EXHIBIT 4.2
SECURITIES PURCHASE AGREEMENT
This SECURITIES PURCHASE AGREEMENT (the "AGREEMENT"), dated as of
December 14, 2001, is entered into by and among EntreMed, Inc., a Delaware
corporation, with headquarters located at 0000 Xxxxxxx Xxxxxx Xxxxx, Xxxxxxxxx,
Xxxxxxxx 00000 (the "COMPANY"), and the investors listed on Schedule 1 attached
hereto (individually, a "BUYER" and collectively, the "BUYERS").
WHEREAS:
A. The Company and the Buyers are executing and delivering this
Agreement in reliance upon the exemption from securities registration afforded
by Rule 506 of Regulation D ("REGULATION D") as promulgated by the United States
Securities and Exchange Commission (the "SEC") under the Securities Act of 1933,
as amended (the "1933 ACT");
B. The Company desires to sell and the Buyers desire to purchase,
upon the terms and conditions stated in this Agreement, shares of the Company's
Common Stock (the "COMMON STOCK"), par value $.01 per share (the "SHARES"), and
warrants, in substantially the same form attached hereto as Exhibit A (the
"WARRANTS"), to acquire shares of Common Stock (as exercised, collectively, the
"WARRANT SHARES"); and
C. Contemporaneously with the execution and delivery of this
Agreement, the parties hereto are executing and delivering a Registration Rights
Agreement, substantially in the form attached hereto as Exhibit B (the
"REGISTRATION RIGHTS AGREEMENT"), pursuant to which the Company has agreed to
provide certain registration rights under the 1933 Act and the rules and
regulations promulgated thereunder.
NOW THEREFORE, the Company and the Buyers hereby agree as follows:
I. PURCHASE AND SALE OF COMMON STOCK AND WARRANTS.
A. Purchase of Common Stock and Warrants. In connection with the
offering by the Company of the Shares and Warrants to the
Buyers, and subject to the satisfaction (or waiver) of the
conditions set forth in Sections 5 and 6 below, the Company
shall issue and sell to each Buyer and each Buyer severally
agrees to purchase from the Company at the Closing (defined
below) shares of Common Stock and Warrants for the aggregate
purchase price set forth opposite such Buyer's name on Schedule
1 (such Buyer's "COMMITTED AMOUNT") at the Price Per Unit
(defined below). A "UNIT" shall consist of one (1) share of
Common Stock and a warrant to acquire 0.25 (25/100) shares of
Common Stock. Unless the Company elects to exercise its right to
require the mandatory exercise thereof in accordance with its
terms, each Warrant shall have a term of five (5) years, and an
exercise price per share equal to $11.81. To determine the
number of Units each Buyer shall purchase, such Buyer's
Committed Amount shall
be divided by the Price Per Unit. The "PRICE PER UNIT" shall
equal seven and 75/100 dollars ($7.75).
B. Closing; Closing Date. Subject to the satisfaction (or waiver)
of the conditions contained in Sections 5 and 6, each Buyer's
Committed Amount shall be paid to the Company by wire transfer
of immediately available funds, and the Company shall thereupon
issue a certificate representing the Shares (the "COMMON STOCK
CERTIFICATES") and the Warrants purchased by such Buyer, duly
executed on behalf of the Company and registered in the name of
such Buyer or its designee. The Closing Date shall be such date
as the Company and Pali Capital, LLC, the placement agent for
the transactions contemplated by this Agreement, shall mutually
agree, but in no event later than December 21, 2001 (such date
being hereinafter referred to as the "CLOSING DATE"). The term
"Closing" as used herein shall mean the delivery to the Closing
Agent (defined below) of the Common Stock Certificates, the
delivery of the Warrants, the payment of the Price Per Unit, and
the delivery of such other documents and taking of such other
actions as are required to be delivered or taken at the Closing
pursuant to this Agreement. All payments contemplated by this
Section 1(b) shall be deposited by wire transfer of immediately
available funds as soon as practicable after the execution of
this Agreement on the date hereof for such Buyer's benefit in an
escrow account with The Bank of New York (the "ESCROW AGENT")
and no interest shall be payable to such Buyer with respect to
such funds. Payments will be returned promptly, without interest
or deduction, if the purchase and sale of the Securities
(defined below) contemplated by this Agreement is terminated for
any reason.
II. BUYER'S REPRESENTATIONS AND WARRANTIES.
Each Buyer represents and warrants with respect to only itself
that:
A. Investment Purpose. Such Buyer is acquiring the Shares and
Warrants purchased hereunder, and any Warrant Shares
subsequently purchased (such Shares, Warrants and Warrant Shares
may also be referred to herein as the "SECURITIES"), for its own
account for investment only and not with a view towards, or for
resale in connection with, the public sale or distribution
thereof, except pursuant to sales registered or exempted under
the 1933 Act; provided, however, that by making the
representations herein, such Buyer does not agree to hold any of
the Securities for any minimum or other specific term and
reserves the right to dispose of the Securities at any time in
accordance with or pursuant to a registration statement or an
exemption under the 1933 Act. Such Buyer does not have any
agreement or understanding, directly or indirectly, with any
person to distribute any of the Securities.
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B. Accredited Investor Status. Such Buyer is an "accredited
investor" as that term is defined in Rule 501(a) of Regulation
D. Such Buyer is not registered as a broker-dealer under Section
15 of the Exchange Act. Such Buyer is not an affiliate of the
Company.
C. Reliance on Exemptions. Such Buyer understands that the
Securities are being offered and sold to it in reliance on
specific exemptions from the registration requirements of United
States federal and state securities laws and that the Company is
relying upon the truth and accuracy of, and such Buyer's
compliance with, the representations, warranties, agreements,
acknowledgments and understandings of such Buyer set forth
herein in order to determine the availability of such exemptions
and the eligibility of such Buyer to acquire such Securities.
D. Information. Such Buyer and its advisors, if any, have been
furnished with all materials relating to the business, finances
and operations of the Company and materials relating to the
offer and sale of the Securities which have been requested by
such Buyer. Such Buyer and its advisors, if any, have been
afforded the opportunity to ask questions of the Company.
Neither such inquiries nor any other due diligence
investigations conducted by such Buyer or its advisors, if any,
or its representatives shall modify, amend or affect such
Buyer's right to rely on the Company's representations and
warranties contained in Section 3 below. Such Buyer understands
that its investment in the Securities involves a high degree of
risk. Such Buyer has sought such accounting, legal and tax
advice as it has considered necessary to make an informed
investment decision with respect to its acquisition of the
Securities.
E. No Governmental Review. Such Buyer understands that no United
States federal or state agency or any other government or
governmental agency has passed on or made any recommendation or
endorsement of the Securities or the fairness or suitability of
the investment in the Securities nor have such authorities
passed upon or endorsed the merits of the offering of the
Securities.
F. Transfer or Resale. Such Buyer understands that except as
provided in the Registration Rights Agreement: (i) the
Securities have not been and are not being registered under the
1933 Act or any state securities laws, and may not be offered
for sale, sold, assigned or transferred unless (A) subsequently
registered thereunder, (B) such Buyer shall have delivered to
the Company an opinion of counsel, in generally acceptable form,
to the effect that such Securities to be sold, assigned or
transferred may be sold, assigned or transferred pursuant to an
exemption from such registration, or (C) such Buyer provides the
Company with reasonable assurance that such Securities can be
sold, assigned or transferred pursuant to Rule 144(k)
promulgated under the 1933 Act, as amended, (or a successor rule
thereto) ("RULE 144(k)").
