment of
liquidated damages pursuant to Section 2(d), if the Commission or
any SEC Guidance sets forth a limitation on the number of
Registrable Securities permitted to be registered on a particular
Registration Statement as a secondary offering (and notwithstanding
that the Company used diligent efforts to advocate with the
Commission for the registration of all or a greater portion of
Registrable Securities), unless otherwise directed in writing by a
Holder as to its Registrable Securities, the number of Registrable
Securities to be registered on such Registration Statement will be
reduced as follows:
a.
First, the Company
shall reduce or eliminate any securities to be included other than
Registrable Securities;
b.
Second, the
Company shall reduce Registrable Securities represented by the
Series A Common Stock Purchase Warrant Shares (applied, in the case
that some such warrant shares may be registered, to the Holders and
holders thereof on a pro rata basis based on the total number of
unregistered Registrable Securities held by such Holders);
and
c.
Third, the Company
shall reduce Registrable Securities represented by any Pre-Funded
Warrant Shares (applied to the Holders on a pro rata basis based on
the total number of unregistered Pre-Funded Warrant Shares held by
such Holders).
In the
event of a cutback hereunder, the Company shall give the Holder at
least five (5) Trading Days prior written notice along with the
calculations as to such Holder’s allotment. In the event the
Company amends the Initial Registration Statement in accordance
with the foregoing, the Company will use its best efforts to file
with the Commission, as promptly as allowed by Commission or SEC
Guidance provided to the Company or to registrants of securities in
general, one or more registration statements on Form S-3 or such
other form available to register for resale those Registrable
Securities that were not registered for resale on the Initial
Registration Statement, as amended.
(d) If: (i) the Initial
Registration Statement is not filed on or prior to its Filing Date
(if the Company files the Initial Registration Statement without
affording the Holders the opportunity to review and comment on the
same as required by Section 3(a) herein, the Company shall be
deemed to have not satisfied this clause (i)), or (ii) the Company
fails to file with the Commission a request for acceleration of a
Registration Statement in accordance with Rule 461 promulgated by
the Commission pursuant to the Securities Act, within five Trading
Days of the date that the Company is notified (orally or in
writing, whichever is earlier) by the Commission that such
Registration Statement will not be “reviewed” or will
not be subject to further review, or (iii) prior to the effective
date of a Registration Statement, the Company fails to file a
pre-effective amendment and otherwise respond in writing to
comments made by the Commission in respect of such Registration
Statement within ten (10) calendar days after the receipt of
comments by or notice from the Commission that such amendment is
required in order for such Registration Statement to be declared
effective, or (iv) a Registration Statement registering for resale
all of the Registrable Securities is not declared effective by the
Commission by the Effectiveness Date of the Initial Registration
Statement, or (v) after the effective date of a Registration
Statement, such Registration Statement ceases for any reason to
remain continuously effective as to all Registrable Securities
included in such Registration Statement, or the Holders are
otherwise not permitted to utilize the Prospectus therein to resell
such Registrable Securities, for more than ten (10) consecutive
calendar days or more than an aggregate of fifteen (15) calendar
days (which need not be consecutive calendar days) during any
12-month period (any such failure or breach being referred to as an
“Event”, and for purposes
of clauses (i) and (iv), the date on which such Event occurs, and
for purpose of clause (ii) the date on which such five (5) Trading
Day period is exceeded, and for purpose of clause (iii) the date
which such ten (10) calendar day period is exceeded, and for
purpose of clause (v) the date on which such ten (10) or fifteen
(15) calendar day period, as applicable, is exceeded being referred
to as “Event
Date”), then, in addition to any other rights the
Holders may have hereunder or under applicable law, on each such
Event Date and on each monthly anniversary of each such Event Date
(if the applicable Event shall not have been cured by such date)
until the applicable Event is cured, the Company shall pay to each
Holder an amount in cash, as partial liquidated damages and not as
a penalty, equal to the product of 1.0% multiplied by the aggregate
Subscription Amount paid by such Holder pursuant to the Purchase
Agreement. If the Company fails to pay any partial liquidated
damages pursuant to this Section in full within seven days after
the date payable, the Company will pay interest thereon at a rate
of 18% per annum (or such lesser maximum amount that is permitted
to be paid by applicable law) to the Holder, accruing daily from
the date such partial liquidated damages are due until such
amounts, plus all such interest thereon, are paid in full. The
partial liquidated damages pursuant to the terms hereof shall apply
on a daily pro rata basis for any portion of a month prior to the
cure of an Event.
(e) If Form S-3 is not
available for the registration of the resale of Registrable
Securities hereunder, the Company shall (i) register the resale of
the Registrable Securities on another appropriate form and (ii)
undertake to register the Registrable Securities on Form S-3 as
soon as such form is available, provided that the Company shall
maintain the effectiveness of the Registration Statement then in
effect until such time as a Registration Statement on Form S-3
covering the Registrable Securities has been declared effective by
the Commission.
(f) Notwithstanding
anything to the contrary contained herein, in no event shall the
Company be permitted to name any Holder or affiliate of a Holder as
any Underwriter without the prior written consent of such
Holder.
3.
Registration
Procedures.
In
connection with the Company’s registration obligations
hereunder, the Company shall:
(a) Not less than three
(3) Trading Days prior to the filing of each Registration Statement
and not less than one (1) Trading Day prior to the filing of any
related Prospectus or any amendment or supplement thereto
(including any document that would be incorporated or deemed to be
incorporated therein by reference), the Company shall (i) furnish
to each Holder copies of all such documents proposed to be filed,
which documents (other than those incorporated or deemed to be
incorporated by reference) will be subject to the review of such
Holders, and (ii) cause its officers and directors, counsel and
independent registered public accountants to respond to such
inquiries as shall be necessary, in the reasonable opinion of
respective counsel to each Holder, to conduct a reasonable
investigation within the meaning of the Securities Act. The Company
shall not file a Registration Statement or any such Prospectus or
any amendments or supplements thereto to which the Holders of a
majority of the Registrable Securities shall reasonably object in
good faith, provided that, the Company is notified of such
objection in writing no later than five (5) Trading Days after the
Holders have been so furnished copies of a Registration Statement
or one (1) Trading Day after the Holders have been so furnished
copies of any related Prospectus or amendments or supplements
thereto. Each Holder agrees to furnish to the Company a completed
questionnaire in the form attached to this Agreement as
Annex C (a
“Selling Stockholder
Questionnaire”) on a date that is not less than two
(2) Trading Days prior to the Filing Date or by the end of the
fourth (4th) Trading Day
following the date on which such Holder receives draft materials in
accordance with this Section.
(b) (i) Prepare and
file with the Commission such amendments, including post-effective
amendments, to a Registration Statement and the Prospectus used in
connection therewith as may be necessary to keep a Registration
Statement continuously effective as to the applicable Registrable
Securities for the Effectiveness Period and prepare and file with
the Commission such additional Registration Statements in order to
register for resale under the Securities Act all of the Registrable
Securities, (ii) cause the related Prospectus to be amended or
supplemented by any required Prospectus supplement (subject to the
terms of this Agreement), and, as so supplemented or amended, to be
filed pursuant to Rule 424, (iii) respond as promptly as reasonably
possible to any comments received from the Commission with respect
to a Registration Statement or any amendment thereto and provide as
promptly as reasonably possible to the Holders true and complete
copies of all correspondence from and to the Commission relating to
a Registration Statement (provided that, the Company shall excise
any information contained therein which would constitute material
non-public information regarding the Company or any of its
Subsidiaries), and (iv) comply in all material respects with the
applicable provisions of the Securities Act and the Exchange Act
with respect to the disposition of all Registrable Securities
covered by a Registration Statement during the applicable period in
accordance (subject to the terms of this Agreement) with the
intended methods of disposition by the Holders thereof set forth in
such Registration Statement as so amended or in such Prospectus as
so supplemented.
(c) If during the
Effectiveness Period, the number of Registrable Securities at any
time exceeds 100% of the number of shares of Common Stock then
registered in a Registration Statement, then the Company shall file
as soon as reasonably practicable, but in any case prior to the
applicable Filing Date, an additional Registration Statement
covering the resale by the Holders of not less than the number of
such Registrable Securities.
(d) Notify the Holders
of Registrable Securities to be sold (which notice shall, pursuant
to clauses (iii) through (vi) hereof, be accompanied by an
instruction to suspend the use of the Prospectus until the
requisite changes have been made) as promptly as reasonably
possible (and, in the case of (i)(A) below, not less than one (1)
Trading Day prior to such filing) and (if requested by any such
Person) confirm such notice in writing no later than one (1)
Trading Day following the day (i)(A) when a Prospectus or any
Prospectus supplement or post-effective amendment to a Registration
Statement is proposed to be filed, (B) when the Commission notifies
the Company whether there will be a “review” of such
Registration Statement and whenever the Commission comments in
writing on such Registration Statement, and (C) with respect to a
Registration Statement or any post-effective amendment, when the
same has become effective, (ii) of any request by the Commission or
any other federal or state governmental authority for amendments or
supplements to a Registration Statement or Prospectus or for
additional information, (iii) of the issuance by the Commission or
any other federal or state governmental authority of any stop order
suspending the effectiveness of a Registration Statement covering
any or all of the Registrable Securities or the initiation of any
Proceedings for that purpose, (iv) of the receipt by the Company of
any notification with respect to the suspension of the
qualification or exemption from qualification of any of the
Registrable Securities for sale in any jurisdiction, or the
initiation or threatening of any Proceeding for such purpose, (v)
of the occurrence of any event or passage of time that makes the
financial statements included in a Registration Statement
ineligible for inclusion therein or any statement made in a
Registration Statement or Prospectus or any document incorporated
or deemed to be incorporated therein by reference untrue in any
material respect or that requires any revisions to a Registration
Statement, Prospectus or other documents so that, in the case of a
Registration Statement or the Prospectus, as the case may be, it
will not contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary
to make the statements therein, in light of the circumstances under
which they were made, not misleading, and (vi) of the occurrence or
existence of any pending corporate development with respect to the
Company that the Company believes may be material and that, in the
determination of the Company, makes it not in the best interest of
the Company to allow continued availability of a Registration
Statement or Prospectus; provided, however, that in no event shall
any such notice contain any information which would constitute
material, non-public information regarding the Company or any of
its Subsidiaries.
(e) Use its best
efforts to avoid the issuance of, or, if issued, obtain the
withdrawal of (i) any order stopping or suspending the
effectiveness of a Registration Statement, or (ii) any suspension
of the qualification (or exemption from qualification) of any of
the Registrable Securities for sale in any jurisdiction, at the
earliest practicable moment.
(f) Furnish to each
Holder, without charge, at least one conformed copy of each such
Registration Statement and each amendment thereto, including
financial statements and schedules, all documents incorporated or
deemed to be incorporated therein by reference to the extent
requested by such Person, and all exhibits to the extent requested
by such Person (including those previously furnished or
incorporated by reference) promptly after the filing of such
documents with the Commission, provided that any such item which is
available on the EDGAR system (or successor thereto) need not be
furnished in physical form.
(g) Subject to the
terms of this Agreement, the Company hereby consents to the use of
such Prospectus and each amendment or supplement thereto by each of
the selling Holders in connection with the offering and sale of the
Registrable Securities covered by such Prospectus and any amendment
or supplement thereto, except after the giving of any notice
pursuant to Section 3(d).
(h) Prior to any
resale of Registrable Securities by a Holder, use its commercially
reasonable efforts to register or qualify or cooperate with the
selling Holders in connection with the registration or
qualification (or exemption from the Registration or qualification)
of such Registrable Securities for the resale by the Holder under
the securities or Blue Sky laws of such jurisdictions within the
United States as any Holder reasonably requests in writing, to keep
each registration or qualification (or exemption therefrom)
effective during the Effectiveness Period and to do any and all
other acts or things reasonably necessary to enable the disposition
in such jurisdictions of the Registrable Securities covered by each
Registration Statement, provided that the Company shall not be
required to qualify generally to do business in any jurisdiction
where it is not then so qualified, subject the Company to any
material tax in any such jurisdiction where it is not then so
subject or file a general consent to service of process in any such
jurisdiction.
(i) If requested by a
Holder, cooperate with such Holder to facilitate the timely
preparation and delivery of certificates representing Registrable
Securities to be delivered to a transferee pursuant to a
Registration Statement, which certificates shall be free, to the
extent permitted by the Purchase Agreement, of all restrictive
legends, and to enable such Registrable Securities to be in such
denominations and registered in such names as any such Holder may
request.
(j) Upon the occurrence
of any event contemplated by Section 3(d), 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 a 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 Holders in accordance
with clauses (iii) through (vi) of Section 3(d) above to suspend
the use of any Prospectus until the requisite changes to such
Prospectus have been made, then the Holders shall suspend use of
such Prospectus. The Company will use its best efforts to ensure
that the use of the Prospectus may be resumed as promptly as is
practicable. The Company shall be entitled to exercise its right
under this Section 3(j) to suspend the availability of a
Registration Statement and Prospectus, subject to the payment of
partial liquidated damages otherwise required pursuant to Section
2(d), for a period not to exceed 60 calendar days (which need not
be consecutive days) in any 12-month period.
(k) Otherwise use
commercially reasonable efforts to comply with all applicable rules
and regulations of the Commission under the Securities Act and the
Exchange Act, including, without limitation, Rule 172 under the
Securities Act, file any final Prospectus, including any supplement
or amendment thereof, with the Commission pursuant to Rule 424
under the Securities Act, promptly inform the Holders in writing
if, at any time during the Effectiveness Period, the Company does
not satisfy the conditions specified in Rule 172 and, as a result
thereof, the Holders are required to deliver a Prospectus in
connection with any disposition of Registrable Securities and take
such other actions as may be reasonably necessary to facilitate the
registration of the Registrable Securities hereunder.
(l) The Company shall
use its best efforts to maintain eligibility for use of Form S-3
(or any successor form thereto) for the registration of the resale
of Registrable Securities.
(m) The Company may
require each selling Holder to furnish to the Company a certified
statement as to the number of shares of Common Stock beneficially
owned by such Holder and, if required by the Commission, the
natural persons thereof that have voting and dispositive control
over the shares. During any periods that the Company is unable to
meet its obligations hereunder with respect to the registration of
the Registrable Securities solely because any Holder fails to
furnish such information within three Trading Days of the
Company’s request, any liquidated damages that are accruing
at such time as to such Holder only shall be tolled and any Event
that may otherwise occur solely because of such delay shall be
suspended as to such Holder only, until such information is
delivered to the Company.
4.
Registration Expenses. All fees
and expenses incident to the performance of or compliance with,
this Agreement by the Company shall be borne by the Company whether
or not any Registrable Securities are sold pursuant to a
Registration Statement. The fees and expenses referred to in the
foregoing sentence shall include, without limitation, (i) all
registration and filing fees (including, without limitation, fees
and expenses of the Company’s counsel and independent
registered public accountants) (A) with respect to filings made
with the Commission, (B) with respect to filings required to be
made with any Trading Market on which the Common Stock is then
listed for trading, and (C) in compliance with applicable state
securities or Blue Sky laws reasonably agreed to by the Company in
writing (including, without limitation, fees and disbursements of
counsel for the Company in connection with Blue Sky qualifications
or exemptions of the Registrable Securities), (ii) printing
expenses (including, without limitation, expenses of printing
certificates for Registrable Securities), (iii) messenger,
telephone and delivery expenses, (iv) fees and disbursements of
counsel for the Company, (v) Securities Act liability insurance, if
the Company so desires such insurance, and (vi) fees and expenses
of all other Persons retained by the Company in connection with the
consummation of the transactions contemplated by this Agreement. In
addition, the Company shall be responsible for all of its internal
expenses incurred in connection with the consummation of the
transactions contemplated by this Agreement (including, without
limitation, all salaries and expenses of its officers and employees
performing legal or accounting duties), the expense of any annual
audit and the fees and expenses incurred in connection with the
listing of the Registrable Securities on any securities exchange as
required hereunder. In no event shall the Company be responsible
for any broker or similar commissions of any Holder or, except to
the extent provided for in the Transaction Documents, any legal
fees or other costs of the Holders.
(a) Indemnification by the Company.
The Company shall, notwithstanding any termination of this
Agreement, indemnify and hold harmless each Holder, the officers,
directors, members, partners, agents, brokers (including brokers
who offer and sell Registrable Securities as principal as a result
of a pledge or any failure to perform under a margin call of Common
Stock), investment advisors and employees (and any other Persons
with a functionally equivalent role of a Person holding such
titles, notwithstanding a lack of such title or any other title) of
each of them, each Person who controls any such Holder (within the
meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act) and the officers, directors, members, stockholders,
partners, agents and employees (and any other Persons with a
functionally equivalent role of a Person holding such titles,
notwithstanding a lack of such title or any other title) of each
such controlling Person, to the fullest extent permitted by
applicable law, from and against any and all losses, claims,
damages, liabilities, costs (including, without limitation,
reasonable attorneys’ fees) and expenses (collectively,
“Losses”), as incurred,
arising out of or relating to (1) any untrue or alleged untrue
statement of a material fact contained in a Registration Statement,
any Prospectus or any form of prospectus or in any amendment or
supplement thereto or in any preliminary prospectus, or arising out
of or relating to any omission or alleged omission of a material
fact required to be stated therein or necessary to make the
statements therein (in the case of any Prospectus or supplement
thereto, in light of the circumstances under which they were made)
not misleading or (2) any violation or alleged violation by the
Company of the Securities Act, the Exchange Act or any state
securities law, or any rule or regulation thereunder, in connection
with the performance of its obligations under this Agreement,
except to the extent, but only to the extent, that (i) such untrue
statements or omissions are based solely upon information regarding
such Holder furnished in writing to the Company by such Holder
expressly for use therein, or to the extent that such information
relates to such Holder or such Holder’s proposed method of
distribution of Registrable Securities and was reviewed and
expressly approved in writing by such Holder expressly for use in a
Registration Statement, such Prospectus or in any amendment or
supplement thereto (it being understood that the Holder has
approved Annex B hereto for this purpose) or (ii) in the case of an
occurrence of an event of the type specified in Section
3(d)(iii)-(vi), the use by such Holder of an outdated, defective or
otherwise unavailable Prospectus after the Company has notified
such Holder in writing that the Prospectus is outdated, defective
or otherwise unavailable for use by such Holder and prior to the
receipt by such Holder of the Advice contemplated in Section 6(c).
The Company shall notify the Holders promptly of the institution,
threat or assertion of any Proceeding arising from or in connection
with the transactions contemplated by this Agreement of which the
Company is aware. Such indemnity shall remain in full force and
effect regardless of any investigation made by or on behalf of such
indemnified person and shall survive the transfer of any
Registrable Securities by any of the Holders in accordance with
Section 6(f).
(b) Indemnification by Holders.
Each Holder shall, severally and not jointly, indemnify and hold
harmless the Company, its directors, officers, agents and
employees, each Person who controls the Company (within the meaning
of Section 15 of the Securities Act and Section 20 of the Exchange
Act), and the directors, officers, agents or employees of such
controlling Persons, to the fullest extent permitted by applicable
law, from and against all Losses, as incurred, to the extent
arising out of or based solely upon: any untrue or alleged untrue
statement of a material fact contained in any Registration
Statement, any Prospectus, or in any amendment or supplement
thereto or in any preliminary prospectus, or arising out of or
relating to any omission or alleged omission of a material fact
required to be stated therein or necessary to make the statements
therein (in the case of any Prospectus or supplement thereto, in
light of the circumstances under which they were made) not
misleading (i) to the extent, but only to the extent, that such
untrue statement or omission is contained in any information so
furnished in writing by such Holder to the Company expressly for
inclusion in such Registration Statement or such Prospectus or (ii)
to the extent, but only to the extent, that such information
relates to such Holder’s information provided in the Selling
Stockholder Questionnaire or the proposed method of distribution of
Registrable Securities and was reviewed and expressly approved in
writing by such Holder expressly for use in a Registration
Statement (it being understood that the Holder has approved Annex B
hereto for this purpose), such Prospectus or in any amendment or
supplement thereto. In no event shall the liability of a selling
Holder be greater in amount than the dollar amount of the proceeds
(net of all expenses paid by such Holder in connection with any
claim relating to this Section 5 and the amount of any damages such
Holder has otherwise been required to pay by reason of such untrue
statement or omission) received by such Holder upon the sale of the
Registrable Securities included in the Registration Statement
giving rise to such indemnification obligation.
