CONVERTIBLE PREFERRED STOCK PURCHASE AGREEMENT
PALATIN TECHNOLOGIES, INC.
------------------------------
April 28, 1998
------------------------------
CONVERTIBLE PREFERRED STOCK PURCHASE AGREEMENT, dated as of April
28, 1998 (this "Agreement"), between Palatin Technologies, Inc., a Delaware
corporation (the "Company"), and the parties who have executed this Agreement
and whose names appear on Schedule 1 hereto (each party listed on Schedule 1
hereto being hereinafter sometimes referred to as a "Purchaser" and collectively
as the "Purchasers").
WHEREAS, certain of the Purchasers and the Company have executed
one or more Subscription Agreements in connection with the offering by the
Company of certain Units relating to the Company's Series B Convertible Stock
(the "Unit Offering");
WHEREAS, the parties to the Unit Offering desire to void ab
initio all agreements and understandings relating thereto;
WHEREAS, subject to the terms and conditions set forth herein,
the Company desires to issue and sell to the Purchasers and the Purchasers,
severally and not jointly, desire to acquire shares of the Company's Series B
Convertible Preferred Stock, $.01 par value per share (the "Preferred Stock").
IN CONSIDERATION of the mutual covenants and agreements set forth
herein and for other good and valuable consideration, the receipt and adequacy
of which are hereby acknowledged, the parties agree as follows:
ARTICLE I
CERTAIN DEFINITIONS
Section 1.1. Certain Definitions. As used in this Agreement,
unless the context requires a different meaning, the following terms have the
meanings indicated in this Section 1.1:
"Affiliate" means, with respect to any Person, any Person that,
directly or indirectly, controls, is controlled by, or is under common control
with, such Person. For purposes of this definition, "control" (including, with
correlative meanings, the terms "controlled by" and "under common control with")
shall mean the possession, directly or indirectly, of the power to direct or
cause the direction of the management and policies of such Person, whether
through the ownership of voting securities or by contract or otherwise.
"Agreement" shall have the meaning set forth in the recitals
hereto.
"Business Day" means any day except Saturday, Sunday and any day
which shall be a Federal legal holiday or a day on which banking institutions in
the State of New York are authorized or required by law or other government
actions to close.
-1-
"Certificate of Designation" shall have the meaning set forth in
Section 2.1(a).
"Closing" shall have the meaning set forth in Section 2.1(b).
"Closing Date" shall have the meaning set forth in Section
2.1(b).
"Code" means the Internal Revenue Code of 1986, as amended, and
the rules and regulations thereunder as in effect on the date hereof.
"Commission" means the Securities and Exchange Commission.
"Common Stock" means the Company's common stock, par value $.01
per share.
"Company" shall have the meaning set forth in the recitals
hereto.
"Conversion Price" shall have the meaning set forth in the
Certificate of Designation.
"Disclosure Materials" means, collectively, the SEC Documents,
the schedules to this Agreement and the Registration Rights Agreement and all
other information furnished in writing by or on behalf of the Company to the
Purchasers or their respective agents and counsel in connection with the
transactions contemplated by this Agreement.
"Escrow Agent" means Xxxxxxxx Xxxxxxxxx Xxxxxx Xxxxxxxx & Xxxxxx
LLP.
"Escrow Agreement" means the escrow agreement, dated as of the
date hereof, among the Company, JNC and the Escrow Agent, in the form of Exhibit
D, as the same may be amended, supplemented or otherwise modified in accordance
with its terms.
"Event" shall have the meaning set forth in Section 4.14.
"Event Date" shall have the meaning set forth in Section 4.14.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"JNC" means JNC Opportunity Fund Ltd., a Cayman Islands
corporation, and a Purchaser hereunder.
"Initial Reserve" shall have the meaning set forth in Section
3.1(d).
"Intellectual Property Rights" shall have the meaning set forth
in Section 3.1(q).
-2-
"Legal Opinion" means the legal opinion letter of Xxxxx Xxxx
Xxxxx Constant & Xxxxxxxx, outside counsel to the Company, addressed to the
Purchasers, dated the Closing Date, substantially in the form attached hereto as
Exhibit C.
"Lien" means, with respect to any asset, any mortgage, lien,
pledge, right of first refusal, charge, security interest or encumbrance of any
kind in or on such asset or the revenues or income thereon or therefrom.
"Material Adverse Effect" shall have the meaning set forth in
Section 3.1(a).
"New York Courts" shall have the meaning set forth in Section
5.8.
"Original Issue Date" shall mean the first issuance of any
Shares, regardless of the number of transfers of any particular Share and
regardless of the number of certificates which may be issued to evidence any
particular Share.
"Person" means an individual or a corporation, partnership,
trust, incorporated or unincorporated association, joint venture, limited
liability company, joint stock company, government (or an agency or political
subdivision thereof) or other entity of any kind.
"Preferred Stock" shall have the meaning set forth in the
recitals hereto.
"Proceeding" means an action, claim, suit, investigation or
proceeding (including, without limitation, an investigation or partial
proceeding, such as a deposition).
"Purchaser(s)" shall have the meaning set forth in the recitals
hereto.
"Registration Rights Agreement" means the registration rights
agreement, dated as of the date hereof, among the Company and the Purchasers, in
the form of Exhibit B, as the same may be amended, supplemented or otherwise
modified in accordance with its terms.
"Required Approvals" shall have the meaning set forth in Section
3.1(f).
"SEC Documents" shall have the meaning set forth in Section
3.1(k).
"Securities" means, collectively, the Shares and the Underlying
Shares.
"Securities Act" means the Securities Act of 1933, as amended.
"Shares" means the shares of Preferred Stock to be purchased
pursuant to this Agreement.
"Stated Value" means $100.
-3-
"Subsequent Financing" shall have the meaning set forth in
Section 4.9.
"Subsequent Financing Notice" shall have the meaning set forth in
Section 4.9.
"Subsidiaries" shall have the meaning set forth in Section
3.1(a).
"Trading Day" shall have the meaning set forth in the Certificate
of Designation.
"Transaction Documents" means collectively, this Agreement, the
Registration Rights Agreement, the Certificate of Designation and the Escrow
Agreement.
"Underlying Shares" means the shares of Common Stock issuable
upon conversion of the Shares in accordance with the terms of the Certificate of
Designation.
"Underlying Securities Registration Statement" means a
registration statement under the Securities Act prepared by the Company and
filed with the Commission in accordance with the Registration Rights Agreement,
covering the resale of the Underlying Shares and naming the holder or holders of
such Underlying Shares as "selling stockholders" thereunder.
"Unit Offering" shall have the meaning set forth in the recitals
hereto.
ARTICLE II
PURCHASE OF SHARES
Section 2.1. Purchase of Shares; Closing.
(a) Subject to the terms and conditions set forth in this
Agreement, the Company shall issue and sell to the Purchasers and the Purchasers
shall, severally and not jointly, purchase up to an aggregate of 18,875 Shares
for an aggregate purchase price of $1,887,500. The Shares shall have the
respective rights, preferences and privileges set forth in Exhibit A (the
"Certificate of Designation").
