SETTLEMENT AGREEMENT
This
Settlement Agreement (the “Agreement”) is made and
entered into by and among Empery Asset Master Ltd., Empery Tax
Efficient, LP and Empery Tax Efficient II, LP (collectively, the
“Empery
Funds”), GT Biopharma Inc. (“GT Biopharma”), Xxxxxxx
Xxxxxxx (“Xxxxxxx”) and Xxxx
Xxxxxxx (“Xxxxxxx”). The Empery
Funds, GT Biopharma, Xxxxxxx and Xxxxxxx are each referred to as a
“Party”
and, collectively, as “Parties.”
WHEREAS, on January 22, 2018, the Empery
Funds and GT Biopharma executed a Securities Purchase Agreement
(the “SPA”) pursuant to which
the Empery Funds purchased from GT Biopharma senior convertible
notes (the “Original
Notes”) and warrants (the “Original Warrants”) to
purchase shares of GT Biopharma’s common stock, par value
$0.001 per share (the “Common
Stock”);
WHEREAS, Xxxxxxx Xxxxxxx was during
certain relevant times Chairman of GT Biopharma’s Board of
Directors, and Xxxx Xxxxxxx was and is a shareholder of GT
Biopharma;
WHEREAS, a dispute arose between GT
Biopharma and the Empery Funds regarding GT Biopharma’s
obligations under the terms of the SPA and the Original Notes and
Original Warrants issued thereunder;
WHEREAS, on August 1, 2018, GT Biopharma
commenced an action against the Empery Funds captioned GT Biopharma Inc., v. Empery Asset Master
LTD., et al., Case No. 1:18-cv-06970 (GDB) (S.D.N.Y.) (the
“SDNY
Action”), alleging, inter alia, that the Empery Funds had
improperly sold short GT Biopharma securities;
WHEREAS, on August 27, 2018, Xxxxxxx
commenced an action against the Empery Funds captioned Xxxxxxx Xxxxxxx v. Empery Asset Master LTD.,
et al., Case No. SC129731 (Sup. Ct. Cal.) (the
“California
Action”), alleging, inter alia, that the Empery Funds had
tortuously interfered with Xxxxxxx’x employment agreement by
suggesting to GT Biopharma’s placement agent that GT
Biopharma should “bolster” its management, and by
engaging in the short selling alleged in the SDNY
Action;
WHEREAS, the Empery Funds promptly
provided GT Biopharma with trading records and third-party
affidavits, demonstrating that the Empery Funds had not engaged in
any of the trading alleged in either of the SDNY Action or
California Action;
WHEREAS, on October 3, 2018, GT
Biopharma voluntarily dismissed the SDNY Action against the Empery
Funds without prejudice;
WHEREAS, on December 24, 2018, the
Empery Funds commenced an action against GT Biopharma captioned
Empery Asset Master LTD., et al.,
v. GT Biopharma, Inc., Index No. 656408/2018 (Sup. Ct. N.Y.
Cnty.) (as amended, the “New York Action”),
alleging, inter alia, that
GT Biopharma was in breach of certain of its obligations under the
SPA (the New York Action, together with the SDNY Action and the
California Action, are referred to herein as the
“Litigations”);
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WHEREAS, the New York Action was amended
by the Empery Funds to assert claims against Xxxxxxx for tortious
interference with the SPA and defamation;
WHEREAS, on February 8, 2019, Xxxxxxx
dismissed the California Action with prejudice against the Empery
Funds;
WHEREAS, the Parties desire to fully
settle and resolve all remaining issues, claims and causes of
action that were raised, or that could have been raised, relating
in every and any way to the Litigations and their relationship to
each other, to avoid further expense and inconvenience of
litigation, without any admission of liability or wrongdoing on the
part of GT Biopharma, Xxxxxxx or Xxxxxxx;
WHEREAS, GT Biopharma, Xxxxxxx, and
Xxxxxxx deny each and every one of the Empery Funds’
allegations of wrongful conduct, and deny that any conduct
challenged by the Empery Funds caused any damage whatsoever, and
have asserted a number of defenses to the Empery Funds’
claims;
WHEREAS, the Parties agree that this
Agreement shall not be deemed or construed to be an admission or
evidence of any violation of any statute or law or of any liability
or wrongdoing by GT Biopharma, Xxxxxxx or Xxxxxxx, or of the truth
of any claim or allegation or a waiver of any defenses
thereto;
AND WHEREAS, the Parties, each acting on
his, her or its own behalf, have approved of the settlement terms
described below.
NOW, THEREFORE, for good and valuable
consideration, the receipt and sufficiency of which is hereby
acknowledged, including in return for the promises and covenants
undertaken by the Parties herein and the releases given herein, the
Parties agree as follows:
1. Settlement
Exchange:
a. Settlement Payment: Within
three (3) Business Days of the date on which this Agreement is
fully executed, GT Biopharma shall pay to each Empery Fund a cash
payment in the amount set forth opposite such Empery Fund’s
name in column (2) of Schedule 1 attached hereto, for
an aggregate amount of $200,000 (the “Settlement Payment”). The
Settlement Payment will be made to each Empery Fund via wire
transfer of immediately available funds in accordance with the wire
transfer information set forth opposite such Empery Fund’s
name in column (3) of Schedule I attached
hereto.
b. Settlement Shares, Settlement Warrants
and Settlement Notes: Within three (3) Business Days of the
date on which this Agreement is fully executed, GT Biopharma shall:
(x) credit the number of shares of Common Stock as set forth
opposite each Empery Fund’s name in column (4) of
Schedule 1 attached
hereto (the “Settlement Shares”) to
the balance account of such Empery Fund with The Depository Trust
Company through its Deposit / Withdrawal at Custodian system in
accordance with the DWAC Instructions set forth opposite such
Empery Fund’s name in column (5) of Schedule 1 attached hereto; (y)
issue and deliver to each Empery Fund pre-funded warrants to
purchase a number of shares of Common Stock as set forth opposite
such Empery Fund’s name in column (6) of Schedule 1 attached hereto,
each in the form attached hereto as Exhibit A (each, a
“Settlement
Warrant” and collectively, the “Settlement Warrants”) to
the address set forth opposite such Empery Fund’s name in
column (8) of Schedule
1 attached hereto, and the aggregate exercise price of such
Settlement Warrants is hereby deemed to be pre-funded to the
Company on a cashless basis in conjunction with each Empery
Fund’s exchange of Original Notes and Original Warrants
pursuant to this Agreement in full payment for the Settlement
Warrant Shares (as defined below) (including, for the avoidance of
doubt, the par value thereof); and (z) issue and deliver to each
Empery Fund an aggregate principal amount of senior convertible
notes as set forth opposite such Empery Fund’s name in column
(7) of Schedule 1
attached hereto, each in the form attached hereto as Exhibit B (each, a
“Settlement
Note” and collectively, the “Settlement Notes” and,
together with the Settlement Shares and Settlement Warrants, the
“Settlement
Securities”) to the address set forth opposite such
Empery Fund’s name in column (8) of Schedule 1 attached hereto,
solely in exchange for the Original Notes and Original Warrants
held by such Empery Fund. The date on which the Settlement Shares,
the Settlement Warrants and the Settlement Notes are delivered to
the Empery Funds is hereinafter referred to as the
“Exchange
Date.” As used herein, “Business Day” means any
day other than a Saturday, Sunday or other day on which commercial
banks in The City of New York are authorized or required to remain
closed.
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c. Original Notes and Original
Warrants: Effective upon receipt of, and solely in exchange
for, the Settlement Shares, the Settlement Warrants and Settlement
Notes, the Original Notes and Original Warrants held by the Empery
Funds, and the SPA, will be deemed cancelled and extinguished and
all rights of the Empery Funds thereunder will terminate. Promptly
following the Exchange Date, but in any event within ten (10)
Business Days thereafter, the Empery Funds shall return the
Original Notes and Original Warrants to GT Biopharma for
cancellation. The Parties acknowledge and agree that the exchange
of the Original Notes and Original Warrants for the Settlement
Shares, Settlement Notes and Settlement Warrants is being made in
reliance upon the exemption from registration provided by Section
3(a)(9) of the Securities Act of 1933, as amended (the
“1933
Act”).