(c) Conduct of Indemnification
Proceedings. If any Proceeding shall be brought or asserted
against any Person entitled to indemnity hereunder (an
“Indemnified
Party”), such Indemnified Party shall promptly notify
the Person from whom indemnity is sought (the “Indemnifying Party”) in
writing, and the Indemnifying Party shall have the right to assume
the defense thereof, including the employment of counsel reasonably
satisfactory to the Indemnified Party and the payment of all fees
and expenses incurred in connection with defense thereof, provided
that the failure of any Indemnified Party to give such notice shall
not relieve the Indemnifying Party of its obligations or
liabilities pursuant to this Agreement, except (and only) to the
extent that it shall be finally determined by a court of competent
jurisdiction (which determination is not subject to appeal or
further review) that such failure shall have materially and
adversely prejudiced the Indemnifying Party.
An
Indemnified Party shall have the right to employ separate counsel
in any such Proceeding and to participate in the defense thereof,
but the fees and expenses of such counsel shall be at the expense
of such Indemnified Party or Parties unless: (1) the Indemnifying
Party has agreed in writing to pay such fees and expenses, (2) the
Indemnifying Party shall have failed promptly to assume the defense
of such Proceeding and to employ counsel reasonably satisfactory to
such Indemnified Party in any such Proceeding, or (3) the named
parties to any such Proceeding (including any impleaded parties)
include both such Indemnified Party and the Indemnifying Party, and
counsel to the Indemnified Party shall reasonably believe that a
material conflict of interest is likely to exist if the same
counsel were to represent such Indemnified Party and the
Indemnifying Party (in which case, if such Indemnified Party
notifies the Indemnifying Party in writing that it elects to employ
separate counsel at the expense of the Indemnifying Party, the
Indemnifying Party shall not have the right to assume the defense
thereof and the reasonable fees and expenses of no more than one
separate counsel shall be at the expense of the Indemnifying
Party). The Indemnifying Party shall not be liable for any
settlement of any such Proceeding effected without its written
consent, which consent shall not be unreasonably withheld or
delayed. No Indemnifying Party shall, without the prior written
consent of the Indemnified Party, effect any settlement of any
pending Proceeding in respect of which any Indemnified Party is a
party, unless such settlement includes an unconditional release of
such Indemnified Party from all liability on claims that are the
subject matter of such Proceeding.
Subject
to the terms of this Agreement, all reasonable fees and expenses of
the Indemnified Party (including reasonable fees and expenses to
the extent incurred in connection with investigating or preparing
to defend such Proceeding in a manner not inconsistent with this
Section) shall be paid to the Indemnified Party, as incurred,
within ten Trading Days of written notice thereof to the
Indemnifying Party, provided that the Indemnified Party shall
promptly reimburse the Indemnifying Party for that portion of such
fees and expenses applicable to such actions for which such
Indemnified Party is finally determined by a court of competent
jurisdiction (which determination is not subject to appeal or
further review) not to be entitled to indemnification
hereunder.
(d) Contribution. If the
indemnification under Section 5(a) or 5(b) is unavailable to an
Indemnified Party or insufficient to hold an Indemnified Party
harmless for any Losses, then each Indemnifying Party shall
contribute to the amount paid or payable by such Indemnified Party,
in such proportion as is appropriate to reflect the relative fault
of the Indemnifying Party and Indemnified Party in connection with
the actions, statements or omissions that resulted in such Losses
as well as any other relevant equitable considerations. The
relative fault of such Indemnifying Party and Indemnified Party
shall be determined by reference to, among other things, whether
any action in question, including any untrue or alleged untrue
statement of a material fact or omission or alleged omission of a
material fact, has been taken or made by, or relates to information
supplied by, such Indemnifying Party or Indemnified Party, and the
parties’ relative intent, knowledge, access to information
and opportunity to correct or prevent such action, statement or
omission. The amount paid or payable by a party as a result of any
Losses shall be deemed to include, subject to the limitations set
forth in this Agreement, any reasonable attorneys’ or other
fees or expenses incurred by such party in connection with any
Proceeding to the extent such party would have been indemnified for
such fees or expenses if the indemnification provided for in this
Section was available to such party in accordance with its
terms.
The
parties hereto agree that it would not be just and equitable if
contribution pursuant to this Section 5(d) were determined by pro
rata allocation or by any other method of allocation that does not
take into account the equitable considerations referred to in the
immediately preceding paragraph. In no event shall the contribution
obligation of a Holder of Registrable Securities be greater in
amount than the dollar amount of the proceeds (net of all expenses
paid by such Holder in connection with any claim relating to this
Section 5 and the amount of any damages such Holder has otherwise
been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission) received by it upon the
sale of the Registrable Securities giving rise to such contribution
obligation.
The
indemnity and contribution agreements contained in this Section are
in addition to any liability that the Indemnifying Parties may have
to the Indemnified Parties.
(a) Remedies. In the event of a
breach by the Company or by a Holder of any of their respective
obligations under this Agreement, each Holder or the Company, as
the case may be, in addition to being entitled to exercise all
rights granted by law and under this Agreement, including recovery
of damages, shall be entitled to specific performance of its rights
under this Agreement. Each of the Company and each Holder agrees
that monetary damages would not provide adequate compensation for
any losses incurred by reason of a breach by it of any of the
provisions of this Agreement and hereby further agrees that, in the
event of any action for specific performance in respect of such
breach, it shall not assert or shall waive the defense that a
remedy at law would be adequate.
(b) No Piggyback on Registrations;
Prohibition on Filing Other Registration Statements. Neither
the Company nor any of its security holders (other than the Holders
in such capacity pursuant hereto) may include securities of the
Company in any Registration Statements other than the Registrable
Securities, except that, subject to Section 2(c), the Company may
at its discretion include up to 357,996 shares of Common Stock
underlying warrants issued to HCW. The Company shall not file any
other registration statements until all Registrable Securities are
registered pursuant to a Registration Statement that is declared
effective by the Commission, provided that this Section 6(b) shall
not prohibit the Company from filing amendments to registration
statements filed prior to the date of this Agreement so long as no
new securities are registered on any such existing registration
statements.
(c) Discontinued Disposition. By
its acquisition of Registrable Securities, each Holder agrees that,
upon receipt of a notice from the Company of the occurrence of any
event of the kind described in Section 3(d)(iii) through (vi), such
Holder will forthwith discontinue disposition of such Registrable
Securities under a Registration Statement until it is advised in
writing (the “Advice”) by the Company
that the use of the applicable Prospectus (as it may have been
supplemented or amended) may be resumed. The Company will use its
best efforts to ensure that the use of the Prospectus may be
resumed as promptly as is practicable. The Company agrees and
acknowledges that any periods during which the Holder is required
to discontinue the disposition of the Registrable Securities
hereunder shall be subject to the provisions of Section
2(d).
(d) Amendments and Waivers. The
provisions of this Agreement, including the provisions of this
sentence, may not be amended, modified or supplemented, and waivers
or consents to departures from the provisions hereof may not be
given, unless the same shall be in writing and signed by the
Company and the Holders of 50.1% or more of the then outstanding
Registrable Securities (for purposes of clarification, this
includes any Registrable Securities issuable upon exercise or
conversion of any Security), provided that, if any amendment,
modification or waiver disproportionately and adversely impacts a
Holder (or group of Holders), the consent of such
disproportionately impacted Holder (or group of Holders) shall be
required. If a Registration Statement does not register all of the
Registrable Securities pursuant to a waiver or amendment done in
compliance with the previous sentence, then the number of
Registrable Securities to be registered for each Holder shall be
reduced pro rata among all Holders and each Holder shall have the
right to designate which of its Registrable Securities shall be
omitted from such Registration Statement. Notwithstanding the
foregoing, a waiver or consent to depart from the provisions hereof
with respect to a matter that relates exclusively to the rights of
a Holder or some Holders and that does not directly or indirectly
affect the rights of other Holders may be given only by such Holder
or Holders of all of the Registrable Securities to which such
waiver or consent relates; provided, however, that the provisions of
this sentence may not be amended, modified, or supplemented except
in accordance with the provisions of the first sentence of this
Section 6(d). No consideration shall be offered or paid to any
Person to amend or consent to a waiver or modification of any
provision of this Agreement unless the same consideration also is
offered to all of the parties to this Agreement.
(e) Notices. Any and all notices or
other communications or deliveries required or permitted to be
provided hereunder shall be delivered as set forth in the Purchase
Agreement.
(f) Successors and Assigns. This
Agreement shall inure to the benefit of and be binding upon the
successors and permitted assigns of each of the parties and shall
inure to the benefit of each Holder. The Company may not assign
(except by merger) its rights or obligations hereunder without the
prior written consent of all of the Holders of the then outstanding
Registrable Securities. Each Holder may assign their respective
rights hereunder in the manner and to the Persons as permitted
under Section 5.7 of the Purchase Agreement.
(g) No Inconsistent Agreements.
Neither the Company nor any of its Subsidiaries has entered, as of
the date hereof, nor shall the Company or any of its Subsidiaries,
on or after the date of this Agreement, enter into any agreement
with respect to its securities, that would have the effect of
impairing the rights granted to the Holders in this Agreement or
otherwise conflicts with the provisions hereof. Neither the Company
nor any of its Subsidiaries has previously entered into any
agreement granting any registration rights with respect to any of
its securities to any Person that have not been satisfied in
full.
(h) Execution and Counterparts.
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 the other party, it being
understood that both parties need not sign the same counterpart. In
the event that any signature is delivered by facsimile transmission
or by e-mail delivery of a “.pdf” format data file,
such signature shall create a valid and binding obligation of the
party executing (or on whose behalf such signature is executed)
with the same force and effect as if such facsimile or
“.pdf” signature page were an original
thereof.
(i) Governing Law. All questions
concerning the construction, validity, enforcement and
interpretation of this Agreement shall be determined in accordance
with the provisions of the Purchase Agreement.
(j) Cumulative Remedies. The
remedies provided herein are cumulative and not exclusive of any
other remedies provided by law.
(k) 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.
(l) Headings. The headings in this
Agreement are for convenience only, do not constitute a part of the
Agreement and shall not be deemed to limit or affect any of the
provisions hereof.
(m) Independent Nature of Holders’
Obligations and Rights. The obligations of each Holder
hereunder are several and not joint with the obligations of any
other Holder hereunder, and no Holder shall be responsible in any
way for the performance of the obligations of any other Holder
hereunder. Nothing contained herein or in any other agreement or
document delivered at any closing, and no action taken by any
Holder pursuant hereto or thereto, shall be deemed to constitute
the Holders as a partnership, an association, a joint venture or
any other kind of group or entity, or create a presumption that the
Holders are in any way acting in concert or as a group or entity
with respect to such obligations or the transactions contemplated
by this Agreement or any other matters, and the Company
acknowledges that the Holders are not acting in concert or as a
group, and the Company shall not assert any such claim, with
respect to such obligations or transactions. Each Holder shall be
entitled to protect and enforce its rights, including without
limitation the rights arising out of this Agreement, and it shall
not be necessary for any other Holder to be joined as an additional
party in any proceeding for such purpose. The use of a single
agreement with respect to the obligations of the Company contained
was solely in the control of the Company, not the action or
decision of any Holder, and was done solely for the convenience of
the Company and not because it was required or requested to do so
by any Holder. It is expressly understood and agreed that each
provision contained in this Agreement is between the Company and a
Holder, solely, and not between the Company and the Holders
collectively and not between and among Holders.
********************
(Signature Pages Follow)
IN
WITNESS WHEREOF, the parties have executed this Registration Rights
Agreement as of the date first written above.
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TENAX THERAPEUTICS, INC.
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By:__/s/
Michael Jebsen___________________
Name:
Michael Jebsen
Title:
Chief Financial Officer
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[SIGNATURE
PAGE OF HOLDERS FOLLOWS]
[SIGNATURE
PAGE OF HOLDERS TO REGISTRATION RIGHTS AGREEMENT]
Name of
Holder: Armistice Capital
Master Fund Ltd.
Signature of Authorized Signatory of
Holder: _/s/ Steven
Boyd_______________
Name of
Authorized Signatory: _Steven
Boyd________________
Title
of Authorized Signatory: _CIO of Armistice Capital, LLC, the
Investment Manager___
Annex A
Plan of Distribution
Each
Selling Stockholder (the “Selling Stockholders”) of
the securities and any of their pledgees, assignees and
successors-in-interest may, from time to time, sell any or all of
their securities covered hereby on the principal Trading Market or
any other stock exchange, market or trading facility on which the
securities are traded or in private transactions. These sales may
be at fixed or negotiated prices. A Selling Stockholder may use any
one or more of the following methods when selling
securities:
●
ordinary brokerage
transactions and transactions in which the broker-dealer solicits
purchasers;
●
block trades in
which the broker-dealer will attempt to sell the securities as
agent but may position and resell a portion of the block as
principal to facilitate the transaction;
●
purchases by a
broker-dealer as principal and resale by the broker-dealer for its
account;
●
an exchange
distribution in accordance with the rules of the applicable
exchange;
●
privately
negotiated transactions;
●
settlement of short
sales;
●
in transactions
through broker-dealers that agree with the Selling Stockholders to
sell a specified number of such securities at a stipulated price
per security;
●
through the writing
or settlement of options or other hedging transactions, whether
through an options exchange or otherwise;
●
a combination of
any such methods of sale; or
●
any other method
permitted pursuant to applicable law.
The
Selling Stockholders may also sell securities under Rule 144 or any
other exemption from registration under the Securities Act of 1933,
as amended (the “Securities Act”), if
available, rather than under this prospectus.
Broker-dealers
engaged by the Selling Stockholders may arrange for other
brokers-dealers to participate in sales. Broker-dealers may receive
commissions or discounts from the Selling Stockholders (or, if any
broker-dealer acts as agent for the purchaser of securities, from
the purchaser) in amounts to be negotiated, but, except as set
forth in a supplement to this Prospectus, in the case of an agency
transaction not in excess of a customary brokerage commission in
compliance with FINRA Rule 2121; and in the case of a principal
transaction a markup or markdown in compliance with FINRA Rule
2121.
In
connection with the sale of the securities or interests therein,
the Selling Stockholders may enter into hedging transactions with
broker-dealers or other financial institutions, which may in turn
engage in short sales of the securities in the course of hedging
the positions they assume. The Selling Stockholders may also sell
securities short and deliver these securities to close out their
short positions, or loan or pledge the securities to broker-dealers
that in turn may sell these securities. The Selling Stockholders
may also enter into option or other transactions with
broker-dealers or other financial institutions or create one or
more derivative securities which require the delivery to such
broker-dealer or other financial institution of securities offered
by this prospectus, which securities such broker-dealer or other
financial institution may resell pursuant to this prospectus (as
supplemented or amended to reflect such transaction).
The
Selling Stockholders and any broker-dealers or agents that are
involved in selling the securities may be deemed to be
“underwriters” within the meaning of the Securities Act
in connection with such sales. In such event, any commissions
received by such broker-dealers or agents and any profit on the
resale of the securities purchased by them may be deemed to be
underwriting commissions or discounts under the Securities Act.
Each Selling Stockholder has informed the Company that it does not
have any written or oral agreement or understanding, directly or
indirectly, with any person to distribute the
securities.
The
Company is required to pay certain fees and expenses incurred by
the Company incident to the registration of the securities. The
Company has agreed to indemnify the Selling Stockholders against
certain losses, claims, damages and liabilities, including
liabilities under the Securities Act.
We
agreed to keep this prospectus effective until the earlier of (i)
the date on which the securities may be resold by the Selling
Stockholders without registration and without regard to any volume
or manner-of-sale limitations by reason of Rule 144, without the
requirement for the Company to be in compliance with the current
public information under Rule 144 under the Securities Act or any
other rule of similar effect or (ii) all of the securities have
been sold pursuant to this prospectus or Rule 144 under the
Securities Act or any other rule of similar effect. The resale
securities will be sold only through registered or licensed brokers
or dealers if required under applicable state securities laws. In
addition, in certain states, the resale securities covered hereby
may not be sold unless they have been registered or qualified for
sale in the applicable state or an exemption from the registration
or qualification requirement is available and is complied
with.
Under
applicable rules and regulations under the Exchange Act, any person
engaged in the distribution of the resale securities may not
simultaneously engage in market making activities with respect to
the common stock for the applicable restricted period, as defined
in Regulation M, prior to the commencement of the distribution. In
addition, the Selling Stockholders will be subject to applicable
provisions of the Exchange Act and the rules and regulations
thereunder, including Regulation M, which may limit the timing of
purchases and sales of the common stock by the Selling Stockholders
or any other person. We will make copies of this prospectus
available to the Selling Stockholders and have informed them of the
need to deliver a copy of this prospectus to each purchaser at or
prior to the time of the sale (including by compliance with Rule
172 under the Securities Act).
Annex
B
SELLING SHAREHOLDERS
The
common stock being offered by the selling shareholders are those
previously issued to the selling shareholders, and those issuable
to the selling shareholders, upon exercise of the warrants. For
additional information regarding the issuances of those warrants,
see “Private Placement of Warrants” above. We are
registering the shares of common stock in order to permit the
selling shareholders to offer the shares for resale from time to
time. Except for ______________, the selling shareholders have not
had any material relationship with us within the past three
years.
The
table below lists the selling shareholders and other information
regarding the beneficial ownership of the shares of common stock by
each of the selling shareholders. The second column lists the
number of shares of common stock beneficially owned by each selling
shareholder, based on its ownership of the shares of common stock
and warrants, as of ________, 2021, assuming exercise of the
warrants held by the selling shareholders on that date, without
regard to any limitations on exercises.
The
third column lists the shares of common stock being offered by this
prospectus by the selling shareholders.
In
accordance with the terms of a registration rights agreement with
the selling shareholders, this prospectus generally covers the
resale the maximum number of shares of common stock issuable upon
exercise of the warrants, determined as if the outstanding warrants
were exercised in full as of the trading day immediately preceding
the date this registration statement was initially filed with the
SEC, each as of the trading day immediately preceding the
applicable date of determination and all subject to adjustment as
provided in the registration right agreement, without regard to any
limitations on the exercise of the warrants. The fourth column assumes the sale
of all of the shares offered by the selling shareholders pursuant
to this prospectus.
Under
the terms of the warrants, a selling shareholder may not exercise
the warrants to the extent such exercise would cause such selling
shareholder, together with its affiliates and attribution parties,
to beneficially own a number of shares of common stock which would
exceed 9.99% of our then outstanding common stock following such
exercise, excluding for purposes of such determination shares of
common stock issuable upon exercise of the warrants which have not
been exercised. The number of shares in the second column does not
reflect this limitation. The selling shareholders may sell all,
some or none of their shares in this offering. See "Plan of
Distribution."
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Name of Selling Shareholder
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Number of shares of Common Stock Owned Prior to
Offering
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Maximum Number of shares of Common Stock to be Sold Pursuant to
this Prospectus
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Number of shares of Common Stock Owned After Offering
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Annex
C
TENAX THERAPEUTICS, INC.
Selling Stockholder Notice and Questionnaire
The
undersigned beneficial owner of common stock (the
“Registrable
Securities”) of Tenax Therapeutics, Inc., a Delaware
corporation (the “Company”), understands
that the Company has filed or intends to file with the Securities
and Exchange Commission (the “Commission”) a
registration statement (the “Registration Statement”)
for the registration and resale under Rule 415 of the Securities
Act of 1933, as amended (the “Securities Act”), of the
Registrable Securities, in accordance with the terms of the
Registration Rights Agreement (the “Registration Rights
Agreement”) to which this document is annexed. A copy
of the Registration Rights Agreement is available from the Company
upon request at the address set forth below. All capitalized terms
not otherwise defined herein shall have the meanings ascribed
thereto in the Registration Rights Agreement.
Certain
legal consequences arise from being named as a selling stockholder
in the Registration Statement and the related prospectus.
Accordingly, holders and beneficial owners of Registrable
Securities are advised to consult their own securities law counsel
regarding the consequences of being named or not being named as a
selling stockholder in the Registration Statement and the related
prospectus.
NOTICE
The
undersigned beneficial owner (the “Selling Stockholder”) of
Registrable Securities hereby elects to include the Registrable
Securities owned by it in the Registration Statement.
The
undersigned hereby provides the following information to the
Company and represents and warrants that such information is
accurate:
QUESTIONNAIRE
1. Name.
(a)
Full Legal Name of
Selling Stockholder
(b)
Full Legal Name of
Registered Holder (if not the same as (a) above) through which
Registrable Securities are held:
(c)
Full Legal Name of
Natural Control Person (which means a natural person who directly
or indirectly alone or with others has power to vote or dispose of
the securities covered by this Questionnaire):
2.
Address for Notices to Selling Stockholder:
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Telephone:
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Fax:
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Contact
Person:
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3.
Broker-Dealer Status:
(a)
Are you a
broker-dealer?