(b) The closing of the purchase and sale of the Shares (the
"Closing") shall take place on such date as the parties shall agree at the
offices of the Escrow Agent, 0000 Xxxxxx xx xxx Xxxxxxxx, Xxx Xxxx, Xxx Xxxx
00000, in accordance with the Escrow Agreement. The date of the Closing is
hereinafter referred to as the "Closing Date."
(c) At the Closing the parties shall deliver the following items
(with respect to the Closing of the purchase and sale of the Shares to be
acquired by JNC hereunder, such deliveries will be made prior to the Closing in
accordance with and subject to the terms and
-4-
conditions of the Escrow Agreement): (i) the Company shall deliver or cause to
be delivered (A) stock certificates representing the aggregate Stated Value of
the Shares to be acquired hereunder by each Purchaser as set forth in Schedule
1, registered in the name of such Purchaser and (B) the Legal Opinion; (ii) each
Purchaser shall deliver or cause to be delivered immediately available funds
equal to the aggregate Stated Value of Shares to be acquired by such Purchaser
as set forth in Schedule 1, in United States dollars and (iii) each party hereto
shall deliver or cause to be delivered all other executed instruments,
agreements and certificates as are required to be delivered by or on their
behalf at the Closing, including without limitation, this Purchase Agreement,
the Registration Rights Agreement and, with respect to the Company and JNC, the
Escrow Agreement. The Company acknowledges that its outside counsel has
received, and the Purchasers (other than JNC) and the Company agree that the
Company's outside counsel shall continue to hold, $287,500, representing the
Purchase Price to be paid at Closing by such other Purchasers.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
Section 3.1. Representations and Warranties of the Company. The
Company hereby represents and warrants to the Purchasers as follows:
(a) Organization and Qualification. The Company is a corporation,
duly incorporated, validly existing and in good standing under the laws of the
jurisdiction of its incorporation, with the requisite corporate power and
authority to own and use its properties and assets and to carry on its business
as currently conducted. The Company has no subsidiaries other than as set forth
in Schedule 3.1(a) (collectively, the "Subsidiaries"). Each of the Subsidiaries
is a corporation, duly incorporated, validly existing and in good standing under
the laws of the jurisdiction of its incorporation, with the requisite corporate
power and authority to own and use its properties and assets and to carry on its
business as currently conducted. Each of the Company and the Subsidiaries is
duly qualified to do business and is in good standing as a foreign corporation
in each jurisdiction in which the nature of the business conducted or property
owned by it makes such qualification necessary, except where the failure to be
so qualified or in good standing, as the case may be, could not, individually or
in the aggregate, (x) adversely affect the legality, validity or enforceability
of the Shares or any Transaction Document, (y) have a material adverse effect on
the results of operations, assets, prospects, or condition (financial or
otherwise) of the Company and the Subsidiaries, taken as a whole or (z)
adversely impair the Company's ability to perform fully on a timely basis its
obligations under any Transaction Document (any of (x), (y) or (z), a "Material
Adverse Effect").
(b) Authorization; Enforcement. The Company has the requisite
corporate power and authority to enter into and to consummate the transactions
contemplated by the Transaction Documents and to otherwise carry out its
obligations thereunder. The execution and
-5-
delivery of each Transaction Document by the Company and the consummation by it
of the transactions contemplated thereby have been duly authorized by all
necessary action on the part of the Company. Each Transaction Document has been
duly executed by the Company and, when delivered in accordance with the terms
hereof and of the Escrow Agreement, each Transaction Document shall constitute
the legal, valid and binding obligation of the Company enforceable against the
Company in accordance with its terms. Neither the Company nor any Subsidiary is
in violation of any provision of its respective certificate of incorporation,
bylaws or other charter documents.
(c) Capitalization. The authorized, issued and outstanding
capital stock of the Company and each of the Subsidiaries is set forth in
Schedule 3.1(c). No shares of Common Stock are entitled to preemptive or similar
rights. Except as specifically disclosed in Schedule 3.1(c), there are no
outstanding options, warrants, rights to subscribe to, calls or commitments of
any character whatsoever relating to, or, except as a result of the purchase and
sale of the Shares hereunder, securities, rights or obligations convertible into
or exchangeable for, or giving any Person any right to subscribe for or acquire,
any shares of Common Stock, or contracts, commitments, understandings, or
arrangements by which the Company or any Subsidiary is or may become bound to
issue additional shares of Common Stock or securities or rights convertible or
exchangeable into shares of Common Stock. To the knowledge of the Company,
except as specifically disclosed in the SEC Documents or Schedule 3.1(c), no
Person or group of Persons beneficially owns (as determined pursuant to Rule
13d-3 promulgated under the Exchange Act) or has the right to acquire by
agreement with or by obligation binding upon the Company beneficial ownership of
in excess of 5% of the Common Stock.
(d) Issuance of Securities. The Shares are duly authorized and,
when issued in accordance with the terms hereof, shall be validly issued, fully
paid and nonassessable, free and clear of all Liens. The Company has and at all
times while any Shares are outstanding will maintain an adequate reserve of duly
authorized shares of Common Stock to enable it to perform its conversion
obligations under the Certificate of Designation, which reserve shall be no less
than 175% of the number of shares of Common Stock as would be issuable upon
conversion in full of the Shares, assuming such conversion occurred on the
Original Issue Date or the Effective Date (as defined in the Registration Rights
Agreement), whichever yields a lower Conversion Price (the "Initial Reserve").
If at any time the sum of the number of shares of Common Stock issuable upon
conversion in full of the then outstanding Shares exceeds 85% of the Initial
Reserve, then the Company shall duly reserve 175% of the number of shares of
Common Stock equal to such excess to fulfill such obligations. This obligation
shall similarly apply to successive excesses. When issued in accordance with the
Certificate of Designation the Underlying Shares will be duly authorized,
validly issued, fully paid and nonassessable, and free and clear of all Liens.
(e) No Conflicts. The execution, delivery and performance of the
Transaction Documents by the Company and the consummation by the Company of the
transactions contemplated thereby do not and will not (i) conflict with or
violate any provision of its certificate of incorporation, bylaws or other
charter documents (each as amended through the date hereof), (ii) subject to
obtaining the consents referred to in Section 3.1(f), conflict with, or
constitute a
-6-
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
(evidencing a Company debt or otherwise) to which the Company is a party or by
which any property or asset of the Company is bound or affected, or (iii) result
in a violation of any law, rule, regulation, order, judgment, injunction, decree
or other restriction of any court or governmental authority to which the Company
is subject (including federal and state securities laws and regulations), or by
which any property or asset of the Company is bound or affected; except in the
case of each of clauses (ii) and (iii), as could not, individually or in the
aggregate, have or result in a Material Adverse Effect. The business of the
Company is not being conducted in violation of any law, ordinance or regulation
of any governmental authority, except for violations which, individually and in
the aggregate, could not have or result in a Material Adverse Effect.