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G. Validity; Enforcement. This Agreement has been duly and validly
authorized, executed and delivered on behalf of such Buyer and
is a valid and binding agreement of such Buyer enforceable
against such Buyer in accordance with its terms, subject as to
enforceability to general principles of equity and to applicable
bankruptcy, insolvency, reorganization, moratorium, liquidation
and other similar laws relating to, or affecting generally, the
enforcement of applicable creditors' rights and remedies.
H. Residency. Such Buyer is a resident of that country and state,
if applicable, specified in its address on Schedule 1.
III. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company represents and warrants to each of the Buyers that:
A. Organization and Qualification. The Company and its
"SUBSIDIARIES" (which for purposes of this Agreement means any
entity in which the Company, directly or indirectly, owns a
controlling position of capital stock or holds a controlling
position of an equity or similar interest), other than Cytokine
Sciences, Inc., are corporations duly organized and validly
existing in good standing under the laws of the jurisdiction in
which they are incorporated, and have the requisite corporate
power and authorization to own their properties and to carry on
their business as now being conducted. Each of the Company and
its Subsidiaries is duly qualified as a foreign corporation to
do business and is in good standing in every jurisdiction in
which its ownership of property or the nature of the business
conducted by it makes such qualification necessary, except to
the extent that the failure to be so qualified or be in good
standing would not have a Material Adverse Effect. As used in
this Agreement, "MATERIAL ADVERSE EFFECT" means any material
adverse effect on the business, properties, assets, operations,
results of operations or financial condition of the Company and
its Subsidiaries, taken as a whole, or on the transactions
contemplated hereby or by the agreements and instruments to be
entered into in connection herewith, or on the authority or
ability of the Company to perform its obligations under the
Transaction Documents (defined below).
B. Authorization; Enforcement; Validity. (i) The Company has the
requisite corporate power and authority to enter into and
perform this Agreement, the Registration Rights Agreement and
the Warrants and each of the other agreements entered into by
the parties hereto in connection with the transactions
contemplated by this Agreement (collectively, the "TRANSACTION
DOCUMENTS"), and to issue the Securities in accordance with the
terms hereof and thereof, (ii) the execution and delivery of the
Transaction Documents by the Company and the consummation by it
of the transactions contemplated hereby and thereby, including
without limitation the issuance of the Common Stock and the
Warrants and the
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reservation for issuance and the issuance of the Warrant Shares
issuable upon exercise thereof, have been duly authorized by the
Company's Board of Directors and no further consent or
authorization is required by the Company, its Board of Directors
or its stockholders, (iii) the Transaction Documents have been
duly executed and delivered by the Company, and (iv) the
Transaction Documents constitute the valid and binding
obligations of the Company enforceable against the Company in
accordance with their 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 creditors' rights and remedies.
C. Issuance of Securities. The Securities are duly authorized and,
upon issuance in accordance with the terms hereof, shall be (i)
validly issued, fully paid and non-assessable and (ii) free from
all taxes, liens and charges with respect to the issue thereof.
The Company has duly authorized and reserved for issuance upon
exercise of the Warrants not less than 100% of the number of
shares of Common Stock needed to provide for the issuance of the
shares of Common Stock upon exercise of the Warrants. Upon
exercise in accordance with the Warrants, the Warrant Shares
will be validly issued, fully paid and nonassessable and free
from all taxes, liens and charges with respect to the issue
thereof, with the holders being entitled to all rights accorded
to a holder of Common Stock. Assuming the accuracy of each
Buyer's representations set forth in Section 2, the offer,
issuance and sale by the Company of the Securities is, and the
issuance by the Company of the Warrant Shares shall be, exempt
from registration under the 1933 Act.
D. No Conflicts. The execution, delivery and performance of the
Transaction Documents by the Company and the consummation by the
Company of the transactions contemplated hereby and thereby
(including, without limitation, the Company's issuance of the
Securities and the reservation for issuance and issuance of the
Warrant Shares) will not (i) result in a violation of the
Company's Certificate of Incorporation, as amended and as in
effect on the date hereof (the "CERTIFICATE OF INCORPORATION")
or the Company's By-laws, as amended and as in effect on the
date hereof (the "BY-LAWS"), or (ii) conflict with, or
constitute a default (or an event which with notice or lapse of
time or both would become a default) under, or give to others
any rights of termination, amendment, acceleration or
cancellation of, any agreement, indenture or instrument to which
the Company or any of its Subsidiaries is a party, or result in
a violation of any law, rule, regulation, order, judgment or
decree (including (assuming the accuracy of the representations
and warranties of each Buyer set forth in Section 2) federal and
state securities laws and regulations and the rules and
regulations of The Nasdaq National Market ("NASDAQ") applicable
to the Company or any of its Subsidiaries or by which any
property or asset of the Company or any of its Subsidiaries is
bound or affected), except
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with respect to clause (ii), for such conflicts, defaults,
terminations, amendments, accelerations, cancellations and
violations as would not, individually or in the aggregate,
reasonably be expected to result in a Material Adverse Effect.
Neither the Company nor any of its Subsidiaries is in violation
of any term of or in default under its Certificate of
Incorporation or By-laws or their organizational charter or
by-laws, and neither the Company nor any of its Subsidiaries is
in violation or any term of or in default under any contract,
agreement, mortgage, indebtedness, indenture, instrument,
judgment, decree or order or any statute, rule or regulation
applicable to the Company or its Subsidiaries (except for
possible conflicts, defaults, terminations, amendments as would
not, individually or in the aggregate, have a Material Adverse
Effect). The business of the Company and its Subsidiaries is not
being conducted, and shall not be conducted, in violation of any
law, ordinance, regulation of any governmental entity, except
for possible violations the sanctions which would not,
individually or in the aggregate, have a Material Adverse
Effect. Except as specifically contemplated by the Transaction
Documents and as required under the 1933 Act and any applicable
state securities laws, the Company is not required to obtain any
consent, authorization or order of, or make any filing or
registration with, any court or governmental agency or any
regulatory or self-regulatory agency in order for it to execute,
deliver or perform any of its obligations under or contemplated
by the Transaction Documents in accordance with the terms hereof
or thereof. All consents, authorizations, orders, filings and
registrations which the Company is required to obtain prior to
Closing pursuant to the preceding sentence have been obtained or
effected or will be obtained or effected on or prior to the
Closing Date. The Company and its Subsidiaries are unaware of
any facts or circumstances which might give rise to any of the
foregoing. The offer and sale of the Securities does not violate
the rules and regulations of Nasdaq. The Company is not in
violation of the listing requirements of Nasdaq and, other than
as may be caused by fluctuations of its stock price, has no
reason to believe that it will not in the foreseeable future
continue to satisfy such listing requirements.
E. SEC Documents; Financial Statements. As of the Closing, the
Company has filed all reports, schedules, forms, statements and
other documents required to be filed by it with the SEC pursuant
to the reporting requirements of the Securities Exchange Act of
1934, as amended (the "1934 ACT") (all of the foregoing filed
prior to the date hereof and all exhibits included therein and
financial statements and schedules thereto and documents
incorporated by reference therein being hereinafter referred to
as the "SEC DOCUMENTS"). As of their respective dates, the SEC
Documents complied in all material respects with the
requirements of the 1934 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
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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 light of the circumstances under which
they were made, not misleading. As of their respective dates,
the financial statements of the Company included in the SEC
Documents complied as to form in all material respects with
applicable accounting requirements and the published rules and
regulations of the SEC with respect thereto. Such financial
statements have been prepared in accordance with generally
accepted accounting principles, consistently applied, during the
periods involved (except (i) as may be otherwise indicated in
such financial statements or the notes thereto, or (ii) in the
case of unaudited interim statements, to the extent they may
exclude footnotes or may be condensed or summary statements) and
fairly present in all material respects the financial position
of the Company as of the dates thereof and the results of its
operations and cash flows for the periods then ended (subject,
in the case of unaudited statements, to normal year-end audit
adjustments). No other information provided by or on behalf of
the Company to the Buyers which is not included in the SEC
Documents contains any untrue statement of a material fact or
omits to state any material fact necessary in order to make the
statements therein, in the light of the circumstance under which
they are or were made, not misleading. Neither the Company nor
any of its Subsidiaries or any of their officers, directors,
employees or agents have provided the Buyers with any material,
nonpublic information.
