Contract
Exhibit 10.1
SECURITIES PURCHASE AND EXCHANGE
AGREEMENT (this “Agreement”), dated as of
October 6, 2009, by and among Aeolus Pharmaceuticals, Inc., a Delaware
corporation with its headquarters located at 00000 Xxxxx Xxxxxx Xxxxxxx, Xxxxx
000, Xxxxxxx Xxxxx, Xxxxxxxxxx 00000 (the ”Company”), and the investors
listed on the Schedule of Buyers attached hereto (individually, a “Buyer” and collectively, the
“Buyers”).
WHEREAS:
A. The
Company and each Buyer is executing and delivering this Agreement in reliance
upon the exemption from securities registration afforded by Section 4(2) of the
Securities Act of 1933, as amended (the “1933 Act”), and Rule 506 of
Regulation D (“Regulation D”) as
promulgated by the United States Securities and Exchange Commission (the “SEC”) under the 1933
Act.
B. Buyers
and the Company are parties to a Registration Rights Agreement, dated as of
November 21, 2005 (the “2005
Registration Rights Agreement”), pursuant to which the Company registered
for resale on behalf of the Buyers on Registration Statement on Form S-1
(333-131903) an aggregate of 2,150,000 shares of common stock, par value $0.01
per share, of the Company (the “Common Stock”), issuable upon
exercise of warrants to purchase Common Stock, each dated November 21, 2005,
issued to the Buyers (the “2005
Warrants”) pursuant to a Purchase Agreement dated November 21, 2005 by
and among the Company, the Buyers and certain other investors (the “2005 Purchase Agreement”). The
exercise price of the 2005 Warrants is $0.28 per share as of the date
hereof.
C. Buyers
and the Company are parties to a Securities Purchase Agreement, dated as of
August 1, 2008 (as amended as of the date hereof, the “Note Purchase Agreement”),
pursuant to which, among other things, Buyers acquired (i) $1,000,000 in
aggregate principal amount of the Company’s Senior Convertible Notes (the “Notes”), which are convertible
into shares (the “Conversion
Shares”) of Common Stock at a conversion price of $0.35 per share
(subject to adjustment) (the “Conversion Price”), (ii)
warrants (the “Note
Warrants”) to acquire up to an aggregate of 2,000,000 shares of Common
Stock (the “Note Warrant
Shares”) at an exercise price of $0.50 per share (subject to adjustment),
and (iii) the option (the “Purchase Option”) to acquire
up to $4,000,000 in additional aggregate principal amount of the Notes having
the terms specified in the Note Purchase Agreement and additional Note Warrants
to acquire up to 8,000,000 additional Note Warrant Shares at an exercise price
of $0.35 per share (subject to adjustment).
D. Certain
of the Buyers and the Company are parties to (i) a Securities Purchase
Agreement, dated as of March 30, 2009 (the “March Purchase Agreement”),
pursuant to which, among other things, those Buyers acquired (A) an aggregate of
5,357,143 shares of Common Stock (the “March Shares”) and (B)
warrants (the “March
Warrants”) to acquire up to an aggregate of 13,392,857 shares of Common
Stock (the “March Warrant
Shares”) at an exercise price of $0.35 per share (subject to adjustment)
and (ii) a Registration Rights Agreement, dated as of March 30, 2009 (the “March Registration Rights
Agreement”).
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E. Each
Buyer, severally and not jointly, wishes to purchase, and the Company wishes to
sell, upon the terms and conditions stated in this Agreement, (i) that aggregate
number of shares (collectively, the “Shares”) of Common Stock set
forth opposite such Buyer’s name in column (3) on the Schedule of Buyers
attached hereto (the “Schedule
of Buyers”) and (ii) warrants, in substantially the form attached hereto
as Exhibit A (the
“New Warrants”), to
acquire up to that number of additional shares of Common Stock set forth
opposite such Buyer’s name in column (4) of the Schedule of Buyers attached
hereto (collectively, the “New
Warrant Shares”) at an exercise price of $0.28 per share (subject to
adjustment) (the “Exercise
Price”). The transactions contemplated by this paragraph E are
hereinafter referred to as the “Financing.” The
Shares and New Warrants shall be issued in units (the “Units”), each Unit consisting
of one (1) Share and New Warrants to acquire two (2) New Warrant
Shares. The Units shall be immediately separable into Shares and New
Warrants upon issuance and the Shares and New Warrants shall be separately
transferable. The Purchase Price (as defined below) payable at the Initial
Closing (as defined below) divided by the number of Units to be acquired at the
Initial Closing is hereinafter referred to as the “Per Unit Purchase
Price”.
F. The
Company wishes to grant to Buyers the option to acquire, collectively, up to
5,892,857 additional Units at the Per Unit Purchase Price in accordance with the
provisions of Section 1(b) below (the “Call Option”).
G. The
Buyers, severally and not jointly, wish to grant to the Company the option to
require the Buyers, severally and not jointly, to acquire up to 5,892,857
additional Units at the Per Unit Purchase Price in accordance with the
provisions of Section 1(b) below (the “Put Option”).
H. Simultaneous
with the consummation of the Financing, the Company and the Buyers wish to
effect the following transactions (collectively, the “Conversion”): (i) the
conversion of the Notes into the Conversion Shares at the Conversion Price in
accordance with the terms of the Notes (the “Note Conversion”), (ii) the
exchange (the “Warrant
Exchange”) of the outstanding 2005 Warrants, Note Warrants and the March
Warrants for new warrants (the “Exchange Warrants”), each in
substantially the form of the New Warrants, to purchase an aggregate of
17,542,857 shares of Common Stock (the “Exchange Warrant Shares”) at
an exercise price equal to the Exercise Price, and (iii) the exchange (the
“Purchase Option
Exchange”) of the Purchase Option for new warrants (the “Option Exchange Warrants”),
each in substantially the form of the New Warrants to purchase an aggregate of
14,285,714 shares of Common Stock (the “Option Exchange Warrant
Shares”) at an exercise price equal to the Exercise Price.
I. Simultaneous
with the consummation of the Financing and the Conversion, the parties wish to
(i) terminate the 2005 Registration Rights Agreement, the March Registration
Rights Agreement and the Purchase Option and (ii) enter into a new Registration
Rights Agreement, substantially in the form attached hereto as Exhibit B (the
“Registration Rights
Agreement”), pursuant to which the Company will provide certain
registration rights with respect to the Shares, the New Warrant Shares, the
Conversion Shares, the Exchange Warrant Shares and the Option Exchange Warrant
Shares under the 1933 Act and the rules and regulations promulgated thereunder,
and applicable state securities laws.
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J. The
New Warrants, the Exchange Warrants and the Option Exchange Warrants are
collectively referred to herein as the “Warrants.” The New Warrant
Shares, the Exchange Warrant Shares and the Option Exchange Warrant Shares are
collectively referred to herein as the “Warrant
Shares.” The Shares, the Conversion Shares, the New Warrants,
the New Warrant Shares, the Exchange Warrants, the Exchange Warrant Shares, the
Option Exchange Warrants and the Option Exchange Warrant Shares are collectively
are referred to herein as the “Securities.”
NOW, THEREFORE, the Company
and each Buyer hereby agree as follows:
1. PURCHASE AND SALE OF SHARES
AND NEW WARRANTS; CONVERSION; OPTION EXERCISE.
(a) Purchase, Sale, Conversion,
and Exchange of Shares and Warrants.
(i) Purchase and
Sale. Subject to the
satisfaction (or waiver) of the conditions set forth in Sections 6 and 7(i) below, the
Company shall issue and sell to each Buyer, and each Buyer severally, but not
jointly, shall purchase from the Company, (x) the number of Shares set forth
opposite such Buyer’s name in column (3) on the Schedule of Buyers and
(y) New Warrants to acquire up to that number of New Warrant Shares set
forth opposite such Buyer’s name in column (4) on the Schedule of Buyers (the
“Initial
Closing”);
(ii) Conversion. Subject
to the satisfaction (or waiver) of the conditions set forth in Sections 6 and 7(i) below, the
Company and the Buyers shall effect the Conversion at the Initial
Closing.
(iii) Initial
Closing. The closing of the Financing and the Conversion (the
“Initial Closing”) shall
occur at 10:00 a.m., New York City time, on the date hereof (or such later date
as is mutually agreed to by the Company and each Buyer) after notification of
satisfaction (or waiver) of the conditions to the Closing set forth in Sections 6 and 7(i) below at the
offices of Xxxxxxxxxx Xxxxxxx PC, 1251 Avenue of the Xxxxxxxx, 00xx Xxxxx, Xxx
Xxxx, Xxx Xxxx 00000. The date on which the Initial Closing occurs is
referred to herein as the “Initial Closing
Date.”
(iv) Financing Purchase
Price. The purchase price to be paid by each Buyer for the
Shares and the New Warrants to be purchased by such Buyer at the Initial Closing
shall be the amount set forth opposite such Buyer’s name in column (5) of the
Schedule of Buyers to be paid on the Initial Closing Date (the “Purchase Price”).
(b) Exercise of Call and Put
Options.
(i) Exercise of Call
Option. At any time, and from time to time, on or prior to
June 30, 2010 (the “Call Option
Termination Date”), the Buyers shall have the right, upon written notice
to the Company (each a “Call
Option Exercise Notice”), to acquire, severally and not jointly, from the
Company their Pro Rata Share (as defined below) of up to 5,892,857 additional
Units at the Per Unit Purchase Price. Each Call Option Exercise
Notice shall indicate (x) the maximum amount of Units the Buyer providing the
Call Option Exercise Notice wishes to purchase from the Company at the Per Unit
Purchase Price, and (y) the
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Business
Day on which the closing of the purchase and sale of the Units subject to the
Call Option Exercise Notice shall occur (a “Call Option Closing”);
provided, however, that any Call Option Closing shall be not less than five (5)
Business Days nor greater than twenty (20) Business Days after the receipt of
such Call Option Exercise Notice by the Company. No Call Option
Exercise Notice may be delivered less than five (5) Business Days before the
Call Option Termination Date. As used herein, a Buyer’s “Pro Rata Share” means the
quotient of the Units purchased by such Buyer at the Initial Closing divided by
the aggregate Units purchased by all of the Buyers at the Initial
Closing.
(ii) Exercise of Put
Option. At any time commencing on the Call Option Termination
Date and ending on July 30, 2010 (the “Put Option Termination Date”),
the Company shall have the right, upon written notice to the Buyers (the “Put Option Exercise Notice”),
to require the Buyers to acquire, severally and not jointly, from the Company up
to their Pro Rata Share of up to 5,892,857 additional Units at the Per Unit
Purchase Price, less any Units acquired by Buyers pursuant to the exercise of
the Call Option. Only one Put Option Exercise Notice may be given
pursuant to this Section 1(b)(ii). The Put Option Exercise Notice
shall indicate (x) the total number of Units to be acquired from the Company at
the Per Unit Purchase Price, (y) each Buyer’s Pro Rata Share of such Units and
(z) the Business Day on which the closing of the purchase and sale of the Units
subject to the Put Option Exercise Notice shall occur (the “Put Option Closing”);
provided, however, that the Put Option Closing shall be not less than five (5)
Business Days nor greater than twenty (20) Business Days after the receipt of
such Put Option Exercise Notice by the Buyers. No Put Option Exercise
Notice may be delivered less than five (5) Business Days before the Put Option
Termination Date. The Buyers shall have the right to rescind the Put
Option Exercise Notice and shall not be required to acquire any additional Units
pursuant to the Put Option upon written notice to the Company given prior to the
closing date specified in the Put Option Exercise Notice if the Buyers
reasonably determine that a material adverse event, condition or circumstance
has occurred with respect to the prospects of the Company’s AEOL 10150 drug
candidate for acute radiation syndrome; provided, that the Company’s failure to
obtain a grant or financing shall not, by itself, constitute a material adverse
event, condition or circumstance with respect thereto.