2. Dismissal of New York Action With
Prejudice: No later than three (3) Business Days following
the Exchange Date, and in consideration for the Settlement Payment,
the Empery Funds shall provide to GT Biopharma and Xxxxxxx a fully
executed stipulation for the dismissal of the New York Action, with
prejudice and on the merits, in the form attached hereto as
Exhibit C (the
“Stipulation”). No later
than two (2) Business Days following GT Biopharma’s and
Xxxxxxx’x receipt of the fully executed Stipulation from the
Empery Funds, the Empery Funds shall file the fully executed
Stipulation with the Court.
3. Releases
and Covenant Not to Xxx:
a. Empery Funds Releases: The
Empery Funds on their own behalf and for and on behalf of each of
their parent companies, subsidiaries, and direct or indirect
affiliates, and any and all of their respective present, former,
and future general partners, limited partners, officers, directors,
shareholders, managers, members, trustees, employees, consultants,
attorneys, and other agents in their respective capacities as such,
and the heirs, executors, administrators, successors, and assigns
of each of them (collectively, the “Empery Funds Releasors”),
hereby completely and irrevocably releases and forever and finally
discharges any and all claims, rights, demands, obligations, causes
of action, counterclaims, defenses, rights of setoff, rights of
rescission, liens, disputes, damages, liabilities, debts, costs,
expenses (including attorneys’ fees), payments, capital
contributions, fees, bonds, covenants, contracts, agreements,
judgments, charges, or losses of any kind or character whatsoever,
in law or equity, whether presently known or unknown, asserted or
unasserted, fixed or contingent, in contract, tort, or otherwise,
that any of the Empery Funds Releasors had, presently may have or
may have in the future against GT Biopharma, Xxxxxxx, or Xxxxxxx,
as well as, to the extent applicable, each of their respective
parent companies, subsidiaries, direct and indirect affiliates, and
any and all of their respective present, former and future
officers, directors, shareholders, managers, members, partners,
employees, consultants, attorneys, and other agents in their
respective capacities as such (collectively, the
“GT Biopharma and
Individual Released Parties”), arising out of or by
reason of any cause, matter, or thing relating to the Litigations.
The release shall apply to Claims whether arising under any
statute, rule or regulation, or under the law of any country,
state, province, territory, or any other jurisdiction, or under
principles of contract law, common law, or equity; provided that,
and consistent with Section 3(f) of this Agreement, nothing herein
shall release claims arising out of this Agreement.
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b. GT Biopharma’s Releases.
GT Biopharma on its own behalf and for and on behalf of its parent
companies, subsidiaries, and direct or indirect affiliates, and any
and all of their respective present, former, and future general
partners, limited partners, officers, directors, shareholders,
managers, members, trustees, employees, consultants, attorneys, and
other agents in their respective capacities as such, and the heirs,
executors, administrators, successors, and assigns of each of them
(collectively, the “GT Biopharma Releasors”),
hereby completely and irrevocably releases and forever and finally
discharges any and all claims, rights, demands, obligations, causes
of action, counterclaims, defenses, rights of setoff, rights of
rescission, liens, disputes, damages, liabilities, debts, costs,
expenses (including attorneys’ fees), payments, capital
contributions, fees, bonds, covenants, contracts, agreements,
judgments, charges, or losses of any kind or character whatsoever,
in law or equity, whether presently known or unknown, asserted or
unasserted, fixed or contingent, in contract, tort, or otherwise,
that any of the GT Biopharma Releasors had, presently may have or
may have in the future against the Empery Funds, as well as each of
the Empery Funds’ investment managers, subsidiaries, and
direct or indirect affiliates, and any and all of their respective
direct or indirect present, former and future officers, directors,
shareholders, managers, members, partners, employees, consultants,
attorneys, and other agents in their respective capacities as such
(collectively, the “Empery Funds Released
Parties”), arising out of or by reason of any cause,
matter, or thing relating or ancillary to: (i) the Litigations
(including each of the Empery Funds’ status as holder of the
Original Notes and/or the Original Warrants), (ii) the status of
each of the Empery Funds as a holder of the Settlement Shares,
Settlement Warrants and/or the Settlement Notes, or (iii) the
status of each of the Empery Funds as a party to this Agreement
and/or the SPA. The releases shall apply to Claims whether arising
under any statute, rule or regulation, or under the law of any
country, state, province, territory, or any other jurisdiction, or
under principles of contract law, common law, or equity; provided
that, consistent with Section 3(f) of this Agreement, nothing in
this release shall release claims arising out of this Agreement or
any Settlement Documents (as defined in Section 6(a) of this
Agreement). For the avoidance of doubt, with respect to the SDNY
Action, the release in this Section 3(b) shall have the same effect
as a dismissal of the SDNY Action with prejudice.
x. Xxxxxxx and Xxxxxxx Releases.
Xxxxxxx and Xxxxxxx on their own behalf and for and on behalf of
each of their respective present, former, and future general
partners, limited partners, employees, consultants, attorneys, and
other agents in their respective capacities as such, and the heirs,
executors, administrators, successors, and assigns of each of them
(collectively, the “Individual Releasors”),
hereby completely and irrevocably release and forever and finally
discharge any and all claims, rights, demands, obligations, causes
of action, counterclaims, defenses, rights of setoff, rights of
rescission, liens, disputes, damages, liabilities, debts, costs,
expenses (including attorneys’ fees), payments, capital
contributions, fees, bonds, covenants, contracts, agreements,
judgments, charges, or losses of any kind or character whatsoever,
in law or equity, whether presently known or unknown, asserted or
unasserted, fixed or contingent, in contract, tort, or otherwise,
that any of the Individual Releasors had, presently may have or may
have in the future against Empery Funds Released Parties, arising
out of or by reason of any cause, matter, or thing relating or
ancillary to: (i) the Litigations (including each of the Empery
Funds’ status as a holder of the Original Notes and/or
Original Warrants), (ii) the status of each of the Empery Funds as
a holder of the Settlement Shares, the Settlement Warrants and/or
the Settlement Notes, or (iii) the status of each of the Empery
Funds as a party to this Agreement and/or the SPA. The releases
shall apply to Claims whether arising under any statute, rule or
regulation, or under the law of any country, state, province,
territory, or any other jurisdiction, or under principles of
contract law, common law, or equity; provided that nothing in this
release shall release claims arising out of this
Agreement.
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d. Covenant Not to Xxx; Defense:
Except as necessary to enforce this Agreement and the Settlement
Documents, each Party on its own behalf and on behalf of any other
Person purporting to act by, through or on behalf of such Party,
hereby covenants, represents, and warrants that it will forever
refrain from suing to enforce or to recover, directly or
indirectly, under any claims released by this Agreement, to the
extent such releases become effective. This Agreement may be
pleaded as a full and complete defense to, and may be used as the
basis for an injunction against any action, suit or other
proceeding which may be instituted, prosecuted or attempted in
breach of the undertakings contained here. As used herein,
“Person” means an
individual, a limited liability company, a partnership, a joint
venture, a corporation, a trust, an unincorporated organization,
any other entity and any government or any department or agency
thereof.
e. Unknown Claims: The Parties
each acknowledge that he, she or it may discover facts in addition
to or different from those that he, she or it now knows or believes
to be true with respect to the matters released herein, but that it
is the express intention of the Parties, except as necessary to
enforce this Agreement and the Settlement Documents, to fully,
finally and forever settle and release any and all claims released
hereby, known or unknown, suspected or unsuspected, which now
exists, heretofore existed, or may hereafter exist, and without
regard to the subsequent discovery or existence of such additional
or different facts. Except that Bristol Investment Fund, Ltd., and
its affiliated entities, do not release or discharge any claims
they may have, now or in the future, as to GT Biopharma and
unrelated to the Litigations. In furtherance of this intention, the
Parties each acknowledge that they have been advised of and
expressly waive any and all provisions, rights and benefits of
California Civil Code Section 1542, which provides:
A
GENERAL RELEASE DOES NOT EXTEND TO CLAIMS THAT THE CREDITOR OR
RELEASING PARTY DOES NOT KNOW OR SUSPECT TO EXIST IN HIS OR HER
FAVOR AT THE TIME OF EXECUTING THE RELEASE, AND THAT, IF KNOWN BY
HIM OR HER, WOULD HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT
WITH THE DEBTOR OR RELEASED PARTY.