(f) Consents and Approvals. Neither the Company nor any
Subsidiary is required to obtain any consent, waiver, authorization or order of,
or make any filing or registration with, any court or other federal, state,
local, foreign or other governmental authority or other Person in connection
with the execution, delivery and performance by the Company of the Transaction
Documents, other than (i) the filing of the Certificate of Designation with the
Secretary of State of Delaware, (ii) the filing of one or more Underlying
Securities Registration Statements with the Commission and the making of
applicable blue-sky filings under state securities laws with respect to the
Securities and the transactions contemplated hereby, each as contemplated hereby
and by the Registration Rights Agreement, (iii) the application for the listing
of the Underlying Shares on the Nasdaq SmallCap Market (and on each other
national securities exchange, market or trading facility on which the Common
Stock is then listed), and (iv) other than, in all other cases, where the
failure to obtain such consent, waiver, authorization or order, or to give or
make such notice or filing, could not, individually or in the aggregate, have or
result in a Material Adverse Effect (the "Required Approvals").
(g) Litigation; Proceedings. Except as specifically disclosed in
the Disclosure Materials, there is no action, suit, notice of violation,
proceeding or investigation pending or, to the best knowledge of the Company,
threatened against or affecting the Company or any of its Subsidiaries or any of
their respective properties before or by any court, governmental or
administrative agency or regulatory authority (federal, state, county, local or
foreign) which (i) adversely affects or challenges the legality, validity or
enforceability of any Transaction Document or the Securities or (ii) could,
individually or in the aggregate, have or result in a Material Adverse Effect.
(h) No Default or Violation. Neither the Company nor any
Subsidiary (i) is in default under or in violation of (or has received notice of
a claim that it is in default under or that it is in violation of) any
indenture, loan or credit agreement or any other agreement or instrument to
which it is a party or by which it or any of its properties is bound, (ii) is in
violation of any order of any court, arbitrator or governmental body, or (iii)
is in violation of any statute, rule or regulation of any governmental
authority, except as could not, individually or in the aggregate, have or result
in a Material Adverse Effect.
-7-
(i) Private Offering. Assuming the accuracy of the
representations and warranties of the Purchasers contained in Sections
3.2(b)-3.2(f), the offering, issuance or sale of the Securities as contemplated
hereunder are exempt from the registration requirements of the Securities Act.
(j) Certain Fees. Except for fees payable to Paramount Capital,
Inc., no fees or commissions will be payable by the Company to any broker,
financial advisor or consultant, finder, investment banker or Person performing
a similar function, placement agent, or bank with respect to the transactions
contemplated hereby. The Purchasers shall have no obligation with respect to
such fees or commissions or with respect to any claims made by or on behalf of
other Persons for fees or commissions of a type contemplated in this Section
that may be due in connection with the transactions contemplated hereby. The
Company shall indemnify and hold harmless each Purchaser, its respective
employees, officers, directors, agents, and partners, and their respective
Affiliates, from and against all claims, losses, damages, costs (including the
costs of preparation and reasonable attorney's fees) and expenses suffered in
respect of any such claimed or existing fees, as and when incurred.
(k) SEC Documents; Financial Statements; No Adverse Change. The
Company has filed all reports required to be filed by it under the Exchange Act,
including pursuant to Section 13(a) or 15(d) thereof, since July 1, 1996 (the
foregoing materials being collectively referred to herein as the "SEC
Documents") on a timely basis or has received a valid extension of such time of
filing and has filed any such SEC Documents prior to the expiration of any such
extension. As of their respective dates, the SEC Documents complied in all
material respects with the requirements of the Securities Act and the Exchange
Act and the rules and regulations of the Commission promulgated thereunder, and
none of the SEC Documents, when filed, contained any untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. The financial
statements of the Company included in the SEC Documents comply in all material
respects with applicable accounting requirements and the rules and regulations
of the Commission with respect thereto. Such financial statements have been
prepared in accordance with generally accepted accounting principles applied on
a consistent basis during the periods involved, except as may be otherwise
specified in such financial statements or the notes thereto, and fairly present
in all material respects the financial position of the Company as of and for the
dates thereof and the results of operations, retained earnings and cash flows
for the periods then ended, subject, in the case of unaudited statements, to
normal year-end audit adjustments. Since the date of the financial statements
included in the Company's Quarterly Report on Form 10-QSB for the period ended
December 31, 1997, (a) there has been no event, occurrence or development that
has had or that could have or result in a Material Adverse Effect, (b) there has
been no material change in the Company's accounting principles, practices or
methods and (c) the Company has conducted its business only in the ordinary
course of such business. The Company last filed audited financial statements
with the Commission for the fiscal year ended June 30, 1997, and has not
received any comments from the Commission in respect thereof.
-8-
(l) Seniority. Except for the Company's Series A Preferred Stock,
no class of equity securities of the Company is senior to the Shares in right of
payment, whether upon liquidation, dissolution or otherwise.
(m) Form S-3 Eligibility. The Company is, and at the Closing Date
will be, eligible to register securities for resale with the Commission under
Form S-3 promulgated under the Securities Act.
(n) Investment Company. The Company is not, and is not an
"Affiliate person" of, an "investment company" within the meaning of the
Investment Company Act of 1940, as amended.
(o) Exclusivity. The Company shall not issue or sell Preferred
Stock to any Person other than the Purchasers.
(p) Listing and Maintenance Requirements Compliance. Since the
date that the listing of the Common Stock was initially approved for trading on
the Nasdaq SmallCap Market, the Company has not received notice (written or
oral) from any stock exchange, market or trading facility on which the Common
Stock is or has been listed (or on which it is or has been quoted) to the effect
that the Company is not in compliance with the listing or maintenance
requirements of such exchange, market or trading facility. The Company is in
compliance with all such maintenance requirements.
(q) Patents and Trademarks. The Company has, or has rights to
use, all patents, patent applications, trademarks, trademark applications,
service marks, trade names, copyrights, licenses, trade secrets and other
intellectual property rights which are necessary for use in connection with its
business or which the failure to so have would have a Material Adverse Effect
(collectively, the "Intellectual Property Rights"). To the best knowledge of the
Company, none of the Intellectual Property Rights infringe on any rights of any
other Person, and the Company either owns or has duly licensed or otherwise
acquired all necessary rights with respect to the Intellectual Property Rights.
The Company has not received any notice from any third party of any claim of
infringement by the Company of any of the Intellectual Property Rights, and has
no reason to believe there is any basis for any such claim. To the best
knowledge of the Company, there is no existing infringement by another Person on
any of the Intellectual Property Rights.
(r) Registration Rights. Except as and to the extent set forth on
Schedule 6(b) to the Registration Rights Agreement, the Company has not granted
or agreed to grant any Person any rights (including "piggy-back" registration
rights) to have any securities of the Company registered with the Commission
which have not been satisfied.