(iii) Option
Closings. Subject to the satisfaction (or waiver) of the
conditions set forth in Sections 6 and 7(c) below, the Company shall issue and
sell to each Buyer delivering a Call Option Exercise Notice (in the event of an
exercise of the Call Option) or to each Buyer receiving a Put Option Exercise
Notice (in the event of the exercise of the Put Option), and each such Buyer
severally, but not jointly, shall purchase from the Company at the applicable
Call Option Closing or Put Option Closing, the number of Units to be issued to
such Buyer in accordance with clauses (i) and (ii) above of this Section 1(b)
(each of the Initial Closing, a Call Option Closing and the Put Option Closing,
a “Closing”). Each
Closing shall occur at 10:00 a.m., New York City time, on the date specified in
this Section 1(b) (or such later date as is mutually agreed to by the Company
and each Buyer) after notification of satisfaction (or waiver) of the conditions
to such Closing set forth in Sections 6 and 7(i) below at the offices of
Xxxxxxxxxx Xxxxxxx PC, 1251 Avenue of the Xxxxxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx
Xxxx 00000. The date on which any such Closing occurs is hereinafter
referred to herein as the “Closing Date.”
(c) Closing
Mechanics.
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(i) Initial
Closing. On the Initial Closing Date, (i) each Buyer (A)
shall pay its respective Purchase Price to the Company by wire transfer of
immediately available funds in accordance with the Company’s written wire
instructions, (B) holding Notes shall surrender to the Company for conversion
and cancellation in accordance with the Note Conversion the Notes in the
aggregate principal amount set forth opposite such Buyer’s name in column (2) of
the Conversion Schedule attached hereto (the “Conversion Schedule”), and (C)
shall surrender to the Company for exchange and cancellation pursuant to the
Warrant Exchange, the 2005 Warrants, the Note Warrants and the March Warrants in
the respective amounts set forth opposite such Buyer’s name in columns (6), (7)
and (8) of the Conversion Schedule and (ii) the Company shall deliver to
each Buyer (A) one or more stock certificates, evidencing the number of
Shares being purchased by such Buyer as set forth opposite such Buyer’s name in
column (3) of the Schedule of Buyers, (B) one or more New Warrants
exercisable for the number of New Warrant Shares set forth opposite such Buyer’s
name in column (4) of the Schedule of Buyers, (C) one or more stock
certificates, evidencing the number of Conversion Shares being issued to such
Buyer as set forth opposite such Buyer’s name in column (3) of the Conversion
Schedule, (D) one or more Exchange Warrants exercisable for the number of
Exchange Warrant Shares set forth opposite such Buyer’s name in column (9) of
the Conversion Schedule, and (E) one or more Option Exchange Warrants
exercisable for the number of Option Exchange Warrant Shares set forth opposite
such Buyer’s name in column (5) of the Conversion Schedule, in all cases duly
executed on behalf of the Company and registered in the name of such Buyer, or
such Buyer’s nominee.
(ii) Additional
Closings. On any Closing Date other than the Initial Closing
Date, (i) each Buyer shall pay its respective Purchase Price for the Units
to be acquired on such Closing Date to the Company by wire transfer of
immediately available funds in accordance with the Company’s written wire
instructions and (ii) the Company shall deliver to each Buyer (A) one
or more stock certificates, evidencing the number of Shares being purchased by
such Buyer on such Closing Date as set forth in the applicable Call Option
Exercise Notice or Put Option Exercise Notice, and (B) one or more New
Warrants exercisable for the number of New Warrant Shares being purchased by
such Buyer on such Closing Date as set forth in the applicable Call Option
Exercise Notice or Put Option Exercise Notice, in all cases duly executed on
behalf of the Company and registered in the name of such Buyer, or such Buyer’s
nominee.
(d) Termination of Agreements
and Purchase Option. Effective as of the Initial Closing, each of the
following shall be terminated in its entirety and of no further force or effect:
the 2005 Registration Rights Agreement, the March Registration Rights Agreement
and the Purchase Option.
2. BUYER’S REPRESENTATIONS AND
WARRANTIES. Each Buyer, severally and not jointly, represents
and warrants to the Company that:
(a) No Sale or
Distribution. Such Buyer is acquiring the Shares, the
Conversion Shares and the Warrants, and upon exercise of the Warrants will
acquire the Warrant Shares issuable upon exercise of the Warrants, for its own
account, not as nominee or agent, and not with a view towards distribution
thereof, and such Buyer has no present intention of selling, granting any
participation in, or otherwise distributing
the same in violation of the 1933 Act or any state securities laws; provided,
however, that by making the representations herein, such
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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 and pursuant to the applicable terms of the Transaction Documents
(as defined in Section 3(b)). Such
Buyer is acquiring the Securities hereunder in the ordinary course of its
business. Such Buyer does not presently have any agreement or
understanding, directly or indirectly, with any Person (as defined in Section 3(r) below) to
distribute any of the Securities.
(b) Accredited Investor
Status. Such Buyer is an “accredited investor” as that term is
defined in Rule 501(a) of Regulation D.
(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 in part 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 the Securities.
(d) Information. Such
Buyer has 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 that have been requested by such Buyer. Such Buyer and
its advisors, if any, have been afforded the opportunity to ask questions of and
receive answers from the Company regarding the Company, its business and the
terms and conditions of the offering of the Securities. Such Buyer
acknowledges that it has had access to the SEC Documents (as defined in Section 3(j) below) via
the SEC’s Electronic Data Gathering and Retrieval System or any successor
database (“XXXXX”). 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 herein. Such Buyer understands and acknowledges
that (i) its investment in the Securities involves a high degree of risk, (ii)
it is able to afford a complete loss of such investment in the Securities, and
(iii) it has such knowledge and experience in financial and business matters
that it is capable of evaluating the merits and risks of the investment
contemplated hereby. 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
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the
Company an opinion of counsel, in a form reasonably acceptable to the Company,
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 or
Rule 144A promulgated under the 1933 Act, as amended (or a successor rule
thereto) (collectively, “Rule
144”); (ii) any sale of the Securities made in reliance on Rule 144
may be made only in accordance with the terms of Rule 144 and further, if Rule
144 is not applicable, any resale of the Securities under circumstances in which
the seller (or the Person through whom the sale is made) may be deemed to be an
underwriter (as that term is defined in the 0000 Xxx) may require compliance
with some other exemption under the 1933 Act or the rules and regulations of the
SEC thereunder; and (iii) neither the Company nor any other Person is under
any obligation to register the Securities under the 1933 Act or any state
securities laws or to comply with the terms and conditions of any exemption
thereunder. Notwithstanding the foregoing, the Securities may be
pledged in connection with a bona fide margin account or other loan or financing
arrangement secured by the Securities and such pledge of Securities, by itself,
shall not be deemed to be a transfer, sale or assignment of the Securities
hereunder, and no Buyer effecting a pledge of Securities shall be required to
provide the Company with any notice thereof or otherwise make any delivery to
the Company pursuant to this Agreement or any other Transaction Document (as
defined in Section 3(b)), including,
without limitation, this Section 2(f).
(g) Legends. Such
Buyer understands that the certificates or other instruments representing the
Shares, the Conversion Shares and the Warrants and, until such time as the
resale of the Warrant Shares have been registered under the 1933 Act as
contemplated by the Registration Rights Agreement or eligible to be sold under
Rule 144 of the 1933 Act without regard to the availability of current
financial information, the stock certificates representing the Warrant Shares,
except as set forth below, shall bear any legend as required by the “blue sky”
laws of any state and a restrictive legend in substantially the following form
(and a stop-transfer order may be placed against transfer of such stock
certificates):
[NEITHER
THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE
SECURITIES INTO WHICH THESE SECURITIES ARE EXERCISABLE HAVE BEEN][THE SECURITIES
REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN] REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE
SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE
ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL, IN A FORM
REASONABLY ACCEPTABLE TO THE COMPANY, THAT REGISTRATION IS NOT REQUIRED UNDER
SAID ACT OR (II) UNLESS SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID
ACT. NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN
CONNECTION WITH A BONA
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FIDE
MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE
SECURITIES.
The
legend set forth above shall be removed and the Company shall issue a
certificate without such legend to the holder of the Securities upon which it is
stamped, if, unless otherwise required by state securities laws, (i) such
Securities are registered for resale under the 1933 Act, (ii) in connection
with a sale, assignment or other transfer, such holder provides the Company with
an opinion of a law firm reasonably acceptable to the Company, in a form
reasonably acceptable to the Company, to the effect that such sale, assignment
or transfer of the Securities may be made without registration under the
applicable requirements of the 1933 Act, or (iii) such holder provides the
Company with reasonable assurance that the Securities can be sold, assigned or
transferred pursuant to Rule 144 or Rule 144A. If an opinion is
required, the Company shall be obligated to retain counsel in order to cause
such counsel to deliver the legal opinion referred to in clause (I)(B) of the
legend set forth above and to pay any related fees and expenses of said
counsel.
(h) Validity;
Enforcement. The execution, delivery and performance by such
Buyer of each of the Transaction Documents (as defined below) to which such
Buyer is a party have been duly and validly authorized, executed and delivered
on behalf of such Buyer and shall constitute the legal, valid and binding
obligations of such Buyer enforceable against such Buyer in accordance with
their respective terms, except (i) as may be limited by general principles
of equity or to applicable bankruptcy, insolvency, reorganization, moratorium,
liquidation and other similar laws relating to, or affecting generally, the
enforcement of applicable creditors’ rights generally, (ii) as limited by
laws relating to specific performance, injunctive relief of other equitable
remedies, and (iii) to the extent the indemnification provisions contained
in this Agreement may be limited by applicable laws.
(i) No
Conflicts. The execution, delivery and performance by such
Buyer of each of the Transaction Documents to which such Buyer is a party and
the consummation by such Buyer of the transactions contemplated hereby and
thereby will not (i) result in a violation of the organizational documents
of such Buyer 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 such Buyer is a
party, or (iii) result in a violation of any law, rule, regulation, order,
judgment or decree (including federal and state securities laws)
applicable to such Buyer, except in the case of clauses (ii) and (iii) above,
for such conflicts, defaults, rights or violations which would not, individually
or in the aggregate, reasonably be expected to have a material adverse effect on
the ability of such Buyer to perform its obligations hereunder or under any
other Transaction Document to which such Buyer is a party.
(j) Residency. Such
Buyer is a resident of that jurisdiction specified below its address on the
Schedule of Buyers.