The
Parties shall also be deemed expressly to have waived any and all
provisions, rights and benefits conferred by any law of any state
or territory of the United States, or principle of common law,
which is similar, comparable, or equivalent to California Civil
Code Section 1542 or that would otherwise limit the releases and
waivers contained in this Agreement.
The
Parties each acknowledge that the foregoing waiver was separately
bargained for and an integral aspect of the settlement of which
this release is a part.
f. Enforcement of This Agreement:
For the avoidance of doubt, notwithstanding the foregoing or any
other provisions of this Agreement, the releases and covenants not
to xxx in this Section 3 shall not apply to any disputes or claims
that may arise in the future relating to the enforcement of the
terms of this Agreement or the Settlement Documents issued pursuant
thereto.
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4. Acknowledgment of Empery Funds’
Alleged Trading: GT Biopharma, Xxxxxxx and Xxxxxxx each
hereby acknowledge that the Empery Funds did not engage in short
selling alleged in the SDNY Action or the California
Action.
5. No Admission: It is understood
and agreed that this Agreement is a compromise and settlement of
the claims released herein, and it shall not be construed as an
admission, concession, or indication of the validity of any claim,
defense, liability, obligation, or wrongdoing. For the avoidance of
doubt, the Acknowledgment of Empery Funds’ Alleged Trading in
Section 4 of this Agreement does not modify in any way the releases
and covenants not to xxx in Section 3 of this Agreement, and,
accordingly, the acknowledgment in Section 4 of this Agreement
shall not serve as the basis for any future claim. Nor will the
Parties argue in or before any court, administrative agency,
tribunal, or make any public statement whatsoever, that this
Agreement or the acknowledgment in Section 4 of this Agreement is
or may be construed as an admission by GT Biopharma, Xxxxxxx, or
Xxxxxxx of any wrongdoing or liability.
6. Representations
and Covenants of GT Biopharma
a. Authorization; Enforcement;
Validity. GT Biopharma has the requisite power and authority
to enter into and perform its obligations under this Agreement, the
Settlement Notes, the Settlement Warrants and each of the other
agreements, instruments, certificates or documents entered into by
the parties hereto in connection with the transactions contemplated
by this Agreement (collectively, the “Settlement Documents”)
and to issue the Settlement Shares, the Settlement Warrants and
Settlement Notes in exchange for the Original Notes and Original
Warrants, all in accordance with the terms hereof and thereof. The
execution and delivery of this Agreement and the other Settlement
Documents by GT Biopharma and the consummation by GT Biopharma of
the transactions contemplated hereby and thereby, including,
without limitation, the issuance of the Settlement Shares, the
Settlement Warrants and Settlement Notes, have been duly authorized
by GT Biopharma’s Board of Directors, and no further filing,
consent, or authorization is required by GT Biopharma, its Board of
Directors or its stockholders. This Agreement and the other
Settlement Documents are duly executed and delivered by GT
Biopharma, and constitute the legal, valid and binding obligations
of GT Biopharma, enforceable against GT Biopharma in accordance
with their respective terms, except as such enforceability may be
limited by general principles of equity or applicable bankruptcy,
insolvency, reorganization, moratorium, liquidation or similar laws
relating to, or affecting generally, the enforcement of applicable
creditors’ rights and remedies.
b. Issuance of Securities. In each
case subject to the terms of the Settlement Documents, the issuance
of the Settlement Shares, the Settlement Warrants and the
Settlement Notes are duly authorized and, upon issuance in
accordance with the terms hereof, shall be validly issued, fully
paid and free from all preemptive or similar rights, taxes, liens
and charges and other encumbrances with respect to the issue
thereof and the Common Stock issued pursuant to the Settlement
Warrants and the Settlement Notes shall be validly issued, fully
paid and non-assessable and free from all preemptive or similar
rights, taxes, liens, charges and other encumbrances with respect
to the issue thereof, with the holder of the Settlement Shares, the
Settlement Warrant Shares and the Settlement Conversion Shares (as
defined below) being entitled to all rights accorded to a holder of
Common Stock. The Settlement Shares, the Settlement Warrants and
the Settlement Notes and the Common Stock issued pursuant to the
Settlement Warrants and the Settlement Notes will not bear any
restrictive legend under applicable securities laws, rules and
regulations. For the purposes of Rule 144 promulgated under the
1933 Act, GT Biopharma acknowledges that the holding period of the
Settlement Shares, the Settlement Warrants and the Settlement Notes
may be tacked onto the holding period of the Original Notes and the
Original Warrants and GT Biopharma agrees not to take a position
contrary to this Section 6(b). As of the Exchange Date, a number of
shares of Common Stock shall have been duly authorized and reserved
for issuance which equals or exceeds (the “Required Reserved
Amount”) the sum of (i) 150% of the maximum number of
shares of Common Stock issuable pursuant to the terms of the
Settlement Notes (the “Settlement Conversion
Shares”) based on the initial Conversion Price (as
defined in the Settlement Notes) (without taking into account any
limitations on the issuance thereof pursuant to the terms of the
Settlement Notes) and (ii) the maximum number of shares of Common
Stock issuable upon exercise of the Settlement Warrants (the
“Settlement Warrant
Shares”) (without taking into account any limitations
on the exercise of the Warrants set forth in the Warrants). As of
the date hereof, there are 679,300,567 shares of Common Stock
authorized and unissued. So long as any Empery Funds owns any
Settlement Warrants and/or Settlement Notes, GT Biopharma shall
take all action necessary to at all times have authorized, and
reserved for the purpose of issuance, no less than the Required
Reserve Amount. If at any time the number of shares of Common
Stock authorized and reserved for issuance is not sufficient
to meet the Required Reserved Amount, GT Biopharma will promptly
take all corporate action necessary to authorize and reserve a
sufficient number of shares, including, without limitation, calling
a special meeting of stockholders to authorize the
reservation of additional shares to meet the GT Biopharma’s
obligations under this Section 6(b), and, in the case of an
insufficient number of authorized shares,
obtain stockholder approval of an increase in such
authorized number of shares, and voting the management shares of GT
Biopharma in favor of an increase in the authorized shares of GT
Biopharma to ensure that the number of authorized shares is
sufficient to meet the Required Reserved Amount.
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c. No Conflicts. The execution,
delivery and performance of the Settlement Documents by GT
Biopharma and the consummation by GT Biopharma of the transactions
contemplated hereby and thereby (including, without limitation, the
issuance of the Settlement Shares, the Settlement Warrants and/or
Settlement Notes) will not (i) result in a violation of the
certificate of incorporation of GT Biopharma or its bylaws, any
memorandum of association, certificate of incorporation,
certificate of formation, any certificate of designations or other
constituent documents of GT Biopharma or any of its Subsidiaries
(as defined in the Settlement Notes), any capital stock of GT
Biopharma or any of its Subsidiaries or the articles of association
or bylaws of GT Biopharma or any of its Subsidiaries, (ii) conflict
with, or constitute a default (or an event which with notice or
lapse of time or both would become a default) in any respect under,
or give to others any rights of termination, amendment,
acceleration or cancellation of, any agreement, indenture or
instrument to which GT Biopharma or any of its Subsidiaries is a
party, or (iii) result in a violation of any law, rule, regulation,
order, judgment or decree (including other foreign, federal and
state securities laws and regulations and the rules and regulations
of the OTC QB (the “Principal Market”) and
including all applicable laws of the State of Delaware and any
foreign, federal and state laws, rules and regulations) applicable
to GT Biopharma or any of its Subsidiaries or by which any property
or asset of GT Biopharma or any of its Subsidiaries is bound or
affected, except, in the case of clauses (ii) and (iii) above,
where such conflict, violation or default would not result,
individually or in the aggregate, in a Material Adverse Effect (as
defined below).