F. Absence of Certain Changes. Since the most recent filing by the
Company with the SEC, there has been no material adverse change
and no material adverse development in the business, properties,
operations, financial condition or results of operations of the
Company and its Subsidiaries, taken as a whole, that could
reasonably be expected to have or result in a Material Adverse
Effect. The Company has not taken any steps, and does not
currently expect to take any steps, to seek protection pursuant
to any bankruptcy law nor does the Company or any of its
Subsidiaries have any knowledge or reason to believe that its
creditors intend to initiate involuntary bankruptcy proceedings.
G. Absence of Litigation. Except as set forth in the SEC Documents,
there is no action, suit, proceeding, inquiry or investigation
before or by any court, public board, government agency,
self-regulatory organization or body pending or, to the
knowledge of the Company or any of its Subsidiaries, threatened
against or affecting the Company, the Common Stock, the Shares
or any of the Company's Subsidiaries or any of the Company's or
the Company's Subsidiaries' officers or directors in their
capacities as such that would have a Material Adverse Effect.
H. Acknowledgment Regarding Buyers' Purchase of Common Stock and
Warrants. The Company acknowledges and agrees that each of the
Buyers is acting solely in the capacity of an arm's length
purchaser with respect to
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the Transaction Documents and the transactions contemplated
hereby and thereby. The Company further acknowledges that each
Buyer is not 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 hereby
and thereby and any advice given by any of the Buyers or any of
their respective representatives or agents in connection with
the Transaction Documents and the transactions contemplated
hereby and thereby is merely incidental to such Buyer's purchase
of the Securities. The Company further represents to each Buyer
that the Company's decision to enter into the Transaction
Documents has been based solely on the independent evaluation by
the Company and its representatives.
I. No Undisclosed Events, Liabilities, Developments or
Circumstances. No event, liability, development or circumstance
has occurred or exists, or is contemplated to occur, with
respect to the Company or its Subsidiaries or their respective
business, properties, prospects, operations or financial
condition, that would be required to be disclosed by the Company
under applicable securities laws on a registration statement
filed with the SEC relating to an issuance and sale by the
Company of Common Stock and which has not been publicly
announced.
J. No General Solicitation. Neither the Company, nor any of its
affiliates, nor any person acting on its or their behalf, has
engaged in any form of general solicitation or general
advertising (within the meaning of Regulation D under the 0000
Xxx) in connection with the offer or sale of the Securities.
K. No Integrated Offering. Neither the Company, nor any of its
affiliates, nor any person acting on its or their behalf has,
directly or indirectly, made any offers or sales of any security
or solicited any offers to buy any security, under circumstances
that would require registration of any of the Securities under
the 1933 Act or cause this offering of the Securities to be
integrated with prior offerings by the Company for purposes of
the 1933 Act or any applicable stockholder approval provisions,
including, without limitation, under the rules and regulations
of any exchange or automated quotation system on which any of
the securities of the Company are listed or designated, nor will
the Company or any of its Subsidiaries take any action or steps
that would require registration of any of the Securities under
the 1933 Act or cause the offering of the Securities to be
integrated with other offerings so as to render invalid the
exemption from registration provided under Regulation D.
L. Employee Relations. Neither the Company nor any of its
Subsidiaries is involved in any union labor dispute nor, to the
knowledge of the Company or any of its Subsidiaries, is any such
dispute threatened.
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M. Intellectual Property Rights. The Company and its Subsidiaries
own or possess adequate rights or licenses to use all
trademarks, trade names, service marks, service xxxx
registrations, service names, patents, patent rights,
copyrights, inventions, licenses, approvals, governmental
authorizations, trade secrets and rights necessary to conduct
their respective businesses as now conducted. None of the
Company's trademarks, trade names, service marks, service xxxx
registrations, service names, patents, patent rights,
copyrights, inventions, licenses, approvals, government
authorizations, trade secrets or other intellectual property
rights material to the conduct of its business as now conducted
have expired or terminated, or are expected to expire or
terminate within two years from the date of this Agreement.
Except as set forth in the SEC Documents, the Company and its
Subsidiaries do not have any knowledge of any infringement by
the Company or its Subsidiaries of trademark, trade name rights,
patents, patent rights, copyrights, inventions, licenses,
service names, service marks, service xxxx registrations, trade
secret or other similar rights of others, or of any such
development of similar or identical trade secrets or technical
information by others and the Company and its Subsidiaries are
unaware of any facts or circumstances which might give rise to
any of the foregoing. The Company and its Subsidiaries have
taken reasonable security measures to protect the secrecy,
confidentiality and value of all of their intellectual
properties.
N. Environmental Laws. The Company and its Subsidiaries (i) are in
compliance with any and all applicable foreign, federal, state
and local laws and regulations relating to the protection of
human health and safety, the environment or hazardous or toxic
substances or wastes, pollutants or contaminants ("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.
O. Title. The Company and its Subsidiaries have good and marketable
title in fee simple to all real property and good and marketable
title to all personal property owned by them which is material
to the business of the Company and its Subsidiaries, in each
case free and clear of all liens, encumbrances and defects
except such as are described in the SEC Documents or such as do
not materially affect the value of such property and do not
interfere with the use made and proposed to be made of such
property by the Company and any of its Subsidiaries. Any real
property and facilities held under lease by the Company and any
of its Subsidiaries are held by them under valid, subsisting and
enforceable leases with such exceptions as are not material and
do not interfere with the use made and proposed to be made of
such property and buildings by the Company and its Subsidiaries.
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P. Insurance. The Company and each of its Subsidiaries are insured
by insurers of recognized financial responsibility against such
losses and risks and in such amounts as management of the
Company believes to be prudent and customary in the businesses
in which the Company and its Subsidiaries are engaged and the
Company does not have any reason to believe it will not be able
to renew its existing insurance coverage under substantially
similar terms for the next two (2) years other than for
increases in the premiums payable with respect to such insurance
that would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect.
Q. Regulatory Permits. The Company and its Subsidiaries possess all
certificates, authorizations and permits issued by the
appropriate federal, state or foreign regulatory authorities
necessary to conduct their respective businesses as presently
conducted, and neither the Company nor any such Subsidiary has
received any notice of proceedings relating to the revocation or
modification of any such certificate, authorization or permit.
R. Tax Status. The Company and each of its Subsidiaries has made or
filed all federal and state income and all other tax returns,
reports and declarations required by any jurisdiction to which
it is subject (unless and only to the extent that the Company
and each of its Subsidiaries has set aside on its books
provisions reasonably adequate for the payment of all unpaid and
unreported taxes) and 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,
except those being contested in good faith and has set aside on
its books provision reasonably adequate for the payment of all
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
know of no basis for any such claim.
S. Transactions With Affiliates. Except as set forth in the SEC
Documents filed at least ten days prior to the date hereof, none
of the officers, control parties, control entities, directors,
or employees of the Company is presently a party to any material
transaction with the Company or any of its Subsidiaries (other
than for services as employees, officers and directors),
including any contract, agreement or other arrangement providing
for the furnishing of services to or by, providing for rental of
real or personal property to or from, or otherwise requiring
payments to or from any officer, director or such employee or,
to the knowledge of the Company, any corporation, partnership,
trust or other entity in which any officer, director, or any
such employee has a substantial interest or is an officer,
director, trustee or partner.