(s) Conversion Procedures. Other than the Conversion Notice
attached to the Certificate of Designation, there are no other procedures to be
followed or legal opinions or other
-9-
documents required be delivered in order to permit holders to exercise their
right to convert Shares in accordance with the time periods set forth in the
Certificate of Designation.
(t) Disclosure. All information relating to or concerning the
Company set forth in the Transaction Documents or the Disclosure Materials
(other than the SEC Documents) is true and correct in all material respects and
does not fail to state any material fact necessary in order to make the
statements herein or therein, in light of the circumstances under which they
were made, not misleading. The Company confirms that, to the best of its
knowledge, it has not provided any Purchaser or any of such Purchaser's agents
or counsel any information that constitutes or might constitute material
nonpublic information. The Company understands and confirms that the Purchasers
shall be relying on the foregoing representation in effecting transactions in
securities of the Company.
Section 3.2. Representations and Warranties of the Purchasers.
Each Purchaser hereby, severally and not jointly, represents and warrants to the
Company as follows:
(a) Organization; Authority. If such Purchaser is an entity, such
Purchaser is an entity organized, validly existing and in good standing under
the laws of the jurisdiction of its organization with the requisite power and
authority to enter into and to consummate the transactions contemplated by the
Transaction Documents to which it is a party and to carry out its obligations
thereunder. If such Purchaser is an individual, such Purchaser has the capacity
to enter into and to consummate the transactions contemplated by the Transaction
Documents to which it is a party and to carry out its obligations thereunder.
The purchase of the Securities to be acquired by such Purchaser hereunder has
been duly authorized by all necessary action on the part of such Purchaser. Each
of this Agreement, the Registration Rights Agreement and, with respect to JNC
only, the Escrow Agreement has been duly executed by such Purchaser and, when
delivered by such Purchaser in accordance with the terms hereof and, with
respect to JNC, of the Escrow Agreement, shall constitute the valid and legally
binding obligation of such Purchaser, enforceable against it in accordance with
its terms.
(b) Investment Intent. Such Purchaser is acquiring the Securities
to be acquired by it hereunder for its own account for investment purposes only
and not with a view to or for distributing or reselling such Securities or any
part thereof or interest therein, without prejudice, however, to such
Purchaser's right, subject to the provisions of this Agreement and the
Registration Rights Agreement, at all times to sell or otherwise dispose of all
or any part of such Securities pursuant to an effective registration statement
under the Securities Act and in compliance with applicable state securities laws
or under an exemption from such registration.
(c) Purchaser Status. At the time such Purchaser was offered the
Securities to be acquired by it hereunder, it was, at the date hereof, it is,
and at the Closing Date, it will be, an "accredited investor" as defined in Rule
501(a) under the Securities Act.
(d) Experience of Purchaser. Such Purchaser, either alone or
together with its representatives, has such knowledge, sophistication and
experience in business and financial
-10-
matters so as to be capable of evaluating the merits and risks of the
prospective investment in the Securities, and has so evaluated the merits and
risks of such investment.
(e) Ability of Purchaser to Bear Risk of Investment. Such
Purchaser acknowledges that an investment in the Securities to be acquired by it
hereunder is speculative and involves a high degree of risk. Such Purchaser is
able to bear the economic risk of an investment in the Securities and, at the
present time, is able to afford a complete loss of such investment.
(f) Access to Information. Such Purchaser acknowledges receipt of
the Disclosure Materials and further acknowledges that it has been afforded (i)
the opportunity to ask such questions as it has deemed necessary of, and to
receive answers from, representatives of the Company concerning the terms and
conditions of the offering of the Securities, and the merits and risks of
investing in the Securities, (ii) access to information about the Company and
the Company's financial condition, results of operations, business, properties,
management and prospects sufficient to enable it to evaluate its investment; and
(iii) the opportunity to obtain such additional information which the Company
possesses or can acquire without unreasonable effort or expense that is
necessary to make an informed investment decision with respect to the investment
and to verify the accuracy and completeness of the information contained in the
Disclosure Materials. Neither such inquiries nor any other investigation
conducted by or on behalf of such Purchaser or its representatives, agents or
counsel shall modify, amend or affect such Purchaser's right to rely on the
truth, accuracy and completeness of the Disclosure Materials and the Company's
representations and warranties contained in the Transaction Documents.
(g) Reliance. Such Purchaser understands and acknowledges that
(i) the Securities to be acquired by it hereunder are being offered and sold to
it without registration under the Securities Act in a private placement that is
exempt from the registration provisions of the Securities Act and (ii) the
availability of such exemption, depends in part on, and the Company will rely
upon the accuracy and truthfulness of, the foregoing representations and such
Purchaser hereby consents to such reliance.
The Company acknowledges and agrees that the Purchasers make no
representations or warranties with respect to the transactions contemplated
hereby other than those specifically set forth in this Section 3.2.
ARTICLE IV
OTHER AGREEMENTS OF THE PARTIES
Section 4.1. Transfer Restrictions. (a) The Securities may only
be disposed of pursuant to an effective registration statement under the
Securities Act, to the Company or pursuant to an available exemption from or in
a transaction not subject to the registration requirements thereof. In
connection with any transfer of any Securities other than pursuant to an
effective registration statement or to the Company, the Company may require the
transferor
-11-
thereof to provide to the Company an opinion of counsel selected and paid for by
the transferor, the form and substance of which opinion shall be reasonably
satisfactory to the Company, to the effect that such transfer does not require
registration under the Securities Act. Notwithstanding the foregoing, the
Company hereby consents to and agrees to register any transfer of Shares by a
Purchaser to an Affiliate thereof and to any transfers among any such Affiliates
provided the transferee certifies to the Company that it is an "accredited
investor" as defined in Rule 501(a) under the Securities Act. Any such Affiliate
transferee shall have the rights of the Purchaser under the Transaction
Documents.
(b) The Purchasers agree to the imprinting, so long as is
required by this Section 4.1(b), of the following legend on the certificates
representing the Securities:
NEITHER THESE SECURITIES NOR THE SECURITIES INTO WHICH THESE
SECURITIES ARE CONVERTIBLE HAVE BEEN REGISTERED WITH THE SECURITIES AND
EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN
RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE
OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR
IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS.
THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN
RESTRICTIONS ON CONVERSION SET FORTH IN SECTION 4.8 OF THE CONVERTIBLE
PREFERRED STOCK PURCHASE AGREEMENT, DATED AS OF APRIL 28, 1998, BETWEEN
PALATIN TECHNOLOGIES, INC. (THE "COMPANY") AND THE ORIGINAL HOLDER
HEREOF. A COPY OF THAT AGREEMENT IS ON FILE AT THE PRINCIPAL OFFICE OF
THE COMPANY.