(b)
If
“yes” to Section 3(a), did you receive your Registrable
Securities as compensation for investment banking services to the
Company?
Note:
If “no”
to Section 3(b), the Commission’s staff has indicated that
you should be identified as an underwriter in the Registration
Statement.
(c)
Are you an
affiliate of a broker-dealer?
(d)
If you are an
affiliate of a broker-dealer, do you certify that you purchased the
Registrable Securities in the ordinary course of business, and at
the time of the purchase of the Registrable Securities to be
resold, you had no agreements or understandings, directly or
indirectly, with any person to distribute the Registrable
Securities?
Note:
If “no”
to Section 3(d), the Commission’s staff has indicated that
you should be identified as an underwriter in the Registration
Statement.
4.
Beneficial Ownership of Securities of the Company Owned by the
Selling Stockholder.
Except as set forth below in this Item 4, the undersigned is not
the beneficial or registered owner of any securities of the Company
other than the securities issuable pursuant to the Purchase
Agreement.
(a)
Type and Amount of
other securities beneficially owned by the Selling
Stockholder:
5.
Relationships with the Company:
Except as set forth below, neither the undersigned nor any of its
affiliates, officers, directors or principal equity holders (owners
of 5% of more of the equity securities of the undersigned) has held
any position or office or has had any other material relationship
with the Company (or its predecessors or affiliates) during the
past three years.
State any
exceptions here:
The
undersigned agrees to promptly notify the Company of any material
inaccuracies or changes in the information provided herein that may
occur subsequent to the date hereof at any time while the
Registration Statement remains effective; provided, that the
undersigned shall not be required to notify the Company of any
changes to the number of securities held or owned by the
undersigned or its affiliates.
By
signing below, the undersigned consents to the disclosure of the
information contained herein in its answers to Items 1 through 5
and the inclusion of such information in the Registration Statement
and the related prospectus and any
amendments or supplements thereto. The undersigned
understands that such information will be relied upon by the
Company in connection with the preparation or amendment of the
Registration Statement and the related prospectus and any
amendments or supplements thereto.
IN
WITNESS WHEREOF the undersigned, by authority duly given, has
caused this Notice and Questionnaire to be executed and delivered
either in person or by its duly authorized agent.
Date:
Beneficial Owner:
Name:
Title:
PLEASE FAX A COPY (OR EMAIL A .PDF COPY) OF THE COMPLETED AND
EXECUTED NOTICE AND QUESTIONNAIRE TO:
SEPARATION
AND GENERAL RELEASE
AGREEMENT
This
Separation and General Release Agreement (the
“Agreement”) is made and entered into by and between
Tenax Therapeutics, Inc. (the “Company”) and Anthony A.
DiTonno (the “Employee”).
WHEREAS, Employee
is currently employed by the Company as Chief Executive Officer
pursuant to an employment agreement between Employee and the
Company dated June 1, 2018 (“Employment
Agreement”).
WHEREAS, in
connection with Employee’s retirement from the Company and
the transition of his responsibilities to the next Chief Executive
Officer, the employment relationship between the Company and
Employee is being terminated as of the Effective Separation Date
defined herein.
WHEREAS, the
Company is willing to provide Employee the severance benefits
described herein in exchange for his entering into this Agreement
and assisting with the transition to the next Chief Executive
Officer, and the parties desire to terminate their employment
relationship on mutually agreeable terms and avoid all litigation
relating to the employment relationship and its
termination.
WHEREAS, Employee
represents that he has carefully read this entire Agreement,
understands its consequences, and voluntarily enters into
it.
NOW
THEREFORE, in consideration of the above and the mutual promises
set forth below, and of other good and valuable consideration, the
receipt and sufficiency of which the parties acknowledge, Employee
and the Company agree as follows:
1. SEPARATION. Employee tenders,
and the Company (including the Board of Directors of the Company)
accepts, Employee’s voluntary resignation from all positions
with the Company, including as a member of the Board of Directors,
such voluntary resignation to be effective July 13, 2021
(“Effective Separation Date”).
2. SEVERANCE BENEFITS. In
consideration of the release of claims and other promises contained
herein and on the condition that this
Agreement has become effective under Section 6 of this
Agreement and that Employee fully complies with his
obligations under this Agreement, the Company will provide Employee
with the following:
(a) Severance pay in the total amount of Five Hundred
and Sixty Two Thousand Eight Hundred and Fifty Two Dollars
($562,852) (less all applicable withholdings), payable in a lump
sum on the sixtieth (60th)
day following the Effective Separation Date (“Severance
Payment Date”).
(b) Transition Services Grant. In
consideration of Employee’s services and assistance in
facilitating the transition of Chief Executive Officer
responsibilities to the next Chief Executive Officer of the
Company, Employee shall be awarded, as of the date hereof, options
to purchase up to 50,000 shares of $0.0001 par value common stock
of the Company pursuant to the Company’s 2016 Stock Incentive
Plan, such options vesting in full on the Effective Separation
Date, as further set forth in the Award Agreement attached hereto
as Exhibit A (such
award, the “Transition Services Grant”).
(c) Prior Equity Grants. As of the
Effective Separation Date, the vesting on all unvested stock
options (including, for the purpose of clarity, the Transition
Services Grant) previously granted by Company to Employee shall
accelerated and be vested and all stock options held by Employee
shall be exercisable as set forth in the applicable option
agreement, except that all options shall be exercisable through the
earlier of: (i) the termination date of such options set forth in
the applicable option agreement; or (ii) July 13, 2026. Employee
understands that, as a result of such extension, any options not
exercised by Employee with 90 days of the Effective Separation Date
may no longer qualify as incentive stock options within the meaning
of Section 422 of the Internal Revenue Code of 1986, as
amended.
(d) Separation Expenses. The
Company will reimburse Executive for the attorney’s fees he
has incurred in connection with the review and negotiation of this
Executive Employment Agreement in an amount not to exceed
$5,000.
(e) Conditioned on the
proper and timely election by Employee and/or his qualified
beneficiaries to continue group health insurance under COBRA after
the Effective Separation Date, reimbursement of the applicable
COBRA premiums paid by Employee for such continuation coverage for
up to the eighteen (18) month period following the Effective
Separation Date. Reimbursements for
COBRA premium payments shall begin on the Severance Payment Date
and shall be made as soon as possible following the
Employee’s submission to the Company of proof of timely
payments, but not later than thirty (30) days after the
Employee’s submission of proof of timely payments; provided,
however, all such claims for reimbursement shall be submitted by
the Employee and paid by the Company no later than twenty-one (21)
months following the termination of the Employee’s
employment. Any obligation for the Company to make payments for
COBRA reimbursement under this Agreement shall immediately cease
when the Employee becomes eligible for health insurance from a
subsequent employer, and the Employee shall promptly notify the
Company of such subsequent eligibility. If Employee desires COBRA
coverage, Employee shall bear full responsibility for applying for
COBRA coverage and nothing herein shall constitute a guarantee of
COBRA benefits. Under no circumstances will Employee be entitled to
a cash payment or other benefit in lieu of reimbursements for the
actual costs of premiums for COBRA continuation hereunder.The
amount of expenses eligible for reimbursement during any calendar
year shall not be affected by the amount of expenses eligible for
reimbursement in any other calendar year.
3. EMPLOYEE
ACKNOWLEDGEMENTS. By signing this Agreement, Employee
represents that he has been properly paid for all time worked and
received all wages and salary (including overtime pay), payment for
accrued but unused vacation or paid time off, expense
reimbursement, and all other amounts of any kind due to him from
the Company and he is not entitled to any other compensation,
payments or benefits of any nature as the result of the termination
of his employment with the sole exception of (a) his final paycheck
for work during his final payroll period which will be paid on the
next regularly scheduled payroll date following the Effective
Separation Date, (b) the pay and benefits under this Agreement, (c)
any accrued and vested benefits payable pursuant to the
Company’s employee benefit plans and (d) acceleration of
vesting of stock option grants and extension of time to exercise as
set forth in Section 2(b) above.
(a) In
consideration of the benefits conferred by this Agreement,
EMPLOYEE (ON BEHALF
OF HIMSELF AND HIS ASSIGNS, HEIRS AND OTHER REPRESENTATIVES)
RELEASES THE COMPANY AND ITS RELATED PARTIES (DEFINED BELOW)
(“RELEASEES”) FROM ALL
CLAIMS AND
WAIVES ALL
RIGHTS KNOWN OR
UNKNOWN, HE MAY HAVE OR CLAIM TO HAVE AGAINST THE COMPANY, ITS
PREDECESSORS, SUBSIDIARIES OR AFFILIATES arising out of or relating to his employment with
the Company and separation therefrom, to the fullest extent
permitted by law, including but not limited
to any and all claims, debts,
demands, actions, causes of action, damages, liabilities, costs,
and expenses:
(i) arising
out of or relating to Employee’s employment with the Company
and the separation of the same;
(ii) arising
out of or relating to Employee’s employment agreement with
the Company or ancillary agreements;
(iii) arising
out of or relating to employment practices or policies of
the Company;
(iv) arising
under federal, state (including specifically, but not limited to,
North Carolina) or local laws prohibiting discrimination,
harassment, or retaliation on the basis of age (including but not
limited to claims under the Age Discrimination in Employment Act of
1967 (“ADEA”), as amended), sex, national origin, race,
religion, disability, veteran status, or any other protected
status, class, or characteristic;
(v) for
compensation and benefits (including but not limited to claims
under the Employee Retirement Income Security Act of 1974
(“ERISA”), Fair Labor Standards Act of 1938
(“FLSA”), Family and Medical Leave Act of 1993
(“FMLA”), all as amended, and similar federal, state,
and local laws and claims under any other Company policy, plan or
program;
(vi) under
federal, state, or local law of any nature whatsoever (including
but not limited to constitutional, statutory, tort, express or
implied contract, or other common law, as well as breach of
covenants of fair dealing and good faith, civil conspiracy, duress,
promissory or equitable estoppel, fraud, mistake,
misrepresentation, violation of public policy, retaliation,
personal injury, breach of fiduciary duty, bad faith, and any other
wrongful conduct);
and
(vii) for
attorneys’ fees.
Provided,
however, the release of claims set forth in this Agreement does
NOT:
(viii) apply
to claims for workers’ compensation benefits, disability
insurance benefits, vested retirement benefits, or unemployment
benefits filed with the applicable state agencies or where
otherwise prohibited by law;
(ix) bar
a challenge under the Older Workers Benefit Protection Act of 1990
(OWBPA) to the enforceability of the waiver and release of ADEA
claims set forth in this Agreement; or
(x) prohibit
Employee from filing a charge with or participating in an
investigation by the U.S. Equal Employment Opportunity Commission
or other governmental agency with jurisdiction concerning the
terms, conditions and privileges of employment or jurisdiction over
the Company’s business or assisting with an investigation
conducted internally by the Company; provided, however, that by
signing this Agreement, Employee waives the right to, and shall not
seek or accept, any monetary or other relief of any nature
whatsoever in connection with any such charges, investigations or
proceedings. This Agreement does not limit Employee’s right
to receive an award for information provided to the SEC, FINRA, or
any other securities regulatory agency or authority.
(b) Employee
will not sue the Releasees on any matters relating to his
employment or separation therefrom arising before the execution of
this Agreement (with the sole exception of claims and challenges
set forth in subparagraph (a) (v) through (vi) above), or join as a
party with others who may sue on any such claims, or opt-in to an
action brought by others asserting such claims, and in the event
that Employee is made a member of any class asserting such claims
without his knowledge or consent, Employee shall opt out of such
action at the first opportunity.
(c) The
Releasees which Employee is releasing by signing this Agreement
include: the Company and its predecessors, successors, and assigns
and its and/or their past, present and future owners, parents,
subsidiaries, affiliates, predecessors, successors, assigns,
officers, directors, employees, employee benefit plans (together
with all plan administrators, trustees, fiduciaries and insurers)
and agents.
5.
COMPANY INFORMATION
AND PROPERTY.
(a)
Employee shall not at any time after his employment terminates
disclose, use or aid third parties in obtaining or using any
confidential or proprietary Company information, including but not
limited to Confidential Information (as defined in the Employee
Non-Disclosure and Invention Assignment Agreement executed by the
Employee, Effective June 1, 2018 (the “Confidentiality
Agreement”), nor access or attempt to access any Company
computer systems, networks or any resources or data that resides
thereon.
Confidential
or proprietary information is information relating to the Company
or any aspect of its business which is not generally available to
the public, the Company’s competitors, or other third
parties, or ascertainable through common sense or general business
or technical knowledge; however, nothing in this paragraph or in
this Agreement or in the agreements referenced in subparagraph (c)
below is intended, nor shall be construed, to (i) prohibit Employee
from any communications to, or participation in any investigation
or proceeding conducted by, any governmental agency referenced in
Section 4, (ii) interfere with, restrain, or prevent Employee
communications regarding wages, hours, or other terms and
conditions of employment, or (iii) prevent Employee from otherwise
engaging in any legally protected activity. Moreover,
notwithstanding the foregoing or any other provision in this
Agreement, Employee cannot be held criminally or civilly liable
under any federal or state trade secret law if he discloses a trade
secret (iv) to federal, state, or local government officials, to
his attorneys, or in a sealed court document, for the purpose of
reporting or investigating a suspected violation of the law; or (v)
to his attorneys or in a sealed court document in connection with a
lawsuit for retaliation by an employer for reporting a suspected
violation of the law.
(b) All
records, files or other materials maintained by or under the
control, custody or possession of the Company or its agents in
their capacity as such shall be and remain the Company’s
property and Employee shall return all such property. By signing
this Agreement, Employee represents that:
(i)
Employee
has returned all the Company property (including, but not limited
to, credit cards; keys; company car; cell phone; air card; access
cards; thumb drive(s), laptop(s), personal digital devices and all
other computer hardware and software; records, files, documents,
manuals, and other documents in whatever form they exist, whether
electronic, hard copy or otherwise and all copies, notes or
summaries thereof and turned over all Company passwords or access
codes which he created, received or otherwise obtained in
connection with his employment);
(ii)
Employee
has not deleted any emails, files or other information from any
Company computer or device prior to his return of the
property;
(iii)
Employee
has permanently deleted any Company information that may reside on
his personal computer(s), other devices or accounts and, if
requested by the Company, has submitted all personal computers,
phones and other devices which he used for Company business, and
has identified all personal accounts on which Company information
has been placed and related passwords, to a third party vendor, as
may be designated by the Company, for inspection and removal of any
Company-related information; and
(iv)
Employee
will fully cooperate with the Company in winding up his work and
transferring that work to those individuals designated by the
Company.
(c) Nothing
in this Agreement shall relieve Employee from any obligations under
any other previously executed Confidentiality Agreement or any
other proprietary information or secrecy agreements. All such
agreements shall continue to be in full force and effect upon the
execution of this Agreement subject to the clarification set forth
in subparagraph (a) above.
6. RIGHT
TO REVIEW AND REVOKE. The
Company delivered this Agreement to Employee on July 1, 2021 by
hand-delivery and desires that he have adequate time and
opportunity to review and understand the consequences of entering
into it. Accordingly, the Company advises him to consult with his
attorney prior to executing it and that he has twenty-one (21) days
within which to consider it. In the event that he does not return
an executed copy of the Agreement to Margaret Rosenfeld at K&L
Gates LLP, 4350 Lassiter at North Hills Avenue, Suite 300, Raleigh,
NC 27609, by no later than the 22nd calendar day after receiving
it, this Agreement and the obligations of the Company herein shall
become null and void and Employee’s employment will terminate
on the Effective Separation Date and he will receive base pay (less
applicable deductions) through the Effective Separation Date and
will not be eligible for the severance benefits described in
Section 2. Employee may revoke the Agreement during the seven (7)
day period immediately following his execution of the Agreement
(“Revocation Period”). The Agreement will not become
effective or enforceable until the Revocation Period has expired on
the eighth (8th) day after Employee signs this Agreement. To revoke
the Agreement, a written notice of revocation must be delivered to
Margaret Rosenfeld at K&L Gates LLP.
7. CONFIDENTIALITY
AND NON-DISPARAGEMENT.
Employee shall keep the terms and
provisions of this Agreement confidential, and Employee represents
and warrants that since receiving this Agreement he has not
disclosed, and going forward will not disclose, the terms and
conditions of this Agreement to third parties, except as follows:
(i) he may reveal the terms and provisions of this Agreement to
members of his immediate family, or to an attorney whom he may
consult for legal advice, or representatives of any governmental
agency referenced in Section 4, provided that such persons agree to
maintain the confidentiality of the Agreement and (ii) he may
disclose the terms and provisions of this Agreement to the extent
such disclosure is required by law. Employee represents and
warrants that since receiving this Agreement, he (i) has not made,
and going forward will not make, disparaging, defaming or
derogatory remarks about the Company or its products, services,
business practices, directors, officers, managers or employees to
anyone; nor (ii) taken, and going forward will not take, any action
that may impair the relations between the Company and its vendors,
customers, employees, or agents or that may be detrimental to or
interfere with, the Company or its business.
Nothing
in this section nor in this Agreement is intended, nor shall be
construed, to (iii) prohibit Employee from any communications to,
or participation in any investigation or proceeding conducted by,
any governmental agency referenced in Section 4, (iv) interfere
with, restrain, or prevent Employee communications regarding wages,
hours, or other terms and conditions of employment, or (v) prevent
Employee from otherwise engaging in any legally protected
activity.
8. OTHER.
Except as expressly provided in this Agreement, this Agreement
supersedes all other understandings and agreements, oral or
written, between the parties and constitutes the sole agreement
between the parties with respect to its subject matter except that
Employee specifically acknowledges and agrees that his obligations
under Section 7 (Confidential Information and Competitive Business
Activities) and the Confidentiality Agreement incorporated by
reference in Section 7 of the Employment Agreement shall continue
after the termination of that Employment Agreement in accordance
with their terms. Each party acknowledges that no representations,
inducements, promises or agreements, oral or written, have been
made by any party or by anyone acting on behalf of any party, which
are not embodied in this Agreement and no agreement, statement or
promise not contained in the Agreement shall be valid or binding on
the parties unless such change or modification is in writing and is
signed by the parties. Employee’s or the Company’s
waiver of any breach of a provision of this Agreement shall not
waive any subsequent breach by the other party. If a court of
competent jurisdiction holds that any provision or sub-part thereof
contained in this Agreement is invalid, illegal or unenforceable,
that invalidity, illegality or unenforceability shall not affect
any other provision in this Agreement.
This
Agreement is intended to avoid all litigation relating to
Employee’s employment with the Company and his separation
therefrom; therefore, it is not to be construed as the
Company’s admission of any liability to him - liability which
the Company denies.
If
Employee does not abide by this Agreement, then he will: (i) return
all monies received under this Agreement and the Company will be
relieved of its obligations hereunder, except to the extent that
such return and relief would result in invalidation of the release
set forth above, and (ii) indemnify the Company for all expenses it
incurs in seeking to enforce the Agreement or as a result of his
failure to abide by this Agreement, including reasonable
attorneys’ fees in defending any released
claims.
This
Agreement shall apply to, be binding upon and inure to the benefit
of the parties’ successors, assigns, heirs and other
representatives and be governed by North Carolina law (with the
sole exception of its conflicts of laws provisions) and the
applicable provisions of federal law, including but not limited to
ADEA.
(a)
General
Compliance. This
Agreement is intended to comply with Section 409A or an exemption
thereunder and shall be construed and administered in accordance
with Section 409A. Notwithstanding any other provision of this
Agreement, payments provided under this Agreement may only be made
upon an event and in a manner that complies with Section 409A or an
applicable exemption. Any payments under this Agreement that may be
excluded from Section 409A either as separation pay due to an
involuntary separation from service or as a short-term deferral
shall be excluded from Section 409A to the maximum extent possible.
For purposes of Section 409A, each installment payment provided
under this Agreement shall be treated as a separate payment. Any
payments to be made under this Agreement upon a termination of
employment shall only be made upon a “separation from
service” under Section 409A. Notwithstanding the foregoing,
the Company makes no representations that the payments and benefits
provided under this Agreement comply with Section 409A, and in no
event shall the Company be liable for all or any portion of any
taxes, penalties, interest, or other expenses that may be incurred
by the Employee on account of non-compliance with Section
409A.
(b)
Specified
Executives.
