SUBSCRIPTION AGREEMENT
Exhibit 10.19
This
Subscription Agreement (this “Agreement”), dated as
of December [__], 2007, by and among HemoBioTech, Inc., a Delaware corporation
(the “Company”), and each
subscriber identified on the signature page hereto (each a “Subscriber” and
collectively the “Subscribers”).
Whereas,
the Company intends to offer for sale, and the Subscribers intends to purchase,
up to [number] units (“Units”), at the price
of $[ __ ] (the “Unit
Purchase Price”) for an aggregate of $6,000,000, each Unit consisting of
one share of the Company’s common stock, $.001 par value (“Common Stock”), and a
warrant exercisable for the purchase of one share of Common Stock (the “Warrants”);
Whereas,
the Company and the Subscribers are executing and delivering this Agreement in
reliance upon an exemption from securities registration afforded by the
provisions of Section 4(2), Section 4(6) and/or Regulation D (“Regulation D”) as
promulgated by the United States Securities and Exchange Commission (the “SEC”) under the
Securities Act of 1933, as amended (the “1933 Act,”
collectively the “Offering
Exemption”);
Now,
Therefore, in consideration of the mutual covenants and other agreements
contained in this Agreement, the Company and the Subscribers hereby agree as
follows:
1. Purchase and Sale of Shares
and Warrants. Subject to the satisfaction of the terms and
conditions of this Agreement, each Subscriber hereby irrevocably agrees to
purchase the full number of Units, consisting of Common Stock and Warrants in
the amounts designated on the signature page hereto (the “Subscription Amount”)
at the Unit Purchase Price, and the Company shall sell such Units to such
Subscribers at the Unit Purchase Price.
2. Escrow Arrangements; Form of
Payment. Upon execution of this Agreement by the parties and
pursuant to the terms of the escrow agreement, substantially in the form of
Exhibit B,
entered into between the Company, the Subscribers, and Signature Bank (the
“Escrow
Agreement”), each Subscriber agrees to make the deliveries required of it
as set forth in the Escrow Agreement, and the Company agrees to make the
deliveries required of the it as set forth in the Escrow Agreement.
3. Exercise Period and Price of
the Warrants. Each Warrant shall be in the form attached
hereto as Exhibit
A, and will be subject to the terms and conditions contained
therein.
4.1 Closing. At
closing of the transactions contemplated herein (the “Closing”), the
Subscribers shall purchase, severally and not jointly, and the Company shall
issue and sell, in the aggregate, a maximum of [ ___ ] Units, each consisting of
one share of Common Stock and a Warrant exercisable for the purchase of one
share of Common Stock. Each Subscriber shall purchase from the
Company, and the Company shall issue and sell to each Subscriber, the amount of
Units specified on Schedule
1. Upon satisfaction of the conditions set forth in Section
4.2, the Closing shall occur on December [ __ ], 2007 at the offices of
Xxxxxxxxx Xxxxxxx, LLP, 000 Xxxx Xxxxxx, Xxx Xxxx, XX 00000, or such other time
and/or location as the parties shall mutually agree.
4.2 Closing
Conditions.
(a) Each
Subscriber’s obligations at Closing are conditioned upon the Company’s delivery
to such Subscriber of:
(i) this
Agreement duly executed by the Company;
(ii) a
certificate evidencing ownership of a number of shares of Common Stock equal to
such Subscriber’s Subscription Amount;
(iii) Warrants,
in the Subscription Amount, registered in the name of such Subscriber, pursuant
to which such Subscriber shall have the right to acquire, with respect to each
Warrant, one share of Common Stock;
(b) The
Company’s obligations at Closing are conditioned upon each Subscriber’s delivery
to the Company of the following:
(i) this
Agreement duly executed by such Subscriber;
(ii) readily
available funds, in the form of a check or a wire transfer, in an amount
sufficient to purchase the Subscription Amount;
(iii) an
executed and properly completed copy of the appropriate Confidential Purchaser
Questionnaire; and
(iv) an
executed and properly completed copy of the form of Registration Rights
Agreement, as attached hereto as Exhibit
C.
(c) As
of Closing, there shall have been no Material Adverse Effect (as defined below)
with respect to the Company since the date hereof.
(d) From
the date hereof to Closing, trading in the Common Stock shall not have been
suspended by the SEC and, at any time prior to Closing, trading in securities
generally as reported by Bloomberg Financial Markets shall not have been
suspended or limited, or minimum prices shall not have been established on
securities whose trades are reported by such service, or on any trading market,
nor shall a banking moratorium have been declared either by the United States or
New York State authorities.