(k) Certain Trading
Activities. Other than with respect to the transactions
contemplated herein, since the time that such Buyer was first contacted by the
Company or any other Person regarding this investment in the Company neither the
Buyer nor any “affiliate” of such Buyer (as defined in Rule 144 of the 0000 Xxx)
which (x) had knowledge of the transactions
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contemplated
hereby, (y) has or shares discretion relating to such Buyer’s investments
or trading or information concerning such Buyer’s investments and (z) is subject
to such Buyer’s review or input concerning such affiliate’s investments or
trading (collectively, “Trading
Affiliates”) has directly or indirectly, nor has any Person acting on
behalf of or pursuant to any understanding with such Buyer or Trading Affiliate,
effected or agreed to effect any transactions in the securities of the
Company. Such Buyer hereby covenants and agrees not to, and shall
cause its Trading Affiliates not to, engage, directly or indirectly, in any
transactions in the securities of the Company or involving the Company’s
securities during the period from the date hereof until such time as
(i) the transactions contemplated by this Agreement are first publicly
announced as described in Section 4(h) hereof or
(ii) this Agreement is terminated in full pursuant to Section 8
hereof. Notwithstanding the foregoing, for avoidance of doubt,
nothing contained herein shall constitute a representation or warranty, or
preclude any actions, with respect to the identification of the availability of,
or securing of, available shares to borrow in order to effect short sales or
similar transactions in the future.
(l) Legal
Investment. Such Buyer acknowledges that the Company has not
provided any advice as to whether the Securities are a suitable investment or
whether the Securities constitute a legal investment for such
Buyer.
(m) Compliance with SEC
Telephone Interpretation. Such Buyer acknowledges the SEC’s
position set forth in Compliance & Disclosure Interpretation 239.10 issued
by the SEC’s Division of Corporation Finance on November 26, 2008, and such
Buyer will adhere to such position.
(n) General
Solicitation. Such Buyer is not purchasing the Shares, the
Conversion Shares and the Warrants as a result of any advertisement, article,
notice or other communication regarding any of the Securities published in any
newspaper, magazine or similar media or broadcast over television or radio or
presented at any seminar.
(o) Organization. Such
Buyer is an entity duly organized, validly existing and in good standing under
the laws of the jurisdiction of its organization with the requisite corporate,
limited liability company or partnership power and authority to enter into and
to consummate the transactions contemplated by this Agreement and the other
applicable Transaction Documents and otherwise to carry out its obligations
hereunder and thereunder.
(p) Acknowledgement Regarding
Insolvency. Notwithstanding anything in this Agreement to the
contrary, such Buyer understands and acknowledges that the Company and its
Subsidiaries, individually and on a consolidated basis, as of the date hereof,
and after giving effect to the transactions contemplated hereby to occur at the
Closing may be, or may become, Insolvent (as defined below). For
purposes of this Section 2(p), “Insolvent” means, with respect
to any Person (as defined in Section 3(r)),
(i) the present fair saleable value of such Person’s assets is less than
the amount required to pay such Person’s total Indebtedness (as defined in Section 3(q)),
(ii) such Person is unable to pay its debts and liabilities, subordinated,
contingent or otherwise, as such debts and liabilities become absolute and
matured, (iii) such Person intends to incur or believes that it will incur
debts that would be beyond its ability to pay as such debts mature or (iv) such
Person has unreasonably small capital with which to conduct the business in
which it is engaged as such business is now conducted and is proposed to be
conducted.
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(q) Record
Owner. Each Buyer is the record owner of and has valid and
legal title to all 2005 Warrants, Notes, Note Warrants, March Warrants and the
Purchase Option set forth opposite such Buyer’s name on the Conversion Schedule,
in each case free and clear of all pledges, liens, encumbrances and adverse
claims with respect thereto, other than those created by the agreements under
which they were issued and those arising under applicable securities
laws.
3. REPRESENTATIONS AND
WARRANTIES OF THE COMPANY. The Company represents and warrants
to each of the Buyers that, as of the date hereof and at all times to and
including the Closing Date, except as otherwise described in the SEC Documents
filed with the SEC prior to the date hereof:
(a) Organization and
Qualification. The Company and its “Subsidiaries” (which for
purposes of this Agreement means “Significant Subsidiary” as such term is
defined in Rule 1-02 of Regulation S-X of the 1933 Act; which as of the date of
this Agreement, is solely comprised of Aeolus Sciences, Inc., a Delaware
corporation and a wholly owned subsidiary of the Company), are entities duly
organized and validly existing and, to the extent legally applicable, in good
standing under the laws of the jurisdiction in which they are formed, and have
the requisite 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 entity to do business and to the
extent legally applicable, 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 reasonably be expected to 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, condition (financial or otherwise) or prospects of the
Company and its Subsidiaries, taken as a whole, or on the transactions
contemplated hereby and the other Transaction Documents or by the agreements and
instruments to be entered into in connection herewith or therewith, or on the
authority or ability of the Company to perform its obligations under the
Transaction Documents (as defined below). Notwithstanding the
foregoing, the entities in which the Company,
directly or indirectly, owns any of the capital stock or holds an equity or
similar interest which are not
Subsidiaries, taken as whole, do not have income, revenues or assets which are
material to the Company and its Subsidiaries, individually, or taken as a whole.
Except for the capital stock of Aeolus Sciences, Inc. or as set forth on Schedule 3(a), the Company
does not, directly or indirectly, own any joint venture or similar entity or
hold capital stock, equity or similar interests.
(b) Authorization; Enforcement;
Validity. The Company has the requisite corporate power and
authority to enter into, deliver and perform its obligations under this
Agreement, the Warrants, the Registration Rights Agreement, the Irrevocable
Transfer Agent Instructions (as defined in Section 5(b)) and each of
the other agreements entered into by the Company and any Buyer 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. Except as set forth on Schedule 3(b),
the execution and delivery of this Agreement and the other Transaction Documents
by the Company and the consummation by the Company of the transactions
contemplated hereby and thereby, including, without limitation, the issuance of
the Shares, the Conversion Shares and the Warrants, and the reservation for
issuance and issuance of Warrant Shares issuable upon exercise of the Warrants,
have been duly
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authorized
by the Company’s board of directors, and no further filing, consent, or
authorization is required by the Company, its board of directors or its
stockholders. This Agreement and the other Transaction Documents of
even date herewith have been (and, to the extent the Closing Date is after the
date hereof, each Transaction Document to be entered into as of the Closing Date
will have been) duly executed and delivered by the Company as of the Closing
Date, and constitute (or in the case of Transaction Documents entered on the
Closing Date if such date is after the date hereof, will constitute as of the
Closing Date) the legal, valid and binding obligations of the Company,
enforceable against the Company in accordance with their respective terms,
except (i) as may be limited by general principles of equity or applicable
bankruptcy, insolvency, reorganization, moratorium, liquidation or similar laws
relating to, or affecting generally, the enforcement of applicable creditors’
rights generally, (ii) as limited by laws relating to specific performance,
injunctive relief of other equitable remedies, and (iii) to the extent the
indemnification provisions contained in this Agreement and the Registration
Rights Agreement may be limited by applicable laws.
(c) Issuance of
Securities. The issuance of the Shares, the Conversion Shares
and the Warrants are duly authorized by the Company and upon issuance in
accordance with the terms of this Agreement shall be free from all taxes, liens
and charges with respect to the issue thereof. A sufficient number of
shares of Common Stock shall have been duly authorized and reserved for issuance
for purposes of enabling the Company to issue that number of shares of Common
Stock issuable 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 preemptive or similar rights, 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 of the representations and warranties set forth in Section 2 of this
Agreement, the offer and issuance by the Company of the Securities is exempt
from registration under the 1933 Act.
(d) No
Conflicts. Except as set forth on Schedule 3(d),
the execution, delivery and performance of this Agreement and the other
Transaction Documents by the Company and the consummation by the Company of the
transactions contemplated hereby and thereby (including, without limitation, the
issuance of the Shares, the Conversion Shares and Warrants and reservation for
issuance and issuance of the Warrant Shares) will not (i) result in a
violation of any certificate of incorporation, certificate of formation, any
certificate of designations or other constituent documents of the Company or any
of its Subsidiaries, any capital stock of the Company or any of its Subsidiaries
or bylaws of the Company or any of its Subsidiaries or (ii) conflict with,
or constitute a default (or an event which with notice or lapse of time or both
would become a default) in any respect under, or give to others any rights of
termination, amendment, acceleration or cancellation of, any agreement,
indenture or instrument to which the Company or any of its Subsidiaries is a
party, or (iii) result in a violation of any law, rule, regulation, order,
judgment or decree (including foreign, federal and state securities laws and
regulations and the rules and regulations of the OTC Bulletin Board (the “Principal Market”)) 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 in the case
of clauses (ii) and (iii) above, to the extent that such violation conflict,
default or right would not reasonably be expected to have a Material Adverse
Effect.
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-11-
(e) Consents and
Filings. Except as set forth on Schedule 3(e),
neither the Company nor any of its Subsidiaries is required to obtain any
consent, authorization or order of, or make any filing or registration with, any
court, governmental agency or any regulatory or self-regulatory agency or any
other Person in order to execute, deliver or perform any of its obligations
under or contemplated by the Transaction Documents to which they are a party, in
each case in accordance with the terms hereof or thereof, other than
(i) the filing with the SEC of one or more Registration Statements in
accordance with the requirements of the Registration Rights Agreement,
(ii) the filing of Form D with the SEC and such filings as are required to
be made under applicable state securities laws, (iii) application(s) to the
Principal Market for the listing of the Securities for trading thereon in the
time and manner required thereby, and (iv) filings required pursuant to
Section 4(h) of this
Agreement. The Company and its Subsidiaries are unaware of any facts
or circumstances that might prevent the Company from obtaining or effecting any
of the registration, application or filings pursuant to the preceding
sentence. The Company is not in violation of the listing requirements
of the Principal Market and has no knowledge of any facts that would reasonably
lead to delisting or suspension of the Common Stock in the foreseeable
future.
(f) Acknowledgment Regarding
Buyer’s Purchase of Securities. The Company acknowledges and
agrees that each Buyer is acting solely in the capacity of an arm’s length
purchaser with respect to the Transaction Documents and the transactions
contemplated hereby and thereby.
(g) No General
Solicitation. Neither the Company, nor any of its Subsidiaries
or 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) in connection with the offer or sale of the
Securities.
(h) No Integrated
Offering. None of the Company, its Subsidiaries, any of their
affiliates, and any Person acting on 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 the issuance of
any of the Securities under the 1933 Act, whether through integration with prior
offerings or otherwise, or cause this offering of the Securities to require
approval of stockholders of the Company for purposes of 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.
(i) Application of Takeover
Protections; Rights Agreement. The Company and its board of
directors have taken all necessary action, if any, in order to render
inapplicable any control share acquisition, business combination, poison pill
(including any distribution under a rights agreement) or other similar
anti-takeover provision under the Certificate of Incorporation (as defined in
Section 3(q)) or the laws
of the state of its incorporation which is or could become applicable to any
Buyer as a result of the transactions contemplated by this Agreement, including,
without limitation, the Company’s issuance of the Securities and any Buyer’s
ownership of the Securities. The Company and its board of directors
have taken all necessary action, if any, in order to render inapplicable any
stockholder rights plan or similar arrangement
--
-12-
relating
to accumulations of beneficial ownership of Common Stock or a change in control
of the Company.
(j) SEC Documents; Financial
Statements. During the two (2) years prior to the date hereof,
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 during the two (2) years prior to the date hereof and all
exhibits included therein and financial statements, notes and schedules thereto
and documents incorporated by reference therein being hereinafter referred to as
the “SEC
Documents”). The Company has made available to the Buyers or
their respective representatives, through XXXXX, true, correct and complete
copies of the SEC Documents. As of their respective filing dates, and
to the Company's knowledge, 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 did not contain any
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not
misleading. As of their respective filing 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 any
officer or director of the Company to the Buyers, solely in their capacity as
Buyers, which is not included in the SEC Documents, including, without
limitation, information referred to in Section 2(d) of this
Agreement or in any disclosure schedules, 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.