d. Consents. GT Biopharma is not
required to obtain any consent, authorization or order of, or make
any filing or registration with, any court, governmental agency or
any regulatory or self-regulatory agency or any other Person in
order for it to execute, deliver or perform any of its obligations
under or contemplated by the Settlement Documents, in each case in
accordance with the terms hereof or thereof, other than (i) the
filings required pursuant to Section 6(j) of this Agreement, (ii)
the notice and/or application(s), if any, required to be delivered
pursuant to Section 6(k) of this Agreement and (iii) those already
obtained or effected on or prior to the date hereof. GT Biopharma
is not in violation of the listing requirements of the Principal
Market and has no knowledge of any facts or circumstances that
would reasonably lead to delisting or suspension of the Common
Stock on the Principal Market in the foreseeable future. The
issuance by GT Biopharma of the Settlement Shares, the Settlement
Warrants or Settlement Notes shall not have the effect of delisting
or suspending the Common Stock from the Principal
Market.
e. FAST Compliance. While any
Settlement Shares, Settlement Warrants or Settlement Notes are
outstanding, GT Biopharma shall maintain a transfer agent that
participates in the DTC Fast Automated Securities Transfer
Program.
f. Right of
Participation.
i. (a) Until the
first date that (i) less than 10% of the aggregate amount of
the Settlement Notes are outstanding and (ii) no Event of Default
(as defined in the Settlement Notes) nor an event which with the
passage of time or the giving of notice could become an Event of
Default is pending, upon any proposed financing through the
issuance by GT Biopharma or any of its Subsidiaries of Common
Stock, Common Stock Equivalents (as defined below), Indebtedness
(as defined below) or a combination thereof, other than (i) a
rights offering to all holders of Common Stock which does not
include extending such rights offering to holders of Settlement
Notes or (ii) an Exempt Issuance (each a “Subsequent Financing”),
the Empery Funds shall have the right to participate in up to an
amount of the Subsequent Financing equal to 100% of the Subsequent
Financing (the “Participation Maximum”),
pro rata (i) to each other in proportion to the aggregate principal
amount of Settlement Notes issued to them pursuant to this
Agreement and (ii) to each other Person holding Permitted
Indebtedness (as defined in the Settlement Notes) and having a
similar right of participation in such Subsequent Financing, on the
conditions and price provided for in the Subsequent Financing,
unless the Subsequent Financing is an underwritten public offering,
in which case GT Biopharma shall notify each Empery Fund of such
public offering when it is lawful for GT Biopharma to do so, but no
Empery Fund shall be entitled to purchase any particular amount of
such public offering without the approval of the lead underwriter
of such underwritten public offering.
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ii. At least ten (10)
Trading Days (as defined in the Settlement Notes) prior to the
closing of the Subsequent Financing, GT Biopharma shall deliver to
each Empery Fund a written notice of its intention to effect a
Subsequent Financing (“Pre-Notice”), which
Pre-Notice shall ask such Empery Fund if it wants to review the
details of such financing (such additional notice, a
“Subsequent
Financing Notice”). Upon the request of an Empery
Fund, and only upon a request by such Empery Fund, for a Subsequent
Financing Notice, GT Biopharma shall promptly, but no later than
one (1) Trading Day after such request, deliver a Subsequent
Financing Notice to such Empery Fund. The requesting Empery Fund
shall be deemed to have acknowledged that the Subsequent Financing
Notice may contain material non-public information. The Subsequent
Financing Notice shall describe in reasonable detail the proposed
terms of such Subsequent Financing, the amount of proceeds intended
to be raised thereunder and the Person or Persons through or with
whom such Subsequent Financing is proposed to be effected and shall
include a term sheet or similar document relating thereto as an
attachment.
iii. Any
Empery Fund desiring to participate in such Subsequent Financing
must provide written notice to GT Biopharma by not later than 5:30
p.m. (New York City time) on the tenth (10th) Trading Day after all
of the Empery Funds have received the Pre-Notice that such Empery
Fund is willing to participate in the Subsequent Financing, the
amount of such Empery Fund’s participation, and representing
and warranting that such Empery Fund has such funds ready, willing,
and available for investment on the terms set forth in the
Subsequent Financing Notice. If GT Biopharma receives no such
notice from an Empery Fund as of such tenth (10th) Trading Day,
such Empery Fund shall be deemed to have notified GT Biopharma that
it does not elect to participate.
iv. If by 5:30 p.m.
(New York City time) on the fifteenth (15th) Trading Day after all
of the Empery Funds have received the Pre-Notice, notifications by
the Empery Funds of their willingness to participate in the
Subsequent Financing (or to cause their designees to participate)
is, in the aggregate with similar notifications from all other
Persons holding Permitted Indebtedness and having similar rights of
participation in the Subsequent Financing, less than the total
amount of the Participation Maximum of the Subsequent Financing,
then GT Biopharma may affect the remaining portion of such
Subsequent Financing on the terms and with the Persons set forth in
the Subsequent Financing Notice and the Empery Funds shall
simultaneously affect their portion of such Subsequent Financing as
set forth in their notifications to GT Biopharma consistent with
the terms set forth in the Subsequent Financing
Notice.
v. If by 5:30 p.m.
(New York City time) on the fifth (5th) Trading Day after all of
the Empery Funds have received the Pre-Notice, GT Biopharma
receives responses to a Subsequent Financing Notice from Empery
Funds, seeking to purchase more than the aggregate amount of the
Participation Maximum, each such Empery Funds shall have the right
to purchase its Pro Rata Portion (as defined below) of the
Participation Maximum. “Pro Rata Portion” means the
ratio of (x) the principal amount of the Settlement Notes issued
hereunder to an Empery Fund participating under this Section 6(f)
and (y) the sum of the aggregate principal amounts of Settlement
Notes issued hereunder to all Empery Funds participating under this
Section 6(f) plus
the sum of the aggregate principal amount of Permitted Indebtedness
held by other Persons who have elected to participate in the
Subsequent Financing under rights of participation similar to this
Section 6(f).
8
vi. GT Biopharma must
provide the Empery Funds with a second Subsequent Financing Notice,
and the Empery Funds will again have the right of participation set
forth above in this Section 6(f), if the Subsequent Financing
subject to the initial Subsequent Financing Notice is not
consummated for any reason on the terms set forth in such
Subsequent Financing Notice within sixty (60) Trading Days after
the date of the initial Subsequent Financing Notice.
vii. GT
Biopharma and each Empery Funds agree that if any Empery Fund
elects to participate in the Subsequent Financing, the transaction
documents related to the Subsequent Financing shall not include any
term or provision whereby such Empery Fund shall be required to
agree to any restrictions on trading as to any of the securities
issued hereunder (for avoidance of doubt, the securities purchased
in the Subsequent Financing shall not be considered securities
purchased hereunder) or be required to consent to any amendment to
or termination of, or grant any waiver, release or the like under
or in connection with, this Agreement, without the prior written
consent of such Empery Fund.
viii. Notwithstanding
anything to the contrary in this Section 6(f) and unless otherwise
agreed to by such Empery Fund, GT Biopharma shall either confirm in
writing to such Empery Fund that the transaction with respect to
the Subsequent Financing has been abandoned or shall publicly
disclose its intention to issue the securities in the Subsequent
Financing, in either case in such a manner such that such Empery
Fund will not be in possession of any material, non-public
information, by the seventeenth (17th) Trading Day following
delivery of the Subsequent Financing Notice. If by such seventeenth
(17th) Trading Day, no public disclosure regarding a transaction
with respect to the Subsequent Financing has been made, and no
notice regarding the abandonment of such transaction has been
received by such Empery Funds, such transaction shall be deemed to
have been abandoned and such Empery Funds shall not be deemed to be
in possession of any material, non-public information with respect
to GT Biopharma or any of its Subsidiaries.
ix. For the purposes of
this Section 6(f): (x) “Common Stock Equivalents”
means any securities of GT Biopharma or its 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;
(y)”Exempt
Issuance” means the issuance of (A) shares of Common
Stock or options to employees, officers or directors of GT
Biopharma 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, (B) 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 and any term thereof have not been
amended since the date of this Agreement to increase the number of
such securities or to decrease the issue price, exercise price,
exchange price or conversion price of such securities and which
securities and the principal terms thereof are described in the SEC
Documents (as defined below), (C) securities issued pursuant to
acquisitions or strategic transactions approved by a majority of
the disinterested directors of GT Biopharma, provided that any such
issuance shall only be to a Person (or to the equity holders 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 GT Biopharma and shall be intended to provide to GT
Biopharma substantial additional benefits in addition to the
investment of funds, but shall not include a transaction in which
GT Biopharma is issuing securities primarily for the purpose of
raising capital or to an entity whose primary business is investing
in securities, (D) as set forth on Schedule 6(f), and (e)
securities issued or issuable to the Empery Funds and their assigns
pursuant to the Settlement Documents including without limitation,
this Section 6(f), or upon exercise, conversion or exchange of any
such securities.