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5. Subscriber’s Representations
and Warranties. Each Subscriber hereby represents and warrants
as of the date hereof and as of the Closing, with regards to itself
that:
(a) Information on
Company. The Subscriber has either obtained or has access to
(through the XXXXX website of the SEC or otherwise) the Company’s reports and
filings, including all exhibits thereto, previously made with the SEC pursuant
to the requirements of the Securities Exchange Act of 1934, as amended (the
“1934 Act”) and
the regulations promulgated thereunder (hereinafter referred to collectively as
the “Reports”). In
addition, the Subscriber has received in writing from the Company such other
information concerning its operations, financial condition and other matters as
the Subscriber has requested in writing (such other information is collectively,
the “Other Written Information”), and the Subscriber considered all factors the
Subscriber deems material in deciding on the advisability of investing in the
Securities.
(b) Information on
Subscriber. The Subscriber is, and will be at the time of the
exercise of the Warrants, an “accredited investor” as defined in Section
2(15) of the 1933
Act and Rule 501 promulgated thereunder. Such Subscriber is not required to be
registered as a broker-dealer under Section 15 of the 1934 Act, is experienced
in investments and business matters, has previously made investments of a
speculative nature, understands that an investment in the Securities involves a
high degree of risk, has purchased securities of United States publicly-owned
companies in private placements in the past and, with its representatives, has
such knowledge and experience in financial, tax and other business matters as to
enable the Subscriber to utilize the information made available by the Company
to evaluate the merits and risks of and to make an informed investment decision
with respect to the proposed purchase, which represents a speculative
investment. The Subscriber, if not a natural person, has the
necessary authority to and is duly and legally qualified to purchase and own the
Securities. The Subscriber is able to bear the risk of such
investment for an indefinite period and to afford a complete loss
thereof. The information set forth on the signature page hereto
regarding the Subscriber is accurate. The sale of the Securities to
the Subscriber as contemplated in this Subscription Agreement complies with or
is exempt from the applicable securities legislation of the jurisdiction of the
residence of the Subscriber.
(c) Purchase of Shares and
Warrants. At Closing, the Subscriber will purchase the Shares
and Warrants for its own account for investment purposes only and not as a
nominee or agent and not with a view towards or for resale in connection with
the distribution of the Securities.
(d) Compliance with Securities
Act. The Subscriber understands and agrees that the Securities
are “restricted securities” have not been registered under the 1933 Act or any
applicable state securities laws, by reason of their issuance in a transaction
that does not require registration under the 1933 Act (based in part on the
accuracy of the representations and warranties of Subscriber contained herein),
and that such Securities must be held indefinitely unless a subsequent
disposition is registered under the 1933 Act or any applicable state securities
laws or is exempt from such registration.
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(e) Shares
Legend. The shares of Common Stock issued hereunder shall bear
the following or similar legend:
“THE
SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED. THESE SHARES MAY NOT BE SOLD,
OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT UNDER SUCH SECURITIES ACT OR ANY APPLICABLE STATE
SECURITIES LAW OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO HEMOBIOTECH,
INC. THAT SUCH REGISTRATION IS NOT REQUIRED.”
(f) Warrants
Legend. The Warrants shall bear the following or similar
legend:
“NEITHER
THIS SECURITY NOR THE SECURITIES INTO WHICH THIS SECURITY IS EXERCISABLE HAVE
BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES
COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY,
MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM,
OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS
EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR REASONABLY ACCEPTABLE
TO THE COMPANY TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY
ACCEPTABLE TO THE COMPANY.”
(g) Communication of
Offer. The offer to sell the Securities was directly
communicated to the Subscriber by the Company. At no time was the
Subscriber presented with or solicited by any leaflet, newspaper or magazine
article, radio or television advertisement, or any other form of general
advertising, or solicited or invited to attend a promotional meeting otherwise
than in connection and concurrently with such communicated offer.
(h) Organization;
Authority. If Subscriber is not a natural person, Subscriber
is an entity duly organized, validly existing and in good standing under the
laws of the jurisdiction of its organization with full right, corporate or
partnership power and authority to enter into and to consummate the transactions
contemplated by the Offering and otherwise to carry out its obligations
thereunder.
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(i) Authority;
Enforceability. This Agreement and other agreements delivered
together with this Agreement or in connection herewith have been duly
authorized, executed and delivered by the Subscriber and are valid and binding
agreements enforceable in accordance with their terms, subject to bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium and similar laws of
general applicability relating to or affecting creditors’ rights generally and
to general principles of equity; and Subscriber, if not a natural person, has
full corporate power and authority necessary to enter into this Agreement and
such other agreements and to perform its obligations hereunder and under all
other agreements entered into by the Subscriber relating hereto.
(j) Correctness of
Representations. Each Subscriber represents that the foregoing
representations and warranties are true and correct as of the date hereof and,
unless a Subscriber otherwise notifies the Company prior to the Closing, shall
remain true and correct as of Closing. The foregoing representations
and warranties shall survive the Closing Date for a period of three
years.