(k) Absence of Certain
Changes. Except as set forth on Schedule 3(k),
since March 31, 2009, there has been no material adverse change and no material
adverse development in the business, properties, operations, condition
(financial or otherwise), results of operations or prospects of the Company or
its Subsidiaries. Since March 31, 2009, the Company has not (i)
declared or paid any dividends, (ii) sold any assets, individually or in the
aggregate, in excess of $100,000 outside of the ordinary course of business or
(iii) had capital expenditures, individually or in the aggregate, in excess of
$500,000. Neither the Company nor any of its Subsidiaries has taken
any steps to seek protection pursuant to any bankruptcy law nor does the Company
have any knowledge or reason to believe that its creditors intend to initiate
involuntary bankruptcy proceedings or any actual knowledge of any fact that
would reasonably lead a creditor to do so.
(l) 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, its Subsidiaries or their
respective business, properties, prospects,
--
-13-
operations
or financial condition, that would be required to be disclosed by the Company
under applicable securities laws on a registration statement on Form S-1 filed
with the SEC relating to an issuance and sale by the Company of its Common Stock
and which has not been publicly announced.
(m) Conduct of Business;
Regulatory Permits. Neither the Company nor any of its
Subsidiaries is in violation of any term of or in default under its Certificate
of Incorporation, any certificate of designations of any outstanding series of
preferred stock of the Company or the Bylaws or their organizational charter or
bylaws, respectively. Neither the Company nor any of its Subsidiaries
is in violation of any judgment, decree or order or any statute, ordinance, rule
or regulation applicable to the Company or its Subsidiaries, and neither the
Company nor any of its Subsidiaries will conduct its business in violation of
any of the foregoing, except for possible violations which could not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect. Without limiting the generality of the foregoing, the
Company is not in violation of any of the rules, regulations or requirements of
the Principal Market and has no knowledge of any facts or circumstances that
would reasonably lead to delisting or suspension of the Common Stock by the
Principal Market in the foreseeable future. During the two (2) years
prior to the date hereof, (i) the Common Stock has been designated for quotation
on the Principal Market, (ii) trading in the Common Stock has not been suspended
by the SEC or the Principal Market and (iii) the Company has received no
communication, written or oral, from the SEC or the Principal Market regarding
the suspension or delisting of the Common Stock from the Principal
Market. The Company and its Subsidiaries possess all certificates,
authorizations and permits issued by the appropriate regulatory authorities
necessary to conduct their respective businesses, except where the failure to
possess such certificates, authorizations or permits would not have,
individually or in the aggregate, a Material Adverse Effect, 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.
(n) Foreign Corrupt
Practices. Neither the Company nor any of its Subsidiaries
nor, to the Company's knowledge, any of their respective current or former
directors, officers, agents, employees or other Persons acting on behalf of the
Company or any of its Subsidiaries has, in the course of its actions for, or on
behalf of, the Company or any of its Subsidiaries (i) used any corporate funds
for any unlawful contribution, gift, entertainment or other unlawful expenses
relating to political activity; (ii) made any direct or indirect unlawful
payment to any foreign or domestic government official or employee from
corporate funds; (iii) violated or is in violation of any provision of the U.S.
Foreign Corrupt Practices Act of 1977, as amended; or (iv) made any unlawful
bribe, rebate, payoff, influence payment, kickback or other unlawful payment to
any foreign or domestic government official or employee.
(o) Xxxxxxxx-Xxxxx
Act. Except as set forth on Schedule 3(o), the Company is
in material compliance with any and all requirements of the Xxxxxxxx-Xxxxx Act
of 2002 that are effective and applicable to the Company as of the date hereof,
and any and all rules and regulations promulgated by the SEC thereunder that are
effective and applicable to the Company as of the date hereof.
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(p) Transactions with
Affiliates. Except as discussed on Schedule 3(p), none of the
officers, directors or employees of the Company or any of its Subsidiaries is
presently a party to any transaction with the Company or any of its Subsidiaries
(other than for ordinary course services as employees, officers or 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 such
officer, director or employee or, to the knowledge of the Company or any of its
Subsidiaries, any corporation, partnership, trust or other entity in which any
such officer, director, or employee has a substantial interest or is an officer,
director, trustee or partner.
(q) Equity
Capitalization. As of the date hereof, the authorized capital
stock of the Company consists of 210,000,000 shares, comprised of
(x) 200,000,000 shares of Common Stock, of which as of the date hereof,
37,563,392 shares are issued and outstanding, and (y) 10,000,000 shares of
preferred stock, par value $0.01 per share, of which 600,000 shares are
designated Series B nonredeemable convertible preferred stock, of which 475,087
shares are issued and outstanding, and no other shares of the Company’s
preferred stock are issued or outstanding. All outstanding shares of
the Company’s capital stock have been, or upon issuance will be, validly issued
and are, or upon issuance will be, fully paid and
nonassessable. Except as described on Schedule 3(q), with respect
to any debt or equity instruments of the Company and its Subsidiaries,
(i) none of the Company’s capital stock is subject to preemptive rights or
any other similar rights or any liens or encumbrances suffered or permitted by
the Company; (ii) there are no outstanding options, warrants, scrip, rights
to subscribe to, calls or commitments of any character whatsoever relating to,
or securities or rights convertible into, or exercisable or exchangeable for,
any capital stock of the Company or any of its Subsidiaries, or contracts,
commitments, understandings or arrangements by which the Company or any of its
Subsidiaries is or may become bound to issue additional capital stock of the
Company or any of its Subsidiaries or options, warrants, scrip, rights to
subscribe to, calls or commitments of any character whatsoever relating to, or
securities or rights convertible into, or exercisable or exchangeable for, any
capital stock of the Company or any of its Subsidiaries; (iii) there are
no financing statements securing obligations in any material amounts, either
singly or in the aggregate, filed in connection with the Company or any of its
Subsidiaries; (iv) there are no agreements or arrangements under which the
Company or any of its Subsidiaries is obligated to register the sale of any of
their securities under the 1933 Act (except the Registration Rights Agreement);
(v) there are no outstanding securities or instruments of the Company or
any of its Subsidiaries which contain any redemption or similar provisions, and
there are no contracts, commitments, understandings or arrangements by which the
Company or any of its Subsidiaries is or may become bound to redeem a security
of the Company or any of its Subsidiaries; (vi) there are no securities or
instruments containing anti-dilution or similar provisions that will be
triggered by the issuance of the Securities; (vii) the Company does not
have any stock appreciation rights or “phantom stock” plans or agreements or any
similar plan or agreement; and (vii) the Company and its Subsidiaries have
no liabilities or obligations required to be disclosed in the SEC Documents but
not so disclosed in the SEC Documents, other than those incurred in the ordinary
course of the Company’s or its Subsidiaries’ respective businesses and which,
individually or in the aggregate, do not or would not have a Material Adverse
Effect. The Company has made available to the Buyers, through XXXXX,
true, correct and complete copies of the Company’s certificate of incorporation,
as amended and as in effect on the date hereof (the
--
-15-
“Certificate of
Incorporation”), and the Company’s bylaws, as amended and as in effect on
the date hereof (the “Bylaws”).
(r) Indebtedness and Other
Contracts. Except as set forth under the agreements or other
arrangements listed on Schedule 3(r), neither the
Company nor any of its Subsidiaries (i) has any outstanding Indebtedness
(as defined below), (ii) is a party to any contract, agreement or
instrument, the violation of which, or default under which, by the other
party(ies) to such contract, agreement or instrument could reasonably be
expected to result in a Material Adverse Effect, (iii) is in violation of
any term of or in default under any contract, agreement or instrument relating
to any Indebtedness, except where such violations and defaults would not result,
individually or in the aggregate, in a Material Adverse Effect, or (iv) is a
party to any contract, agreement or instrument relating to any Indebtedness, the
performance of which, in the judgment of the Company’s officers, has or is
expected to have a Material Adverse Effect. For purposes of this
Agreement: (x) “Indebtedness” of any Person
means, without duplication (A) all indebtedness for borrowed money, (B) all
obligations issued, undertaken or assumed as the deferred purchase price of
property or services, including (without limitation) “capital leases” in
accordance with generally accepted accounting principles (other than trade
payables entered into in the ordinary course of business), (C) all reimbursement
or payment obligations with respect to letters of credit, surety bonds and other
similar instruments, (D) all obligations evidenced by notes, bonds, debentures
or similar instruments, including obligations so evidenced incurred in
connection with the acquisition of property, assets or businesses, (E) all
indebtedness created or arising under any conditional sale or other title
retention agreement, or incurred as financing, in either case with respect to
any property or assets acquired with the proceeds of such indebtedness (even
though the rights and remedies of the seller or bank under such agreement in the
event of default are limited to repossession or sale of such property), (F) all
monetary obligations in excess of $100,000 under any leasing or similar
arrangement which, in connection with generally accepted accounting principles,
consistently applied for the periods covered thereby, is classified as a capital
lease, (G) all indebtedness referred to in clauses (A) through (F) above secured
by (or for which the holder of such Indebtedness has an existing right,
contingent or otherwise, to be secured by) any mortgage, lien, pledge, charge,
security interest or other encumbrance upon or in any property or assets
(including accounts and contract rights) owned by any Person, even though the
Person which owns such assets or property has not assumed or become liable for
the payment of such indebtedness, and (H) all Contingent Obligations in respect
of indebtedness or obligations of others of the kinds referred to in clauses (A)
through (G) above; (y) “Contingent Obligation” means,
as to any Person, any direct or indirect liability, contingent or otherwise, of
that Person with respect to any indebtedness, lease, dividend or other
obligation of another Person if the primary purpose or intent of the Person
incurring such liability, or the primary effect thereof, is to provide assurance
to the obligee of such liability that such liability will be paid or discharged,
or that any agreements relating thereto will be complied with, or that the
holders of such liability will be protected (in whole or in part) against loss
with respect thereto; and (z) “Person” means an individual, a
limited liability company, a partnership, a joint venture, a corporation, a
trust, an unincorporated organization and a government or any department or
agency thereof.
(s) Absence of
Litigation. There is no action, suit, proceeding, inquiry or
investigation before or by the Principal Market, any court, public board,
government agency, self-regulatory organization or body pending or, to the
knowledge of the Company, threatened
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-16-
against
or affecting the Company or any of its Subsidiaries, the Common Stock or any of
the Company’s Subsidiaries or any of the Company’s or its Subsidiaries’ officers
or directors.
(t) 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. Except as set
forth on Schedule
3(t), neither the
Company nor any such Subsidiary has any reason to believe that it will not be
able to renew its existing insurance coverage as and when such coverage expires
or to obtain similar coverage from similar insurers as may be necessary to
continue its business at a cost that would not have a Material Adverse
Effect.
(u) Employee
Relations.
(i) Neither
the Company nor any of its Subsidiaries is a party to any collective bargaining
agreement or employs any member of a union. The Company and its
Subsidiaries believe that their relations with their employees are
good. No executive officer of the Company or any of its Subsidiaries
has notified the Company or any such Subsidiary that such officer intends to
leave the Company or any such Subsidiary or otherwise terminate such officer’s
employment with the Company or any such Subsidiary. No executive
officer of the Company or any of its Subsidiaries, is, or is now expected to be,
in violation of any material term of any employment contract, confidentiality,
disclosure or proprietary information agreement, non-competition agreement, or
any other contract or agreement or any restrictive covenant, and the continued
employment of each such executive officer does not subject the Company or any of
its Subsidiaries to any liability with respect to any of the foregoing
matters.