9
g. Solvency. As of the date
hereof, neither GT Biopharma nor any of its Subsidiaries has taken
any steps to seek protection pursuant to any bankruptcy law nor
does GT Biopharma have knowledge that its creditors or its
Subsidiaries’ creditors intend to initiate involuntary
bankruptcy proceedings or knowledge of any fact which would
reasonably lead a creditor to do so. GT Biopharma,
individually, and GT Biopharma and its subsidiaries, on a
consolidated basis, are not as of the date hereof, and after giving
effect to the transactions contemplated hereby will not be,
Insolvent. As used herein,
“Insolvent”
means, with respect to any Person, (i) the present fair saleable
value of such Person’s assets is less than the amount
required to pay such Person’s total Indebtedness (as defined
in Section 6(o)), (ii) such Person is unable to pay its debts and
liabilities, subordinated, contingent or otherwise, as such debts
and liabilities become absolute and matured, (iii) such Person
intends to incur or believes that it will incur debts that would be
beyond its ability to pay as such debts mature or (iv) such Person
has unreasonably small capital with which to conduct the business
in which it is engaged as such business is now conducted and is
proposed to be conducted.
h. Shell
Company Status. GT
Biopharma is not, and has never been,
an issuer identified in Rule 144(i)(1) of the 1933
Act.
i. SEC Filings. As of their
respective filing dates, GT Biopharma’s filings with the
United States Securities and Exchange Commission (the
“SEC”)
under the Securities Exchange Act of 1934, as amended (the
“Exchange
Act”) since January 23, 2018 (the “SEC Documents”), complied
in all material respects with the requirements of the Exchange Act
and the rules and regulations of the SEC promulgated thereunder
applicable to the SEC Documents, and none of the SEC Documents, at
the time they were filed with the SEC, 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. GT Biopharma represents that,
as of the date hereof, no material event or circumstance has
occurred which would be required to be publicly disclosed or
announced on a Current Report on Form 8-K, either as of the date
hereof or solely with the passage of time by GT Biopharma but which
has not been so publicly announced or disclosed.
j. Disclosure of Transactions and Other
Material Information. GT Biopharma shall file a
current report on Form 8-K reasonably acceptable to the Empery
Funds (the “8-K
Filing”) on or before 8:30 a.m., New York City time,
on the first Business Day after this Agreement has been duly
executed and delivered, in the form required by the 1934 Act,
relating to the transactions contemplated by this Agreement and
attaching a form of this Agreement, the form of the Settlement
Warrant and the form of the Settlement Note (including, without
limitation, all schedules and exhibits to such agreement, if any)
as an exhibit to such filing. From and after the filing of
the 8-K Filing with the SEC, no Empery Fund shall be in possession
of any material, nonpublic information received from GT Biopharma,
any of its Subsidiaries or any of their respective officers,
directors, employees or agents that is not disclosed in the 8-K
Filing. In addition, effective upon the filing of the 8-K Filing,
GT Biopharma acknowledges and agrees that any and all
confidentiality or similar obligations under any agreement, whether
written or oral, between GT Biopharma, any of its Subsidiaries or
any of their respective officers, directors, employees or agents,
on the one hand, and any Empery Fund or any of their respective
affiliates, on the other hand, shall terminate and be of no further
force or effect. GT Biopharma shall not, and shall cause each of
its subsidiaries and its and each of their respective officers,
directors, employees and agents, not to, provide any Empery Fund
with any material, nonpublic information regarding GT Biopharma or
any of its subsidiaries from and after the date hereof without the
express prior written consent of such Empery Fund or as otherwise
contemplated hereby. To the extent that GT Biopharma, any of
its subsidiaries or any of their respective officers, directors,
affiliates employees or agents delivers any material, non-public
information to any Empery Fund without such Empery Fund’s
consent, GT Biopharma hereby covenants and agrees that no Empery
Fund shall have any duty of confidentiality to GT Biopharma, any of
its Subsidiaries or any of their respective officers, directors,
employees or agents with respect to, or a duty to GT Biopharma, any
of its Subsidiaries or any of their respective officers, directors,
employees or agents not to trade on the basis of, such material,
non-public information. GT Biopharma understands and confirms
that the Empery Funds will rely on the foregoing representations in
effecting transactions in securities of GT
Biopharma.
10
k. Listing. GT Biopharma
shall, if applicable, take all steps necessary to promptly secure
the listing or quotation of all of (i) Settlement Shares,
Settlement Conversion Shares and Settlement Warrant Shares without
regard to any limitation on the conversion of the Settlement Notes
or exercise of the Settlement Warrants and (ii) any capital stock
of GT Biopharma issued or issuable with respect to the Settlement
Shares, the Settlement Warrants, the Settlement Warrant Shares, the
Settlement Notes or the Settlement Conversion Shares, as
applicable, as a result of any stock split, stock dividend,
recapitalization, exchange or similar event or otherwise (the
“Listed
Securities”) upon the Principal Market or any other
national securities exchange or automated quotation system, if any,
upon which the Common Stock is then listed and shall maintain such
listing of all Listed Securities. GT Biopharma shall pay all
fees and expenses in connection with satisfying its obligations
under this Section 6(k).
l. No Integration Actions. None of
GT Biopharma, any of its affiliates or any Person acting on behalf
of GT Biopharma or such affiliate will sell, offer for sale or
solicit offers to buy in respect of any security (as defined in the
1933 Act) that would be integrated with the issuance of the
Settlement Shares, the Settlement Warrants and Settlement Notes in
a manner that would require the registration under the 1933 Act of
the issuance to the Empery Funds or require shareholder approval
under the rules and regulations of the Principal Market, and GT
Biopharma will take all action that is appropriate or necessary to
assure that its offerings of other securities will not be
integrated for purposes of the 1933 Act or the rules and
regulations of the Principal Market with the issuance of the
Settlement Shares, the Settlement Warrants and Settlement Notes
contemplated hereby.
m. Additional Settlement Notes; Variable
Securities. For so long as any Settlement Notes remain
outstanding, GT Biopharma shall not, in any manner, (i) issue or
sell any rights, warrants or options to subscribe for or purchase
Common Stock or directly or indirectly convertible into or
exchangeable or exercisable for Common Stock at a price which
varies or may vary with the market price of the Common Stock,
including by way of one or more reset(s) to any fixed price unless
the conversion, exchange or exercise price of any such security
cannot be less than the then applicable Conversion Price with
respect to the Common Stock into which any Settlement Note is
convertible (collectively, “Variable Rate
Transactions”) or (ii) enter into any agreement, or
issue any securities pursuant to any agreement, including, without
limitation, an equity line of credit, at-the-market offering or
similar agreement, whereby GT Biopharma may issue securities at a
future determined price.
n. Corporate Existence. So long as
any Empery Fund beneficially owns any Settlement Warrants and/or
Settlement Notes, GT Biopharma shall (i) maintain its corporate
existence and (ii) not be party to any Fundamental Transaction (as
defined in the Settlement Warrants and the Settlement Notes) unless
GT Biopharma is in compliance with the applicable provisions
governing Fundamental Transactions set forth in the Settlement
Warrants and the Settlement Notes.