Underlying Shares shall not contain the legend set forth above or
any other legend if the conversion of Shares or other issuances of Underlying
Shares, as the case may be, occurs at any time while an Underlying Securities
Registration Statement is effective under the Securities Act or, in the event
there is not an effective Underlying Securities Registration Statement at such
time, if in the opinion of counsel to the Company such legend is not required
under applicable requirements of the Securities Act (including judicial
interpretations and pronouncements issued by the staff of the Commission). The
Company agrees that it will provide Purchasers, upon request, with a certificate
or certificates representing Underlying Shares, free from such legend at such
time as such legend is no longer required hereunder. The Company may not make
any notation on its records or give instructions to any transfer agent of the
Company which enlarge the restrictions of transfer set forth in this Section
4.1(b).
-12-
Section 4.2. Acknowledgment of Dilution. The Company acknowledges
that the issuance of Underlying Shares upon conversion of the Shares may result
in dilution of the outstanding shares of Common Stock, which dilution may be
substantial under certain market conditions. The Company further acknowledges
that its obligation to issue Underlying Shares in accordance with the
Certificate of Designation is unconditional and absolute regardless of the
effect of any such dilution.
Section 4.3. Furnishing of Information. As long as any Purchaser
owns Securities, the Company covenants to timely file (or obtain extensions in
respect thereof and file within the applicable grace period) all reports
required to be filed by the Company after the date hereof pursuant to Section
13(a) or 15(d) of the Exchange Act. If at any time prior to the date on which
all Purchasers may resell all of their respective Underlying Shares without
volume restrictions pursuant to Rule 144(k) promulgated under the Securities Act
(as determined by counsel to the Company pursuant to a written opinion letter to
such effect, addressed and acceptable to the Company's transfer agent for the
benefit of and enforceable by the Purchasers) the Company is not required to
file reports pursuant to such sections, it will prepare and furnish to the
Purchasers and make publicly available in accordance with Rule 144(c)
promulgated under the Securities Act annual and quarterly financial statements,
together with a discussion and analysis of such financial statements in form and
substance substantially similar to those that would otherwise be required to be
included in reports required by Section 13(a) or 15(d) of the Exchange Act in
the time period that such filings would have been required to have been made
under the Exchange Act. The Company further covenants that it will take such
further action as any holder of Securities may reasonably request, all to the
extent required from time to time to enable such Person to sell Securities
without registration under the Securities Act within the limitation of the
exemptions provided by Rule 144 promulgated under the Securities Act, including
the legal opinion referenced above in this Section. Upon the request of any such
Person, the Company shall deliver to such Person a written certification of a
duly authorized officer as to whether it has complied with such requirements.
Section 4.4. Use of Proceeds. The Company shall use all of the
proceeds from the sale of the Securities for working capital purposes and not
for the satisfaction of any portion of Company debt in excess of an aggregate of
$1,200,000 or to redeem any Company equity or equity-equivalent securities.
Pending application of the proceeds of this placement in the manner permitted
hereby the Company will invest such proceeds in interest bearing accounts and/or
short-term, investment grade interest bearing securities.
Section 4.5. Listing of Underlying Shares. The Company shall (a)
not later than the fifth Business Day following the Closing Date prepare and
file with the Nasdaq SmallCap Market (as well as any other national securities
exchange, market or trading facility on which the Common Stock is then listed)
an additional shares listing application covering at least 175% of the number of
Underlying Shares as would be issuable upon a conversion in full of the Shares,
assuming such conversion occurred on the Original Issue Date, (b) take all steps
necessary to cause such shares to be approved for listing on the Nasdaq SmallCap
Market (as well as on any other national securities exchange, market or trading
facility on which the Common Stock is then
-13-
listed) as soon as possible thereafter, and (c) provide to the Purchasers
evidence of such listing, and the Company shall maintain the listing of its
Common Stock on such exchange or market. In addition, if at any time the number
of shares of Common Stock issuable on conversion of all then outstanding Shares
is greater than the number of shares of Common Stock theretofore listed with the
Nasdaq SmallCap Market (and any such other national securities exchange, market
or trading facility), the Company shall promptly take such action (including the
actions described in the preceding sentence) to file an additional shares
listing application with the Nasdaq SmallCap Market (and any such other national
securities exchange, market or trading facility) covering at least a number of
shares equal to 175% of the number of Underlying Shares as would then be
issuable upon a conversion in full of the Shares.
Section 4.6. Integration. The Company shall not and shall use its
best efforts to ensure that no Affiliate shall sell, offer for sale or solicit
offers to buy or otherwise negotiate in respect of any security (as defined in
Section 2 of the Securities Act) that would be integrated with the offer or sale
of the Securities in a manner that would require the registration under the
Securities Act of the issue, offer or sale of the Securities to the Purchasers.
Section 4.7. Increase in Authorized Shares. At such time as the
Company would be, if a notice of conversion were to be delivered on such date,
precluded from converting in full all of the Shares that remain unconverted at
such date due to the unavailability of a sufficient number of shares of
authorized but unissued or re-acquired Common Stock, the Board of Directors of
the Company shall promptly (and in any case within 30 Business Days from such
date) prepare and mail to the stockholders of the Company proxy materials
requesting authorization to amend the Company's certificate of incorporation to
increase the number of shares of Common Stock which the Company is authorized to
issue to at least a number of shares equal to the sum of (i) all shares of
Common Stock then outstanding, (ii) the number of shares of Common Stock
issuable on account of all outstanding warrants, options and convertible
securities (other than the Preferred Stock) and on account of all shares
reserved under any stock option, stock purchase, warrant or similar plan, and
(iii) 175% of the number of Underlying Shares as would then be issuable upon a
conversion in full of the then outstanding Shares in accordance with the terms
of this Agreement and the Certificate of Designation. In connection therewith,
the Board of Directors shall (x) adopt proper resolutions authorizing such
increase, (y) recommend to and otherwise use its best efforts to promptly and
duly obtain stockholder approval to carry out such resolutions (and hold a
special meeting of the stockholders no later than the 60th day after delivery of
the proxy materials relating to such meeting) and (z) within 5 Business Days of
obtaining such stockholder authorization, file an appropriate amendment to the
Company's certificate of incorporation to evidence such increase. If the Company
does not receive stockholder approval for such increase or the Company fails to
file an appropriate amendment in the time provided therefor by the immediately
preceding sentence, then the provisions of Section 5(c) of the Certificate of
Designation and Section 4.14 hereof shall apply.
Section 4.8. Purchaser Ownership of Common Stock. JNC agrees not
to use its ability to convert Shares to the extent such conversion or exercise
would result in it beneficially owning (as determined in accordance with Section
13(d) of the Exchange Act and the rules
-14-
thereunder) in excess of 4.999% of the then issued and outstanding shares of
Common Stock, including shares issuable upon conversion of the Shares held by it
after application of this Section. To the extent that the limitation contained
in this Section applies, the determination of whether Shares are convertible by
JNC (in relation to other securities owned by it) and of which Shares are
convertible shall be in the sole discretion of JNC, and the submission of Shares
for conversion shall be deemed to be JNC's determination of whether such Shares
are convertible (in relation to other securities owned by it) and of which of
its Shares are convertible, in each case subject to such aggregate percentage
limitation, and the Company shall have no obligation to verify or confirm the
accuracy of such determination. Nothing contained herein shall be deemed to
restrict the right of JNC to convert Shares at such time as such conversion will
not violate the provisions of this Section. The provisions of this Section may
be waived by JNC upon not less than 75 days prior notice to the Company, and the
provisions of this Section shall continue to apply until such 75th day (or
later, if stated in the notice of waiver).