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T. Eligibility. The Company is currently eligible to register the
resale of the Common Stock and Warrant Shares on a registration
statement on Form S-3 under the 1933 Act.
U. Dilutive Effect. The Company acknowledges that its obligation to
issue the Warrant Shares upon exercise of the Warrants in
accordance with this Agreement and the Warrants, is absolute and
unconditional regardless of the dilutive effect that such
issuance may have on the ownership interests of other
stockholders of the Company.
V. Company Acknowledgement. The Company acknowledges and agrees
that no Buyer makes or has made any representations or
warranties with respect to the transactions contemplated by this
Agreement other than those specifically set forth in this
Section 2.
IV. COVENANTS.
A. Reasonable Best Efforts. Each party shall use its reasonable
best efforts timely to satisfy each of the conditions to be
satisfied by it as provided in Sections 5 and 6 of this
Agreement.
B. Form D and Blue Sky. The Company agrees to file a Form D with
respect to the Securities as required under Regulation D and to
provide a copy thereof to each Buyer promptly after such filing.
The Company shall, on or before the Closing Date, take such
action as the Company shall reasonably determine is necessary in
order to obtain an exemption for or to qualify the Securities
for sale to the Buyers at the Closing pursuant to this Agreement
under applicable securities or "Blue Sky" laws of the states of
the United States, and shall provide evidence of any such action
so taken to the Buyers on or prior to the Closing Date. The
Company shall make all filings and reports relating the offer
and sale of the Securities required under applicable securities
or "Blue Sky" laws of the states of the United States following
the Closing Date.
C. Reporting Status. Until the earlier of (i) the date which is one
year after the date as of which the Investors (as that term is
defined in the Registration Rights Agreement) may sell all of
the Common Stock and Warrant Shares without restriction pursuant
to Rule 144(k) promulgated under the 1933 Act (or successor
thereto), or (ii) the date on which the Investors shall have
sold all the Common Stock and Warrant Shares (the "REGISTRATION
PERIOD"), the Company shall file all reports required to be
filed with the SEC pursuant to the 1934 Act, and the Company
shall not terminate its status as an issuer required to file
reports under the 1934 Act even if the 1934 Act or the rules and
regulations thereunder would otherwise permit such termination.
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D. Use of Proceeds. The Company will use the proceeds from the sale
of the Common Stock and Warrants for working capital needs and
other general corporate purposes.
E. Right of First Refusal. Subject to the exceptions described
below, the Company shall not negotiate or contract with any
party for any equity financing (including any debt financing
with an equity component) or issue in a transaction any equity
securities of the Company or securities convertible or
exchangeable into or for equity securities of the Company
(including debt securities with an equity component and any
equity line of credit) in any form ("FUTURE OFFERINGS") during
the period beginning on the date hereof and ending on, and
including, the date which is 90 days after the Effective Date
(defined below), unless it shall have first delivered to each
Buyer or a designee appointed by such Buyer written notice (the
"FUTURE OFFERING NOTICE") describing the proposed Future
Offering, including the terms and conditions thereof, and
providing each Buyer an option to purchase up to its Aggregate
Percentage (defined below) of the securities to be issued in
such Future Offering, as of the date of delivery of the Future
Offering Notice, in the Future Offering (the limitations
referred to in this sentence is referred to as the "CAPITAL
RAISING LIMITATIONS"). For purposes of this Section 4(e),
"AGGREGATE PERCENTAGE" at any time with respect to any Buyer
shall mean the percentage obtained by dividing (i) the aggregate
number of the shares of Common Stock initially issued at the
Closing to such Buyer by (ii) the aggregate number of the shares
of Common Stock sold to the Buyers by the Company at the Closing
in connection with the Offering. A Buyer can exercise its option
to participate in a Future Offering by delivering written notice
thereof to participate to the Company within five (5) business
days after receipt of a Future Offering Notice, which notice
shall state the quantity of securities being offered in the
Future Offering that such Buyer will purchase, up to its
Aggregate Percentage, and that number of securities it is
willing to purchase in excess of its Aggregate Percentage. In
the event that one or more Buyers fail to elect to purchase up
to each such Buyer's Aggregate Percentage, then each Buyer which
has indicated that it is willing to purchase a number of
securities in such Future Offering in excess of its Aggregate
Percentage shall be entitled to purchase its pro rata portion
(determined in the same manner as described in the preceding
sentence) of the securities in the Future Offering which one or
more of the Buyers have not elected to purchase. In the event
the Buyers fail to elect to fully participate in the Future
Offering within the periods described in this Section 4(e), the
Company shall have 45 days thereafter to sell the securities of
the Future Offering that the Buyers did not elect to purchase,
upon terms and conditions, no more favorable to the purchasers
thereof than specified in the Future Offering Notice. In the
event the Company has not sold such securities of the Future
Offering within such 45 day period, the Company shall not
thereafter issue or sell such securities without first offering
such securities to the Buyers in the manner provided
-12-
in this Section 4(e). Notwithstanding anything to the contrary
set forth in this Agreement, the Capital Raising Limitations
shall not apply to (i) any public offering of equity securities
(including any debt financing with an equity component)
(provided, however, that the exception contained in this clause
(i) shall not apply to equity lines or similar transactions),
(ii) a loan from a commercial bank which does not have any
equity feature, (iii) any transaction involving the Company's
issuance of securities as consideration (A) in any sale,
acquisition, merger, consolidation, reorganization or similar
transaction involving the Company or any Subsidiary, (B) for the
acquisition of a business, product, license or other assets by
the Company or any Subsidiary, or (C) strategic alliance
involving the Company or any Subsidiary, (iv) the issuance of
securities of the Company or any Subsidiary upon exercise or
conversion of the options, warrants or other convertible
securities outstanding as of the date hereof, (v) the grant of
additional options or warrants, or the issuance of additional
securities (and the issuance of securities of the Company or any
Subsidiary upon exercise or conversion of such additional
options or warrants), under any Company or Subsidiary stock
option plan, restricted stock plan, stock purchase plan or any
other agreement or contract for the benefit of the Company's or
any Subsidiary's employees, consultants, agents or directors, or
(vi) financing transactions by any Subsidiary of the Company
that include as a component thereof the issuance by the Company
of warrants to purchase Common Stock; provided, however, that
Warrants to purchase no more than an aggregate of 25,000 shares
of Common Stock (as adjusted to account for any stock splits,
combinations, reclassifications or other similar transactions
involving the Common Stock) may be issued in transactions
contemplated by this clause (vi) and any such Subsidiary shall
not transfer or distribute to the Company the proceeds of such
financing. The Buyers shall not be required to participate in or
exercise their right of first refusal with respect to a
particular Future Offering in order to exercise their right of
first refusal with respect to later Future Offerings.
F. Listing. The Company shall promptly secure the listing of all of
the Registrable Securities (as that term is defined in the
Registration Rights Agreement) on Nasdaq and shall maintain, so
long as any other shares of Common Stock shall be so listed,
such listing of all Registrable Securities from time to time
issuable under the terms of the Transaction Documents. Neither
the Company nor any of its Subsidiaries shall take any action
which would be reasonably expected to result in the delisting or
suspension of the Common Stock on Nasdaq. The Company shall
promptly, and in no event later than the following business day,
provide to each Buyer copies of any notices it receives from
Nasdaq regarding the continued eligibility of the Common Stock
for listing on Nasdaq. The Company shall pay all fees and
expenses in connection with satisfying its obligations under
this Section 4(f).
-13-
G. Reservation of Shares. The Company shall take all action
necessary to at all times have authorized, and reserved for the
purpose of issuance, no less than 100% of the number of shares
of Common Stock needed to provide for the issuance of the shares
of Common Stock upon exercise of all outstanding Warrants.