(ii) Except
as set forth on Schedule 3(o), the Company and
its Subsidiaries, to their knowledge, are in compliance with all federal, state,
local and foreign laws and regulations respecting labor, employment and
employment practices and benefits, terms and conditions of employment and wages
and hours, except where failure to be in compliance would not, either
individually or in the aggregate, reasonably be expected to result in a Material
Adverse Effect.
(v) Title. Except
as set forth on Schedule 3(v), 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 or such as
do not materially affect the value of such property and do not materially
interfere with the use made and proposed to be made of such property by the
Company and 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, except (i) as
limited by applicable bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar laws of general applicability, relating
to or affecting creditors’ rights generally, (ii) as limited by laws
relating to specific performance, injunctive relief or other equitable remedies,
and (iii) to the
--
-17-
extent
any indemnification provisions contained in such leases may be limited by
applicable laws.
(w) Intellectual Property
Rights. The Company and its Subsidiaries own or possess
adequate rights or licenses to use all trademarks, service marks and all
applications and registrations therefor, trade names, patents, patent rights,
copyrights, original works of authorship, inventions, trade secrets and other
intellectual property rights (“Intellectual Property Rights”)
necessary to conduct their respective businesses as conducted on the date of
this Agreement. Except as set forth on Schedule 3(w), none of the
Company’s registered, or applied for, Intellectual Property Rights have expired
or terminated or have been abandoned, or are expected to expire or terminate or
expected to be abandoned, within three years from the date of this Agreement, in
each case except as have not had and could not reasonably be expected to have a
Material Adverse Effect. To the knowledge of the Company, no product
or service of the Company or its Subsidiaries infringes the Intellectual
Property Rights of others. There is no claim, action or proceeding
being made or brought, or to the knowledge of the Company or its Subsidiaries,
being threatened, against the Company or its Subsidiaries regarding (i) its
Intellectual Property Rights, or (ii) that the products or services of the
Company or its Subsidiaries infringe the Intellectual Property Rights of
others. Neither the Company nor any of its Subsidiaries is aware of
any facts or circumstances which might give rise to any of the foregoing
infringements or claims, actions or proceedings. The Company and its
Subsidiaries have taken reasonable security measures to protect the secrecy,
confidentiality and value of all of their Intellectual Property Rights, except
where failure to do so could not, individually or in the aggregate, reasonably
be expected to have a Material Adverse Effect.
(x) Environmental
Laws. The Company and its Subsidiaries, to their knowledge,
(i) are in compliance with any and all Environmental Laws (as hereinafter
defined), (ii) have received all permits, licenses or other approvals
required of them under applicable Environmental Laws to conduct their respective
businesses and (iii) are in compliance with all terms and conditions of any
such permit, license or approval where, in each of the foregoing clauses (i),
(ii) and (iii), the failure to so comply could be reasonably expected to have,
individually or in the aggregate, a Material Adverse Effect. The term
“Environmental Laws”
means all federal, state, local or foreign laws relating to pollution or
protection of human health or the environment (including, without limitation,
ambient air, surface water, groundwater, land surface or subsurface strata),
including, without limitation, laws relating to emissions, discharges, releases
or threatened releases of chemicals, pollutants, contaminants, or toxic or
hazardous substances or wastes (collectively, “Hazardous Materials”) into the environment, or
otherwise relating to the manufacture, processing, distribution, use, treatment,
storage, disposal, transport or handling of Hazardous Materials, as well as all
authorizations, codes, decrees, demands or demand letters, injunctions,
judgments, licenses, notices or notice letters, orders, permits, plans or
regulations issued, entered, promulgated or approved thereunder.
(y) Tax
Status. The Company and each of its Subsidiaries (i) has made
or filed all foreign, federal and state income and all other tax returns,
reports and declarations required by any jurisdiction to which it is subject,
(ii) has paid all taxes and other governmental assessments and charges that are
material in amount, shown or determined to be due on such returns, reports and
declarations, except those being contested in good faith and (iii) has set aside
on its books provisions reasonably adequate for the payment of all taxes for
periods subsequent
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-18-
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.
(z) Internal Accounting and
Disclosure Controls. The Company and each of its Subsidiaries
maintain a system of internal accounting controls sufficient to provide
reasonable assurance that (i) transactions are executed in accordance with
management’s general or specific authorizations, (ii) transactions are
recorded as necessary to permit preparation of financial statements in
conformity with generally accepted accounting principles and to maintain asset
and liability accountability, (iii) access to assets or incurrence of
liabilities is permitted only in accordance with management’s general or
specific authorization and (iv) the recorded accountability for assets and
liabilities is compared with the existing assets and liabilities at reasonable
intervals and appropriate action is taken with respect to any
difference. Except as set forth on Schedule 3(z), the Company
maintains disclosure controls and procedures (as such term is defined in Rule
13a-14 under the 0000 Xxx) that are effective in ensuring that information
required to be disclosed by the Company in the reports that it files or submits
under the 1934 Act is recorded, processed, summarized and reported, within the
time periods specified in the rules and forms of the SEC, including, without
limitation, controls and procedures designed in to ensure that information
required to be disclosed by the Company in the reports that it files or submits
under the 1934 Act is accumulated and communicated to the Company’s management,
including its principal executive officer or officers and its principal
financial officer or officers, as appropriate, to allow timely decisions
regarding required disclosure. Except as set forth on Schedule 3(z), during the
twelve months prior to the date hereof neither the Company nor any of its
Subsidiaries have received any notice or correspondence from any accountant
relating to any material weakness in any part of the system of internal
accounting controls of the Company or any of its Subsidiaries.
(aa) Off Balance Sheet
Arrangements. There is no transaction, arrangement, or other
relationship between the Company or any of its Subsidiaries and an
unconsolidated or other off balance sheet entity that is required to be
disclosed by the Company in its 1934 Act filings and is not so disclosed or that
otherwise would be reasonably likely to have a Material Adverse
Effect.
(bb) Investment Company
Status. Neither the Company nor any of its Subsidiaries is,
and upon consummation of the sale of the Securities neither the Company nor any
of its Subsidiaries will be, an “investment company,” a company controlled by an
“investment company” or an “affiliated person” of, or “promoter” or “principal
underwriter” for, an “investment company” as such terms are defined in the
Investment Company Act of 1940, as amended.
(cc) Transfer
Taxes. On the Closing Date, all stock transfer, documentary
stamp taxes or other taxes (other than income or similar taxes) which are
required to be paid in connection with the sale and transfer of the Securities
to be sold to each Buyer hereunder on the Closing Date will be, or will have
been, fully paid or provided for by the Company, and all laws imposing such
taxes will be or will have been complied with.
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-19-
(dd) Manipulation of
Price. The Company has not, and to its knowledge no one acting
on its behalf has, (i) taken, directly or indirectly, any action designed
to cause or to result in the stabilization or manipulation of the price of any
security of the Company to facilitate the sale or resale of any of the
Securities, (ii) sold, bid for, purchased, or paid any compensation for
soliciting purchases of, any of the Securities, or (iii) paid or agreed to
pay to any person any compensation for soliciting another to purchase any other
securities of the Company.
(ee) Disclosure. The
Company confirms that neither it nor any other Person acting on its behalf has
provided any of the Buyers or their agents or counsel, solely in their capacity
as prospective Buyers, with any information that constitutes or could reasonably
be expected to constitute material, nonpublic information. The
Company understands and confirms that each of the Buyers will rely on the
foregoing representations in effecting transactions in securities of the
Company. All disclosure provided to the Buyers regarding the Company
or any of its Subsidiaries, their business and the transactions contemplated
hereby, including the Schedules to this Agreement, furnished by or on behalf of
the Company is true and correct and does not contain any untrue statement of a
material fact or omit to state any material fact necessary in order to make the
statements made therein, in the light of the circumstances under which they were
made, not misleading. Each press release issued by the Company or any
of its Subsidiaries during the twelve (12) months preceding the date of this
Agreement did not at the time of release contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading. No event or
circumstance has occurred or information exists with respect to the Company or
any of its Subsidiaries or its or their business, properties, prospects,
operations or financial conditions, which, under applicable law, rule or
regulation, requires public disclosure or announcement by the Company but which
has not been so publicly announced or disclosed in accordance with such
requirements. The Company acknowledges and agrees that no Buyer makes
or has made any representations or warranties with respect to the transactions
contemplated hereby other than those specifically set forth in Section 2.
Notwithstanding the foregoing, the Company and each Buyer acknowledge that Buyer
has or may have one or more agents serving as a director on the Board of
Directors of the Company and that the receipt or awareness of any information
related to the Company gained by any such director in his or her capacity as a
director of the Company shall not be deemed a violation of this paragraph by the
Company.
(ff) Acknowledgement Regarding
Buyers’ Trading Activity. Anything in this Agreement or
elsewhere herein to the contrary notwithstanding, but subject to compliance by
the Buyers with applicable law and the terms of this Agreement, it is understood
and acknowledged by the Company (i) that none of the Buyers have been asked
by the Company or its Subsidiaries to agree, nor has any Buyer agreed with the
Company or its Subsidiaries, to desist from purchasing or selling, long and/or
short, securities of the Company, or “derivative” securities based on securities
issued by the Company or to hold the Securities for any specified term;
(ii) that past or future open market or other transactions by any Buyer,
including, without limitation, short sales or “derivative” transactions, before
or after the closing of this or future private placement transactions, may
negatively impact the market price of the Company’s publicly-traded securities;
(iii) that any Buyer, and counter parties in “derivative” transactions to
which any such Buyer is a party, directly or indirectly, presently may have a
“short” position in the Common Stock; and (iv) that each Buyer shall not be
deemed to have any affiliation with or
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-20-
control
over any arm’s length counter-party in any “derivative”
transaction. The Company further understands and acknowledges that
(a) one or more Buyers may engage in hedging and/or trading activities at
various times during the period that the Securities are outstanding, including,
without limitation, during the periods that the value of the Warrant Shares
deliverable with respect to Securities are being determined and (b) such hedging
and/or trading activities (if any) could reduce the value of the existing
stockholders’ equity interests in the Company at and after the time that the
hedging and/or trading activities are being conducted.
(gg) Placement
Agents. Except as set forth on Schedule 3(gg), neither the
Company nor any of its subsidiaries has engaged any placement agent or other
agent in connection with the Financing or the Conversion.
4. COVENANTS.
(a) Best
Efforts. Each party shall use its best efforts to timely
satisfy each of the conditions to be satisfied by it as provided in Sections 6 and 7 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 (or to obtain
an exemption from such qualification), 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 to 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 date on which the Buyers shall have sold all
the Warrant Shares and none of the Warrants
is outstanding (the “Reporting
Period”), the Company shall timely file (or obtain extensions in respect
thereof and file within the applicable grace period) all reports required to be
filed with the SEC pursuant to the 1934 Act. As long as any
Buyer owns Securities, if the Company is not required to file reports pursuant
to the 1934 Act, it will prepare and furnish to the Buyers and make publicly
available in accordance with Rule 144(c) such information as is required for the
Buyers to sell the Securities under Rule 144. The Company further covenants that
it will take such further action as any holder of Securities may reasonably
request, to the extent required from time to time to enable such Person to sell
such Securities without registration under the Securities Act within the
requirements of the exemption provided by Rule 144, including, without
limitation, causing the transfer agent for the Common Stock to remove legends
and stop transfer instructions with respect to any Warrant Shares which may be
sold under Rule 144 without regard to the availability of current financial
information.