Section 4.9. Right of Participation; Subsequent Registrations.
(a) The Company shall not, other than pursuant to the currently contemplated
strategic arrangement described in Schedule 6(b) to the Registration Rights
Agreement, directly or indirectly, without the prior written consent of JNC,
offer, sell, grant any option to purchase, or otherwise dispose of (or announce
any offer, sale, grant or any option to purchase or other disposition) any of
its or its Affiliates' equity or equity-equivalent securities or any instrument
that permits the holder thereof to acquire Common Stock at any time over the
life of the security or investment at a price that is less than the closing
sales price of the Common Stock at the time of issuance of such security or
investment (a "Subsequent Financing") for a period of 180 days after the Closing
Date, except (i) the granting of options or warrants to employees, officers and
directors, and the issuance of shares upon exercise of options granted, under
any stock option plan or employment agreement or, with respect to senior
management, consulting agreements heretofore or hereinafter duly adopted by the
Company, (ii) shares issued upon exercise of any currently outstanding warrants
and upon conversion of any currently outstanding convertible preferred stock in
each case disclosed in Schedule 3.1(c), and (iii) shares of Common Stock issued
upon conversion of the Shares, unless (A) the Company delivers to JNC a written
notice (the "Subsequent Financing Notice") of its intention to effect such
Subsequent Financing, which Subsequent Financing Notice shall describe in
reasonable detail the proposed terms of such Subsequent Financing, the amount of
proceeds intended to be raised thereunder, the Persons with whom such Subsequent
Financing shall be affected, and attached to which shall be a term sheet or
similar document relating thereto, and (B) JNC shall not have notified the
Company by 5:00 p.m. (Eastern Standard time) on the tenth (10th) Trading Day
after its receipt of the Subsequent Financing Notice of its willingness to
provide (or to cause its sole designee to provide), subject to completion of
mutually acceptable documentation, up to $2,000,000 (at JNC's option) of the
financing described in the Subsequent Financing Notice to the Company on
substantially the terms set forth in the Subsequent Financing Notice. If JNC
shall fail to notify the Company of its (or its designee's) intention to
participate in such Subsequent Financing and to enter into such negotiations
within such time period, the Company may effect the Subsequent Financing
substantially upon the terms and to the Persons (or Affiliates of such Persons)
set forth in the Subsequent Financing Notice without participation therein by
JNC; provided, that the Company shall provide JNC with a second Subsequent
Financing Notice,
-15-
and JNC shall again have the right of participation set forth above in this
paragraph (a), if the Subsequent Financing subject to the initial Subsequent
Financing Notice shall not have been consummated for any reason on the terms set
forth in such Subsequent Financing Notice within forty-five (45) days after the
date of the initial Subsequent Financing Notice with the Person (or an Affiliate
of such Person) identified in the Subsequent Financing Notice. The right of
participation granted in this paragraph to JNC shall confer no rights to any
Purchaser other than JNC to participate in a future financing by the Company.
(b) Except for Underlying Shares and other "Registrable
Securities" (as such term is defined in the Registration Rights Agreement) to be
registered in accordance with the Registration Rights Agreement and for Company
securities permitted under Section 6(b) of the Registration Rights Agreement to
be registered in the Underlying Securities Registration Statement, the Company
shall not, for a period of not less than forty-five (45) days after the date
that the Underlying Securities Registration Statement is declared effective by
the Commission, without the prior written consent of the Purchasers, (i) issue
or sell any of its or any of its Affiliates' equity or equity-equivalent
securities pursuant to Regulation S promulgated under the Securities Act, or
(ii) register for resale any securities of the Company. Any days that a
Purchaser is not permitted to sell Underlying Shares under the Underlying
Securities Registration Statement shall be added to such forty-five (45) day
period for the purposes of (i) and (ii) above.
Section 4.10. Notice of Breaches. Each of the Company and each
Purchaser shall give prompt written notice to the other of any breach by it of
any representation, warranty or other agreement contained in any Transaction
Document, as well as any events or occurrences arising after the date hereof,
which would reasonably be likely to cause any representation or warranty or
other agreement of such party, as the case may be, contained in the Transaction
Document to be incorrect or breached as of such Closing Date. However, no
disclosure by a party pursuant to this Section shall be deemed to cure any
breach of any representation, warranty or other agreement contained in any
Transaction Document.
Notwithstanding the generality of the foregoing, the Company shall
promptly notify the Purchasers of any notice or claim (written or oral) that it
receives from any lender of the Company to the effect that the consummation of
the transactions contemplated by the Transaction Documents violates or would
violate any written agreement or understanding between such lender and the
Company, and the Company shall promptly furnish by facsimile to the Purchasers a
copy of any written statement in support of or relating to such claim or notice.
Section 4.11. Conversion and Exercise Obligations of the Company.
The Company shall honor conversions of the Shares and shall deliver Underlying
Shares upon such conversions in accordance with the respective terms and
conditions and time periods set forth in the Certificate of Designation.
Section 4.12. Transfer of Intellectual Property Rights. Except in
the ordinary course of the Company's business consistent with past practice or
in connection with the sale of all or substantially all of the assets of the
Company, the Company shall not transfer, sell or
-16-
otherwise dispose of, any Intellectual Property Rights, or allow the
Intellectual Property Rights to become subject to any Liens, or fail to renew
such Intellectual Property Rights (if renewable and would otherwise expire).
Section 4.13. Reimbursement. In the event that any Purchaser,
other than by reason of its gross negligence or willful misconduct, becomes
involved in any capacity in any action, proceeding or investigation brought by
or against any Person, including stockholders of the Company, in connection with
or as a result of the consummation of the transactions contemplated pursuant to
the Transaction Documents, the Company will reimburse such Purchaser for its
reasonable legal and other expenses (including the cost of any investigation and
preparation) incurred in connection therewith. The reimbursement obligations of
the Company under this paragraph shall be in addition to any liability which the
Company may otherwise have, shall extend upon the same terms and conditions to
any Affiliate of each Purchaser and each of the partners, directors, agents,
employees and controlling persons (if any), as the case may be, of each
Purchaser and any such Affiliate, and shall be binding upon and inure to the
benefit of any successors, assigns, heirs and personal representatives of the
Company, each Purchaser and any such Affiliate and any such Person. The Company
also agrees that no Purchaser or any such Affiliates, partners, directors,
agents, employees or controlling persons shall have any liability to the Company
or any Person asserting claims on behalf of or in right of the Company in
connection with or as a result of the consummation of the Transaction Documents,
except to the extent that any losses, claims, damages, liabilities or expenses
incurred by the Company result from the gross negligence or willful misconduct
of such Purchaser or its partners, directors, agents, employees and controlling
persons (if any), in connection with the transactions contemplated by this
Agreement. No Purchaser shall, without the prior written consent of the Company,
which shall not be unreasonably withheld or delayed, effect any settlement of
any action in respect of which the Company is a party.