Notwithstanding any other provision of this Agreement, if any
payment or benefit provided to the Employee in connection with his
termination of employment is determined to constitute
“nonqualified deferred compensation” within the meaning
of Section 409A and the Employee is determined to be a
“specified Executive” as defined in Section
409A(a)(2)(b)(i), then such payment or benefit shall not be paid
until the first payroll date to occur following the six-month
anniversary of the Effective Separation Date or, if earlier, on the
Employee’s death (the “Specified Executive Payment
Date”). The aggregate of any payments that would otherwise
have been paid before the Specified Executive Payment Date shall be
paid to the Employee in a lump sum on the Specified Executive
Payment Date and thereafter, any remaining payments shall be paid
without delay in accordance with their original
schedule.]
[Signature page follows.]
IN
WITNESS WHEREOF, the parties have entered into this Agreement on
the day and year written below.
EMPLOYEE REPRESENTS THAT HE HAS CAREFULLY READ THE ENTIRE
AGREEMENT, UNDERSTANDS EACH AND EVERY TERM, AND VOLUNTARILY ENTERS
INTO IT.
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/s/ Anthony A.
DiTonno
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07/06/2021
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Anthony A.
DiTonno
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Date
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TENAX
THERAPEUTICS, INC.
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By:
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/s/ Michael
Jebsen
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07/06/2021
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Name:
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Michael
Jebsen
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Date
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Title:
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Chief Financial
Officer
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EXECUTIVE
EMPLOYMENT AGREEMENT
THIS EXECUTIVE EMPLOYMENT AGREEMENT
(this “Agreement”), is made as of July 6,
2021 (the “Effective
Date”), by and between Tenax Therapeutics, Inc., a
Delaware corporation, with its principal place of business in North
Carolina (the “Company”), and Christopher Thomas
Giordano (the “Executive”).
W
I T N E S S E T H:
WHEREAS, the Company desires to employ
the Executive as its Chief Executive Officer and provide adequate
assurances to the Executive and the Executive desires to accept
such employment on the terms set forth below.
NOW, THEREFORE, in consideration of the
foregoing, of the mutual promises herein, and of other good and
valuable consideration, the receipt and sufficiency of which the
parties acknowledge, the Company and the Executive agree as
follows:
1. Employment. As of July 6, 2021
(the “Employment Start
Date”), the Company hereby employs the Executive and
the Executive hereby accepts employment with the Company to perform
the Transition Services (as defined below). As of July 14, 2021
(the “CEO Start
Date”), the Company hereby employs the Executive and
the Executive hereby accepts employment as Chief Executive Officer
of the Company upon the terms and conditions of this
Agreement. The
Board of Directors of the Company (the “Board”) will also appoint the
Executive as a member of Board, effective July 14,
2021.
2. Duties. From and after the
Employment Start Date and prior to the CEO Start Date, the
Executive will, in the manner reasonably requested by the Board,
assist the Board in smoothly transitioning the duties of the
Company’s retiring Chief Executive Officer to the Executive
(the “Transition
Services”). From and after the CEO Start Date, the
Executive will have such authority, and will faithfully perform all
of the duties, normally associated with the position of Chief
Executive Officer and a member of the Board, including but not
limited to all duties set forth in this Agreement, and all
additional duties consistent with such position that are reasonably
prescribed from time to time by the Board. The Executive shall
devote such business time and attention as reasonably necessary to
perform his duties and responsibilities on behalf of the Company
and in furtherance of its best interests; provided, however, that
he, subject to his obligations hereunder, shall be permitted to
make personal investments, perform reasonable volunteer services
and serve on the boards of directors (or similar governing bodies)
of nonprofit entities and/or for profit entities that are not in
competition with the Company as long as any such activities do not
interfere in any material way with his duties and responsibilities,
including but not limited, those set forth in this Agreement. The
Executive shall comply with all Company policies, standards, rules
and regulations (the “Company
Policies”) as may exist from time to time and all
applicable government laws, rules and regulations that are now or
hereafter in effect.
3. Term. Unless earlier terminated
as provided herein, the initial term of this Agreement shall
commence on the Employment Start Date and shall continue until the
one-year anniversary of the Employment Start Date (the
“Initial Term”).
After the Initial Term, this Agreement shall automatically renew
for successive one-year terms on the same terms and conditions set
forth herein unless: (a) earlier terminated or amended as provided
herein; or (b) either party gives the other written notice of
non-renewal at least ninety (90) days prior to the end of the
Initial Term or any renewal term of this Agreement, in which case,
this Agreement shall terminate on the expiration of the
then-current Term. The Initial Term of this Agreement and all
applicable renewals thereof are referred to herein as the
“Term.”
4. Compensation. During the Term,
as compensation for the services rendered by the Executive under
this Agreement, the Executive shall be entitled to receive the
following (all payments are subject to applicable
withholdings):
(a) Base Salary. The Executive
shall receive an annual salary of Three Hundred Seventy-Five Thousand Dollars and
00/100 Dollars ($375,000.00) (less applicable withholdings)
(“Base Salary”)
payable in accordance with the payroll policies of the Company as
such policies may exist from time to time or as otherwise agreed
upon by the parties. The Board shall review, on an annual basis,
the Executive’s salary and may increase or decrease such
salary as the Board deems appropriate; provided, however, that any
decrease shall only be effective if it is a result of an
across-the-board decrease affecting all senior executives as a
group.
(b) Bonuses. Each fiscal year
during the Term, the Executive shall be entitled to an annual
bonus, the amount of which is based on percentage achievement of
annual goals set by the Company, after consultation with the
Executive, at the beginning of each fiscal year for such fiscal
year (“Annual
Bonus”), which achievement shall be determined as of
the last day of such fiscal year. For the fiscal year during which
the Employment Start Date occurs, the Executive shall be entitled
to a prorated Annual Bonus based on the same criteria but the
amount of which shall be reduced based on the percentage of the
fiscal year the Executive served in his position, which shall
include only the time from the Employment Start Date through the
last of such fiscal year. If the Executive achieves one hundred
percent (100%) of the annual goals during the Term, the Annual
Bonus shall be fifty percent (50%) of his Base Salary
(“Target
Bonus”). There is no cap on the Annual Bonus for
exceeding one hundred percent (100%) of annual goals; for example,
an achievement of two hundred percent (200%) of annual goals would
result in an Annual Bonus equal to one hundred percent (100%) of
his Base Salary. The Annual Bonus shall be paid in accordance with
the Company’s regular bonus payment procedures, and, in all
events, will be paid no later than sixty (60) days following the
end of the fiscal year in which the Annual Bonus was earned. Except
as otherwise set forth in Section 5(d)(ii)(C), in order to be
eligible to receive the Annual Bonus, the Executive must be
employed by the Company on the last day of the fiscal year in which
the Annual Bonus was earned.
(c) Benefits. The Executive shall
be entitled to receive those benefits provided from time to time to
other executive employees of the Company, in accordance with the terms and
conditions of the applicable plan documents, provided that the
Executive meets the eligibility requirements thereof.
(d) Business Expenses. The Company
shall pay, or reimburse the Executive for, all reasonable and
appropriate expenses incurred by the Executive directly related to
conduct of the business of the Company; provided that the Executive
complies with the Company’s policies for the reimbursement or
advancement of business expenses that are now or hereafter in
effect. The Company shall provide such payments or reimbursements
within thirty (30) days following the Executive’s incurrence
of the expense. The Company will reimburse Executive for the
attorney’s fees he has incurred in connection with the review
and negotiation of this Executive Employment Agreement in an amount
not to exceed $10,000.
(e) Option Plan and Awards under the
Plan.
(i) Option Plan. The Compensation
Committee of the Board has adopted a Plan for Employee Inducement
Stock Option Grants (the “Plan”) pursuant to which it is
authorized to grant option awards to certain new employees from
time to time as inducements material to them entering into
employment with the Company. To ensure compliance with the Plan
with respect to the stock options being granted to the Executive in
connection with his employment with the Company, each of the
Company and the Executive agrees and acknowledges that prior to the
Executive’s appointment by the Company as an employee and a
member of the Board pursuant to this Agreement, the Executive has
had no employment or consulting relationship with the Company (or
its Affiliates or Subsidiaries as defined in the Plan) and did not
serve as a member of the Board of the Company (or its Affiliates or
Subsidiaries as defined in the Plan).
(ii) Awards
under the Plan. On the Effective Date, the Compensation
Committee of the Board has approved stock options under the Plan
entitling the Executive to purchase up to: (i) 250,000 shares of
Company Common Stock with a time-based vesting schedule (the
“Time-Based
Option”); and (ii) 100,000 shares of Company Common
Stock with a performance-based vesting schedule (the
“Performance-Base
Option”, together with the Time-Based Option, the
“Options”). The
Options will be granted at the Fair Market Value (as defined in the
Plan) as of the Employment Start Date. The Time-Based Option shall
vest over a four-year period with the following vesting schedule:
25% of the Option (62,500 shares of Company Common Stock) vesting
on the anniversary of the Employment Start Date and an additional
25% of the Option (62,500 shares of Company Stock) shall vest on
each of the following three anniversaries of the Employment Start
Date provided that the Executive remains continuously employed with
the Company through each such vesting date. 50,000 shares of
Company Common Stock underlying the Performance-Based Option shall
vest if the Company has initiated a Phase 3 clinical trial for
Levosimendan by June 30, 2022 and an additional 50,000 shares of
the Company Common Stock underlying the Performance-Based Option
shall vest if the Company has initiated a Phase 3 clinical trial
for Imatinib by June 30, 2022. A Phase 3 clinical trial shall be
deemed initiated once the first patient has been enrolled in such
clinical trial. The terms and conditions for the Options will be
set forth in Stock Option Agreements between the Executive and the
Company in the forms set forth on Exhibit A (for Time-Based Stock Option)
and Exhibit B (for
Performance-Based Stock Option) and shall be subject to and
governed in all respects by the Plan and the respective Stock
Option Agreement. The Options shall be granted as incentive stock
options (“ISOs”), provided to the
extent that any portion of an option does not qualify for ISO
treatment on the Employment Start Date, such portion shall instead
be granted as a non-qualified stock option. The Company agrees that
it shall (i) promptly following the issuance of the Options, file a
Registration Statement on Form S-8 with the Securities and Exchange
Commission with respect to the Options and (ii) within 12 months
following the issuance of the Options, seek approval from the
Company’s stockholders of the issuance of those Options that
qualify as ISOs in the manner required by the Internal Revenue Code
of 1986, as amended.
5. Termination and Obligations of the
Company upon Termination. This Agreement and the
Executive’s employment by the Company shall or may be
terminated, as the case may be, as set forth below.
(a) Termination upon Expiration of the
Term. This Agreement and the Executive’s employment by
the Company shall terminate upon the expiration of the
Term.
(b) Termination by the Executive.
The Executive may terminate this Agreement and his employment with
the Company as follows:
(i) Voluntary Resignation. For any
reason other than Good Reason thirty (30) days after written notice
of the Executive’s resignation is received by the Company
(“Voluntary
Resignation”).
(ii) For
Good Reason. For purposes of this Agreement, the
Executive’s termination of his employment will be deemed to
have been for “Good
Reason” if the Executive resigns within six (6) months
after any of the following conditions having arisen without his
prior written consent and after having given the Company written
notice of the existence of such condition within ninety (90) days
of the Executive’s knowledge of the existence of the
condition and providing the Company with thirty (30) days to remedy
the condition:
(A)
a material
diminution in the Executive’s base salary;
(B)
a material
diminution in the Executive’s authority, duties, or
responsibility by the assignment to him of authority, duties, or
responsibilities materially inconsistent with his position as Chief
Executive Officer;
(C)
the
Executive’s place of employment is relocated by more than
fifty (50) miles; or
(D)
any breach by the
Company of any material provision of this Agreement or any other
written agreement with the Executive.
(c) Termination by the Company. The
Company may terminate this Agreement and the Executive’s
employment by the Company immediately upon written notice to the
Executive (or his personal representative):
(i) Without Cause. At any time and
for any reason other than reasons set forth in Sections 5(c)(ii)
(Death), (iii) (Disability), or (iv) (Cause), (“Without Cause”);
(ii) Death.
Upon the death of the Executive, in which case this Agreement shall
terminate immediately; provided that, such termination shall not
prejudice any benefits payable to the Executive’s spouse or
beneficiaries which are fully vested as of the date of death
(“Death”);
(iii) Disability.
If the Executive is “permanently disabled” (as defined
herein), in which case this Agreement shall terminate immediately;
provided that, such termination shall not prejudice any benefits
payable to the Executive, the Executive’s spouse or
beneficiaries which are fully vested as of the date of the
termination of this Agreement. For purposes of this Agreement, the
Executive shall be considered “permanently disabled”
when a qualified medical doctor mutually acceptable to the Company
and the Executive or the Executive’s personal representative
shall have certified in writing that the Executive has been unable,
because of a medically determinable physical or mental disability
or illness, to perform substantially all of the Executive’s
duties, with or without a reasonable accommodation, for more than
one hundred eighty (180) calendar days measured from the last full
day of work (“Disability”);
(iv)
For “Cause”.
The term “Cause”, as used herein, shall
mean:
(A)
Any willful
material breach of the terms of this Agreement, or of any other
written agreement with the Executive, by the Executive, which
breach is not cured by the Executive within thirty (30) days after
the Company provides the Executive with written notice specifying
the nature of such breach;
(B)
The
Executive’s material misappropriation of the Company’s
tangible or intangible property, or material and intentional breach
of the Confidentiality Agreement (provided, however, that for this
purpose, the Executive will not be deemed to have breached the
Confidentiality Agreement in connection with any disclosure made
pursuant to a court order, subpoena or other legal
obligation);
(C)
The
Executive’s material failure to comply with the Company
Policies or any other reasonable policies and/or directives of the
Board, which failure is not cured by the Executive within thirty
(30) days after the Company provides the Executive with written
notice specifying the nature of such failure;
(D)
The
Executive’s abuse of illegal drugs or any illegal substance,
or the Executive’s abuse of alcohol in any manner that
materially interferes with the performance of the Executive’s
duties under this Agreement;
(E)
Any dishonest or
illegal action (including, without limitation, embezzlement) by the
Executive which may result in material harm to the interests and
well-being of the Company, including, without limitation, harm to
its reputation, business, or financial condition;
(F)
The
Executive’s failure to cooperate with a bona fide internal
investigation or an investigation by regulatory or law enforcement
authorities, after being instructed by the Company to cooperate, or
the willful destruction or failure to preserve documents or other
materials known to be relevant to such investigation or the
inducement of others to fail to cooperate or to produce documents
or other materials in connection with such investigation;
or
(G)
The
Executive’s failure to disclose any conflict of interest
known to the Executive that the Executive may have with the Company
in a transaction between the Company and any third party which
failure is detrimental to the interest and well-being of the
Company.
(d)
Obligations upon
Termination.
(i) Upon the
termination of this Agreement and the Executive’s employment
with the Company pursuant to the expiration of the Term following
the Executive’s notice of non-renewal pursuant to Section 3,
by the Executive pursuant to Section 5(b)(i) (Voluntary
Resignation), or by the Company pursuant to Section 5(c)(ii)
(Death), (iii) (Disability) or (iv) (Cause), the Company shall have
no further obligations hereunder other than the payment of all
compensation and other benefits payable to the Executive (or his
estate or heirs) through the date of such termination in accordance
with the Company’s normal payroll cycle and terms of the
applicable benefit plans and programs in existence at the time the
Executive’s employment is terminated.
(ii) Upon
termination of this Agreement and the Executive’s employment
with the Company by the Company pursuant to Section 5(c)(i)
(Without Cause), upon expiration of the Term following the
Company’s notice of non-renewal pursuant to Section 3, or by
the Executive pursuant to Section 5(b)(ii) (Good Reason), the
Executive shall be entitled to the following, with those benefits
described in Sections 5(d)(ii)(B), (C) and (D) specifically
conditioned upon Executive’s execution and non-revocation of
a valid release under Section 6 and compliance with his obligations
under Sections 7, 8, and 9:
(A)
payment of all
compensation and other benefits payable to the Executive through
the date of such termination in accordance with the Company’s
normal payroll cycle and terms of the applicable benefit plans and
programs in existence at the time the Executive’s employment
is terminated;
(B)
payment of an
amount equal to twelve (12) months of his then current Base Salary
(less applicable withholdings), payable in a lump sum on the
sixtieth (60th) day following
the date of the Executive’s separation from service (the
“Severance Payment
Date”);
(C)
a lump sum payment
in an amount equal to the Target Bonus for the fiscal year in which
such termination occurred, multiplied by a fraction, the numerator
of which is the number of days during which the Executive was
employed by the Company in the fiscal year of his termination and
the denominator of which is 365 (less applicable withholdings),
with such payment to be made on the Severance Payment Date;
and
(D)
reimbursement for
premium payments the Executive makes under the Consolidated Budget
Reconciliation Act (“COBRA”) to continue the Executive
and, if applicable, the Executive’s family’s health
insurance coverage under the Company’s group health insurance
plan for twelve (12) months from the date of termination.
Reimbursements for COBRA premium payments shall begin on the
Severance Payment Date and shall be made as soon as possible
following the Executive’s submission to the Company of proof
of timely payments, but not later than thirty (30) days after the
Executive’s submission of proof of timely payments; provided,
however, all such claims for reimbursement shall be submitted by
the Executive and paid by the Company no later than fifteen (15)
months following the termination of the Executive’s
employment. Any obligation for the Company to make payments for
COBRA reimbursement under this Agreement shall immediately cease
when the Executive becomes eligible for health insurance from a
subsequent employer, and the Executive shall promptly notify the
Company of such subsequent eligibility. If the Executive desires
COBRA coverage, the Executive shall bear full responsibility for
applying for COBRA coverage and nothing herein shall constitute a
guarantee of COBRA benefits. Under no circumstances will the
Executive be entitled to a cash payment or other benefit in lieu of
reimbursements for the actual costs of premiums for COBRA
continuation hereunder. The amount of expenses eligible for
reimbursement during any calendar year shall not be affected by the
amount of expenses eligible for reimbursement in any other calendar
year.
6. Release of Claims.
Notwithstanding any provision of this Agreement to the contrary
(other than the last sentence of this Section 6), the
Company’s obligation to provide the payments and benefits
under Section 5(d)(ii)(B),(C) and (D) of this Agreement is
conditioned upon the Executive’s execution and non-revocation
of an enforceable release of claims and his compliance with his
obligations under Sections 7, 8, and 9 of this Agreement. If the
Executive chooses not to execute such a release, timely revokes his
execution of the release, or fails to comply with his obligations
under Sections 7, 8, and 9 of this Agreement, then the
Company’s obligation to compensate him ceases upon the
termination of his employment except as to amounts due at the time
pursuant to Section 5(d)(ii)(A). The Company shall provide the
release of claims to the Executive within seven (7) days of his
separation from service, and the Executive must execute it within
the time period specified in the release (which shall not be longer
than forty five (45) days from the date of receipt). Such release
shall not be effective until any applicable revocation period has
expired.
7. Confidential Information and
Competitive Business Activities. The Executive acknowledges
that by virtue of his employment and position with the Company, he
has or will have access to Confidential Information (as defined in
the Employee Non-Disclosure and Invention Assignment Agreement
executed by the Executive, effective as of the Employment Start
Date (the “Confidentiality
Agreement”)), of the Company, including valuable
information about its business operations and entities with which
it does business in various locations, and has developed or will
develop relationships with parties with whom it does business in
various locations. The Executive also acknowledges that the
Confidential Information and competitive business activities
provisions set forth in the Confidentiality Agreement, are
reasonably necessary to protect the Company’s legitimate
business interests, are reasonable as to the time, territory and
scope of activities which are restricted, do not interfere with
public policy or public interest and are described with sufficient
accuracy and definiteness to enable him to understand the scope of
the restrictions imposed on him. The Executive acknowledges that
his failure to abide by the provisions set forth in the
Confidentiality Agreement and the provisions set forth under
Sections 8 and 9 of this Agreement would cause irreparable harm to
the Company for which legal remedies would be inadequate.
Therefore, in addition to any legal or other relief to which the
Company may be entitled by virtue of the Executive’s failure
to abide by the provisions set forth in the Confidentiality
Agreement: (i) the Company will be released of its obligations
under this Agreement to make any post-termination payments; (ii)
the Company may seek legal and equitable relief, including but not
limited to preliminary and permanent injunctive relief, for the
Executive’s actual or threatened failure to abide by these
provisions; (iii) the Executive will return all post-termination
payments received pursuant to this Agreement; and (iv) the
Executive will indemnify the Company for all reasonable and
documented expenses, including attorneys’ fees, incurred by
it in successfully enforcing these provisions. In the event that
the Company exercises its right to discontinue payments under this
provision and/or the Executive returns all post- termination
payments received pursuant to this Agreement, the Executive shall
remain obligated to abide by the provisions set forth in Section 3
in the Confidentiality Agreement.