H. Issuance of Warrant Shares. The issuance of the Warrant Shares
shall be duly authorized, and when issued in accordance with the
Warrants, the Warrant Shares will be validly issued, fully paid
and non-assessable and free of all taxes, liens, charges and
preemptive rights with respect to the issue thereof.
I. Limitation on Filing Registration Statements. The Company shall
not file a registration statement (other than (i) a Registration
Statement (as defined in the Registration Rights Agreement),
(ii) a registration statement relating solely to employee
benefit plans or (iii) a registration statement on Form S-4
relating to a merger, acquisition or similar transaction or
corporate reorganization involving the Company or any
Subsidiary) covering the sale or resale of shares of Common
Stock with the SEC during the period beginning on the date
hereof and ending on the Effective Date.
J. Independent Auditors. The Company shall, until at least three
(3) years after the Closing Date, maintain as its independent
auditors an accounting firm authorized to practice before the
SEC.
K. Corporate Existence and Taxes. The Company shall, until at least
the later of (i) the date that is three (3) years after the
Closing Date or (ii) the exercise of all Warrants purchased
pursuant to this Agreement, maintain its corporate existence in
good standing (provided, however, that the foregoing covenant
shall not prevent the Company from entering into any merger or
corporate reorganization as long as the surviving entity in such
transaction, if not the Company, has common stock listed for
trading on Nasdaq, the New York Stock Exchange or the American
Stock Exchange and shall pay all its taxes when due except for
taxes which the Company disputes.
L. Filing of Form 8-K. On or before the first day after the Closing
Date, the Company shall file a Form 8-K with the SEC describing
the terms of the transactions contemplated by the Transaction
Documents in the form required by the 1934 Act.
M. Legends.
1. Such Buyer understands and agrees that the certificates
or other instruments representing the Securities, except
as set forth below, shall bear a restrictive legend in
substantially the following form (and the Company shall
be entitled to issue a stop-transfer order
-14-
against transfer of such certificates if the Securities
represented by such certificates are not transferred in
accordance with the following legend):
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "1933 ACT"), OR
APPLICABLE STATE SECURITIES LAWS. THE SECURITIES HAVE BEEN ACQUIRED FOR
INVESTMENT AND MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR
ASSIGNED (1) IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR
THE SECURITIES UNDER THE 1933 ACT AND APPLICABLE STATE SECURITIES LAWS,
(2) IN THE ABSENCE OF AN OPINION OF COUNSEL, IN GENERALLY ACCEPTABLE
FORM, THAT REGISTRATION IS NOT REQUIRED UNDER THE 1933 ACT OR (3) UNLESS
SOLD, TRANSFERRED OR ASSIGNED PURSUANT TO RULE 144(K) UNDER THE 1933
ACT.
The legend set forth above shall be removed and the Company shall issue a
certificate, within three (3) trading days of a request thereof, without such
legend to the holder of the Securities upon which it is stamped or otherwise
imprinted if: (i) such Securities are registered for resale under the 1933 Act,
(ii) in connection with any transaction other than as described in clause (i),
such holder provides the Company with an opinion of counsel, in generally
acceptable form, to the effect that a public sale, assignment or transfer of the
Securities may be made without registration under the 1933 Act, or (iii) such
holder provides the Company with reasonable assurances that the Securities may
be sold pursuant to Rule 144(k).
2. If the Company fails to issue a certificate, without the
legend set forth in Section 4(m)(i) within three (3)
trading days following the request therefor as provided
in Section 4(m)(i), and if after such third (3rd)
trading day such holder purchases (in an open market
transaction or otherwise) shares of Common Stock to
deliver in satisfaction of a sale by such holder of the
shares that the holder anticipated receiving from the
Company (a "BUY-IN"), then the Company shall (i)
promptly honor its obligation to issue to such holder a
certificate without the legend set forth in Section
4(m)(i) and (ii) pay cash to such holder in an amount
equal to the excess (if any) of the total purchase price
(including brokerage commissions, if any) of the shares
of Common Stock so purchased over the product of (A)
such number of shares of Common Stock, times (B) the
closing sale price of the Common Stock on the date of
the event giving rise to the Company's obligation to
deliver such certificates.
N. Restrictions on Sales of Securities. Such Buyer has not and will
not, prior to the earlier of (i) 90 days following the Closing
Date or (ii) the date that
-15-
the Registration Statement (as defined in the Registration
Rights Agreement) required to be filed pursuant to Section 2(a)
of the Registration Rights Agreement is first declared effective
by the SEC (the "EFFECTIVE DATE"), when the trading price of the
Common Stock is less than $9.00 per share, if then prohibited by
law or regulation, sell, dispose of, or grant any rights with
respect to (collectively, a "DISPOSITION"), the Shares or
Warrant Shares, nor will such Buyer engage in any hedging or
other transaction which is designed to result in a Disposition
of Shares or Warrant Shares by such Buyer prior to such date. In
addition, such Buyer represents that as of the date of this
Agreement such Buyer does not have any existing short position
in the Common Stock that was entered into subsequent to such
Buyer obtaining knowledge of the transactions contemplated
hereby nor has such Buyer executed any derivative instruments
with any third party, which in either case is designed to
dispose of the Shares or Warrant Shares prior to the earlier of
(i) 90 days following the Closing Date or (ii) the Effective
Date.
O. Limitations on Certain Sales of Securities by the Company.
1. Without the prior written consent of Buyers who then
hold at least two-thirds (2/3) of the shares of Common
Stock purchased pursuant to this Agreement and then
outstanding, from the Closing Date until the Effective
Date, the Company shall not engage in any offering of
its equity securities (including any public offering of
debt securities with an equity component), whether under
its existing shelf registration statement, a new
registration statement or otherwise; provided, however,
that the foregoing limitation shall not apply to (i) a
loan from a commercial bank which does not have any
equity feature, (ii) any transaction involving the
Company's issuance of securities as consideration (A) in
any sale, acquisition, merger, consolidation,
reorganization or similar transaction involving the
Company or any Subsidiary, (B) for the acquisition of a
business, product, license or other assets by the
Company or any Subsidiary, or (C) in any strategic
alliance involving the Company or any Subsidiary, (iii)
the issuance of securities of the Company or any
Subsidiary upon exercise or conversion of the options,
warrants or other convertible securities outstanding as
of the date hereof, (iv) the grant of additional options
or warrants, or the issuance of additional securities
(and the issuance of securities of the Company or any
Subsidiary upon exercise or conversion of such
additional options or warrants), under any Company or
Subsidiary stock option plan, restricted stock plan,
stock purchase plan or any other agreement or contract
for the benefit of the Company's or any Subsidiary's
employees, consultants, agents or directors, or (v)
financing transactions by any Subsidiary of the Company
that include as a component thereof the issuance by the
Company of warrants to purchase
-16-
Common Stock; provided, however, that Warrants to
purchase no more than an aggregate of 25,000 shares of
Common Stock (as adjusted to account for any stock
splits, combinations, reclassifications or other similar
transactions involving the Common Stock) may be issued
in transactions contemplated by this clause (v) and any
such Subsidiary shall not transfer or distribute to the
Company the proceeds of such financing.