(d) Use of
Proceeds. The Company will use the proceeds from the sale of
the Securities for general corporate purposes, and not for (x) the
repayment of any outstanding Indebtedness of the Company or any of its
Subsidiaries at any time prior to the scheduled maturity date thereof or
(y) the redemption or repurchase of any of its or its Subsidiaries’
equity
--
-21-
securities
other than the repurchase of equity issued to or held by employees, officers,
directors and consultants of the Company or a Subsidiary upon termination of
their employment or services with the Company or a Subsidiary.
(e) Financial
Information. The Company agrees to send the following to each
Buyer (or each transferee thereof as permitted by Section 2(f)) during the
Reporting Period (i) unless the following are filed with the SEC through
XXXXX and are available to the public through the XXXXX system, within one (1)
Business Day after the filing thereof with the SEC, a copy of its Annual Reports
and Quarterly Reports on Form 10-K, 10-Q, any interim reports or any
consolidated balance sheets, income statements, stockholders’ equity statements
and/or cash flow statements for any period other than annual, any Current
Reports on Form 8-K and any registration statements (other than on Form S-8) or
amendments filed pursuant to the 1933 Act, (ii) unless the following are
available to the public through a national news wire, including, without
limitation, Business Wire, on the same day as the release thereof, facsimile or
e-mailed copies of all press releases issued by the Company or any of its
Subsidiaries, and (iii) copies of any notices and other information made
available or given to all stockholders of the Company generally,
contemporaneously with the making available or giving thereof to the
stockholders. As used herein, “Business Day” means any day
other than Saturday, Sunday or other day on which commercial banks in The City
of New York are authorized or required by law to remain closed.
(f) Listing. The
Company shall promptly secure the listing of the Shares, the Conversion Shares
and the Warrant Shares upon each national securities exchange and automated
quotation system, if any, upon which the Common Stock is then listed (subject to
official notice of issuance) and shall maintain such listing of all Shares and
Warrant Shares from time to time issuable under the terms of the Transaction
Documents. The Company shall maintain the Common Stock’s
authorization for quotation on the Principal Market. 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 the Principal Market. The Company shall pay all fees and expenses
in connection with satisfying its obligations under this Section 4(f).
(g) Expenses. Subject
to Section 8 below, the
parties hereto shall pay their own costs and expenses in connection herewith,
except that, the Company shall pay the documented, reasonable and customary
third party expenses incurred by the Buyers in connection with the negotiation,
preparation and execution of the Transaction Documents, including the reasonable
fees and expenses of one counsel to the Buyers, which shall be Xxxxxxxxxx
Xxxxxxx PC. Such expenses shall be paid not later than, in the case of fees and
expenses associated with the Closing, five (5) Business Days following the
Closing.
(h) Disclosure of Transactions
and Other Material Information. On or before 11:30 a.m., New
York City time, on the first Business Day following the date of this Agreement,
the Company shall issue a press release and file a Current Report on Form 8-K
describing the terms of the transactions contemplated by the Transaction
Documents in the form required by the 1934 Act and attaching the material
Transaction Documents (including, without limitation, this Agreement, the form
of Warrant and the Registration Rights Agreement) as exhibits to such filing
(such filing, including all such attachments, the “8-K Filing”). From
and after the filing of
--
-22-
the 8-K
Filing with the SEC, no Buyer shall be in possession of any material, nonpublic
information received from the Company or any of its Subsidiaries or any of their
respective officers, directors, employees or agents, that is not disclosed in
the 8-K Filing; provided, however, that the mere possession of such information
by a director of the Company who is affiliated with a Buyer shall not be
required to be disclosed in the 8-K Filing; and provided further that Buyer may
have, or may be deemed to have, material, non-public information received from
the Company or its officers, directors, employees or agents as a result of Buyer
having one or more agents serving as a director on the Board of Directors of the
Company. The Company shall not, and shall cause each of its
Subsidiaries and its and each of their respective officers, directors, employees
and agents, not to, provide any Buyer, solely in Buyer’s capacity as a purchaser
of Securities hereunder, with any material, nonpublic information regarding the
Company or any of its Subsidiaries from and after the filing of the 8-K Filing
with the SEC without the express written consent of such
Buyer. Subject to the foregoing, neither the Company, its
Subsidiaries nor any Buyer shall issue 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 (i) in substantial conformity with the 8-K Filing and
contemporaneously therewith and (ii) as is required by applicable law and
regulations (provided that in the case of clause (i) each Buyer shall be
consulted by the Company in connection with any such press release or other
public disclosure prior to its release).
(i) Reservation of
Shares. The Company shall take all action necessary to at all
times have authorized, and reserved for the purpose of issuance, a sufficient
number of shares of Common Stock for the purpose of enabling the Company to
issue that number of shares of Common Stock issuable upon exercise of the
Warrants (without taking into account any limitations on the exercise of the
Warrants set forth in the Warrants).
(j) Fundamental
Transactions. So long as any Buyer beneficially owns any
Securities, the Company shall not be party to any Fundamental Transaction (as
defined in the Warrants) unless the Company is in compliance with the applicable
provisions governing Fundamental Transactions set forth in the
Warrants.
(k) Conduct of
Business. The business of the Company and its Subsidiaries
shall not be conducted in violation of any law, ordinance or regulation of any
governmental entity, except where such violations would not result, either
individually or in the aggregate, in a Material Adverse Effect.
5. REGISTER; TRANSFER AGENT
INSTRUCTIONS.
(a) Register. The
Company shall maintain at its principal executive offices (or such other office
or agency of the Company as it may designate by notice to each holder of
Securities), a register for the Shares, the Conversion Shares and the Warrants
in which the Company shall record the name and address of the Person in whose
name the Shares, the Conversion Shares and the Warrants have been
issued (including the name and address of each transferee), the number of Shares
held by such Person, and the number of Warrant Shares issuable upon exercise of
the Warrants held by such Person. The Company shall keep
the
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-23-
register
open and available at all times during business hours for inspection of any
Buyer or its legal representatives, upon reasonable advance written notice to
the Company.
(b) Transfer Agent
Instructions. The Company shall issue irrevocable instructions
to its transfer agent, American Stock Transfer and Trust Company, and any subsequent
transfer agent, to issue certificates or credit shares to the applicable balance
accounts at The Depository Trust Company (“DTC”), registered in the name
of each Buyer or its respective nominee(s), for the Shares, the Conversion
Shares and the Warrant Shares issued at the Closing or upon exercise of the
Warrants in such amounts as specified from time to time by each Buyer to the
Company upon exercise of the Warrants in the form of Exhibit C
attached hereto (the “Irrevocable Transfer Agent
Instructions”). The Company warrants that no instruction other
than the Irrevocable Transfer Agent Instructions referred to in this Section 5(b), and stop
transfer instructions to give effect to Section 2(g) hereof, will
be given by the Company to its transfer agent, and that the Securities shall
otherwise be freely transferable on the books and records of the Company as and
to the extent provided in this Agreement and the other Transaction
Documents. If a Buyer effects a sale, assignment or transfer of the
Securities in accordance with Section 2(f), the Company
shall permit the transfer and shall promptly instruct its transfer agent to
issue one or more certificates or credit shares to the applicable balance
accounts at DTC in such name and in such denominations as specified by such
Buyer to effect such sale, transfer or assignment. In the event that
such sale, assignment or transfer involves Shares, Conversion Shares or Warrant
Shares sold, assigned or transferred pursuant to an effective registration
statement or pursuant to Rule 144, the transfer agent shall issue such
Securities to the Buyer, assignee or transferee, as the case may be, without any
restrictive legend. The Company acknowledges that a breach by it of
its obligations hereunder will cause irreparable harm to a
Buyer. Accordingly, the Company acknowledges that the remedy at law
for a breach of its obligations under this Section 5(b)
will be inadequate and agrees, in the event of a breach or threatened breach by
the Company of the provisions of this Section 5(b), that a Buyer
shall be entitled, in addition to all other available remedies, to an order
and/or injunction restraining any breach and requiring immediate issuance and
transfer, without the necessity of showing economic loss and without any bond or
other security being required.
6. CONDITIONS
TO THE COMPANY’S OBLIGATION TO SELL.
The
obligation of the Company hereunder to consummate the Financing and the
Conversion at the Closing and to issue and sell additional Units as provided
herein is subject to the satisfaction, at or before the applicable 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 participating in such Closing with prior
written notice thereof:
(i) Such
Buyer shall have executed each of the Transaction Documents to which it is a
party and delivered the same to the Company.
(ii) Such
Buyer and each other Buyer shall have delivered to the Company the deliveries
required to be made by them pursuant to Section 1(d) hereof.
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-24-
(iii) The
representations and warranties of such Buyer shall be true and correct in all
material respects (except for those representations and warranties that are
qualified by materiality or Material Adverse Effect, which shall be true and
correct in all respects) as of the date when made and as of the applicable
Closing Date as though made at that time (except for representations and
warranties that speak as of a specific date, which shall be true and correct as
of such specified 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 applicable Closing Date.
7. CONDITIONS TO EACH BUYER’S
OBLIGATION TO PURCHASE.
(a) Conditions to the Initial
Closing. The obligation of each Buyer hereunder to consummate
the Financing and the Conversion at the Initial Closing is subject to the
satisfaction, at or before the Initial 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.
(i) The
Company shall have duly executed and delivered to such Buyer (I) the Securities
that are being acquired by the Buyers at the Closing pursuant to Section 1(b),
(II) each of the other Transaction Documents to which the Company is a
party and (III) such other certificates or instruments required to be delivered
by it pursuant to the Transaction Documents in connection with the Initial
Closing.
(ii) The
Company shall have delivered to such Buyer a copy of the Irrevocable Transfer
Agent Instructions, in the form of Exhibit C
attached hereto, which instructions shall have been executed by the Company and
delivered to and acknowledged in writing by the Company’s transfer
agent.
(iii) Such
Buyer shall have received the opinion of Paul, Hastings, Xxxxxxxx & Xxxxxx
LLP, counsel to the Company, dated as of the Initial Closing Date, in
substantially the form of Exhibit D
attached hereto.
(iv) The
Company shall have delivered to such Buyer copies of (a) the Certificate of
Incorporation of the Company and (b) the certificate of incorporation of
Aeolus Sciences, Inc., each as certified by the Secretary of State of the State
of Delaware within ten (10) Business Days of the Initial Closing
Date.
(v) The
Company shall have delivered to such Buyer copies of certificates of good
standing for each of the Company and Aeolus Sciences, Inc., each as certified by
the Secretary of State of the State of Delaware within five (5) Business Days of
the Initial Closing Date.
(vi) The
Company shall have delivered to such Buyer a certificate, executed by the
Secretary of the Company and dated as of the Initial Closing Date, as to
(i) the resolutions consistent with Section 3(b) as
adopted by the Company’s board of directors in a form reasonably acceptable to
such Buyer, (ii) the Certificate of Incorporation of the Company, (iii) the
certificate of incorporation of Aeolus Sciences, Inc., (iii) the Bylaws of
the Company and
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-25-
(iv) the
bylaws of Aeolus Sciences, Inc., each as in effect at the Initial Closing, which
certificate shall be in form and substance acceptable to the Buyers and shall
provide specimen signatures for each of the officers or directors of the Company
who execute and deliver this Agreement or any other Transaction Document to be
delivered at the Initial Closing by or on behalf of the Company (in each case,
pursuant to the authorization of the Company’s board of directors).