11
o. Indebtedness and Other
Contracts. Neither GT Biopharma nor any of its Subsidiaries
(i) except as disclosed in Schedule 6(o)(i) attached
hereto, has any outstanding Indebtedness as of the date hereof,
(ii) except as disclosed in Schedule 6(o)(ii) attached
hereto, is a party to any contract, agreement or instrument as of
the date hereof, the violation of which, or default under which, by
the other party(ies) to such contract, agreement or instrument
could reasonably be expected to result in a Material Adverse Effect
(as defined below), (iii) except as disclosed in Schedule 6(o)(iii) attached
hereto, is in violation of any term of or in default under any
contract, agreement or instrument relating to any Indebtedness as
of the date hereof, except where such violations and defaults would
not result, individually or in the aggregate, in a Material Adverse
Effect, or (iv) except as disclosed in Schedule 6(o)(iv) attached
hereto, is a party to any contract, agreement or instrument
relating to any Indebtedness as of the date hereof, the performance
of which, in the judgment of GT Biopharma’s officers, has or
is expected to have a Material Adverse Effect. Schedule 6(o) provides a
detailed description of the material terms of any such outstanding
Indebtedness as of the date hereof. For purposes of this Agreement:
(x) “Indebtedness” of any
Person means, without duplication (A) all indebtedness for borrowed
money, (B) all obligations issued, undertaken or assumed as the
deferred purchase price of property or services, including, without
limitation, “capital leases” in accordance
with generally accepted
accounting principles, consistently applied, during the periods
involved (“GAAP”) (other than trade
payables entered into in the ordinary course of business consistent
with past practice), (C) all reimbursement or payment obligations
with respect to letters of credit, surety bonds and other similar
instruments, (D) all obligations evidenced by notes, bonds,
debentures or similar instruments, including obligations so
evidenced incurred in connection with the acquisition of property,
assets or businesses, (E) all indebtedness created or arising under
any conditional sale or other title retention agreement, or
incurred as financing, in either case with respect to any property
or assets acquired with the proceeds of such indebtedness (even
though the rights and remedies of the seller or bank under such
agreement in the event of default are limited to repossession or
sale of such property), (F) all monetary obligations under any
leasing or similar arrangement which, in connection with GAAP,
consistently applied for the periods covered thereby, is classified
as a capital lease, (G) all indebtedness referred to in clauses (A)
through (F) above secured by (or for which the holder of such
Indebtedness has an existing right, contingent or otherwise, to be
secured by) any mortgage, deed of trust, lien, pledge, charge,
security interest or other encumbrance of any nature whatsoever in
or upon any property or assets (including accounts and contract
rights) with respect to any asset or property owned by any Person,
even though the Person which owns such assets or property has not
assumed or become liable for the payment of such indebtedness, and
(H) all Contingent Obligations in respect of indebtedness or
obligations of others of the kinds referred to in clauses (A)
through (G) above; (y) “Contingent Obligation”
means, as to any Person, any direct or indirect liability,
contingent or otherwise, of that Person with respect to any
Indebtedness, lease, dividend or other obligation of another Person
if the primary purpose or intent of the Person incurring such
liability, or the primary effect thereof, is to provide assurance
to the obligee of such liability that such liability will be paid
or discharged, or that any agreements relating thereto will be
complied with, or that the holders of such liability will be
protected (in whole or in part) against loss with respect thereto;
and (z) “Material
Adverse Effect” means any material adverse effect on
the business, properties, assets, liabilities, operations, results
of operations, condition (financial or otherwise) or prospects of
GT Biopharma and its Subsidiaries, taken as a whole, or on the
transactions contemplated hereby or on the other Settlement
Documents or by the agreements and instruments to be entered into
in connection herewith or therewith, or on the authority or ability
of GT Biopharma to perform any of its obligations under any of the
Settlement Documents.
12
p. Indemnification: To the fullest
extent permitted by law, GT Biopharma will, and hereby does,
indemnify, hold harmless and defend each of the Empery Funds, the
directors, officers, partners, members, employees, agents,
representatives of, and each Person, if any, who controls any
Investor within the meaning of the 1933 Act or the 1934 Act (each,
an “Indemnified
Person”), against any losses, claims, damages,
liabilities, judgments, fines, penalties, charges, costs,
reasonable attorneys’ fees, amounts paid in settlement or
expenses, joint or several (collectively, “Claims”), incurred in
investigating, preparing or defending any action, claim, suit,
inquiry, proceeding, investigation or appeal taken from the
foregoing by or before any court or governmental, administrative or
other regulatory agency, body or the SEC, whether pending or
threatened, whether or not an indemnified party is or may be a
party thereto (“Indemnified Damages”), to
which any of them may become subject insofar as such Claims (or
actions or proceedings, whether commenced or threatened, in respect
thereof) arise out of, relate to, or are based upon: (a) any
misrepresentation or breach of any representation or warranty made
by GT Biopharma in the Settlement Documents, (b) any breach of any
covenant, agreement or obligation of GT Biopharma contained in the
Settlement Documents or (c) any cause of action, suit or claim
brought or made against such Indemnified Person by a third party
(including for these purposes a derivative action brought on behalf
of GT Biopharma) and arising out of, resulting from, or ancillary
to: (i) the status of each of the Empery Funds as a holder of the
Original Notes and/or the Original Warrants; (ii) the execution,
delivery, performance or enforcement of the Settlement Documents,
(iii) the status of each of the Empery Funds as a holder of the
Settlement Shares, the Settlement Warrants and/or the Settlement
Notes, or (iv) the status of each of the Empery Funds as a party to
this Agreement and/or the SPA. For the avoidance of doubt, the
violations set forth in this Section 6(p) are intended to apply,
and shall apply, to direct claims between asserted by or against
any Indemnified Person, on the one hand, and GT Biopharma, on the
other, as well as any third party claims asserted by or against an
Indemnified Person. GT Biopharma shall reimburse the Indemnified
Persons, promptly as such expenses are incurred and are due and
payable, for any reasonable and invoiced legal fees or other
reasonable and invoiced expenses incurred by them in connection
with investigating or defending any such Claim.
7. Representations and Covenants of
Xxxxxxx and Xxxxxxx:
a. Authorization; Enforcement;
Validity. Each of Xxxxxxx and Xxxxxxx has the legal capacity
and right to execute, deliver, enter into and perform his
obligations under this Agreement and each of the other Settlement
Documents in accordance with the terms hereof and thereof. This
Agreement and the other Settlement Documents are duly executed and
delivered by each of Xxxxxxx and Xxxxxxx, and constitute the legal,
valid and binding obligations of each of Xxxxxxx and Xxxxxxx,
enforceable against Xxxxxxx and Xxxxxxx in accordance with their
respective terms, except as such enforceability may be limited by
general principles of equity or applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation or similar laws relating
to, or affecting generally, the enforcement of applicable
creditors’ rights and remedies.
8. Non Disparagement. Each of the
Empery Funds, GT Biopharma, Xxxxxxx, and Xxxxxxx, severally and not
jointly, agrees that, from and after the execution of this
Agreement, each of them shall not make, publish or communicate, or
encourage any other Person to make, publish or communicate, any
Disparaging (as defined below) remarks, comments, or statements
concerning any other Person that is subject to, or a signatory of,
this Agreement. As used herein, “Disparaging” remarks,
comments or statements are those that impugn the character,
honesty, integrity, morality, or business acumen or abilities in
connection with any aspect of the operation of business of, or
reflect negatively upon, the individual or entity being disparaged.
Each of the Empery Funds, GT Biopharma, Xxxxxxx, and Xxxxxxx,
severally and not jointly, further agrees that, from the execution
of this Agreement, they shall not encourage any other Person to
consider, threaten, or file any action, claim, suit, inquiry, or
proceeding against any Person that is subject to, or a signatory
of, this Agreement. This provision shall in no way limit the
ability of any party to enforce the Settlement Documents.
..
13
9. Confidentiality: The Parties
agree that the negotiations that resulted in this Agreement, are
confidential and they will not disclose them to any third party
except: (i) to their respective attorneys, accountants and
insurers; (ii) as required by, or for use in, any court of
competent jurisdiction or regulatory body or agency; (iii) as
required by any federal, state or municipal rule, regulation or
law; (iv) to any tax preparation professional and to the extent
necessary to accurately file city, state and federal taxes; and,
(v) with respect to the Empery Funds only, to any limited partner,
potential investor or any other Person if, in the Empery
Funds’ own judgment, disclosure is necessary to explain, for
any business purpose, the background, circumstances, and/or results
of the Litigations.
10. Entire Agreement; Amendments:
This Agreement and any schedules and exhibits hereto constitute the
entire agreement among the Parties as to the settlement and
supersede any prior agreements among the Parties with respect to
the subject matter of this Agreement. No representations,
warranties or inducements have been made or relied upon by any
Party concerning this Agreement or its exhibits, other than the
representations, warranties and covenants expressly set forth in
such documents. This Agreement shall not be modified or amended in
any way except in writing executed by or on behalf of each Party to
be bound thereby or by their respective successors-in-interest.