2. Without the prior written consent of Buyers who then
hold at least two-thirds (2/3) of the shares of Common
Stock purchased pursuant to this Agreement and then
outstanding, during the thirty (30) day period
immediately following the Effective Date, the Company
shall not engage in a offering of its equity securities
(including any public offering of debt securities with
an equity component) at price per share that is less
than the Price Per Unit; provided, however, that the
foregoing limitation shall not apply to (i) a loan from
a commercial bank which does not have any equity
feature, (ii) any transaction involving the Company's
issuance of securities as consideration (A) in any sale,
acquisition, merger, consolidation, reorganization or
similar transaction involving the Company or any
Subsidiary, (B) for the acquisition of a business,
product, license or other assets by the Company or any
Subsidiary, or (C) in any strategic alliance involving
the Company or any Subsidiary, (iii) the issuance of
securities of the Company or any Subsidiary upon
exercise or conversion of the options, warrants or other
convertible securities outstanding as of the date
hereof, (iv) the grant of additional options or
warrants, or the issuance of additional securities (and
the issuance of securities of the Company or any
Subsidiary upon exercise or conversion of such
additional options or warrants), under any Company or
Subsidiary stock option plan, restricted stock plan,
stock purchase plan or any other agreement or contract
for the benefit of the Company's or any Subsidiary's
employees, consultants, agents or directors, or (v)
financing transactions by any Subsidiary of the Company
that include as a component thereof the issuance by the
Company of warrants to purchase Common Stock; provided,
however, that Warrants to purchase no more than an
aggregate of 25,000 shares of Common Stock (as adjusted
to account for any stock splits, combinations,
reclassifications or other similar transactions
involving the Common Stock) may be issued in
transactions contemplated by this clause (v) and any
such Subsidiary shall not transfer or distribute to the
Company the proceeds of such financing
V. CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL.
-17-
The obligation of the Company hereunder to issue and sell the Common
Stock and Warrants to each Buyer at the Closing is subject to the satisfaction,
at or before the Closing Date, of each of the following conditions, provided
that these conditions are for the Company's sole benefit and may be waived by
the Company at any time in its sole discretion by providing each Buyer with
prior written notice thereof:
A. Such Buyer shall have executed each of the Transaction Documents
to which it is a party and delivered the same to the closing
agent(s) (the "CLOSING AGENT") for the transactions contemplated
by this Agreement.
B. The representations and warranties of such Buyer shall be true
and correct in all material respects as of the date when made
and as of the Closing Date as though made at that time (except
for representations and warranties that speak as of a specific
date), and such Buyer shall have performed, satisfied and
complied in all material respects with the covenants, agreements
and conditions required by this Agreement to be performed,
satisfied or complied with by such Buyer at or prior to the
Closing Date.
C. There shall not be in effect any law, rule or regulation
prohibiting or restricting the transactions contemplated hereby,
or requiring any consent or approval which shall not have been
obtained.
VI. CONDITIONS TO EACH BUYER'S OBLIGATION TO PURCHASE.
The obligation of each Buyer hereunder to purchase the Common Stock and
Warrants at the Closing is subject to the satisfaction, at or before the Closing
Date, of each of the following conditions, provided that these conditions are
for each Buyer's sole benefit and may be waived by such Buyer at any time in its
sole discretion by providing the Company with prior written notice thereof:
A. The Company shall have executed each of the Transaction
Documents to which it is a party and delivered the same to the
Closing Agent.
B. The Company's common stock shall be authorized for quotation on
Nasdaq and trading in Common Stock shall not have been suspended
by the SEC or Nasdaq.
C. The representations and warranties of the Company shall be true
and correct as of the date when made and as of the Closing Date
as though made at that time (except for representations and
warranties that speak as of a specific date) and the Company
shall have performed, satisfied and complied with the covenants,
agreements and conditions required by the Transaction Documents
to be performed, satisfied or complied with by the Company at or
prior to the Closing Date.
-18-
D. The Company shall have delivered to the Closing Agent the
opinion of the Company's outside legal counsel, dated as of the
Closing Date, in substantially the form of Exhibit C attached
hereto.
E. The Company shall have made all filings, other than those
contemplated by the Registration Rights Agreement, under all
applicable federal and state securities laws necessary to
consummate the issuance of the Securities pursuant to this
Agreement in compliance with such laws.
F. The Company shall have executed and delivered to the Closing
Agent (i) the shares of Common Stock being purchased by such
Buyer at the Closing and (ii) the Warrants being purchased by
such Buyer at the Closing.
G. The Company shall have made all filings under all applicable
federal and state securities laws necessary to consummate the
issuance of the Securities pursuant to this Agreement in
compliance with such laws.
H. As of the Closing Date, the Company shall have reserved out of
its authorized and unissued Common Stock, solely for the purpose
of effecting the exercise of the Warrants, no less than 100% of
the number of shares of Common Stock needed to provide for the
issuance of the shares of Common Stock upon exercise of all
outstanding Warrants.
I. The Company shall have delivered to the Closing Agent the
following:
1. A certificate, executed by the Chief Executive Officer
of the Company, dated as of the Closing Date, confirming
that the representations and warranties described in
Section 6(c) were true and correct as of the date when
made and as of the Closing Date.
2. A certificate evidencing the incorporation and good
standing of the Company and TheraMed, Inc. in each such
corporation's state of incorporation issued by the
Secretary of State of such state of incorporation as of
a date within 10 days of the Closing Date;
3. A certified copy of the Certificate of Incorporation as
certified by the Secretary of State of the State of
Delaware within 10 days of the Closing Date; and
4. A secretary's certificate, dated as the Closing Date, as
to (A) resolutions of the Board of Directors and/or a
committee of the Board of Directors of the Company
consistent with Section 3(b)(ii) of this Agreement, (B)
the Certificate of Incorporation and (C) the Bylaws,
each as in effect at the Closing.
-19-
J. The Company shall have delivered to the Buyer such other
documents relating to the transactions contemplated by this
Agreement as the Buyer may reasonably request.
K. There shall not be in effect any law, rule or regulation
prohibiting or restricting the transactions contemplated hereby,
or requiring any consent or approval which shall not have been
obtained.
L. Trading in securities generally on Nasdaq shall not have been
suspended or limited, nor shall there be any major outbreak or
escalation of hostilities involving the United States that in
either case in the reasonable judgment of the Buyers makes it
impracticable to purchase the Common Stock and Warrants.
M. The Company shall have reimbursed Cranshire Capital, L.P. and
Vertical International for each such Buyer's out-of-pocket costs
and expenses, including, without limitation, such Buyers'
attorneys' fees and expenses, incurred by them in connection
with the due diligence review of the transactions contemplated
by this Agreement and of the Company, and the negotiation and
preparation of the Transaction Documents and the consummation of
the transactions contemplated thereby. Notwithstanding anything
to the contrary contained in this Agreement, in no event shall
the Company be required to reimburse such Buyers for
out-of-pocket expenses to the extent that the aggregate
out-of-pocket expenses of both such Buyers shall exceed $55,000.
Subject to the maximum reimbursement provided for in the
immediately preceding sentence, Cranshire Capital, L.P. and
Vertical International may effect the reimbursement provided for
in this Section 6(m) by reducing such Buyer's Committed Amount
by up to one-half of the aggregate out-of-pocket costs and
expenses incurred by such Buyers.
VII. INDEMNIFICATION.
In consideration of each Buyer's execution and delivery of the
Transaction Documents and acquiring the Securities thereunder and in addition to
all of the Company's other obligations under the Transaction Documents, the
Company shall defend, protect, indemnify and hold harmless each Buyer and each
other holder of the Securities and all of their stockholders, officers,
directors, employees and direct or indirect investors and any of the foregoing
person's agents or other representatives (including, without limitation, those
retained in connection with the transactions contemplated by this Agreement)
(collectively, the "INDEMNITEES") from and against any and all actions, causes
of action, suits, claims, losses, costs, penalties, fees, liabilities and
damages, and expenses in connection therewith (irrespective of whether any such
Indemnitee is a party to the action for which indemnification hereunder is
sought), and including reasonable attorneys' fees and disbursements (the
"INDEMNIFIED LIABILITIES"), incurred by any Indemnitee as a result of, or
arising out of, or relating to (a) any misrepresentation or breach of any
representation or warranty made by the Company in
-20-
the Transaction Documents or any other certificate, instrument or document
contemplated hereby or thereby, (b) any breach of any covenant, agreement or
obligation of the Company contained in the Transaction Documents or any other
certificate, instrument or document contemplated hereby or thereby or (c) any
cause of action, suit or claim brought or made against such Indemnitee and
arising out of or resulting from the execution, delivery, performance or
enforcement of the Transaction Documents or any other certificate, instrument or
document contemplated hereby or thereby. To the extent that the foregoing
undertaking by the Company may be unenforceable for any reason, the Company
shall make the maximum contribution to the payment and satisfaction of each of
the Indemnified Liabilities which is permissible under applicable law.