8. Non-Competition. In addition to
the provisions set forth in the Confidentiality Agreement and
obligations under Section 7 of this Agreement:
(a) Employee
understands that the nature of Employee’s position gives
Employee access to and knowledge of Confidential Information (as
defined in the Confidentiality Agreement) and places Employee in a
position of trust and confidence with the Company. Employee further
understands and acknowledges that the Company’s ability to
reserve its Confidential Information, good will, and trade secrets
for its exclusive knowledge and use is of great competitive
importance and commercial value to the Company, and that improper
use or disclosure by Employee would likely result in unfair or
unlawful competitive activity. Therefore, given the aforementioned
and in consideration for the promises provided to Employee by the
Company herein, during the Restricted Period (as defined below),
Employee shall not engage in Competitive Activity (as defined
below) in the Prohibited Territory (as defined below).
(b) The
“Restricted
Period” means: (i) the period of time that Employee is
employed by the Company; and (ii) the 12-month period following the
last day of Employee’s employment with the Company (such last
day referred to herein as the “Separation Date”).
(c) “Competitive Activity”
means: performing services in any role or capacity, whether as
an officer, director, shareholder, owner, partner, joint venturer,
employee, independent contractor, consultant, advisor, sole
proprietorship, agent, or representative for a Competitor of the
Company that are the same as or substantially similar to the work
Employee performed on behalf of the Company at any time during the
12 months prior to the Separation Date. Notwithstanding the
preceding, passively owning less than 5% of a public company shall
not constitute by itself Competitive Activity or assisting others
to engage in Competitive Activity.
(d) “Competitor” means: an individual,
business, corporation, association, firm, undertaking, company,
partnership, joint venture, hospital, organization or other entity
other than the Company that either (A) conducts Restricted Business
within the Prohibited Territory or (B) provides or sells goods or
services within the Prohibited Territory which are otherwise
competitive with the goods or services provided by the
Company.
(e) The
“Restricted
Business” means: the research, development, marketing,
and sale of cardiovascular and pulmonary hypertension focused
therapeutic products and any business engaged in by the Company as
of the Separation Date.
(f) “Prohibited
Territory” means: (i) the State of North Carolina; and
(ii) within a fifty (50) mile radius of any location in the United
States in which Employee provided services at the time of, or
during the 12-month period prior to, the Separation
Date.
9. Non-Solicitation. In addition
to the provisions set forth in the Confidentiality Agreement and
obligations under Sections 7 and 8 of this Agreement:
(a) Employee
understands and acknowledges that because of Employee’s
experience with and relationship to the Company, Employee will have
access to and will learn about much or all of the Company’s
referral sources, customer information, and investor information,
including, but not limited to, Confidential Information. Employee
understands and acknowledges that the Company’s relationships
with its referral sources, customers, and investors is of great
competitive value, and that the Company has invested and continues
to invest substantial resources in developing and preserving these
relationships, and the loss of any such relationship or goodwill
will cause significant and irreparable harm to the Company.
Therefore, given the aforementioned and in consideration for the
promises provided to Employee by the Company herein, during the
Restricted Period, Employee shall not: (i) solicit, encourage,
or cause any Restricted Supplier (as defined below) not to do
business with or to reduce any part of its business with the
Company; (ii) solicit, encourage, or cause any Restricted Referral
Source (as defined below) not to do business with the Company or to
reduce any part of the volume of business referred to the Company;
(iii) solicit, encourage, or cause any investor or lender not to do
business with or to reduce any part of its business with the
Company; (iv) make, publish, or communicate to any person or entity
or in any public forum any defamatory or disparaging remarks,
comments, or statements about the Company or its business, owners,
or agents, whether in writing, verbally, or on any online forum;
(v) solicit, encourage, or cause any Restricted Client (as defined
below) not to do business with or to reduce any part of its
business with the Company; (vi) market, sell or provide to any
Restricted Client any services or products that are competitive
with or a substitute for the Company’s services or products;
(vii) solicit, encourage, or cause any Restricted Client (as
defined below) not to do business with or to reduce any part of its
business with the Company; (viii) solicit, encourage, or cause any
Restricted Employee (as defined below) to leave the Company; or
(ix) assist or encourage anyone else to engage in any of the
conduct prohibited by this Section 9.
(b) “Restricted Client” means: (i) any
Company client with whom Employee had material business contact at
any time during the twelve (12) months prior to Employee’s
last day of employment with the Company; and (ii) any Company
client for whom Employee provided services at any time during the
twelve (12) months prior to Employee’s last day of employment
with the Company.
(c) “Restricted Referral Source” means
any business entity or person that operates or does business within
the Prohibited Territory and that has referred business to the
Company, if such referred business constitutes at least twenty
percent (20%) of the Company’s aggregate gross revenue during
the 12-month period prior to the Separation Date.
(d) “Restricted Supplier” means any
Company supplier or vendor that operates or does business within
the Prohibited Territory, if the materials, goods, or services
purchased by the Company from such supplier or vendor constitute at
least twenty percent (20%) of the Company’s aggregate
purchases during the 12-month period prior to the Separation
Date.
(e) “Restricted
Employee” means each Company employee with whom
Employee had material business contact or about whose abilities
Employee learned while employed by the Company, and whom the
Company employed at any time during the then-previous 12 months.
Employee understands and acknowledges that the Company has extended
and continues to expend significant time and expense in recruiting
and training its employees and that the loss of such employees
would cause significant and irreparable harm to the
Company.
10.
Representations and
Warranties.
(a) The Executive
represents and warrants to the Company that the Executive’s
performance of this Agreement and as an employee of the Company
does not and will not breach any non-competition agreement or any
agreement to keep in confidence proprietary information acquired by
the Executive in confidence or in trust prior to the Executive's
employment by the Company. The Executive represents and warrants to
the Company that the Executive has not entered into, and agrees not
to enter into, any agreement that conflicts with or violates this
Agreement.
(b) The Executive
represents and warrants to the Company that the Executive has not
brought and shall not bring with the Executive to the Company, or
use in the performance of the Executive's responsibilities for the
Company, any materials or documents of a former employer which are
not generally available to the public or which did not belong to
the Executive prior to the Executive’s employment with the
Company, unless the Executive has obtained written authorization
from the former employer or other owner for their possession and
use and provided the Company with a copy thereof.
11. Notices. All notices, requests,
consents, approvals, and other communications to, upon, and between
the parties shall be in writing and shall be deemed to have been
given, delivered, made, and received when: (a) personally
delivered; (b) deposited for next day delivery by Federal Express,
or other similar overnight courier services; (c) transmitted via
telefacsimile or other similar device to the attention of the
Company’s Chief Financial Officer with receipt acknowledged;
or (d) three (3) days after being sent or mailed by certified mail,
postage prepaid and return receipt requested, addressed as
follows:
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Attn:
Chief Financial Officer
One
Copley Parkway
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Christopher Thomas
Giordano
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135
Vintage Drive
Chapel
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12. Indemnification, Liability
Insurance. The Company shall indemnify and hold the
Executive harmless to the fullest extent permitted by the laws of
the Company’s state of incorporation in effect at the time
against and in respect of any and all actions, suits, proceedings,
claims, demands, judgments, costs, expenses (including advancement
of reasonable attorney’s fees), losses, and damages resulting
from the Executive’s performance of the Executive’s
duties and obligations with the Company. The Executive will be
entitled to be covered, both during and, while potential liability
exists, by the insurance policies that the Company maintains
generally for the benefit of officers and directors of the Company
against all costs, charges and expenses incurred in connection with
any action, suit or proceeding to which the Executive may be made a
party by reason of being an officer or director of the Company in
the same amount and to the same extent as the Company covers its
other officers and directors. These obligations shall survive the
termination of the Executive’s employment with the
Company.
13. Effect/Assignment. This
Agreement shall be binding on and inure to the respective benefit
of the Company and its successors and assigns and the Executive and
his personal representatives. The Company shall require any
successor (whether direct or indirect, by purchase, merger,
consolidation, reorganization or otherwise) to all or substantially
all of the business or assets of the Company, within fifteen (15)
days of such succession, expressly to assume and agree to perform
this Agreement in the same manner and to the same extent as the
Company would be required to perform if no such succession had
taken place. The Executive may not assign this Agreement or
delegate his obligations hereunder. As used in this Agreement,
“Company” shall mean the Company and any such successor
which assumes and agrees to perform the duties and obligations of
the Company under this Agreement by operation of law or
otherwise.
14. Entire Agreement. Except as
expressly provided in this Agreement and except for the
Confidentiality Agreement, this Agreement: (i) supersedes all other
understandings and agreements, oral or written, between the parties
with respect to the subject matter of this Agreement; and (ii)
constitutes the sole agreement between the parties with respect to
this subject matter. Each party acknowledges that: (A) no
representations, inducements, promises or agreements, oral or
written, have been made by any party or by anyone acting on behalf
of any party, which are not embodied in this Agreement; and (B) no
agreement, statement or promise not contained in this Agreement
shall be valid. No change or modification of this Agreement shall
be valid or binding upon the parties unless such change or
modification is in writing and is signed by the
parties.
15. Severability. If a court of
competent jurisdiction holds that any provision or sub- part
thereof contained in this Agreement is invalid, illegal or
unenforceable, that invalidity, illegality or unenforceability
shall not affect, impair, or invalidate any other provision in this
Agreement. If any court determines that any of such covenants, or
any part thereof, is invalid or unenforceable because of the
geographic or temporal scope of such provision, such court will
reduce such scope to the minimum extent necessary to make such
covenants valid and enforceable. Executive acknowledges that the
restrictive covenants contained in Sections 7, 8, and 9 are a
condition of this Agreement and are reasonable and valid in
temporal scope and in all other respects.
16. Amendment and Waiver. No
provision of this Agreement, including the provisions of this
Section, may be amended, modified, superseded, deleted, or waived
in any manner except by a written agreement executed by the
parties. Further, the Company’s or the Executive’s
waiver of any breach of a provision of this Agreement shall not
waive any subsequent breach by the other party.
17. Governing Law. This Agreement
and the employment relationship created by it shall be governed by
North Carolina law without giving effect to North Carolina choice
of law provisions.
18. Consent to Jurisdiction and
Venue. Each of the parties agrees that any suit, action, or
proceeding arising out of this Agreement may be instituted against
it in the Superior Court of Wake County, North Carolina or in the
United States District Court for the Eastern District of North
Carolina (assuming that such court has subject matter jurisdiction
over such suit, action or proceeding). Each of the parties hereby
waives any objection that it may have to the venue of any such
suit, action, or proceeding, and each of the parties hereby
irrevocably consents to the personal jurisdiction of any such court
in any such suit, action, or proceeding.
19. Counterparts. This Agreement
may be executed in more than one counterpart, each of which shall
be deemed an original, and all of which shall be deemed a single
agreement.
20. Headings. The headings herein
are for convenience only and shall not affect the interpretation of
this Agreement.
(a)
Section 409A of the Internal Revenue
Code.
(i) Parties’ Intent.
The parties intend that the provisions of this Agreement comply
with Section 409A of the Internal Revenue Code of 1986, as amended
(the “Code”),
and the regulations thereunder (collectively, “Section 409A”), or an exemption,
and all provisions of this Agreement shall be construed in a manner
consistent with the requirements for avoiding taxes or penalties
under Section 409A. If any provision of this Agreement (or of any
award of compensation, including equity compensation or benefits)
would cause the Executive to incur any additional tax or interest
under Section 409A, the Company shall, upon the specific request of
the Executive, use its reasonable business efforts to in good faith
reform such provision to comply with Code Section 409A;
provided, that to
the maximum extent practicable, the original intent and economic
benefit to the Executive and the Company of the applicable
provision shall be maintained. The Company shall timely use its
reasonable business efforts to amend any plan or program in which
the Executive participates to bring it in compliance with Section
409A.
(ii) Separation
from Service. A termination of employment shall not be
deemed to have occurred for purposes of any provision of this
Agreement relating to the payment of any amounts or benefits upon
or following a termination of employment unless such termination
also constitutes a “Separation from Service” within the
meaning of Section 409A and, for purposes of any such provision of
this Agreement, references to a “termination,”
“termination of employment,” “separation from
service” or like terms shall mean Separation from
Service.
(iii) Separate
Payments. Each installment payment required under this
Agreement shall be considered a separate payment for purposes of
Section 409A.
(iv) Delayed
Distribution to Specified Employees. If the Company
determines in accordance with Sections 409A and 416(i) of the Code
and the regulations promulgated thereunder, in the Company’s
sole discretion, that the Executive is a specified employee of the
Company, determined in accordance with Section 409A, any payments
and/or benefits provided under this Agreement that constitute
”nonqualified deferred compensation” subject to Section
409A that are provided to Executive on account of his Separation
from Service shall not be provided until the day after the
six-month anniversary of Executive’s termination date
(“Specified Employee Payment
Date”). The aggregate amount of any payments that
would otherwise have been made to Executive during such six-month
period shall be paid in a lump sum to Executive on the Specified
Employee Payment Date without interest and, thereafter, any
remaining reimbursements shall be paid without delay in accordance
with their original schedule.
(b) Withholdings. The Company shall
withhold any amounts required from any payment due the Executive
hereunder in accordance with state and federal tax law
requirements.
22. Obligations Survive Termination of
Employment. The termination of Executive’s employment
for whatever reason will not impair or relieve Executive of any of
Executive’s obligations under this Agreement which, by their
express terms or by implication, extend beyond the term of
Executive’s employment.
[Signatures on following page]
IN WITNESS WHEREOF, the parties have
executed this Employment Agreement as of the day and year first
above written.
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TENAX
THERAPEUTICS, INC.
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By:
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/s/ Michael
Jebsen
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Michael
Jebsen
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Chief Financial
Officer
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Christopher
Thomas Giordano
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/s/ Christopher Thomas
Giordano
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[Signature Page to Executive Employment Agreement]
Exhibit A
[To
be attached]
Exhibit B
[To be attached]
Tenax Therapeutics, Inc.
Plan for Employee Inducement Stock Option Grants
(As approved on July 6, 2021 by the Compensation
Committee)
Article
1.
Establishment, Purpose, and Duration
1.1 Establishment.
Tenax Therapeutics, Inc. (the “Company”) hereby
establishes an employee inducement stock compensation plan to be
known as the Plan for Employee Inducement Stock Option
Grants (the
“Plan”), as set forth in this document. The Plan
permits Awards of Inducement Options as inducement material
to New Employees entering into initial employment with the Company
and in accordance with
the employment inducement grant exception to the shareholder
approval requirements of the NASDAQ Stock Market LLC
(“NASDAQ”) set forth in NASDAQ Listing Rule
5635(c)(4). The Plan became effective on July 6, 2021 when
approved by the members of the Company’s Compensation
Committee and remains in effect as provided in Section 1.3
hereof.
1.2 Purpose
of the Plan; Compliance with NASDAQ Exemption from Shareholder
Approval.
(a) Purpose
of the Plan. The purpose of the
Plan is to award Inducement Options to New Employees to advance the
interests of the Company and its shareholders by giving New
Employees a personal stake in the Company’s growth,
development and financial success. The Inducement Options under the
Plan will motivate a New Employee to devote his or her best efforts
to the business of the Company and also attract and retain the
services of New Employee who are in the position to make
significant contributions to the Company’s future success and
align them with shareholder interests.
2.1 (b) Compliance
with NASDAQ Exemption from
Shareholder Approval. The
Company may award Inducement Options to a New Employee under this
Plan pursuant to the exception from NASDAQ shareholder approval
requirements for the issuance of such securities as set forth in
NASDAQ Listing Rule 5635(c))(4). A New Employee who receives an
Award under this Plan must have no relationship with the
Company (or its Affiliates or Subsidiaries) prior to his or her employment with the Company
either as a current or former employee or consultant to the
Company (or its Affiliates or Subsidiaries), including without limitation as a member of the
Board of Directors of the Company, its Affiliates or its
Subsidiaries. This restriction is to ensure that Awards made
pursuant to this Plan are “arms-length” between the
Company and all New Employees and are
made in accordance with NASDAQ Listing Rule 5635(c))(4). The
Company’s Compensation Committee must approve any Awards
under this Plan. In addition, the Company must disclose in a press
release the material terms of any Award, including but not limited
to a New Employee’s name, title, and the number of Shares
underlying any Award, and file a Listing of Additional Shares
Notification Form with NASDAQ regarding the Shares underlying any
Award.
1.3 Duration
of the Plan. Unless sooner terminated as provided herein,
the Plan shall terminate ten (10) years from the Effective Date.
After the Plan’s termination, no new Awards may be granted,
but Awards previously granted shall remain outstanding in
accordance with their applicable terms and conditions, including
the terms and conditions of the Plan. Notwithstanding the
foregoing, no Incentive Stock Options may be granted more than ten
(10) years after the earlier of: (a) the date the Plan is adopted
by the Board, or (b) the Effective Date.
Article
2.
Definitions
Whenever used in
this Plan, the following terms shall have the meanings set forth
below, and when the meaning is intended, the initial letter of the
word shall be capitalized:
2.2 “Affiliate”
shall mean any corporation or other entity (including, but not
limited to, a partnership or a limited liability company) that is
affiliated with the Company through stock or equity ownership or
otherwise, and is designated as an Affiliate for purposes of this
Plan by the Compensation Committee.
2.3 “Annual
Award Limit” or “Annual Award Limits” have
the meaning set forth in Section 4.3.
2.4 “Award”
means, individually or collectively, a grant under this Plan
of Nonqualified Stock Options and Incentive Stock Options, in each
case subject to the terms of this Plan.
2.5 “Award
Agreement” means either: (a) a written agreement
entered into by the Company and a New Employee setting forth the
terms and provisions applicable to an Award granted under this
Plan, or (b) a written or electronic statement issued by the
Company to a New Employee describing the terms and provisions of
such Award, including any amendment or modification thereof. The
Compensation Committee may provide for the use of electronic,
Internet, or other nonpaper Award Agreements, and the use of
electronic, Internet, or other nonpaper means for the acceptance
thereof and actions thereunder by a New Employee.
2.6 “Beneficial
Owner” or “Beneficial Ownership” shall
have the meaning ascribed to such terms in Rule 13d-3 promulgated
under the Exchange Act.
2.7 “Board”
or “Board of
Directors” means the Board of Directors of
the Company.
2.8 “Cause”
shall have the meaning ascribed thereto in any employment agreement
between the Company or any of its subsidiaries and a New Employee,
or, if there is no employment agreement or if any such employment
agreement does not contain a definition of “cause”,
then Cause shall mean a finding by the Compensation Committee that
a New Employee has (i) been charged with a felony or a crime
involving moral turpitude, (ii) committed an act of fraud or
embezzlement against the Company or its subsidiaries, (iii)
materially violated any policy of the Company or its subsidiaries,
(iv) failed, refused or neglected to substantially perform their
duties (other than by reason of a physical or mental impairment) or
to implement the directives of the Company, or (v) willfully
engaged in conduct that is materially injurious to the Company,
monetarily or otherwise.
2.9 “Change
in Control” for purposes of this Plan means the
happening of any of the following:
(i)
When any
“person” as such term is used in Section 13(d) and
14(d) of the Exchange Act (other than the Company, a Subsidiary or
a Company benefit plan, including any trustee of such plan acting
as a trustee) is or becomes the “beneficial owner” (as
defined in Rule 13d-3 under the Exchange Act), directly or
indirectly, of securities of the Company representing fifty percent
(50%) or more of the combined voting power of the Company’s
then outstanding securities entitled to vote generally in the
election of directors;
(ii)
A merger or
consolidation of the Company with any other corporation, other than
a merger or consolidation which would result in the voting
securities of the Company outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by
being converted into voting securities of the surviving entity) at
least fifty percent (50%) of the total voting power represented by
the voting securities of the Company or such surviving entity
outstanding immediately after such merger or consolidation, or the
shareholders of the Company approve an agreement for the sale or
disposition by the Company of all or substantially all the
Company’s assets; or
(iii)
A change in the
composition of the Board of Directors of the Company occurring
within a two-year period, as a result of which fewer than a
majority of the directors are Incumbent Directors. “Incumbent
Directors” for such purposes shall mean non-executive
Directors who either (A) are Directors of the Company as of the
date the Plan is approved by shareholders, or (B) are elected, or
nominated for election to the Board with the affirmative votes of
at least a majority of the Incumbent Directors at the time of such
election or nomination (but shall not include an individual whose
election or nomination is in connection with an actual or
threatened proxy contest relating to the election of Directors to
the Company).
Notwithstanding the
foregoing, an Award that is subject to Code Section 409A will not
be paid or settled upon a Change in Control unless the Change in
Control constitutes a “change in control event” under
Code Section 409A and Treasury Regulation Section
1.409A-3(i)(5).