Section 4.14. Liquidated Damages Upon Occurrence of Certain
Events. (a) If the Common Stock shall for any reason fail to be listed on, or be
suspended from trading from, the Nasdaq National Market or Nasdaq SmallCap
Market for three (3) Trading Days (which need not be consecutive Trading Days),
then each holder of Preferred Stock then outstanding shall have the right to
require the Company to pay to it in cash an amount equal to 25% of the aggregate
Stated Value of all shares of Preferred Stock then held by it, as liquidated
damages and not as a penalty. Any such payment by the Company shall be due in
full within five (5) Business Days of the date that the holder of such Preferred
Stock notifies the Company of the exercise of the right to payment contained in
this paragraph. Interest shall accrue and be payable on such liquidated damages
at the rate of 18% per annum until the full amount of such liquidated damages,
plus all accrued and unpaid interest thereon, are paid in full. A Purchaser
shall not be entitled to liquidated damages as a result of a suspension or
delisting described above in this paragraph if it has previously provided the
Company with a Subsequent Reduced Conversion Price Notice pursuant Section
5(c)(i) of the Certificate of Designation, except in the event that the
suspension or delisting that was the subject of such Subsequent Reduced
Conversion Price Notice had been cured and a new suspension or delisting arose
thereafter. For purposes hereof, shares of Preferred Stock for which a
conversion has been requested in accordance with the Certificate of Designation
-17-
shall be deemed to be outstanding if such delisting or suspension occurs on or
prior to the date that the holder receives Underlying Shares from the Company in
respect thereof.
(b) If (i) the conversion rights of a Purchaser are suspended for
any reason, or if a Purchaser is not for any reason permitted to sell
Registrable Securities under an Underlying Securities Registration Statement, or
(ii) the Company fails to comply with requests by a Purchaser for conversion of
any shares of its Preferred Stock into Underlying Shares in accordance with the
terms and time periods set forth in the Certificate of Designation or (iii) the
Company is required to convene a meeting of stockholders pursuant to Section
5(a)(ii) of the Certificate of Designation and fails to convene such meeting
within the time period specified in such Section or does so convene such a
meeting within such time period but fails to obtain Shareholder Approval (as
defined in the Certificate of Designation) at such meeting (any such failure or
breach being referred to as an "Event" and, for purposes of clauses (i), (ii)
and (iii) the date on which such Event occurs, being referred to as "Event
Date"), then, each such Purchaser may require the Company to pay to it in cash,
1.5% of the aggregate Stated Value of all shares of Preferred Stock then held by
it, as liquidated damages and not as a penalty. In addition, on each monthly
anniversary of the Event Date until the Event is cured, each such Purchaser may
require the Company to pay to it in cash, 2.5% of the aggregate Stated Value of
all shares of Preferred Stock then held by it, as liquidated damages and not as
a penalty. A Purchaser shall not be entitled to liquidated damages for an Event
for any month for which it has elected to deliver to the Company an Initial
Reduced Conversion Price Notice pursuant Section 5(c)(i) of the Certificate of
Designation in respect of such Event. However, a Purchaser shall be entitled to
receive both the benefits of the Initial Reduced Conversion Price Notice and the
liquidated damages contemplated in this paragraph for the same Event, but not
both in the same monthly period. The Purchasers shall have the right to
liquidated damages for multiple and/or successive Events. For purposes hereof,
shares of Preferred Stock for which a conversion has been requested in
accordance with the Certificate of Designation shall be deemed to be outstanding
and held by the converting holder if an Event occurs on or prior to the date
that the holder receives Underlying Shares from the Company in respect thereof.
(B) If the Company fails for any reason to deliver to a holder
certificates representing the number of Underlying Shares issuable upon a
conversion of Preferred Stock in accordance with Section 5(b)(i) of the
Certificate of Designation prior to the third Trading Day after the Conversion
Date, then the Company shall pay to the converting holder, in cash, as
liquidated damages and not as a penalty, $1,500 for each day after such third
Trading Day until such certificates are received. Nothing herein shall limit a
holder's right to pursue actual damages for the Company's failure to deliver
certificates representing such Underlying Shares within the period specified
herein and in the Certificate of Designation, and such holder shall have the
right to pursue all remedies available to it at law or in equity including,
without limitation, a decree of specific performance and/or injunctive relief.
The exercise of any such rights shall be cumulative and shall not prohibit the
holders from seeking to enforce other damages available under this Agreement or
the Certificate of Designation.
-18-
ARTICLE V
MISCELLANEOUS
Section 5.1. Fees and Expenses. At the Closing, the Company shall
pay (i) $25,000 to the Escrow Agent for the legal fees and disbursements of the
Purchasers in connection with the preparation and negotiation of the Transaction
Documents and (ii) $5,000 to JNC for its due diligence expenses and
disbursements in connection with the transactions contemplated hereby. Other
than the amounts contemplated by the immediately preceding sentence, and except
as set forth in the Registration Rights Agreement, each party shall pay the fees
and expenses of its advisers, counsel, accountants and other experts, if any,
and all other expenses incurred by such party incident to the negotiation,
preparation, execution, delivery and performance of this Agreement. The Company
shall pay all stamp and other taxes and duties levied in connection with the
issuance of the Shares pursuant hereto. The Purchasers shall be responsible for
their own tax liability that may arise as a result of the investment hereunder
or the transactions contemplated by this Agreement.
Section 5.2. Entire Agreement; Amendments, Exhibits and
Schedules. This Agreement, together with the Exhibits and Schedules hereto, the
Certificate of Designation, the Registration Rights Agreement and (with respect
to JNC and the Company) the Escrow Agreement contain the entire understanding of
the parties with respect to the subject matter hereof and supersede all prior
agreements and understandings, oral or written, with respect to such matters,
including, without limitation, any and all agreements and understandings with
respect to the Unit Offering. The Exhibits and Schedules to this Agreement are
hereby incorporated herein and made a part hereof for all purposes as if fully
set forth herein.
Section 5.3. Notices. Any notice or other communication or
delivery required or permitted to be provided hereunder shall be in writing and
shall be deemed to have been received on the earliest of (i) the date of
transmission, if such notice or communication is delivered to the address or to
the facsimile telephone number (as the case may be) specified in this Section
prior to 8:00 p.m. (Eastern Standard time) on a Business Day, (ii) the Business
Day after the date of transmission or hand delivery, if such notice or
communication is delivered to the address or the at the facsimile telephone
number (as the case may be) specified in this Section later than 8:00 p.m.
(Eastern Standard time) on any date and earlier than 11:59 p.m. (Eastern
Standard time) on such date, (iii) the Business Day following the date of
mailing, if sent by nationally recognized overnight courier service, or (iv)
upon actual receipt by the party to whom such notice is required to be given.