VIII. LIQUIDATED DAMAGES.
The Company agrees that Buyers will suffer damages if the
Company (a) violates any material provision of or fails to fulfill any of its
material obligations or duties pursuant to the Transaction Documents (other than
the Registration Rights Agreement) and such violation or failure, directly or
indirectly, restricts the Buyers from selling, transferring or disposing of its
Shares or (b) violates the Company's covenants set forth in Section 4(d) (Use of
Proceeds), 4(e) (Right of First Refusal) or 4(i) (Limitation on Filing
Registration Statements) (a "COMPANY VIOLATION"), and that it would be difficult
to ascertain the extent of such damages. Accordingly, in the event of such
Company Violation, the Company hereby agrees to pay liquidated damages
("LIQUIDATED DAMAGES") to each Buyer, in cash, (x) upon the occurrence of a
Company Violation, an amount equal to one percent (1%) of the aggregate Price
Per Unit of the Units then held by such Buyer, and (y) if the Company Violation
has not been cured by the first month anniversary following the date of the
Company Violation, an amount equal to one percent (1%) of the Price Per Unit of
the Units then held by such Buyer and (z) on each monthly anniversary thereafter
until the Company Violation has been cured, an amount equal to one percent (1%)
of the aggregate Price Per Unit of the Units then held by such Buyer; provided,
however, that all periods referred to in clauses (y) and (z) above shall be
tolled during delays caused by the action or inaction of any Buyer, and the
Company shall have no liability in respect of any such delay. The Liquidated
Damages payable pursuant hereto shall be payable within five (5) business days
following the date of the Company Violation or the monthly anniversary thereof,
as the case may be. Notwithstanding anything to the contrary contained herein,
(x) Liquidated Damages shall not be payable under this Section 8 for more than
one Company Violation occurring or existing at any one time, (y) no Liquidated
Damages shall be payable under this Section 8 in respect of any Company
Violation which also constitutes a Registration Default under the Registration
Rights Agreement or is an exception from the definition of Registration Default
contained in the Registration Rights Agreement and (z) the Company shall have no
liability to any Buyer for any Liquidated Damages under this Section 8 at the
occurrence of a Company Violation or thereafter if the Company's violation of
any such material provision or failure to fulfill such material obligations is
caused by or results from any action or inaction of any such Buyer or any other
Buyer.
IX. GOVERNING LAW; MISCELLANEOUS.
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A. Governing Law; Jurisdiction; Jury Trial. This Agreement shall be
governed by and construed in all respects by the internal laws
of the State of New York (except for the proper application of
the United States federal securities laws), without giving
effect to any choice of law or conflict of law provision or rule
(whether of the State of New York or any other jurisdictions)
that would cause the application of the laws of any
jurisdictions other than the State of New York. Each party
hereby irrevocably submits to the exclusive jurisdiction of the
state and federal courts sitting in the City of New York. EACH
PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND
AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY
DISPUTE HEREUNDER OR IN CONNECTION HEREWITH OR ARISING OUT OF
THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY. In any
suit or action to enforce the provisions of this Agreement, the
prevailing party shall be entitled to be reimbursed for all
reasonable legal fees and expenses incurred by such party in
connection with such suit or action.
B. Counterparts. This Agreement may be executed in two or more
identical counterparts, all of which 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;
provided that a facsimile signature shall be considered due
execution and shall be binding upon the signatory thereto with
the same force and effect as if the signature were an original,
not a facsimile, signature.
C. Headings. The headings of this Agreement are for convenience of
reference and shall not form part of, or affect the
interpretation of, this Agreement.
D. Severability. If any provision of this Agreement shall be
invalid or unenforceable in any jurisdiction, such invalidity or
unenforceability shall not affect the validity or enforceability
of the remainder of this Agreement in that jurisdiction or the
validity or enforceability of any provision of this Agreement in
any other jurisdiction.
E. Entire Agreement; Amendments. This Agreement supersedes all
other prior oral or written agreements between the Buyers, the
Company, their affiliates and persons acting on their behalf
with respect to the matters discussed herein, and this Agreement
and the instruments referenced herein contain the entire
understanding of the parties with respect to the matters covered
herein and therein and, except as specifically set forth herein
or therein, neither the Company nor any Buyer makes any
representation, warranty, covenant or undertaking with respect
to such matters. No provision of this Agreement may be amended
other than by an instrument in writing signed by the Company and
holders of at least
-22-
two-thirds (2/3) of the shares of Common Stock purchased
pursuant to this Agreement and then outstanding, and, except as
otherwise provided herein, no provision hereof may be waived
other than by an instrument in writing signed by the party
against whom enforcement is sought.
F. Notices. Any notices, consents, waivers or other communications
required or permitted to be given under the terms of this
Agreement must be in writing and will be deemed to have been
delivered: (i) upon receipt, when delivered personally; (ii)
upon receipt, when sent by facsimile (provided confirmation of
transmission is mechanically or electronically generated and
kept on file by the sending party); or (iii) one business day
after deposit with a nationally recognized overnight delivery
service, in each case properly addressed to the party to receive
the same. The addresses and facsimile numbers for such
communications shall be:
If to the Company:
EntreMed, Inc.
0000 Xxxxxxx Xxxxxx Xxxxx
Xxxxxxxxx, XX 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxx X. Xxxxxxx, Ph.D.
With a copy to:
Xxxxxx & Xxxxxx
0000 Xxxxxx Xxxxxxxxx, Xxx. 000
XxXxxx, XX 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxxxx X. Xxx, Esq.
If to a Buyer, to it at the address and facsimile number set forth on Schedule 1
with copies to such Buyer's legal representative as set forth on Schedule 1, or
at such other address and/or facsimile number and/or to the attention of such
other person as the recipient party has specified by written notice given to
each other party five (5) days prior to the effectiveness of such change.
G. Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the parties and their respective
successors and assigns, including any purchasers of the Common
Stock. A Buyer may assign some or all of its rights hereunder
without the consent of the Company; provided, however, that any
such assignment shall not release such Buyer from its
obligations hereunder unless such obligations are assumed by
such assignee and the Company has consented to such assignment
and assumption.
-23-
H. No Third Party Beneficiaries. This Agreement is intended for the
benefit of the parties hereto and their respective permitted
successors and assigns, and is not for the benefit of, nor may
any provision hereof be enforced by, any other person.
I. Survival. Unless this Agreement is terminated under Section
9(l), the representations and warranties of the Company and the
agreements and covenants set forth in Sections 3, 4 and 9, the
indemnification provisions set forth in Section 7, and the
liquidated damages provisions in Section 8 shall survive the
Closing. Each Buyer shall be responsible only for its own
representations, warranties, agreements and covenants hereunder.