11. Voluntary and Informed Assent:
Each Party to this Agreement represent and agree that the Party has
read and fully understood the provisions of this Agreement, that
they are fully competent to enter into and sign this Agreement, and
that they are executing this Agreement voluntarily, free of any
duress or coercion.
12. Construction: The language of
all parts of this Agreement shall in all cases be construed as a
whole, according to its fair meaning, and not strictly for or
against any Party. This Agreement was prepared jointly by the
Parties, and no presumptions or rules of interpretation based upon
the identity of the Party preparing or drafting the Agreement, or
any part thereof, shall be applicable or invoked.
13. Headings: The section headings
contained in each section of this Agreement are intended solely for
convenience of reference and shall not limit or expand the express
terms of this Agreement or otherwise be used in its
construction.
14. Choice of Law: This Agreement
shall be considered to have been negotiated, executed and
delivered, and to be wholly performed in the State of New York, and
the rights and obligations of the Parties to the Agreement shall be
construed and enforced in accordance with, and governed by, the
internal, substantive laws of the State of New York without giving
effect to that State’s choice of law principles.
15. Dispute Resolution: The Parties
agree that the exclusive jurisdiction for any legal proceeding
arising out of or relating to this Agreement shall be the Supreme
Court of the State of New York, New York County, and all Parties
hereby waive any challenge to personal jurisdiction or venue in
that court.
14
16. Waiver: The waiver by any Party
of any breach of this Agreement by the other shall not be deemed a
waiver of that or any other prior or subsequent breach of any
provision of this Agreement by any other Party.
17. Severability: If any provision
or provisions of this Agreement or the settlement shall be held to
contravene or be invalid under any applicable law, such
contravention or invalidity shall not invalidate the whole
Agreement, but the Agreement shall be construed as not containing
the particular provision or provisions held to be illegal, invalid
or unenforceable, and the remaining rights and obligations of the
Parties shall remain in full force and effect and construed and
enforced accordingly so long as this Agreement as so modified
continues to express, without material change, the original
intentions of the Parties as to the subject matter hereof and the
prohibited nature, invalidity or unenforceability of the
provision(s) in question does not substantially impair the
respective expectations or reciprocal obligations of the Parties or
the practical realization of the benefits that would otherwise be
conferred upon the Parties. The Parties will endeavor in good faith
negotiations to replace the prohibited, invalid or unenforceable
provision(s) with a valid provision(s), the effect of which comes
as close as possible to that of the prohibited, invalid or
unenforceable provision(s).
18. Effect of Cancellation or
Termination: If the settlement set forth in this Agreement
does not become effective, or is terminated, reversed or vacated by
a court of competent jurisdiction for any reason, then,
notwithstanding anything herein to the contrary, the settlement set
forth in this Agreement shall be null and void and of no further
force or effect, and each Party shall be restored to his, her or
its respective position as it existed prior to the execution of
this Agreement, including for statute of limitations purposes.
Neither the existence of this Agreement, the facts of its
existence, the terms hereof or any statements or negotiations
between the Parties relating hereto shall be admissible in evidence
or shall be referred to for any purpose in any subsequent
litigation, action or proceeding, except in a proceeding to enforce
its terms.
19. Binding Effect: This Agreement
binds and inures to the benefit of the Parties and their respective
past and present agents, employees, attorneys, representatives,
officers, directors, shareholders, successors, assigns,
transferees, insurers and sureties, and all of their subsidiaries,
parents, predecessors, successors and controlled or affiliated
companies.
20. Authority: Each Person signing
this Agreement on behalf of any Party represents and warrants that
such Person has full authority to enter into this Agreement and to
lawfully and effectively release each other party to this Agreement
as set forth herein, free of any rights of settlement, approval,
subrogation, or other condition or impediment.
21. Notices. Any notices, consents,
waivers or other communications required or permitted to be given
under the terms of this Agreement or the Settlement Shares, the
Settlement Warrants or Settlement Notes issued hereunder must be in
writing and will be deemed to have been delivered: (i) upon
receipt, when delivered personally; (ii) upon delivery, when sent
by facsimile (provided confirmation of transmission is mechanically
or electronically generated and kept on file by the sending party),
(iii) upon delivery, when sent by electronic mail (provided that
the sending party does not receive an automated rejection notice);
or (iv) one Business Day after deposit with an overnight courier
service, in each case properly addressed to the party to receive
the same. The addresses, facsimile numbers and e-mail addresses for
such communications shall be:
15
If to
GT Biopharma:
0000
Xxxxxxxx Xxxx, Xxxxx 000
Xxxxxxx
Xxxxx, XX 00000
Email:
xxx@xxxxxxxxxxx.xxx; xxx@xxxxxxxxxxx.xxx
With a
copy to (for informational purposes only):
Xxxxxx
Xxxxxx
Xxxxx
XxXxxxxx
1901
Avenue of the Stars Suite 950
Telephone: (000)
000-0000
Facsimile: (000)
000-0000
E-mail:
xxxxxx.xxxxxx@xxxxxxxxxxxxx.xxx
If to
Xxxxxxx:
0000
Xxxxxxxx Xxxx, Xxxxx 000
Xxxxxxx
Xxxxx, XX 00000
Email:
xxx@xxxxxxxxxxx.xxx
With a
copy to (for informational purposes only):
Xxxxxx
Xxxxxx
Xxxxx
XxXxxxxx
1901
Avenue of the Stars Suite 950
Telephone: (000)
000-0000
Facsimile: (000)
000-0000
E-mail:
xxxxxx.xxxxxx@xxxxxxxxxxxxx.xxx
If to
Xxxxxxx:
Xxx
Xxxx
Bristol
Capital Advisors, LLC
000 X.
Xxxxxxxxx Xxxx., Xxxxx 000
Xxx
Xxxxxxx, Xxxxxxxxxx 00000
Main Line:
(000) 000-0000
Direct
Line: (000) 000-0000
Facsimile: (000)
000-0000
E-mail:
xxx@xxxxxxxxxxxxxxxx.xxx
16
With a
copy to (for informational purposes only):
Xxxxxx
Xxxxxx
Xxxxx
XxXxxxxx
1901
Avenue of the Stars Suite 950
Telephone: (000)
000-0000
Facsimile: (000)
000-0000
E-mail:
xxxxxx.xxxxxx@xxxxxxxxxxxxx.xxx
If to
the Empery Funds:
c/o
Empery Asset Management, LP
0
Xxxxxxxxxxx Xxxxx, Xxxxx 0000
Xxxxxxxxx: Xxxx X.
Xxxx
Facsimile: 0 000
000 0000
Telephone: 0 000
000 0000
Email:
xxxxxxx@xxxxxxxx.xxx
With a
copy (for informational purposes only) to:
Xxxxxx
Xxxxxxxxx
Xxxxxxx
Xxxx & Xxxxx LLP
000
Xxxxx Xxxxxx
Xxx
Xxxx, Xxx Xxxx 00000
Telephone: (000)
000-0000
Facsimile: (000)
000-0000
E-mail:
xxxxxx.xxxxxxxxx@xxx.xxx
22. Specific Performance. Each
Party hereto acknowledges and agrees, on behalf of itself, herself
or himself and its, her or his affiliates, that irreparable harm
would occur in the event any of the provisions of this Agreement or
any of the other Settlement Documents were not performed in
accordance with their specific terms or were otherwise breached. It
is accordingly agreed that the Parties will be entitled to specific
relief hereunder, including, without limitation, an injunction or
injunctions to prevent and enjoin breaches of the provisions of
this Agreement and/or the other Settlement Documents and to enforce
specifically the terms and provisions hereof and thereof, in
addition to any other remedy to which they may be entitled at law
or in equity.
23. Counterpart Signature Pages:
This Agreement may be executed in any number of counterparts, and
each counterpart shall have the same force and effect as an
original and shall constitute an effective, binding agreement on
the part of each of the undersigned, all counterparts when taken
together shall constitute the entire Agreement.