2.10 “Change
in Control Price” means the price per Share paid in
conjunction with any transaction resulting in a Change in Control
(as determined in good faith by the Compensation Committee if any
part of the offered price is payable other than in cash) or, in the
case of a Change in Control occurring solely by reason of events
not related to a transfer of Shares, the highest Fair Market Value
of a Share on any of the thirty (30) consecutive trading days
ending on the last trading day before the Change in Control
occurs.
2.11 “Code”
means the U.S. Internal Revenue Code of 1986, as amended from time
to time. For purposes of this Plan, references to sections of the
Code shall be deemed to include references to any applicable
regulations thereunder and any successor or similar
provision.
2.12 “Company”
means Tenax Therapeutics, Inc., a Delaware corporation, and any
successor thereto as provided in Article 14
herein.
2.13 “Compensation
Committee” means the Compensation Committee of the
Board, composed of independent members
of the Board of Directors in compliance with NASDAQ Listing Rule
5605(d)(2).
2.14 “Director”
means any individual who is a member of the Board of Directors of
the Company.
2.15 “Effective
Date” has the meaning set forth in Section
1.1.
2.16 “Exchange
Act” means the Securities Exchange Act of 1934, as
amended from time to time, or any successor act
thereto.
2.17 “Fair
Market Value” or “FMV” means the closing price of a
Share reported on an established stock exchange on the applicable
date, the preceding trading day, the next succeeding trading day,
or an average of trading days, as determined by the Compensation
Committee in its discretion. In the event Shares are not publicly
traded at the time a determination of their value is required to be
made hereunder, the determination of their Fair Market Value shall
be made in good faith by the Compensation Committee, taking into
account such factors as the Compensation Committee deems
appropriate.
2.18 “Incentive
Stock Option” or “ISO” means an Option to
purchase Shares granted under Article 6 to a New Employee, that is
designated as an Incentive Stock Option and that is intended
to meet the requirements of Code Section 422 or any successor
provision.
2.19 “Inducement
Options” mean any Nonqualified Stock Options and
Incentive Stock Options awarded by the Compensation Committee
pursuant to this Plan as an inducement
material to a New Employee entering into initial employment with
the Company and made in accordance with NASDAQ Listing Rule
5635(c)(4).
2.20 “Insider”
shall mean an individual who is, on the relevant date, an officer
or Director of the Company, or a more than ten percent (10%)
Beneficial Owner of any class of the Company’s equity
securities that is registered pursuant to Section 12 of the
Exchange Act, as determined by the Board or Committee in accordance
with Section 16 of the Exchange Act.
2.21 “New
Employee(s)” means a participant eligible to receive
an Award under this Plan at the time of his or her initial
employment with the Company who has no relationship with the
Company (or its Affiliates or Subsidiaries) prior to his or her
employment with the Company either as a current or former employee
or consultant to the Company (or its Affiliates or Subsidiaries),
including without limitation as a member of the Board of Directors
of the Company, its Affiliates or its Subsidiaries. This
restriction is to ensure that Awards made pursuant to this Plan are
“arms-length” between the Company and all New Employees
and are made in accordance with NASDAQ
Listing Rule 5635(c))(4).
2.22 “Nonqualified
Stock Option” or “NQSO” means an Option
that is not intended to meet the requirements of Code
Section 422 or that otherwise does not meet such
requirements.
2.23 “Option”
means an Incentive Stock Option or a Nonqualified
Stock Option, as described in Article 6.
2.24 “Option
Price” means the price at which a Share may be
purchased by a New Employee pursuant to an Option.
2.25 “Performance
Period” means the period of time during which the
performance goals must be met in order to determine the degree of
payout and/or vesting with respect to an Award.
2.26 “Person”
shall have the meaning ascribed to such term in Section 3(a)(9) of
the Exchange Act and used in Sections 13(d) and 14(d) thereof,
including a “group” as defined in Section 13(d)
thereof.
2.27 “Plan” means this Plan for Employee
Inducement Stock Option Grants.
2.28 “Plan
Year” means the calendar year.
2.29 “Share” means a share of
common stock of the Company, par value $0.0001 per
share.
2.30 “Subsidiary”
means any corporation or other entity, whether domestic or foreign,
in which the Company has or obtains, directly or indirectly, a
proprietary interest of more than fifty percent (50%) by reason of
stock ownership or otherwise.
2.31 “Termination”
or “Terminate” means cessation of the
employee-employer relationship between a New Employee and the
Company and all Affiliates and Subsidiaries for any reason.
Notwithstanding the foregoing, with respect to any Award subject to
Code Section 409A, any such cessation or termination also must
constitute a “separation from service” as defined under
Treasury Regulation Section 1.409A-1(h).
Article
3.
Administration
3.1 General.
The Compensation Committee shall be responsible for administering
the Plan, subject to this Article 3 and the other provisions of
this Plan. The Compensation Committee may employ attorneys,
consultants, accountants, agents, and other advisors, any of whom
may be an employee of the Company, and the Compensation Committee,
the Company, and its officers and Directors shall be entitled to
rely upon the advice, opinions, or valuations of any such advisors.
All actions taken and all interpretations and determinations made
by the Compensation Committee shall be final and binding upon a New
Employee, the Company, and all other interested
individuals.
3.2 Authority
of the Compensation Committee. Subject to any express
provisions set forth in the Plan, the Compensation Committee shall
have full and exclusive discretionary power under this Plan to: (i)
designate a New Employee to be recipients of Awards; (ii) determine
the type and size of Awards; (iii) determine the terms and
conditions of Awards; (iv) certify satisfaction of any performance
goals; (v) construe and interpret the terms and the intent of the
Plan and any Award Agreement or other instrument entered into under
the Plan; (vi) establish, amend, or waive rules and regulations for
the Plan’s administration; (vii) subject to the provisions of
Articles 10 and 12, amend the terms and conditions of any
outstanding Award; and (viii) make any other determination and take
any other action that it deems necessary or desirable for the
administration of the Plan, provided that all authority exercised
by the Compensation Committee is in accordance with Nasdaq Listing Rule
5635(c))(4).
Article
4.
Shares Subject to This Plan and Maximum Awards
4.1 Number
of Shares Available for Awards. Subject to adjustment as
provided in Section 4.4 herein, the maximum number of Shares
currently available for issuance under this Plan shall
be Seven Hundred and Fifty Thousand (750,000) Shares
and may only be granted by the Compensation Committee as an
inducement material to the employment of a New Employee. All
such Shares shall be available for issuance in the form of any of
the Inducement Options authorized under the Plan, as determined by
the Compensation Committee in its discretion.
4.2 Share
Usage. Shares covered by an Award shall be reserved for that
award while the reward remains outstanding but shall only be
counted as used to the extent they are actually issued. Further,
any Shares withheld to satisfy tax-withholding obligations on
Awards issued under the Plan and Shares tendered to pay the
exercise price of Awards under the Plan will not be eligible to be
returned as available Shares under the Plan.
4.3 Annual
Award Limits. The following limits (each an “Annual
Award Limit” and, collectively, “Annual Award
Limits”) shall apply to grants of such Awards under this
Plan: the maximum aggregate number of
Shares subject to Awards granted in any one Plan Year to a New
Employee under this Plan and subject to any award of incentive
equity made pursuant the Company’s 2016 Stock Incentive Plan
shall be one million (1,000,000), as adjusted pursuant to Sections
4.4 and/or 12.2.
4.4 Adjustments
in Authorized Shares. In
the event any recapitalization, forward or reverse split,
reorganization, merger, consolidation, incorporation, spin-off,
combination, repurchase, exchange of Shares or other securities,
dividend or distribution of Shares or other special and
nonrecurring dividend or distribution (other than cash dividends or
distributions), liquidation, dissolution, sale or purchase of
assets or other similar transactions or events, affects the Shares
such that an adjustment is determined by the Compensation Committee
to be appropriate in order to prevent dilution or enlargement of
the rights of grantees under the Plan, then the Compensation
Committee shall equitably adjust any or all of (i) the number and
kind of securities deemed to be available thereafter for grants of
Awards under this Plan or under particular forms of Awards, (ii)
the number and kind of securities subject to outstanding Awards,
(iii) the Option Price or Grant Price applicable to outstanding
Awards, (iv) the Annual Award Limits or (v) other value
determinations applicable to outstanding Awards.
In
addition, the Compensation Committee is authorized to make
adjustments in the terms and conditions of, and the criteria
included in, outstanding Awards (including, without limitation,
acceleration of the expiration date of such Awards, cancellation of
such Awards in exchange for the intrinsic (i.e., in-the-money)
value, if any, of the vested portion thereof, substitution of
outstanding Awards using securities or other obligations of a
successor or other entity, modifications of performance goals,
changes in the length of Performance Periods, or payment of a bonus
or dividend equivalent) in recognition of unusual or nonrecurring
events (including, without limitation, a Change in Control of the
Company, an event described in the preceding sentence, or a cash
dividend or distribution) affecting the Company or any subsidiary
of the Company or the financial statements of the Company or any
subsidiary of the Company, or in response to changes in applicable
laws, regulations, or accounting principles.
Notwithstanding
anything to the contrary in this Section 4.4, an adjustment to an
Option shall be made only to the extent such adjustment complies
with the requirements of Code Section 409A.
Subject
to the provisions of Article 12 and notwithstanding anything else
herein to the contrary, without affecting the number of Shares
reserved or available hereunder, the Compensation Committee may
authorize the issuance or assumption of benefits under this Plan in
connection with any merger, consolidation, acquisition of property
or stock, or reorganization upon such terms and conditions as it
may deem appropriate (including, but not limited to, a conversion
of equity awards into Awards under this Plan in a manner consistent
with applicable accounting standards, subject to compliance with
the rules under Code Sections, 422 and 424, as and where
applicable.
Article
5.
Eligibility and Leave of Absence
5.1 Eligibility.
Only New Employees are eligible to participate in this
Plan.
5.2 Leave
of Absence. If a New Employee takes a “leave of
absence” (as such term is defined in the Company’s
employee handbook, or, if no such definition exists, as otherwise
defined by the Compensation Committee in its direction), she or he
or she may be considered as still in the employ of the Company, an
Affiliate or Subsidiary for purposes of continued vesting of Awards
under the Plan, if so determined by the Compensation Committee in
its discretion.
Article
6.
Stock Options
6.1 Grant
of Options. Subject to the terms and provisions of this
Plan, Options may be granted to a New Employee in such number, and
upon such terms, and at any time and from time to time as
shall be determined by the Compensation Committee, in its sole
discretion, provided that ISOs may be granted a New Employee only
if he or she is employed by the Company or of any parent or
subsidiary corporation (as permitted under Code Sections 422 and
424). A New Employee, who is employed by an Affiliate and/or
Subsidiary and is subject to Code Section 409A, may only be granted
Options to the extent the Affiliate and/or Subsidiary is part of
the Company’s consolidated group for United States federal
tax purposes.
6.2 Award
Agreement. Each Option grant shall be evidenced by an Award
Agreement that shall specify the Option Price, the maximum duration
of the Option, the number of Shares to which the Option pertains,
the conditions upon which an Option shall become vested and
exercisable, and such other provisions as the Compensation
Committee shall determine which are not inconsistent with the terms
of this Plan. The Award Agreement also shall specify whether the
Option is intended to be an ISO or an NQSO.
6.3 Option
Price. The Option Price for each grant of an Option under
this Plan shall be determined by the Compensation Committee in its
sole discretion and shall be specified in the Award Agreement;
provided, however, the Option Price on the date of grant must be at
least equal to one hundred percent (100%) of the FMV of the Shares
as determined on the date of grant; provided, further, however,
that the Option Price must be at least equal to one hundred and ten
percent (110%) of the FMV of a Share on the date of grant with
respect to any ISO issued to a New Employee who, on the date of
grant, owns (as defined in Code Section 424(d)) stock possessing
more than ten percent (10%) of the total combined voting power of
all classes of stock of the Company or of its subsidiary
corporation (as defined in Code Section 424(f)) (a “10%
Shareholder”).
6.4 Term
of Options. Each Option granted to a New Employee shall
expire at such time as the Compensation Committee shall determine
at the time of grant; provided, however, no Option shall be
exercisable later than the tenth (10th) anniversary date
of its grant; provided, further, however, that no ISO granted
to a 10% Shareholder shall be exercisable later than the day before
the fifth (5th) anniversary of its date of grant.
6.5 Exercise
of Options. Options granted under this Article 6 shall
be exercisable at such times and be subject to such restrictions
and conditions as the Compensation Committee shall in each instance
approve, which terms and restrictions need not be the same for each
grant or for each New Employee. Notwithstanding anything in this
Plan to the contrary, to the extent that the aggregate FMV of the
Shares (determined as of the date of grant of the applicable ISO)
with respect to which ISOs are exercisable for the first time by a
New Employee during any calendar year (under all plans of the
Company and its subsidiary corporations (as defined in
Code Section 424(f)) exceeds $100,000, such Options shall be
treated as NQSOs.
Options
granted under this Article 6 shall be exercised by the delivery of
a notice of exercise to the Company or an agent designated by the
Company in a form specified or accepted by the Compensation
Committee setting forth the number of Shares with respect to which
the Option is to be exercised, accompanied by full payment for the
Shares, or by complying with any alternative exercise procedures
the Compensation Committee may authorize.
6.6 Payment.
A condition of the issuance of the Shares as to which an Option
shall be exercised shall be the payment of the Option Price. The
Option Price of any Option shall be payable to the Company in full
either: (a) in cash or its equivalent; (b) by tendering
(either by actual delivery or attestation) previously acquired
Shares having an aggregate Fair Market Value at the time of
exercise equal to the Option Price (provided that the Compensation
Committee may in its discretion require the Shares that are
tendered have been held by a New Employee for at certain period of
time prior to their tender to satisfy the Option Price if acquired
under this Plan or any other compensation plan maintained by the
Company or purchased on the open market); (c) by a cashless
(broker-assisted) exercise; (d) by a combination of (a), (b),
and/or (c); or (e) any other method approved or accepted by the
Compensation Committee in its sole discretion.
Unless
otherwise determined by the Compensation Committee, all payments
under all of the methods indicated above shall be paid in United
States dollars.
6.7 Restrictions
on Shares. The Compensation Committee may impose such
restrictions on any Shares acquired pursuant to the exercise of an
Option granted under this Article 6 as it deems advisable,
including, without limitation, minimum holding period requirements,
restrictions under applicable federal securities laws, under the
requirements of any stock exchange or market upon which such Shares
are then listed and/or traded, or under any blue sky or state
securities laws as may be applicable to such Shares.
6.8 Termination
of Employment/Service. A New Employee’s Award
Agreement shall set forth the extent to which a New Employee shall
have the right to exercise the Option following a New
Employee’s Termination. Such provisions shall be determined
in the sole discretion of the Compensation Committee, shall be
included in the Award Agreement entered into with each New
Employee, need not be uniform among all Options issued pursuant to
this Article 6, and may reflect distinctions based on the reasons
for Termination.
6.9 Notification
of Disqualifying Disposition. If a New Employee shall make
any disposition of Shares issued pursuant to the exercise of an ISO
under the circumstances described in Code Section 421(b) (relating
to certain disqualifying dispositions), a New Employee shall notify
the Company of such disposition within ten (10) calendar days
thereof.
Article
7.
Transferability and Forfeiture of Awards
7.1 Transfer
Restrictions. Except as provided in Section 7.2 below,
during a New Employee’s lifetime, his or her Awards shall be
exercisable only by a New Employee or a New Employee’s legal
representative. Awards shall not be transferable other than by will
or the laws of descent and distribution; no Awards shall be
subject, in whole or in part, to attachment, execution, or levy of
any kind; and any purported transfer in violation hereof shall be
null and void. The Compensation Committee may establish such
procedures as it deems appropriate for a New Employee to designate
a beneficiary to whom any amounts payable or Shares deliverable in
the event of, or following, a New Employee’s death, may be
provided.
7.2 Committee
Action. The Compensation Committee may, in its discretion,
determine that notwithstanding Section 7.1, any or all Awards
(other than ISOs) shall be transferable to and exercisable by such
transferees, and subject to such terms and conditions, as the
Compensation Committee may deem appropriate; provided, however, no
Award may be transferred for value (as defined in the General
Instructions to Form S-8).
7.3 Forfeiture
of Awards. Notwithstanding anything else to the contrary
contained herein, the Compensation Committee in granting any Award
shall have the full power and authority to determine whether, to
what extent and under what circumstances such Award shall be
forfeited, cancelled or suspended. Unless an Award Agreement
includes provisions expressly superseding the provisions of this
Section 7.3, the provisions of this Section 7.3 shall apply to all
Awards. Any such forfeiture shall be effected by the Company in
such manner and to such degree as the Compensation Committee, in
its sole discretion, determines, and will in all events (including
as to the provisions of this Section 7.3) be subject to applicable
laws.
In
order to effect a forfeiture under this Section 7.3, the
Compensation Committee may require that a New Employee sell Shares
received upon exercise or settlement of an Award to the Company or
to such other person as the Company may designate at such price and
on such other terms and conditions as the Compensation Committee in
its sole discretion may require. Further, as a condition of each
Award, the Company shall have, and each New Employee shall be
deemed to have given the Company, a proxy on each New
Employee’s behalf, and each New Employee shall be required
and be deemed to have agreed to execute any other documents
necessary or appropriate to carry out this Section
7.3.
Unless
otherwise specified by the Compensation Committee, in addition to
any vesting or other forfeiture or repurchase conditions that may
apply to an Award and Shares issued pursuant to an Award, each
Award granted under the Plan will be subject to the following
forfeiture conditions:
(a) Breach of a Restrictive Covenant. All
outstanding Awards and Shares issued pursuant to an Award held by
an New Employee will be forfeited in their entirety (including as
to any portion of an Award or Shares subject thereto that are
vested or as to which any repurchase or resale rights or forfeiture
restrictions in favor of the Company or its designee with respect
to such Shares have previously lapsed) if a New Employee breaches
any noncompetition, confidentiality or other restrictive covenant
that may apply to a New Employee, as determined by the Compensation
Committee in its sole discretion; provided, that if a New Employee has
sold Shares issued upon exercise or settlement of an Award within
six (6) months prior to the date on which a New Employee would
otherwise have been required to forfeit such Shares or the Option
under this subsection (a) as a result of a New Employee’s
breach, then the Company will be entitled to recover any and all
profits realized by a New Employee in connection with such
sale.
(b) Termination for Cause. All outstanding
Awards and Shares issued pursuant to an Award held by a New
Employee will be forfeited in their entirety (including as to any
portion of an Award or Shares subject thereto that are vested or as
to which any repurchase or resale rights or forfeiture restrictions
in favor of the Company or its designee have previously lapsed) if
a New Employee’s employment or service is terminated by the
Company for Cause; provided, however, that if a New Employee has
sold Shares issued upon exercise or settlement of an Award within
six (6) months prior to the date on which a New Employee would
otherwise have been required to forfeit such Shares under this
subsection (b) as a result of termination of a New Employee’s
employment or service for Cause, then the Company will be entitled
to recover any and all profits realized by a New Employee in
connection with such sale; and provided further, that in the event the
Compensation Committee determines that it is necessary to establish
whether grounds exist for termination for Cause, the Award will be
suspended during any period required to conduct such determination,
meaning that the vesting, exercisability and/or lapse of
restrictions otherwise applicable to the Award will be tolled and
if grounds for such termination are determined to exist, the
forfeiture specified by this subsection (b) will apply as of the
date of suspension, and if no such grounds are determined to exist,
the Award will be reinstated on its original terms.
Article
8.
Performance Measures
8.1 Performance
Measures. The performance goals upon which the payment or
vesting of an Award to a New Employee shall be limited to the
following Performance Measures:
(a)
Commercial
milestones
(b)
Clinical
development milestones
(c)
Regulatory
development milestones
Any
Performance Measure(s) may be used to measure the performance of
the Company, Subsidiary, and/or Affiliate as a whole or any
business unit of the Company, Subsidiary, and/or Affiliate or any
combination thereof, as the Compensation Committee may deem
appropriate, or any of the above Performance Measures as compared
to the performance of a group of comparator companies, or published
or special index that the Compensation Committee, in its sole
discretion, deems appropriate. The Compensation Committee also has
the authority to provide for accelerated vesting of any Award based
on the achievement of performance goals pursuant to the Performance
Measures specified in this Article 8.