The address for such notices and communications to any Purchaser shall be as set
forth below such Purchaser's name on Schedule 1 and, if to the Company, to the
following address:
Palatin Technologies, Inc.
000 Xxxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Facsimile No.: (000) 000-0000
Attn: Xxxxxx X. Xxxxxx
-19-
With copies to: Xxxxx Xxxx Xxxxx Constant & Xxxxxxxx
00 Xxxxxxxxxxx Xxxxx
Xxx Xxxx, XX 00000
Facsimile No.: (000) 000-0000
Attn: Xxxxx X. Xxxxxxx, Esq.
or such other address as may be designated in writing hereafter, in the same
manner, by such Person.
Section 5.4. Amendments; Waivers. No provision of this Agreement
may be waived or amended except in a written instrument signed, in the case of
an amendment, by the Company and each Purchaser, or, in the case of a waiver, by
the party against whom enforcement of any such waiver is sought. No waiver of
any default with respect to any provision, condition or requirement of this
Agreement shall be deemed to be a continuing waiver in the future or a waiver of
any other provision, condition or requirement hereof, nor shall any delay or
omission of either party to exercise any right hereunder in any manner impair
the exercise of any such right accruing to it thereafter.
Section 5.5. Headings. The headings herein are for convenience
only, do not constitute a part of this Agreement and shall not be deemed to
limit or affect any of the provisions hereof.
Section 5.6. Successors and Assigns. This Agreement shall be
binding upon and inure to the benefit of the parties and their successors and
permitted assigns, including any Persons to whom a Purchaser transfers Shares.
The assignment by a party of this Agreement or any rights hereunder shall not
affect the obligations of such party under this Agreement.
Section 5.7. No Third-Party Beneficiaries; Obligations Several.
This Agreement is intended for the benefit of the parties hereto and their
respective successors and permitted assigns and, other than with respect to
permitted assignees under Section 5.6, is not for the benefit of, nor may any
provision hereof be enforced by, any other Person. The obligations of the
Purchasers under the Transaction Documents are several and not joint and no
Purchaser shall be responsible for any obligations of or misdeeds by any other
Purchaser.
Section 5.8. Governing Law. This Agreement shall be governed by
and construed and enforced in accordance with the internal laws of the State of
New York without regard to the principles of conflicts of law thereof. Each
party hereby irrevocably submits to the non-exclusive jurisdiction of any New
York state court sitting in the Borough of Manhattan, the state and federal
courts sitting in the City of New York or any federal court sitting in the
Borough of Manhattan in the City of New York (collectively, the "New York
Courts") in respect of any Proceeding arising out of or relating to this
Agreement, and irrevocably accepts for itself and in respect of its property,
generally and unconditionally, jurisdiction of the New York Courts. Each
-20-
party irrevocably waives to the fullest extent it may effectively do so under
applicable law any objection that it may now or hereafter have to the laying of
the venue of any such proceeding brought in any New York Court and any claim
that any such proceeding brought in any New York Court has been brought in an
inconvenient forum. Nothing herein shall affect the right of any Holder. Each
party hereby irrevocably waives personal service of process and consents to
process being served in any such suit, action or proceeding by receiving a copy
thereof sent to such party at the address in effect for notices to it under this
Agreement and agrees that such service shall constitute good and sufficient
service of process and notice thereof. Nothing contained herein shall be deemed
to limit in any way any right to serve process in any manner permitted by law.
Section 5.9. Survival. The representations, warranties,
agreements and covenants contained in this Agreement shall survive the Closing
and the issuance and conversion of the Shares for a period of three years from
the Closing Date, except for claims arising from fraud which shall survive for
the applicable statute of limitations.
Section 5.10. Execution. This Agreement may be executed in two or
more counterparts, all of which when taken together shall be considered one and
the same agreement, and shall become effective when counterparts have been
signed by each party and delivered to the other parties, it being understood
that all parties need not sign the same counterpart. In the event that any
signature is delivered by facsimile transmission, such signature shall create a
valid and binding obligation of the party executing (or on whose behalf such
signature is executed) the same with the same force and effect as if such
facsimile signature page were an original thereof.
Section 5.11. Publicity. The Company and JNC shall consult with
each other in issuing any press releases or otherwise making public statements
with respect to the transactions contemplated hereby and neither JNC nor the
Company shall issue any such press release or otherwise make any such public
statement without the prior written consent of the other, which consent shall
not be unreasonably withheld or delayed, except that no prior consent shall be
required if such disclosure is required by law, in which such case the
disclosing party shall provide the other party with prior notice of such public
statement. Notwithstanding the foregoing, the Company shall not publicly
disclose the name of JNC without its prior written consent, except to the extent
that JNC's name (but not the name of any beneficial owner thereof) is required
to be disclosed by the Nasdaq Stock Market (or any successor association) or the
Commission. The Purchasers other than JNC shall not make any public statement or
issue any press release regarding the transactions contemplated hereby without
the prior written consent of JNC and the Company. Within 10 Business Days of the
Closing Date, the Company shall issue a press release or file with the
Commission a Form 8-K or Form 10-QSB publicly announcing the sale of the Shares
to the Purchasers.
Section 5.12. Severability. In case any one or more of the
provisions of this Agreement shall be invalid or unenforceable in any respect,
the validity and enforceability of the remaining terms and provisions of this
Agreement shall not in any way be affected or impaired thereby and the parties
will attempt to agree upon a valid and enforceable provision which shall
-21-
be a reasonable substitute therefor, and upon so agreeing, shall incorporate
such substitute provision in this Agreement.
Section 5.13. Remedies. Each of the parties to this Agreement
acknowledges and agrees that the other parties would be damaged irreparably in
the event any of the provisions of this Agreement are not performed in
accordance with their specific terms or otherwise are breached. Accordingly,
each of the parties hereto agrees that the other parties shall be entitled to an
injunction or injunctions to prevent breaches of the provisions of this
Agreement and to enforce specifically this Agreement and the terms and
provisions of this Agreement in any action instituted in any court of the United
States of America or any state thereof having jurisdiction over the parties to
this Agreement and the matter, in addition to any other remedy to which they may
be entitled, at law or in equity.
-22-
IN WITNESS WHEREOF, the parties hereto have caused this
Convertible Preferred Stock Purchase Agreement to be duly executed as of the
date first indicated above.
The Company:
-----------
PALATIN TECHNOLOGIES, INC.
By:_____________________________
Name: Xxxxxx X. Xxxxxx
Title: Chairman and Chief Executive Officer
The Purchasers:
--------------
JNC OPPORTUNITY FUND LTD.
By:_____________________________
Name:
Title:
XXXXXX XXXX
________________________________
Xxxxxx Xxxx
XXXXXX AND XXXXXXX XXXXXXXXX
________________________________
Xxxxxx Xxxxxxxxx Xxxxxxx Xxxxxxxxx
XXXX X. XXXXXXXX
________________________________
Xxxx X. Xxxxxxxx
-23-