17
IN WITNESS WHEREOF, the Parties have
caused this Agreement to be executed by themselves or their duly
authorized representatives on the respective dates set forth
below.
|
Dated:
June 19, 2020
/s/ Xxxxxx Xxxxxx
Name:
Xxxxxx Xxxxxx
Title:
Chief Financial Officer
|
Dated:
June 18, 2020
EMPERY ASSET MASTER LTD., EMPERY TAX EFFICIENT, LP, EMPERY TAX
EFFICIENT II, LP
By:
Empery Asset Management, LP, its authorized agent
/s/ Xxxxx Director
Name:
Xxxxx Director
Title:
General Counsel
|
|
Dated:
June 19, 2020
/s/ Xxxxxxx Xxxxxxx
Xxxxxxx
Xxxxxxx
|
Dated:
June 18, 2020
/s/ Xxxx Xxxxxxx
Xxxx
Xxxxxxx
|
EXHIBIT A
FORM OF SETTLEMENT WARRANT
19
EXHIBIT B
FORM OF SETTLEMENT NOTE
20
EXHIBIT C
SUPREME
COURT OF THE STATE OF NEW YORK
COUNTY
OF NEW YORK
|
Empery
Asset Master, Ltd., Empery Tax Efficient, LP and Empery Tax
Efficient II, LP
Plaintiffs,
vs.
GT
Biopharma Inc. and Xxxx Xxxxxxx
Defendants.
|
::::::::::::::::
|
Index
No.:
STIPULATION OF VOLUNTARYDISCONTINUANCE WITH PREJUDICE
|
IT IS HEREBY STIPULATED AND AGREED, by
and between the undersigned, that the above-captioned action (the
“Action”) and all claims that were asserted or could
have been asserted in the Action are hereby voluntarily dismissed
with prejudice, with each party bearings its own legal costs,
attorney’s fees and expenses.
IT IS HEREBY FURTHER STIPULATED AND
AGREED, that this stipulation may be filed, without further
notice, with the Clerk of the Court and may be executed by
facsimile and in counterparts.
21
Dated: June __, 0000
Xxx
Xxxx, Xxx Xxxx
|
________________________________
Xxxxxx
Xxxxxxxxx
Xxxxxxx
Xxxx & Xxxxx LLP
000
Xxxxx Xxx
Xxx
Xxxx, XX 00000
Attorneys for the Empery Funds
|
________________________________
Xxxxxx
Xxxxxx
Xxxxx
XxXxxxxx
1901
Avenue of the Stars
Xxxxx
000
Xxx
Xxxxxxx, XX 00000
Attorneys for GT Biopharma Inc. and Xxxx Xxxxxxx
SO
ORDERED:
|
____________________________________
22
SCHEDULE
1
|
(1)
|
(2)
|
(3)
|
(4)
|
(5)
|
(6)
|
(7)
|
(8)
|
|
Buyer
|
Amount of Settlement Payment
|
Wire Instructions for Delivery of Settlement Payment
|
Number of Settlement Shares
|
DWAC Instructions for Delivery of Settlement Shares
|
Number of Warrant Shares
|
Aggregate Principal Amount of Settlement Notes
|
Address for Delivery of Settlement Warrants and Settlement
Notes
|
|
Empery Asset Master Ltd.
|
$87,599.93
|
Wire
instructions previously provided to GT Biopharma
|
1,532,999
|
DWAC
instructions previously provided to GT Biopharma
|
2,408,998
|
$197,099.84
|
c/o
Empery Asset Management, XX0 Xxxxxxxxxxx Xxxxx, Xxxxx 0000Xxx Xxxx,
XX 10020Attention: Xxxx X. LaneTelephone: 212 608 3300Email:
xxxxxxx@xxxxxxxx.xxx
|
|
Empery Tax Efficient, LP
|
$9,488.87
|
Wire
instructions previously provided to GT Biopharma
|
166,055
|
DWAC
instructions previously provided to GT Biopharma
|
260,944
|
$21,349.97
|
c/o
Empery Asset Management, XX0 Xxxxxxxxxxx Xxxxx, Xxxxx 0000Xxx Xxxx,
XX 10020Attention: Xxxx X. LaneTelephone: 212 608 3300Email:
xxxxxxx@xxxxxxxx.xxx
|
|
Empery Tax Efficient, LP
|
$23,811.29
|
Wire
instructions previously provided to GT Biopharma
|
416,698
|
DWAC
instructions previously provided to GT Biopharma
|
654,810
|
$53,575.40
|
c/o
Empery Asset Management, XX0 Xxxxxxxxxxx Xxxxx, Xxxxx 0000Xxx Xxxx,
XX 10020Attention: Xxxx X. LaneTelephone: 212 608 3300Email:
xxxxxxx@xxxxxxxx.xxx
|
|
Empery
Tax Efficient II, LP
|
$79,099.91
|
Wire
instructions previously provided to GT Biopharma
|
1,384,248
|
DWAC
instructions previously provided to GT Biopharma
|
2,175,248
|
$177,974.80
|
c/o
Empery Asset Management, XX0 Xxxxxxxxxxx Xxxxx, Xxxxx 0000Xxx Xxxx,
XX 10020Attention: Xxxx X. LaneTelephone: 212 608 3300Email:
xxxxxxx@xxxxxxxx.xxx
|
|
TOTAL
|
$200,000.00
|
|
3,500,000
|
|
5,500,000
|
$450,000.00
|
|
23
SCHEDULE 6(f)
1.
The issuance of up to an additional $4,500,000 aggregate principal
amount of senior convertible notes to individuals or entities other
than the Empery Funds.
The issuance of Common Stock in connection with exercise or
conversion of Permitted Indebtedness, warrants or convertible
preferred stock, in each case, in accordance with their
terms.
24
SCHEDULE 6(o)
Schedule 6(o)(i)
Convertible Notes / Debentures
As of the date of the Agreement, there were $15,294,365.74
aggregate principal amount of convertible notes and 10% senior
convertible debentures outstanding which were issued pursuant to
securities purchase agreements entered into with numerous investors
(collectively, the “Existing
Notes”).
The Existing Notes are convertible, at the holder’s option,
at any time into shares of the Common Stock at a conversion rate
that is subject to adjustment due to certain events, including
stock dividends, stock splits and in connection with the issuance
by the Company of Common Stock or common stock equivalents at an
effective price per share lower than the conversion rate then in
effect. The conversion price for the Existing Notes is currently
$0.20 per share. In addition, certain of the outstanding Existing
Notes will be subject to mandatory conversion in connection with
the completion of a subsequent financing in the amount of $15
million, subject to certain beneficial ownership
limitations.
The Existing Notes generally have terms of six months to one year.
The Existing Notes each accrue interest at a rate of 10% per annum,
subject to increase to 18% per annum upon and during the occurrence
of an event of default. Interest is payable in cash or, at the
holder’s option, in shares of Common Stock based on the
conversion price then in effect.
Office Lease Agreement
On October 1, 2018, the Company entered into a three-year lease
agreement for its principal office in Xxxxxxxx Xxxxxxx, Xxxxxxxxxx
with Sheffield Properties of Illinois, Inc. (the
“Office
Lease”). The Office
Lease is classified as a capital lease under
GAAP.
Gemini Pharmaceuticals Line of Credit Facility
On November 8, 2010, the Company entered into a financing
arrangement with Gemini Pharmaceuticals, Inc.
(“Gemini”),
a product development and manufacturing partner of the Company,
pursuant to which Gemini made a $250,000 strategic equity
investment in the Company and agreed to make a $750,000 purchase
order line of credit facility available to the Company (the
“Gemini
Line of Credit”). The
outstanding principal of all advances under the Gemini Line of
Credit will bear interest at the rate of interest of prime plus 2%
per annum. As of the date of the Agreement, there is $31,000
outstanding under the Gemini Line of Credit.
Schedule 6(o)(ii)
Clinical Trial Agreement, dated as of September 6, 2019, between
the Company and the University of Minnesota.
Schedule 6(o)(iii)
1.
$13,277,365.74 aggregate principal amount of the Existing
Notes
2.
Office Lease
3.
Gemini Line of Credit
Schedule 6(o)(iv)
$15,294,365.74 aggregate principal amount of Existing
Notes
25