8.2 Evaluation
of Performance. The Compensation Committee may provide in
any such Award that any evaluation of achievement of Performance
Measures may include or exclude any of the following events that
occur during a Performance Period: (a) asset write-downs, (b)
litigation or claim judgments or settlements, (c) the effect of
changes in tax laws, accounting principles, or other laws or
provisions affecting reported results, (d) any reorganization and
restructuring programs, (e) extraordinary nonrecurring items as
described in Accounting Principles Board Opinion No. 30 and/or in
management’s discussion and analysis of financial condition
and results of operations appearing in the Company’s annual
report to shareholders for the applicable year, (f) acquisitions or
divestitures, and (g) foreign exchange gains and losses; and (h)
changes in material liability estimates. To the extent such
inclusions or exclusions affect Awards to a New Employee, they
shall be prescribed in a form that meets the requirements of Code
Section 162(m) for deductibility.
8.3 Adjustment
of Performance-Based Compensation. Awards that are intended
to qualify as Performance-Based Compensation may not be adjusted
upward. The Compensation Committee shall retain the discretion to
adjust such Awards downward, either on a formula or discretionary
basis, or any combination, based on market, performance or service
conditions, as the Compensation Committee determines.
8.4 Committee
Discretion. In the event that applicable tax and/or
securities laws change to permit Committee discretion to alter the
governing Performance Measures without obtaining shareholder
approval of such changes, the Compensation Committee shall have
sole discretion to make such changes without obtaining shareholder
approval. In addition, in the event that the Compensation Committee
determines that it is advisable to grant Awards that shall not
qualify as Performance-Based Compensation, the Compensation
Committee may make such grants without satisfying the requirements
of Code Section 162(m) and base vesting on Performance Measures
other than those set forth in Section 8.1.
Article
9.
Dividends and Dividend Equivalents
A New
Employee may be granted dividends or dividend equivalents based on
the dividends declared on Shares that are subject to any Award, to
be credited as of dividend payment dates, during the period between
the date the Award is granted and the date the Award is exercised,
vests, or expires, as determined by the Compensation Committee;
provided, however, that dividends or dividend equivalents credited
with respect to performance-based Awards will be subject to the
same underlying performance-based vesting conditions as the Awards
and will not be subject to Committee discretion. The dividends or
dividend equivalents may be subject to any limitations and/or
restrictions determined by the Compensation Committee. Such
dividend equivalents shall be converted to cash or additional
Shares by such formula and at such time and subject to such
limitations as may be determined by the Compensation
Committee.
Article
10.
Change in Control of the Company
10.1 Awards
Assumed or Substituted in Connection with a Change in
Control. Unless otherwise expressly provided in an Award
Agreement, with respect to each outstanding Award that is assumed
or substituted in connection with a Change in Control of the
Company, in the event that (1) a Change in Control occurs and (2) a
New Employee’s employment or service is involuntarily
terminated by the Company, its successor or affiliate thereof
without Cause on or after the effective time of the Change in
Control but prior to eighteen (18) months following said Change in
Control, then:
(a) Any and all Options
granted hereunder shall become exercisable, and shall remain
exercisable in accordance with their terms;
(b) For
Plan purposes, an Award will be considered assumed if, following
the Change in Control, the Award confers the right to purchase or
receive, for each Share subject to the Award immediately prior to
the Change in Control, the consideration (whether stock, cash, or
other securities or property) received in the Change in Control by
holders of Common Stock for each Share held on the effective date
of the transaction (and if holders were offered a choice of
consideration, the type of consideration chosen by the holders of a
majority of the outstanding Shares); provided, however, that if
such consideration received in the Change in Control is not solely
common stock of the successor corporation or its parent, the
Compensation Committee may, with the consent of the successor
corporation, provide for the consideration to be received upon the
exercise of an Option, for each Share subject to such Award, to be
solely common stock of the successor corporation or its parent
equal in fair market value to the per share consideration received
by holders of Common Stock in the Change in Control.
(c) Awards
shall be considered assumed or substituted if, upon the occurrence
of a Change in Control after which there will be a generally
recognized U.S. public market for (1) the Company’s Stock,
(2) common stock for which the
Company’s Stock is exchanged, or (3) the common stock of
a successor or acquirer entity (such publicly traded stock,
“Public Shares”), the then outstanding Awards are
assumed, exchanged or substituted for by a successor or acquirer
entity such that following the Change in Control, the Awards relate
to such Public Shares and, except as otherwise provided by this
Section 10.1, remain subject to such terms and conditions that
were applicable to the Awards prior to the Change in
Control.
10.2 No
Assumption or Substitution in Connection with Change in
Control. Unless
otherwise expressly provided in an Award Agreement, with respect to
each outstanding Award that is not assumed or substituted in
connection with a Change in Control, then prior to the occurrence
of a Change in Control, any and all Options granted hereunder shall
vest in full and become immediately exercisable in accordance with
their terms and the Compensation Committee will notify a New
Employee in writing that the Options will be exercisable for a
period of time determined by the Compensation Committee in the
Compensation Committee’s sole discretion and the Option will
terminate upon the expiration of said period.
10.3 Cashout
and Cancellation of Awards. Notwithstanding any other
provisions of the Plan, in the event that each outstanding Award is
not assumed or substituted in connection with a Change in Control
and except as would otherwise result in adverse tax consequences
under Section 409A of the Code, the Compensation Committee may, in
its discretion, provide that each Award shall, immediately upon the
occurrence of a Change in Control, be cancelled in exchange for a
payment in cash or securities in an amount equal to (x) the excess
if any of the consideration paid per Share in the Change in Control
over the exercise or purchase price per Share subject to the Award
multiplied by (y) the number of Shares granted under the Award.
Without limiting the generality of the foregoing, in the event that
the consideration paid per Share in the Change in Control is lesser
than or equal to the exercise price or purchase price per Share
subject to the Award, the Compensation Committee may, in its
discretion, cancel such Award without any consideration upon the
occurrence of a Change in Control.
Article
11.
Rights of a New Employee
11.1 Employment
/ Service. Nothing in this Plan or an Award Agreement shall
interfere with or limit in any way the right of the Company, its
Affiliates, and/or its Subsidiaries to terminate a New
Employee’s employment or service on the Board or to the
Company at any time or for any reason not prohibited by law, nor
confer upon a New Employee any right to continue his employment or
service as a director or third party service provider
for any specified period of time.
Neither
an Award nor any benefits arising under this Plan shall constitute
an employment contract with the Company, its Affiliates, and/or its
Subsidiaries and, accordingly, subject to Articles 3 and 12,
this Plan and the benefits hereunder may be terminated at any time
in the sole and exclusive discretion of the Compensation Committee
without giving rise to any liability on the part of the Company,
its Affiliates, and/or its Subsidiaries.
11.2 Participation.
No individual shall have the right to be selected to receive an
Award under this Plan other than a New Employee and no Awards may
be made to a New Employee by the Compensation Committee under this
Plan other than in connection with his initial employment by the
Company.
11.3 Rights
as a Shareholder. Except as otherwise provided herein or in
any Award Agreement, a New Employee shall have none of the rights
of a shareholder with respect to Shares covered by any Award until
a New Employee becomes the record holder of such
Shares.
Article
12.
Amendment, Modification, Suspension, and Termination
12.1 Amendment,
Modification, Suspension, and Termination. Subject to
Section 12.3, the Compensation Committee may, at any time and
from time to time, alter, amend, modify, suspend, or terminate this
Plan and any Award Agreement in whole or in part; provided,
however, that, without the prior approval of the Company’s
shareholders and except as provided in Section 4.4, (a) Options
will not be repriced, replaced, or regranted through cancellation,
or by lowering the Option Price of a previously granted Option, and
(b) no payment shall be made to cancel an Option, as the case may
be, exceeds the Fair Market Value. No material amendment of this Plan shall be
made without shareholder approval if shareholder approval is
required by law, regulation, or stock exchange rule.
12.2 Adjustment
of Awards Upon the Occurrence of Certain Unusual or Nonrecurring
Events. The Compensation Committee may make adjustments in
the terms and conditions of, and the criteria included in, Awards
in recognition of unusual or nonrecurring events (including,
without limitation, the events described in Section 4.4 hereof)
affecting the Company or the financial statements of the Company or
of changes in applicable laws, regulations, or accounting
principles, whenever the Compensation Committee determines that
such adjustments are appropriate in order to prevent unintended
dilution or enlargement of the benefits or potential benefits
intended to be made available under this Plan. The determination of
the Compensation Committee as to the foregoing adjustments, if any,
shall be conclusive and binding on a New Employee under this
Plan.
12.3 Awards
Previously Granted. Notwithstanding any other
provision of this Plan to the contrary (other than Section 12.4),
no termination, amendment, suspension, or modification of this Plan
or an Award Agreement shall adversely affect in any material
way any Award previously granted under this Plan, without the
written consent of a New Employee.
12.4 Amendment
to Conform to Law. Notwithstanding any other
provision of this Plan to the contrary, the Board may amend the
Plan or an Award Agreement, to take effect retroactively or
otherwise, as deemed necessary or advisable for the purpose of
conforming the Plan or an Award Agreement to any present or future
law relating to plans of this or similar nature (including, but not
limited to, Code Section 409A), and to the administrative
regulations and rulings promulgated thereunder. By accepting an
Award under this Plan, a New Employee agrees to any amendment made
pursuant to this Section 12.4 to any Award granted under the Plan
without further consideration or action.
Article
13.
Withholding
13.1 Tax
Withholding. The Company shall have the power and the right
to deduct or withhold, or require a New Employee to remit to the
Company, the minimum statutory amount to satisfy federal, state,
and local taxes, domestic or foreign, required by law or regulation
to be withheld with respect to any taxable event arising as a
result of this Plan.
13.2 Share
Withholding. With respect to withholding required upon the
exercise of Options or any other taxable event arising as a result
of an Award granted hereunder, a New Employee may elect, subject to
the approval of the Compensation Committee, to satisfy the
withholding requirement, in whole or in part, by having the Company
withhold Shares having a Fair Market Value on the date the tax is
to be determined equal to the minimum statutory total tax that
could be imposed on the transaction. All such elections shall be
irrevocable, made in writing, and signed by a New Employee, and
shall be subject to any restrictions or limitations that the
Compensation Committee, in its sole discretion, deems
appropriate.
Article
14.
Successors
All
obligations of the Company under this Plan with respect to Awards
granted hereunder shall be binding on any successor to the Company,
whether the existence of such successor is the result of a direct
or indirect purchase, merger, consolidation, or otherwise, of all
or substantially all of the business and/or assets of the
Company.
Article
15.
General Provisions
15.1 Legend.
The certificates for Shares may include any legend that the
Compensation Committee deems appropriate to reflect any
restrictions on transfer of such Shares.
15.2 Gender
and Number. Except where otherwise indicated by the context,
any masculine term used herein also shall include the feminine, the
plural shall include the singular, and the singular shall include
the plural.
15.3 Severability. In
the event any provision of this Plan shall be held illegal or
invalid for any reason, the illegality or invalidity shall not
affect the remaining parts of this Plan, and this Plan shall be
construed and enforced as if the illegal or invalid provision had
not been included.
15.4 Requirements
of Law. The
granting of Awards and the issuance of Shares under this Plan shall
be subject to all applicable laws, rules, and regulations, and to
such approvals by any governmental agencies or stock exchange as
may be required.
15.5 Delivery
of Title. The
Company shall have no obligation to issue or deliver evidence of
title for Shares issued under this Plan prior to:
(a) Obtaining any
approvals from governmental agencies that the Company determines
are necessary or advisable; and
(b) Completion of any
registration or other qualification of the Shares under any
applicable national or foreign law or ruling of any governmental
body that the Company determines to be necessary or
advisable.
15.6 Inability
to Obtain Authority. The inability of the Company to
obtain authority from any regulatory body having jurisdiction,
which authority is deemed by the Company’s counsel to be
necessary to the lawful issuance and sale of any Shares hereunder,
shall relieve the Company of any liability in respect of the
failure to issue or sell such Shares as to which such requisite
authority shall not have been obtained.
15.7 Investment
Representations. The Compensation Committee may
require any individual receiving Shares pursuant to an Award under
this Plan to represent and warrant in writing that the individual
is acquiring the Shares for investment and without any present
intention to sell or distribute such Shares.
15.8 State
Securities Laws. Notwithstanding any provision of this Plan
to the contrary, the Compensation Committee, in its sole
discretion, shall have the power and authority to modify the terms
and conditions of any Award granted to a New Employee if he or she
resides in one or more individual states to the extent necessary or
desirable under applicable state securities laws. Any modifications
to Plan terms and procedures established under this Section 15.8 by
the Compensation Committee shall be attached to this Plan document
as appendices.
15.9 Uncertificated
Shares. To the extent that this Plan provides for issuance
of certificates to reflect the transfer of Shares and the Shares
are publicly traded, the transfer of such Shares may be effected on
a non-certificated basis, to the extent not prohibited by
applicable law or the rules of any stock exchange.
15.10 Unfunded
Plan. A New
Employee shall have no right, title, or interest whatsoever in or
to any investments that the Company and/or its Subsidiaries and/or
its Affiliates may make to aid it in meeting its obligations under
this Plan. Nothing contained in this Plan, and no action taken
pursuant to its provisions, shall create or be construed to create
a trust of any kind, or a fiduciary relationship between the
Company and any New Employee, beneficiary, legal representative, or
any other individual. To the extent that any individual acquires a
right to receive payments from the Company, its Subsidiaries,
and/or its Affiliates under this Plan, such right shall be no
greater than the right of an unsecured general creditor of the
Company, a Subsidiary, or an Affiliate, as the case may be. All
payments to be made hereunder shall be paid from the general funds
of the Company, a Subsidiary, or an Affiliate, as the case may be,
and no special or separate fund shall be established and no
segregation of assets shall be made to assure payment of such
amounts except as expressly set forth in this Plan.
15.11 No
Fractional Shares. No fractional Shares shall be issued or
delivered pursuant to this Plan or any Award. The Compensation
Committee shall determine whether cash, Awards, or other property
shall be issued or paid in lieu of fractional Shares or whether
such fractional Shares or any rights thereto shall be forfeited or
otherwise eliminated.
15.12 Retirement
and Welfare Plans. Neither Awards made under this Plan nor
Shares issued pursuant to such Awards may be included as
“compensation” for purposes of computing the benefits
payable to a New Employee under the Company’s or any
Subsidiary’s or Affiliate’s retirement plans (both
qualified and nonqualified) or welfare benefit plans unless such
other plan expressly provides that such compensation shall be taken
into account in computing a New Employee’s
benefit.
15.13 Deferred
Compensation. No
deferral of compensation (as defined under Code Section 409A
or guidance thereto) is intended under this Plan. Notwithstanding
this intent, if any Award would be considered deferred compensation
as defined under Code Section 409A, and if this Plan fails to meet
the requirements of Code Section 409A with respect to such Award,
then such Award shall be null and void. However, the Compensation
Committee may permit deferrals of compensation pursuant to the
terms of a New Employee’s Award Agreement, a separate plan,
or a subplan that meets the requirements of Code Section 409A and
any related guidance. Additionally, to the extent any Award is
subject to Code Section 409A, notwithstanding any provision herein
to the contrary, the Plan does not permit the acceleration of the
time or schedule of any distribution related to such Award, except
as permitted by Code Section 409A, the regulations thereunder,
and/or the Secretary of the United States Treasury.
15.14 Nonexclusivity
of This Plan. The adoption of this Plan shall not be
construed as creating any limitations on the power of the Board or
Committee to adopt such other compensation arrangements as it may
deem desirable for any New Employee.
15.15 No
Constraint on Corporate Action. Nothing in this Plan shall
be construed to: (a) limit, impair, or otherwise affect the
Company’s or a Subsidiary’s or an Affiliate’s
right or power to make adjustments, reclassifications,
reorganizations, or changes of its capital or business structure,
or to merge or consolidate, or dissolve, liquidate, sell, or
transfer all or any part of its business or assets; or, (b) limit
the right or power of the Company or a Subsidiary or an Affiliate
to take any action which such entity deems to be necessary or
appropriate.
15.16 Governing
Law. The Plan and each Award Agreement shall be governed by
the laws of the State of Delaware, excluding any conflicts or
choice of law rule or principle that might otherwise refer
construction or interpretation of this Plan to the substantive law
of another jurisdiction. Unless otherwise provided in the Award
Agreement, recipients of an Award under this Plan are deemed to
submit to the exclusive jurisdiction and venue of the federal or
state courts of Delaware to resolve any and all issues that may
arise out of or relate to this Plan or any related Award
Agreement.
15.17 Indemnification. Subject
to requirements of Delaware law, each individual who is or shall
have been a member of the Board, or a committee appointed by the
Board, or an officer of the Company to whom authority was delegated
in accordance with Article 3, shall be indemnified and held
harmless by the Company against and from any loss, cost, liability,
or expense that may be imposed upon or reasonably incurred by a New
Employee in connection with or resulting from any claim, action,
suit, or proceeding to which a New Employee may be a party or in
which a New Employee may be involved by reason of any action taken
or failure to act under this Plan and against and from any and all
amounts paid by a New Employee in settlement thereof, with the
Company’s approval, or paid by a New Employee in satisfaction
of any judgment in any such action, suit, or proceeding against a
New Employee, provided a New Employee shall give the Company an
opportunity, at its own expense, to handle and defend the same
before a New Employee undertakes to handle and defend it on a New
Employee’s own behalf, unless such loss, cost, liability, or
expense is a result of a New Employee’s own willful
misconduct or except as expressly provided by statute.
The
foregoing right of indemnification shall not be exclusive of any
other rights of indemnification to which such individuals may be
entitled under the Company’s Articles of Incorporation or
Bylaws, as a matter of law, or otherwise, or any power that the
Company may have to indemnify them or hold them
harmless.
15.18 Recoupment.
A New Employee will be obligated to return to the Company payments
received with respect to Awards in the event of an overpayment to a
New Employee of incentive compensation due to inaccurate financial
data, in accordance with any applicable Company clawback or
recoupment policy, as such policy may be amended and in effect from
time to time, or as otherwise required by law or applicable stock
exchange listing standards, including, without limitation Section
10D of the Securities Exchange Act of 1934, as amended. Each New
Employee, by accepting an Award pursuant to the Plan, agrees to
return the full amount required under this Section 15.18 at such
time and in such manner as the Compensation Committee shall
determine in its sole discretion and consistent with applicable
law.
FORM OF
TENAX THERAPEUTICS, INC.
PLAN FOR EMPLOYEE INDUCEMENT STOCK OPTION GRANTS
AWARD AGREEMENT
(Awarding Incentive Stock Option to Employee)
THIS
AWARD AGREEMENT (this “Agreement”) is made and entered
into as of [DATE OF OPTION] by and between Tenax Therapeutics,
Inc., a Delaware corporation (the “Company”), and
[OPTIONEE] (the
“Optionee”) pursuant to the provisions of the Tenax
Therapeutics, Inc. Plan for Employee Inducement Stock Option Grants
(the “Plan”), which is incorporated herein by
reference. Capitalized terms not defined in this Agreement shall
have the meanings given to them in the Plan.
WITNESSETH:
WHEREAS, the
Optionee is providing, or has agreed to provide, services to the
Company as [OPTIONEE TITLE]; and
WHEREAS, the
Compensation Committee of the Company’s Board of Directors
desires to award a stock option to purchase shares of the $0.0001
par value common stock of the Company (the “Shares”) to
the Optionee as an employment inducement grant (within the meaning
of NASDAQ Listing Rule 5635(c)(4)).
NOW,
THEREFORE, in consideration of the premises and the mutual
agreements set forth herein, the parties agree as
follows:
1. Grant of Option. Effective as
of [DATE OF GRANT] (the “Date of Grant”),
the Company hereby grants to the Optionee an option (the
“Option”) to purchase up to [NUMBER OF
SHARES] Shares
(“Optioned Shares”) at the Option Price per Share of
[OPTION PRICE] (the
“Option Price”), subject to the terms and conditions of
the Plan and this Agreement, in accordance with the employment
inducement grant exception to the shareholder approval requirements
of the NASDAQ Stock Market LLC (“NASDAQ”) set forth in
NASDAQ Listing Rule 5635(c)(4). The future value of such Shares is
unknown and cannot be predicted with certainty. If such Shares do
not increase in value, the Option will have no value.
2. Term of Option. Subject to
earlier termination under Section 4 hereof, the term of the
Option shall be ten (10) years (the
“Term”).
3. Vesting Schedule. The Option
shall vest and become exercisable for purchase of the Optioned
Stock on the following schedule: [VESTING DETAILS]. The
Option shall not vest for any Optioned Stock that has not vested
prior to the date the Optionee’s Continuous Status as an
Employee or Consultant (as defined in the Plan)
terminates.