J. Publicity. The Company and each Buyer shall have the right to
approve before issuance any press releases or any other public
statements with respect to the transactions contemplated hereby;
provided, however, that the Company shall be entitled, without
the prior approval of any Buyer, to make any press release or
other public disclosure with respect to such transactions as is
required by applicable law and regulations. Notwithstanding the
foregoing sentence, Cranshire Capital, L.P. and Vertical
Ventures, L.L.C. shall be consulted by the Company in connection
with the preparation of the Form 8-K required to be filed
pursuant to Section 4(m) and in no event shall the press release
filed as an exhibit to such 8-K identify any particular Buyer
hereunder without the Company first having received the written
consent of such Buyer.
K. Further Assurances. Each party shall do and perform, or cause to
be done and performed, all such further acts and things, and
shall execute and deliver all such other agreements,
certificates, instruments and documents, as the other party may
reasonably request in order to carry out the intent and
accomplish the purposes of this Agreement and the consummation
of the transactions contemplated hereby.
L. Termination. In the event that the Closing shall not have
occurred with respect to a Buyer on or before three (3) business
days from the date hereof due to the Company's or such Buyer's
failure to satisfy the conditions set forth in Sections 5 and 6
above (and the nonbreaching party's failure to waive such
unsatisfied condition(s)), the nonbreaching party shall have the
option to terminate this Agreement with respect to such
breaching party at the close of business on such date without
liability of any party to any other party.
M. Placement Agent. The Company acknowledges that it has engaged
Pali Capital LLC as placement agent in connection with the sale
of the Shares and Warrants. The Company shall be responsible for
the payment of any placement agent's fees or broker's
commissions relating to or arising out of the transactions
contemplated hereby. The Company shall pay, and hold each Buyer
harmless against, any liability, loss or expense (including,
-24-
without limitation, attorneys' fees and out of pocket expenses)
arising in connection with any such claim.
N. No Strict Construction. The language used in this Agreement will
be deemed to be the language chosen by the parties to express
their mutual intent, and no rules of strict construction will be
applied against any party.
O. Remedies. Each Buyer and each holder of the Securities shall
have all rights and remedies set forth in the Transaction
Documents and all rights and remedies which such holders have
been granted at any time under any other agreement or contract
and all of the rights which such holders have under any law. Any
person having any rights under any provision of this Agreement
shall be entitled to enforce such rights specifically (without
posting a bond or other security), to recover damages by reason
of any breach of any provision of this Agreement and to exercise
all other rights granted by law.
P. Payment Set Aside. To the extent that the Company makes a
payment or payments to the Buyers hereunder or pursuant to the
Transaction Documents or the Buyers enforce or exercise their
rights hereunder or 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.
Q. Non-Public Information. The Company confirms that as long as any
Buyer owns Securities, neither the Company nor any other person
acting on its behalf will provide any of such Buyer or its
agents or counsel with any information that constitutes or might
constitute material non-public information, unless such Buyer
shall have agreed to execute a written agreement regarding the
confidentiality and use of such information. The Company
understands and confirms that the Buyers shall be relying on the
foregoing representations in effecting transactions in
securities of the Company.
[Signature Pages Follow]
-25-
IN WITNESS WHEREOF, the Buyers and the Company have caused this
Securities Purchase Agreement to be duly executed as of the date first written
above.
COMPANY:
ENTREMED, INC.
By: /s/ Xxxx X. Xxxxxxx, PhD
---------------------------------
Name: Xxxx X. Xxxxxxx, PhD
Title: Chairman and CEO
[COUNTERPART SIGNATURE PAGE TO
SECURITIES PURCHASE AGREEMENT]
BUYER:
CRANSHIRE CAPITAL, L.P.
By: Downsview Capital, Inc.,
the General Partner
By: /s/ Xxxxxxxx X. Xxxxx
--------------------------
Name: Xxxxxxxx X. Xxxxx
Title: President
BUYER:
EURAM CAP STRAT "A" FUND LIMITED
By: JMJ Capital, Inc., the
Investment Manager
By: /s/ Xxxxxxxx X. Xxxxx
--------------------------
Name: Xxxxxxxx X. Xxxxx
Title: President
BUYER:
CLEVELAND OVERSEAS LTD.
By: Primeway S.A., Director
By: /s/ Beat Xxxx
-----------------
Name: Beat Xxxx
BUYER:
WINCHESTER GLOBAL TRUST
COMPANY LIMITED AS TRUSTEE FOR
CADUCEUS CAPITAL TRUST
By: /s/ Xxxxxx X. Xxxxx
---------------------------------
Name: Xxxxxx X. Xxxxx
Title: Managing Partner,
OriMed Advisors LLC
BUYER:
CADUCEUS CAPITAL II, L.P.
By: /s/ Xxxxxx X. Xxxxx
---------------------------------
Name: Xxxxxx X. Xxxxx
Title: Managing Partner,
OriMed Advisors LLC
BUYER:
PW EUCALYPTUS FUND, L.L.C.
By: /s/ Xxxxxx X. Xxxxx
---------------------------------
Name: Xxxxxx X. Xxxxx
Title: Managing Partner,
OriMed Advisors LLC
BUYER:
PW EUCALYPTUS FUND, LTD.
By: /s/ Xxxxxx X. Xxxxx
---------------------------------
Name: Xxxxxx X. Xxxxx
Title: Managing Partner,
OriMed Advisors LLC
BUYER:
DMG LEGACY FUND LLC
By: DMG Advisors LLC, Managing
Member
By: /s/ Xxxxxx Xxxxxx
---------------------------------
Name: Xxxxxx Xxxxxx
Title: Chief Financial Officer
BUYER:
DMG LEGACY INSTITUTIONAL FUND LLC
By: DMG Advisors LLC, Managing
Member
By: /s/ Xxxxxx Xxxxxx
---------------------------------
Name: Xxxxxx Xxxxxx
Title: Chief Financial Officer
BUYER:
DMG LEGACY INTERNATIONAL LTD.
By: DMG Advisors LLC, Investment
Advisor
By: /s/ Xxxxxx Xxxxxx
---------------------------------
Name: Xxxxxx Xxxxxx
Title: Chief Financial Officer
BUYER:
EDJ Limited
By: /s/ Xxxxxxx Xxxxxx
---------------------------------
Name: Xxxxxxx Xxxxxx
Title: Trading Advisor
BUYER:
Xxxxxx X. Xxxxxxxx
By: /s/ Xxxxxx X. Xxxxxxxx
---------------------------------
Name: Xxxxxx X. Xxxxxxxx
BUYER:
MAPLE BANK GMBH-MILAN BRANCH
By: /s/ Xxxxx Xxxxxxx
---------------------------------
Name: X.X. Xxxxxxx
Title: Authorized Signatory
BUYER:
XXXXXX PARTNERS, L.P.
By: /s/ Xxxxxxx Xxxxxx
---------------------------------
Name: Xxxxxxx Xxxxxx
Title: General Partners
BUYER:
S.A.C. CAPITAL ASSOCIATES, LLC
BY: S.A.C. Capital Advisors, LLC
By: /s/ Xxxxx Xxxxxxxx
---------------------------------
Name: Xxxxx Xxxxxxxx
Title: General Counsel
BUYER:
XXXXXX SERVICE
By: /s/ Xxxxxx Service
---------------------------------
Name: Xxxxxx Service
BUYER:
STEELHEAD INVESTMENTS, LTD.
By: /s/ Xxxxx X'Xxxx
---------------------------------
Name: Xxxxx X'Xxxx
Title: Authorized Signatory
BUYER:
VERTICAL INTERNATIONAL LTD.
By: /s/ Xxxxxxx Xxxxxxxxx
---------------------------------
Name: Xxxxxxx Xxxxxxxxx
Title: Authorized Signatory
BUYER:
ZLP MASTER FUND, LTD
By: /s/ Xxxxxx X. Xxxxxx
---------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Director