(vii) The
representations and warranties of the Company shall be true and correct in all
material respects (except for those representations and warranties that are
qualified by materiality or Material Adverse Effect, which shall be true and
correct in all respects) as of the date when made and at all times through and
including as of the Initial Closing Date as though made at that time (except for
representations and warranties that speak as of a specific date, which shall be
true and correct as of such specified date) and the Company shall have
performed, satisfied and complied in all material respects 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 Initial Closing
Date. Such Buyer shall have received a certificate, executed by the
Chief Executive Officer, President, Chief Financial Officer or Vice President of
the Company, dated as of the Initial Closing Date, to the foregoing effect and
as to such other matters as may be reasonably requested by such Buyer, in form
and substance acceptable to the Buyers.
(viii) The
Common Stock (I) shall be designated for quotation or listed on the Principal
Market and (II) shall not have been suspended, as of the Closing Date, by the
SEC or the Principal Market from trading on the Principal Market nor shall
suspension by the SEC or the Principal Market have been threatened, as of the
Initial Closing Date, either (A) in writing by the SEC or the Principal Market
or (B) by falling below the minimum listing maintenance requirements of the
Principal Market.
(ix) The
Company shall have obtained all governmental, regulatory or third party consents
and approvals, if any, necessary for the sale of the Securities.
(x) The
Company shall have delivered to such Buyer such other documents relating to the
transactions contemplated by this Agreement as such Buyer or its counsel may
reasonably request.
(b) Conditions to each
additional Closing. The obligation of each Buyer hereunder to
purchase Units at each additional Closing Date is subject to the satisfaction,
at or before the applicable 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.
(i) The
Company shall have complied with all of the conditions set forth in Section
7.1(a) on or prior to the Initial Closing Date.
(ii) The
Company shall have duly executed and delivered to such Buyer (a) the Securities
being purchased by such Buyer at the applicable Closing, and (b) each of the
other Transaction Documents to which the Company is a party and such other
certificates or
--
-26-
instruments
required to be delivered by it pursuant to the Transaction Documents in
connection with such Closing.
(iii) Each
Transaction Document to be entered into as of the applicable Closing Date has
been duly executed and delivered by the Company and constitutes, as of such
Closing Date, the legal, valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms, except (i) as may
be limited by general principles of equity or applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation or similar laws relating to, or
affecting generally, the enforcement of applicable creditors’ rights generally,
(ii) as limited by laws relating to specific performance, injunctive relief of
other equitable remedies, and (iii) to the extent the indemnification
provisions contained in this Agreement may be limited by applicable
laws.
(iv) The
Company shall have delivered to such Buyer copies of certificates of good
standing for each of the Company and Aeolus Sciences, Inc., each as certified by
the Secretary of State of the State of Delaware within five (5) Business Days of
such Closing Date.
(v) On
the applicable Closing Date, all stock transfer, documentary stamp taxes or
other taxes (other than income or similar taxes) which are required to be paid
in connection with the sale and transfer of the Securities to be sold to each
Buyer hereunder on such Closing Date will be, or will have been, fully paid or
provided for by the Company, and all laws imposing such taxes will be or will
have been complied with.
(vi) The
Company shall have timely filed (or obtained extensions in respect thereof and
filed within the applicable grace period) all reports, schedules, forms,
statements and other documents required to be filed by it with the SEC pursuant
to the 1934 Act from the date of this Agreement through the applicable Closing
Date.
(vii) The
representations and warranties of the Company shall be true and correct in all
material respects (except for those representations and warranties that are
qualified by materiality or Material Adverse Effect, which shall be true and
correct in all respects) as of the date when made and as of such Closing Date as
though made at that time (except for representations and warranties that speak
as of a specific date, which shall be true and correct as of such specified
date, and with respect to all other representations and warranties, after giving
effect to any updated disclosure schedules delivered by the Company to the Buyer
on such Closing Date or as otherwise described in any reports, schedules, forms,
statements and other documents filed by the Company with the SEC pursuant to the
reporting requirements of the 1934 Act from the period commencing on the Initial
Closing Date and ending on such Closing Date, including the exhibits included
therein and financial statements, notes and schedules thereto and documents
incorporated by reference therein; provided that such representations and
warranties as so qualified by such updated disclosure schedules or other
disclosures are reasonably acceptable to such Buyer in its sole discretion) and
the Company shall have performed, satisfied and complied in all material
respects 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 such Closing Date. Such Buyer shall have received a
certificate, executed by the Chief Executive Officer, President, Chief Financial
Officer or Vice
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-27-
President
of the Company, dated as of such Closing Date, to the foregoing effect, the
conditions set forth in this Section 7(b) have been satisfied, and as to such
other matters as may be reasonably requested by such Buyer, in form and
substance acceptable to such Buyer.
(viii) The
Company shall have delivered to such Buyer such other documents relating to the
transactions contemplated by this Agreement as such Buyer or its counsel may
reasonably request; provided that neither Xmark Opportunity Partners, LLC nor
any “affiliate” of Xmark Opportunity Partners, LLC (as defined in Rule 144 of
the 0000 Xxx) shall have the right under this Section 7(b)(viii) to request that
the Company deliver an opinion of counsel in connection with any additional
Closing.
8. TERMINATION. In
the event that the Initial Closing shall not have occurred with respect to a
Buyer on or before five (5) Business Days from the date hereof due to the
Company’s or such Buyer’s failure to satisfy the conditions set forth in Sections 6 and 7 above (and the
non-breaching party’s failure to waive such unsatisfied condition(s)), the
non-breaching 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; provided, however, that if this
Agreement is terminated in its entirety pursuant to this Section 8 solely as a
result of the Company’s failure to satisfy the conditions in Section 7 above, the Company shall remain obligated to
reimburse the non-breaching Buyers for the expenses described in Section 4(g)
above.
9. MISCELLANEOUS.
(a) Governing Law; Jurisdiction;
Jury Trial. All questions concerning the construction,
validity, enforcement and interpretation of this Agreement shall be governed by
the internal laws of the State of New York, 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, the borough of Manhattan, for the
adjudication of any dispute hereunder or in connection herewith or with any
transaction contemplated hereby or discussed herein, and hereby irrevocably
waives, and agrees not to assert in any suit, action or proceeding, any claim
that it is not personally subject to the jurisdiction of any such court, that
such suit, action or proceeding is brought in an inconvenient forum or that the
venue of such suit, action or proceeding is improper. Each party
hereby irrevocably waives personal service of process and consents to process
being served in any such suit, action or proceeding by mailing a copy thereof to
such party at the address for such 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. 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 WITH
OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED
HEREBY.
--
-28-
(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 and the other Transaction Documents
supersede 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, the other Transaction Documents
and the instruments referenced herein and therein 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 the holders of at least two-thirds of the aggregate number of Shares
and Warrant Shares issued and issuable under the Warrants, and any amendment to
this Agreement made in conformity with the provisions of this Section 9(e) shall be
binding on all Buyers and holders of Securities as applicable. No
provision hereof may be waived other than by an instrument in writing signed by
the party against whom enforcement is sought. No such amendment shall
be effective to the extent that it applies to less than all of the holders of
the applicable Securities then outstanding. No consideration shall be
offered or paid to any Person to amend or consent to a waiver or modification of
any provision of any of the Transaction Documents unless the same consideration
also is offered to all of the parties to the Transaction Documents, holders of
Shares or holders of the Warrants, as the case may be.
(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 an overnight courier
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:
00000
Xxxxx Xxxxxx Xxxxxxx, Xxxxx 000
Xxxxxxx
Xxxxx, Xxxxxxxxxx 00000
--
-29-
Telephone: (000)
000-0000
Facsimile: (000) 000-0000
Attention: Xxxx
X. XxXxxxx, President
with a
copy to:
Paul,
Hastings, Xxxxxxxx & Xxxxxx LLP
00 Xxxxxx
Xxxxxx, 00xx Xxxxx
Xxx
Xxxxxxxxx, XX 00000
Telephone: (415)
XXX-XXXX
Facsimile: (415)
XXX-XXXX
Attention: XXXXXXXXXXXX
If to the
Transfer Agent:
American
Stock Transfer and Trust Company
0000 00xx
Xxxxxx
Xxxxxxxx,
Xxx Xxxx 00000
Telephone: (718)
XXX-XXXX
Facsimile: (718)
XXX-XXXX
Attention: XXXXXXXXXXX
If to a
Buyer, to its address and facsimile number set forth on the Schedule of Buyers,
with copies to such Buyer’s representatives as set forth on the Schedule of
Buyers,
with a
copy (for informational purposes only) to:
Xmark
Opportunity Partners, LLC
00 Xxxxx
Xxxxxx, Xxxxx 000
Xxxxxxxxxx,
Xxxxxxxxxxx 00000
Telephone: (203)
XXX-XXXX
Facsimile: (203)
XXX-XXXX
Attention: XXXXXXXXXXX
and
Xxxxxxxxxx
Xxxxxxx PC
1251
Avenue of the Xxxxxxxx, 00xx Xxxxx
Xxx Xxxx,
Xxx Xxxx 00000
Telephone: (973)
XXX-XXXX
Facsimile: (973)
XXX-XXXX
Attention: XXXXXXXXXXXX
or to
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. Written confirmation of receipt (A) given by the recipient of
such notice, consent, waiver or other communication, (B) mechanically or
electronically
--
-30-
generated
by the sender’s facsimile machine containing the time, date, recipient facsimile
number and an image of the first page of such transmission or (C) provided by an
overnight courier service shall be rebuttable evidence of personal service,
receipt by facsimile or receipt from an overnight courier service in accordance
with clause (i), (ii) or (iii) above, respectively.
(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 Shares, the Conversion Shares or the
Warrants. The Company shall not assign this Agreement or any rights
or obligations hereunder without the prior written consent of the holders of at
least two-thirds of the Shares, the Conversion Shares and the Warrant Shares
issued and issuable under the Warrants, including by way of a Fundamental
Transaction (unless the Company is in compliance with the applicable provisions
governing Fundamental Transactions set forth in the Warrants). Except
as set forth in Section 2(f) above with
respect to the Warrant Shares, a Buyer may assign some or all of its rights
hereunder without the consent of the Company, in which event such assignee shall
be deemed to be a Buyer hereunder with respect to such assigned rights and shall
enter into a joinder to this Agreement and shall become subject to the terms and
conditions of this Agreement applicable to a Buyer with respect to such rights
assigned to it.
(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 8, the
representations and warranties of the Company and the Buyers contained in Sections 2 and 3, and the
agreements and covenants set forth in Sections 4, 5 and 9 shall survive
the Closing. Each Buyer shall be responsible only for its own
representations, warranties, agreements and covenants hereunder.
(j) 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
any 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.
(k) Indemnification.
(i) 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, partners, members, officers,
directors, employees and direct or indirect investors and any of the foregoing
Persons’ 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
--
-31-
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 the Transaction Documents or any other
certificate, instrument or document delivered hereby or thereby or (b) any
breach of any covenant, agreement or obligation of the Company contained in the
Transaction Documents or any other certificate, instrument or document delivered
hereby or thereby. The amount paid or payable by an Indemnitee as a result any
Indemnified Liability (or action in respect thereof) shall be deemed to include,
for purposes of this Section 9(k), any
reasonable legal or other expenses reasonably and actually incurred by such
Indemnitee in connection with investigating or defending or preparing to defend
any such action or claim.