In no
event will any portion of the Option that is not vested and
exercisable at the time of the termination of the Optionee’s
service relationship become vested and exercisable following such
termination.
4. Termination of Option. Except
as otherwise provided herein, the Option shall terminate on the
earliest to occur of the following:
(a)
The expiration of
the Term of the Option.
(b)
The 91st day after
termination of the Optionee’s service relationship for any
reason other than one specified in (c) or
(d) below.
(c)
The 366th day after
termination of the Optionee’s service relationship as a
result of the Optionee’s death, or a disability or retirement
that is approved by the Committee for this purpose.
(d)
Termination of the
Optionee’s service relationship by the Company for reasons
that would constitute Cause if the Optionee were an
employee.
5. Exercise of Option. The vested portion of the Option
may be exercised in whole or in part by delivery of an exercise
notice in the form attached as Exhibit A (the
“Exercise Notice”) which shall state the election to
exercise the Option and set forth the number of Shares with respect
to which the Option is being exercised. The Exercise Notice shall
be accompanied by payment of an amount equal to the aggregate
Option Price as to all exercised Shares. Payment of such amount
shall be by any of the following methods, or combination thereof,
at the election of the Optionee: (a) in cash or its
equivalent; (b) by tendering (either by actual delivery or
attestation) previously acquired Shares having an aggregate Fair
Market Value at the time of exercise equal to the Option Price;
(c) by a cashless (broker-assisted) exercise; or (d) any
other method approved or accepted by the Committee in its sole
discretion. The Option
shall be deemed to be exercised upon receipt by the Company of such
fully executed Exercise Notice accompanied by the aggregate Option
Price.
6. Non-Transferability of Option.
This Option may not be transferred in any manner otherwise than by
will or the laws of descent and distribution and, during the
Optionee’s lifetime, may only be exercised by the
Optionee.
7. Restrictions on Shares. This
Agreement shall be subject to all applicable laws, rules, and
regulations, and to such approvals by any governmental agencies or
stock exchange as may be required. The Optionee agrees to take all
steps the Committee determines are necessary to comply with all
applicable provisions of federal and state securities law in
exercising his or her rights under this Agreement. The Committee
may impose such restrictions on any Shares acquired pursuant to the
exercise of this Option as it deems advisable, including, without
limitation, minimum holding period requirements, restrictions under
applicable federal securities laws, under the requirements of any
stock exchange or market upon which such Shares are then listed
and/or traded, or under any blue sky or state securities laws
as may be applicable to such Shares.
8. Forfeiture. Where an Optionee engages in certain competitive
activity or is terminated by the Company for Cause, his or her
Option and Shares are subject to forfeiture conditions under
Section 7.3 of the Plan. Upon the occurrence of any of the
events set forth in Section 7.3 of the Plan, in addition to the
remedies provided in Section 7.3, the Company shall be entitled to
issue a stop transfer order and other documents implementing the
forfeiture to its transfer agent, the depository or any of its
nominees, and any other person with respect to this Option and the
Shares.
9. Successors and Assigns. The
Company may assign any of its rights under this Agreement to single
or multiple assignees, and this Agreement shall inure to the
benefit of the successors and assigns of the Company. Subject to
the restrictions on transfer herein set forth, the terms and
conditions of the Plan and this Agreement shall be binding upon the
Optionee and his or her heirs, executors, administrators,
successors and assigns.
10. Interpretation. Any dispute
regarding the interpretation of this Agreement shall be submitted
by the Optionee or by the Company forthwith to the Committee, which
shall review such dispute at its next regular meeting. The
resolution of such a dispute by the Committee shall be final and
binding on all parties.
11. Tax Consequences. The exercise
of this Option and the subsequent disposition of the Shares may
cause the Optionee to be subject to federal, state and/or foreign
taxation. The Optionee should consult a tax advisor before
exercising this Option or disposing of the Shares purchased
hereunder.
12. Acknowledgement. The Optionee
acknowledges and agrees: (i) that the Plan is discretionary in
nature and may be suspended or terminated by the Company at any
time; (ii) that the grant of the Option does not create any
contractual or other right to receive future grants of options or
any right to continue the Optionee’s service relationship
with the Company (for the vesting period or otherwise);
(iii) that the Optionee remains subject to discharge from such
relationship to the same extent as if the Option had not been
granted; (iv) that all determinations with respect to any such
future grants, including, but not limited to, when and on what
terms they shall be made, will be at the sole discretion of the
Committee; (v) that participation in the Plan is voluntary;
(vi) that the value of the Option is an extraordinary item of
compensation that is outside the scope of the Optionee’s
employment contract if any; and (vii) that the Option is not
part of normal or expected compensation for purposes of calculating
any severance, resignation, redundancy, end of service payments,
bonuses, long-service awards, pension or retirement benefits or
similar benefits.
13. Optionee Data Privacy. As a
condition of the grant of this Option, the Optionee consents to the
collection, use and transfer of personal data as described in this
paragraph. The Optionee understands that the Company and its
Affiliates hold certain personal information about the Optionee,
including but not limited to the Optionee’s name, home
address and telephone number, date of birth, social security
number, salary, nationality, job title, shares of common stock or
directorships held in the Company, details of all Options or other
entitlement to shares of common stock awarded, cancelled,
exercised, vested, unvested or outstanding in the Optionee’s
favor for the purpose of managing and administering the Plan
(“Data”). The Optionee further understands that the
Company and/or its Affiliates will transfer Data amongst themselves
as necessary for the purposes of implementation, administration and
management of the Optionee’s participation in the Plan, and
that the Company and/or any of its Affiliates may each further
transfer Data to any third parties assisting the Company in the
implementation, administration and management of the Plans. The
Optionee understands that these recipients may be located in the
Optionee’s country of residence or elsewhere. The Optionee
authorizes them to receive, possess, use, retain and transfer Data
in electronic or other form, for the purposes of implementing,
administering and managing the Optionee’s participation in
the Plan, including any requisite transfer of such Data as may be
required for the administration of the Plan and/or the subsequent
holding shares of common stock on the Optionee’s behalf to a
broker or other third party with whom the shares acquired on
exercise may be deposited. The Optionee understands that the
Optionee may, at any time, view the Data, require any necessary
amendments to it or withdraw the consent herein in writing by
contacting the local human resources representative.
14. Confidentiality. The Optionee
agrees not to disclose the terms of this offer to anyone other than
the members of the Optionee’s immediately family or the
Optionee’s counsel or financial advisors and agrees to advise
such persons of the confidential nature of this offer.
15. Entire Agreement; Governing
Law. The Plan is incorporated herein by reference. The Plan
and this Agreement constitute the entire agreement of the parties
with respect to the subject matter hereof and supersede in their
entirety all prior undertakings and agreements of the Company and
the Optionee with respect to the subject matter hereof, and may not
be modified adversely to the Optionee’s interest except by
means of a writing signed by the Company and Optionee. This
Agreement is governed by the internal substantive laws but not the
choice of law rules of Delaware.
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OPTIONEE
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TENAX THERAPEUTICS, INC.
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By:
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Signature:
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Name:
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[NAME
OF OFFICER]
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Name:
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[OPTIONEE]
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Title:
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[TITLE
OF OFFICER]
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Exhibit A
FORM OF
EXERCISE NOTICE FOR STOCK OPTIONS
GRANTED PURSUANT TO THE PLAN FOR
EMPLOYEE INDUCEMENT STOCK OPTION GRANTS1
Tenax
Therapeutics, Inc.
One
Copley Parkway, Suite 490
Morrisville,
North Carolina 27560
Attention: Stock
Plan Administrator
1. Exercise of Option. Effective
as of today, ,
20 , the
undersigned (the “Optionee”) hereby elects to exercise
the Optionee’s option (the “Option”) to
purchase shares
of the Common Stock (the “Shares”) of Tenax
Therapeutics, Inc. (the “Company”) under and pursuant
to the Tenax Therapeutics, Inc. Plan for Employee Inducement Stock
Option Grants (the “Plan”) and the Award Agreement with
a grant date of ,
20 (the
“Award”). The Grant Number of the Option
is ,
and the per share exercise price is $ .
2. Delivery of Payment. The
Optionee herewith delivers to the Company the aggregate exercise
price of the Option, as set forth in the Award, by means
of (check
one):
☐
a check
in U.S. dollars made payable to Tenax Therapeutics, Inc., or bank
transfer;
or
☐
(i) a
share certificate (or certificates) representing previously
acquired shares and (ii) a check in U.S. Dollars made payable to
Tenax Therapeutics, Inc. or bank transfer that, in combination,
have an aggregate value (the Fair Market Value of the shares
delivered plus the check or bank transfer amount) equal to the
aggregate exercise price of the Option.
3. Representations of Optionee.
The Optionee acknowledges that the Optionee has received, read and
understood the Plan and the Award and agrees to abide by and be
bound by their terms and conditions. In making the decision to
exercise the option(s) the Optionee has relied upon his or her own
independent investigations or those made by his or her
representatives, if any (including professional, financial, tax,
legal and other advisors). The Optionee (and his or her
representatives, if any) has had an opportunity to review
information with respect to the Company, desires no further
additional information concerning the Company or its operations,
and deems such information reviewed adequate to evaluate the merits
and risks of the Optionee’s investment in the Company. The
Optionee understands that the Option has been granted in accordance
with the employment inducement grant exception to the shareholder
approval requirements of the NASDAQ Stock Market LLC (the
“NASDAQ”) set forth in NASDAQ Listing Rule
5635(c)(4).
The
Optionee acknowledges that the Company is relying upon each of the
above representations in connection with the exercise of the option
and the issuance of the underlying Shares.
4. Rights as Shareholder. Until
the issuance of the Shares (as evidenced by the appropriate entry
on the books of the Company or of a duly authorized transfer agent
of the Company), no right to vote or receive dividends or any other
rights as a shareholder shall exist with respect to the Shares,
notwithstanding the exercise of the Option. The Shares shall be
issued to the Optionee as soon as practicable after the Option is
exercised. No adjustment shall be made for a dividend or other
right for which the record date is prior to the date of issuance
except as provided in the Plan.
______________________________
5. Tax Consultation and
Withholding. The Optionee understands that the Optionee may
suffer adverse tax consequences as a result of the Optionee’s
purchase or disposition of the Shares. The Optionee represents that
the Optionee has consulted with any tax consultants the Optionee
deems advisable in connection with the purchase or disposition of
the Shares and that the Optionee is not relying on the Company for
any tax advice.
6. Restrictive Legends. The
Optionee understands and agrees that the Company shall cause the
legends set forth below or legends substantially equivalent
thereto, to be placed upon any certificate(s) evidencing ownership
of the Shares together with any other legends that may be required
by the Company or by state or federal securities laws:
THE
SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO THE TENAX
THERAPEUTICS, INC. CHRISTOPHER THOMAS GIORDANO PLAN FOR EMPLOYEE
INDUCEMENT STOCK OPTION GRANTS, AS SUCH PLAN MAY BE ALTERED,
AMENDED, RESTATED OR MODIFIED FROM TIME TO TIME, AND ANY TRANSFEREE
OF THESE SECURITIES SHALL BE SUBJECT TO THE TERMS OF SUCH PLAN.
COPIES OF THE FOREGOING PLAN ARE MAINTAINED WITH THE CORPORATE
RECORDS OF THE ISSUER AND ARE AVAILABLE FOR INSPECTION AT THE
PRINCIPAL OFFICES OF THE ISSUER.
THE
SECURITIES REPRESENTED BY THIS CERTIFICATE ARE ALSO SUBJECT TO AN
AWARD AGREEMENT BETWEEN THE ISSUER AND THE HOLDER, AS SUCH
AGREEMENT MAY BE AMENDED, RESTATED OR MODIFIED FROM TIME TO TIME,
AND ANY TRANSFEREE OF THESE SECURITIES SHALL BE SUBJECT TO THE
TERMS OF SUCH AGREEMENT. COPIES OF THE FOREGOING AGREEMENT ARE
MAINTAINED WITH THE CORPORATE RECORDS OF THE ISSUER AND ARE
AVAILABLE FOR INSPECTION AT THE PRINCIPAL OFFICES OF THE
ISSUER.
7. Governing Law. This Agreement
shall be governed by the internal substantive laws but not the
choice of law rules of Delaware.
8. Entire Agreement. The Plan and
Award are incorporated herein by reference. This Agreement, the
Plan, and the Award constitute the entire agreement of the parties
with respect to the subject matter hereof and supersede in their
entirety all prior undertakings and agreements of the Company and
the Optionee with respect to the subject matter hereof, and may not
be modified adversely to the Optionee’s interest except by
means of a writing signed by the Company and the
Optionee.
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Submitted
by:
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Accepted
by:
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OPTIONEE
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TENAX THERAPEUTICS, INC.
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By:
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Signature:
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Name:
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Name:
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Title:
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Date:
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Tenax Therapeutics Announces CEO Transition and
$10 Million PIPE Offering
Priced At-the-Market under Nasdaq Rules
–
Anthony DiTonno Retires from
Tenax; Christopher Giordano Appointed as CEO
–
Morrisville, NC, July 7, 2021 – Tenax Therapeutics,
Inc. (Nasdaq: TENX), a specialty pharmaceutical company that
address cardiovascular and pulmonary diseases with high unmet
medical need, today announced a CEO transition in connection with
the retirement of its current CEO:
●
Effective July 13,
2021, Mr. Anthony A. DiTonno will retire as Chief Executive Officer
and Director of the Company, following a successful decade of
service with the Company.
●
The Board has
appointed Mr. Christopher T. Giordano to serve as Chief Executive
Officer and a Director of the Company, effective July 14, 2021.
From July 6, 2021 through July 14, 2021, Mr. Giordano will serve as
an employee of the Company to assist with the smooth transition of
Mr. DiTonno’s duties.
The Company also announced that it has entered into a definitive
agreement with a single healthcare-focused institutional investor
for the issuance and sale of 4,773,269 Units at a purchase price of
$2.095 per Unit. Each Unit consists of one unregistered pre-funded
warrant to purchase one share of common stock, par value $0.0001
and one unregistered warrant to purchase one share of common stock.
In the aggregate, 9,546,538 shares of the Company’s
common stock are underlying the warrants.
The unregistered pre-funded warrants have an exercise price of
$0.0001 per share of common stock, are immediately exercisable, and
may be exercised at any time until exercised in full. The
unregistered warrants have an exercise price of $1.97 per share of
common stock, are immediately exercisable, and will expire five and
one-half years from the date of issuance.
The aggregate gross proceeds to the Company of the offering are
expected to be approximately $10 million. The offering is expected
to close on or about July 8, 2021, subject to the satisfaction of
customary closing conditions.
Gerald
Proehl, Chairman of the Board of Directors for the Company, said:
"We thank Tony for his dedicated service and many contributions to
Tenax and wish him the best in his well-deserved retirement from
executive management. While we will miss Tony’s services and
involvement in our Company, this transition will not affect
Tenax’s focus or direction. We are looking forward to having
Chris contribute his extensive experience with bringing
pharmaceutical products to market as Tenax’s new leader, and
to continuing to enhance shareholder value through the development
and approval of our products for use by patients suffering from
cardiovascular and pulmonologic diseases, which is further
supported by the financing we are announcing
today.”
Mr.
Giordano, age 47, brings more than 20 years of experience in the
clinical research industry. He most recently served as President of
IQVIA Biotech and IQVIA MedTech (formerly Novella Clinical), where
he led an executive team that executed a clinical trial portfolio
that grew from 250 to 400 active projects during his three years of
leadership from March 2018 through his departure in April 2021 and
saw double-digit annual growth in sales each year of his tenure.
Mr. Giordano has been involved in the pharmaceutical development
industry since 1998. In January 2001, he joined PPD, another global
clinical research organization, in a sales role. Over the next
seven years, he grew into increasing operational responsibility,
and in August 2008 transitioned to Quintiles as a Vice President,
where he oversaw all consulting, regulatory, commercial, and
clinical development services (including early-phase pharmacology
through phase IV registry and safety studies) offered to his
clients in the oncology, auto-immune, CNS, cardiovascular, and
renal disease areas. He served in roles of increasing
responsibility at Quintiles, being appointed Global Vice President
of the cardiovascular, renal, and metabolic group in February 2016,
a position he held until his appointment as President of IQVIA
Biotech and IQVIA MedTech.
Certain Securities and Nasdaq Disclosures
The Units described above were offered in a private placement under
Section 4(a)(2) of the Securities Act of 1933, as amended (the
“Act”), and Regulation D promulgated thereunder and,
along with the shares of common stock underlying the Units have not
been registered under the Act, or applicable state securities laws.
Accordingly, the Units and underlying shares of common stock may
not be offered or sold in the United States except pursuant to an
effective registration statement or an applicable exemption from
the registration requirements of the Act and such applicable state
securities laws.
This press release shall not constitute an offer to sell or the
solicitation of an offer to buy these securities, nor shall there
be any sale of these securities in any jurisdiction in which such
offer, solicitation or sale would be unlawful prior to the
registration or qualification under the securities laws of any such
jurisdiction.
In
connection with his appointment, on July 6, 2021, Mr. Giordano was
awarded options to purchase
350,000 shares of the Company's common stock under two separate
awards. These awards were made in accordance with the employment
inducement award exemption provided by NASDAQ Rule 5635(c)(4) and
were therefore not awarded under the Company's stockholder approved
equity plan. Under one award, 250,000 shares will vest over a four
year period, with one-quarter vesting per year, beginning one year
from the grant date. Under the second award, 100,000 shares will
vest upon the achievement of certain performance metrics related to
the clinical trials of the Company. The options have a 10-year term
and will have an exercise price equal to $1.97 per
share.
About Tenax Therapeutics
Tenax
Therapeutics, Inc., is a specialty pharmaceutical company focused
on identifying, developing, and commercializing products that
address cardiovascular and pulmonary diseases with high unmet
medical need. The Company has a
world-class scientific advisory team including recognized global
experts in pulmonary hypertension. The Company owns North American
rights to develop and commercialize levosimendan and has recently
released detailed results from the Phase 2 HELP Study of
levosimendan in Pulmonary Hypertension associated with Heart
Failure and preserved Ejection Fraction (PH-HFpEF) at the Heart
Failure Society of America (HFSA) Virtual Annual Scientific
Meeting. Tenax is also developing a delayed release oral
formulation of imatinib, designed to avoid gastric irritation, in a
single pivotal trial in patients with pulmonary artery hypertension
(PAH). For more information, visit www.tenaxthera.com.
About Levosimendan
Levosimendan
is a calcium sensitizer that works through a unique triple
mechanism of action. It initially was developed for intravenous use
in hospitalized patients with acutely decompensated heart failure.
It was discovered and developed by Orion Pharma, Orion Corporation
of Espoo Finland, and is currently approved in over 60 countries
for this indication and not available in the United States. Tenax
Therapeutics acquired the North American rights to develop and
commercialize levosimendan from Phyxius Pharma, Inc.
About Imatinib
Imatinib
is an antiproliferative agent developed to target the BCR-ABL
tyrosine kinase in patients with chronic myeloid leukemia. The
inhibitory effects of imatinib on PDGF receptors and c-KIT
suggested that it may be efficacious in PAH. Imatinib reversed
experimentally induced pulmonary hypertension and has pulmonary
vasodilatory effects in animal models and proapoptotic effects on
pulmonary artery smooth muscle cells from patients with idiopathic
PAH. In a phase 3 clinical trial imatinib produced significant
improvements in exercise capacity, but a high rate of dropouts
attributed largely to gastric intolerance prevented regulatory
approval.
Caution Regarding Forward-Looking Statements
This
news release contains certain forward-looking statements by the
Company that involve risks and uncertainties and reflect the
Company’s judgment as of the date of this release. The
forward-looking statements are subject to a number of risks and
uncertainties, including, but not limited to matters beyond the
Company’s control that could lead to delays in the clinical
study, new product introductions and customer acceptance of these
new products; matters beyond the Company’s control that could
impact the Company’s continued compliance with Nasdaq listing
requirements; the impact of management changes on the
Company’s business and unanticipated charges, costs and
expenditures not currently contemplated that may occur as a result
of management changes; and other risks and uncertainties as
described in the Company’s filings with the Securities and
Exchange Commission, including in its annual report on Form 10-K
filed on March 31, 2021 and its quarterly report on Form 10-Q filed
on May 17, 2021, as well as its other filings with the SEC. The
Company disclaims any intent or obligation to update these
forward-looking statements beyond the date of this release.
Statements in this press release regarding management’s
future expectations, beliefs, goals, plans or prospects constitute
forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995.
Contacts
Investor
Contact:
John
Mullaly
Managing
Director
LifeSci
Advisors, LLC
C:
617-429-3548
jmullaly@lifesciadvisors.com