(ii) Promptly
after receipt by an Indemnitee under this Section 9(k) of notice of
any claim or the commencement of any action, such Indemnitee shall, if a claim
in respect thereof is to be made against the indemnifying party under this Section 9(k), notify the Company
in writing of the claim or the commencement of that action; provided, however,
that the failure to notify the Company shall not relieve the Company from any
liability which it may have under this Section 9(k) except to the
extent the Company, in its capacity as the indemnifying party, has been
prejudiced by such failure. If any such claim or action shall be
brought against an Indemnitee, and it shall notify the Company thereof, the
Company shall be entitled to participate therein and, to the extent that it
wishes, to assume the defense thereof with counsel satisfactory to such
Indemnitee. After notice from the Company to the applicable
Indemnitee of its election to assume the defense of such claim or action, the
Company shall not be liable to such Indemnitee under this Section 9(k) for any legal
or other expenses subsequently incurred by such Indemnitee in connection with
the defense thereof other than reasonable costs of investigation. The
Company, in its capacity as indemnifying party, shall not:
(x) without
the prior written consent of each applicable Indemnitee (which consent shall not
be unreasonably withheld, conditioned or delayed), settle or compromise or
consent to the entry of any judgment with respect to any pending or threatened
claim, action, suit or proceeding in respect of which indemnification or
contribution may be sought hereunder (whether or not such Indemnitees are actual
or potential parties to such claim or action) unless such settlement, compromise
or consent includes an unconditional release of each such Indemnitee from all
liability arising out of such claim, action, suit or proceeding, or
(y) be
liable for any settlement of any such action effected without its written
consent (which consent shall not be unreasonably withheld, conditioned or
delayed), but if settled with its written consent or if there be a final
judgment for the plaintiff in any such action, the Company, in its capacity as
the indemnifying party, agrees to indemnify and hold harmless each applicable
Indemnitee from and against any loss or liability by reason of such settlement
or judgment.
(iii) If
the indemnification provided for in this Section 9(k) shall for any
reason be unavailable or insufficient to hold harmless an Indemnitee in respect
of any
--
-32-
Indemnified
Liability (or action in respect thereof), the Company, in its capacity as the
indemnifying party, shall, in lieu of indemnifying such Indemnitee, contribute
to the amount paid or payable by such Indemnitee as a result of such Indemnified
Liability (or action in respect thereof), in such proportion as is appropriate
to reflect the relative fault of the Company on the one hand and each applicable
Indemnitee on the other.
(l) 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.
(m) 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. Furthermore, the Company
recognizes that in the event that it fails to perform, observe, or discharge any
or all of its obligations under the Transaction Documents, any remedy at law may
prove to be inadequate relief to the Buyers. The Company therefore
agrees that the Buyers shall be entitled to seek temporary and permanent
injunctive relief in any such case without the necessity of proving actual
damages and without posting a bond or other security.
(n) Rescission and Withdrawal
Right. Notwithstanding anything to the contrary contained in
(and without limiting any similar provisions of) the Transaction Documents,
whenever any Buyer exercises a right, election, demand or option under a
Transaction Document and the Company does not timely perform its related
obligations within the periods therein provided, then such Buyer may rescind or
withdraw, in its sole discretion from time to time upon written notice to the
Company, any relevant notice, demand or election in whole or in part without
prejudice to its future actions and rights.
(o) Payment Set
Aside. To the extent that the Company makes a payment or
payments to the Buyers hereunder or pursuant to any of the other 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, foreign, 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.
(p) Independent Nature of
Buyers’ Obligations and Rights. The obligations of each Buyer
under any Transaction Document are several and not joint with the obligations of
any other Buyer, and no Buyer shall be responsible in any way for the
performance of the obligations of any other Buyer under any Transaction
Document. Nothing contained herein or in any other
--
-33-
Transaction
Document, and no action taken by any Buyer pursuant hereto or thereto, shall be
deemed to constitute the Buyers as, and the Company acknowledges that the Buyers
do not so constitute, a partnership, an association, a joint venture or any
other kind of entity, or create a presumption that the Buyers are in any way
acting in concert or as a group, and the Company will not assert any such claim
with respect to such obligations or the transactions contemplated by the
Transaction Documents and the Company acknowledges that the Buyers are not
acting in concert or as a group with respect to such obligations or the
transactions contemplated by the Transaction Documents. The Company
acknowledges and each Buyer confirms that it has independently participated in
the negotiation of the transaction contemplated hereby with the advice of its
own counsel and advisors. Each Buyer shall be entitled to
independently protect and enforce its rights, including, without limitation, the
rights arising out of this Agreement or out of any other Transaction Documents,
and it shall not be necessary for any other Buyer to be joined as an additional
party in any proceeding for such purpose.
[Signature Pages
Follow.]
--
-34-
IN WITNESS WHEREOF, each Buyer
and the Company have caused their respective signature page to this Securities
Purchase and Exchange Agreement to be duly executed as of the date first written
above.
|
|
COMPANY:
|
|
|
By:
|
/s/ Xxxxxxx X.
XxXxxxx
|
|
|
Name:
|
Xxxxxxx
X. XxXxxxx
|
|
|
Title:
|
Chief
Financial Officer
|
Signature
Page to Securities Purchase Agreement
IN WITNESS WHEREOF, each Buyer
and the Company have caused their respective signature page to this Securities
Purchase and Exchange Agreement to be duly executed as of the date first written
above.
|
|
BUYERS:
|
|
|
XMARK
OPPORTUNITY FUND, L.P.
|
|
By:
|
XMARK
OPPORTUNITY GP, LLC, its General
Partner
|
|
By:
|
XMARK
OPPORTUNITY PARTNERS, LLC, its Sole
Member
|
|
By:
|
XMARK
CAPITAL PARTNERS, LLC, its Managing
Member
|
|
|
By:
|
/s/ Xxxxxxxx X.
Xxxx
|
|
Name:
|
Xxxxxxxx
X. Xxxx
|
|
Title:
|
Co-Managing
Member
|
|
|
XMARK
OPPORTUNITY FUND, LTD.
|
|
By:
|
XMARK
OPPORTUNITY MANAGER, LLC, its Investment
Manager
|
|
By:
|
XMARK
OPPORTUNITY PARTNERS, LLC, its Sole
Member
|
|
By:
|
XMARK
CAPITAL PARTNERS, LLC, its Managing
Member
|
|
|
By:
|
/s/ Xxxxxxxx X.
Xxxx
|
|
Name:
|
Xxxxxxxx
X. Xxxx
|
|
Title:
|
Co-Managing
Member
|
|
|
XMARK
JV INVESTMENT PARTNERS, LLC
|
|
By:
|
XMARK
OPPORTUNITY MANAGER, LLC, its Investment
Manager
|
|
By:
|
XMARK
CAPITAL PARTNERS, LLC, its Managing
Member
|
|
|
By:
|
/s/ Xxxxxxxx X.
Xxxx
|
|
Name:
|
Xxxxxxxx
X. Xxxx
|
|
Title:
|
Co-Managing
Member
|
Signature
Page to Securities Purchase Agreement
SCHEDULE
OF BUYERS
|
(1)
|
(2)
|
(3)
|
(4)
|
(5)
|
(6)
|
|
Purchaser
|
Address
and
Facsimile
Number
(Jurisdiction)
|
Number
of
Shares
|
Number
of
Warrant
Shares
|
Purchase
Price
|
Legal
Representative’s Address and Facsimile Number
(if
different than in column (2))
|
|
Xmark
Opportunity Fund, L.P.
|
c/o
Xmark Opportunity Partners, LLC
00
Xxxxx Xxxxxx
Xxxxx
000
Xxxxxxxxxx,
XX 00000
Telephone: (203)
XXX-XXXX
Facsimile: (203)
XXX-XXXX
Attention: Xxxxxxxx
X. Xxxx
(Delaware)
|
1,767,857
|
3,535,714
|
$495,000.00
|
|
|
Xmark
Opportunity Fund, Ltd.
|
c/o
Xmark Opportunity Partners, LLC
00
Xxxxx Xxxxxx
Xxxxx
000
Xxxxxxxxxx,
XX 00000
Telephone: (203)
XXX-XXXX
Facsimile: (203)
XXX-XXXX
Attention: Xxxxxxxx
X. Xxxx
(Cayman
Islands)
|
4,125,000
|
8,250,000
|
$1,155,000.00
|
|
|
Xmark
JV Investment Partners, LLC
|
c/o
Xmark Opportunity Partners, LLC
00
Xxxxx Xxxxxx
Xxxxx
000
Xxxxxxxxxx,
XX 00000
Telephone: (203)
XXX-XXXX
Facsimile: (203)
XXX-XXXX
Attention: Xxxxxxxx
X. Xxxx
(Delaware)
|
0
|
0
|
0
|
|
|
Total
|
5,892,857
|
11,785,714
|
$1,650,000
|
||
|
(1)
|
(2)
|
(3)
|
(4)
|
(5)
|
(6)
|
CONVERSION
SCHEDULE
|
(1)
|
(2)
|
(3)
|
(4)
|
(5)
|
(6)
|
(7)
|
(8)
|
(9)
|
|
Buyer
|
Aggregate
Principal
Amount
of
Notes
|
Number
of
Shares
to be issued upon conversion of Notes
|
Amount
of the Purchase
Option
|
Number
of Option Exchange Warrant Shares
|
Number
of 2005
Warrant
Shares
|
Number
of Note
Warrant
Shares
|
Number
of March 2009 Warrant Shares
|
Number
of Exchange Warrant Shares
|
|
Xmark
Opportunity Fund, L.P.
|
$300,000.00
|
857,143
|
$1,200,000.00
|
4,285,714
|
660,000
|
600,000
|
4,687,500
|
5,947,500
|
|
Xmark
Opportunity Fund, Ltd.
|
$700,000.00
|
2,000,000
|
$2,800,000.00
|
10,000,000
|
990,000
|
1,400,000
|
8,705,357
|
11,095,357
|
|
Xmark
JV Investment Partners, LLC
|
$0.00
|
0
|
$0.00
|
0
|
500,000
|
0
|
0
|
500,000
|
|
Total
|
$1,000,000.00
|
2,857,143
|
$4,000,000.00
|
14,285,714
|
2,150,000
|
2,000,000
|
13,392,857
|
17,542,857
|
|
(1)
|
(2)
|
(3)
|
(4)
|
(8)
|
(5)
|
(6)
|
(7)
|
(8)
|
Signature
Page to Securities Purchase Agreement
EXHIBITS
Exhibit
A Form
of Warrant
Exhibit
B Form
of Registration Rights Agreement
Exhibit
C Form
of Irrevocable Transfer Agent Instructions
Exhibit
D Form
of Opinion of Company’s Counsel
SCHEDULES
Schedule
3(a) Organization
and Qualification
Schedule
3(b) Authorization;
Enforcement; Validity
Schedule
3(d) No
Conflicts
Schedule
3(e) Consents
and Filings
Schedule
3(k) Absence
of Certain Changes
Schedule
3(o) Xxxxxxxx-Xxxxx
Act
Schedule
3(p) Transactions
with Affiliates
Schedule
3(q) Equity
Capitalization
Schedule
3(r) Indebtedness
and Other Contracts
Schedule
3(t) Insurance
Schedule
3(u) Employee
Relations
Schedule
3(v) Title
Schedule
3(w) Intellectual
Property Rights
Schedule
3(z) Internal
Accounting and Disclosure Controls
Schedule
3(gg) Placement
Agents
Signature
Page to Securities Purchase Agreement