(k) No Tax or Legal
Advice. Such Subscriber understands that nothing in this
Agreement, any other agreement or any other materials presented to such
Subscriber in connection with the purchase and sale of the Units constitutes
legal, tax or investment advice and such information may not be used, for the
purpose of (i) avoiding tax-related penalties under the Internal Revenue Code or
(ii) promoting, marketing or recommending to another party any tax-related
matters addressed herein. Such Subscriber has consulted such legal,
tax and investment advisors as it, in its sole discretion, has deemed necessary
or appropriate in connection with its purchase of Units.
6. Company Representations and
Warranties. The Company represents and warrants to each
Subscriber that:
(a) Due
Incorporation. The Company is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware
and has the requisite corporate power to own its properties and to carry on its
business as currently being conducted. The Company is duly qualified
as a foreign corporation to do business and is in good standing in each
jurisdiction where the nature of the business conducted or property owned by it
makes such qualification necessary, unless the failure to be so qualified or in
good standing, as the case may be, would not have or would not reasonably be
expected to result in (i) a material adverse effect on the legality, validity or
enforceability of this Agreement or any other document in connection with the
Offering, (ii) a material adverse effect on the results of operations, assets,
business or financial condition of the Company, or (iii) a material adverse
effect on the Company’s ability to perform in any material respect on a timely
basis its obligations under this Agreement (any of (i), (ii) or (iii),
constituting a “Material Adverse
Effect”).
(b) Outstanding
Stock. All issued and outstanding shares of capital stock of
the Company has been duly authorized and validly issued and are fully paid and
non-assessable.
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(c) Authority;
Enforceability. This Agreement and the Warrants have been duly
authorized, executed and delivered by the Company and are valid and binding
agreements enforceable in accordance with their terms, subject to bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium and similar laws of
general applicability relating to or affecting creditors’ rights generally and
to general principles of equity, and the Company has full corporate power and
authority necessary to enter into this Agreement, the Warrants, the Escrow
Agreement, the form of which is attached hereto as Exhibit B, the
Registration Rights Agreement, the form of which is attached hereto as Exhibit C, and such
other agreements and to perform its obligations hereunder and under all other
agreements entered into by the Company relating hereto.
(d) Consents. No
consent, approval, authorization or order of any court, governmental agency or
body or arbitrator having jurisdiction over the Company, or over any of its
affiliates, the NASD, Inc., Nasdaq, the OTC Bulletin Board nor the Company’s
stockholders is required for execution of this Agreement and all other
agreements entered into by the Company relating thereto, including, without
limitation, the issuance and sale of the Securities, and the performance of the
Company’s obligations hereunder and under all such other
agreements.
(e) No Violation or
Conflict. Assuming the representations and warranties of the
Subscribers in Section 5 are true and correct, neither the execution and
delivery of this Agreement nor the issuance and sale of the Securities nor the
performance of the Company’s obligations under this Agreement and all other
agreements entered into by the Company relating thereto by the Company
will:
(i) violate,
conflict with, result in a material breach of, or constitute a default (or an
event which with the giving of notice or the lapse of time or both would be
reasonably likely to constitute a default) or give to others any rights of
termination, amendment, acceleration or cancellation under (A) the certificate
of incorporation or bylaws of the Company, (B) any decree, judgment, order, law,
treaty, rule, regulation or determination applicable to the Company of any
court, governmental agency or body, or arbitrator having jurisdiction over the
Company or any of its affiliates (including federal and state securities laws
and regulations) or over the properties or assets of the Company or any of its
affiliates, (C) the terms of any bond, debenture, note or any other evidence of
indebtedness, or any agreement, stock option or other similar plan, indenture,
lease, mortgage, deed of trust or other instrument to which the Company or any
of its affiliates is a party, by which the Company or any of its affiliates is
bound or affected, or to which any of the properties or assets of the Company or
any of its affiliates is subject, or (D) the terms of any “lock-up” or similar
provision of any underwriting or similar agreement to which the Company, or any
of its affiliates is a party except the violation, conflict, breach, or default
of which would not have a Material Adverse Effect on the Company;
or
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(ii) result
in the creation or imposition of any lien, charge or encumbrance upon the
securities or any of the assets of the Company or any of its
affiliates.
(f) The
Securities. The Securities upon issuance:
(i) are,
or will be, free and clear of any security interests, liens, claims or other
encumbrances, subject to restrictions upon transfer under the 1933 Act and any
applicable state securities laws;
(ii) have
been, or will be, duly and validly authorized and on the date of issuance will
be duly and validly issued, fully paid and nonassessable (and if eventually
registered pursuant to the 1933 Act, and resold pursuant to an effective
registration statement will be free trading and unrestricted, provided that each
Subscriber complies with the prospectus delivery requirements of the 1933 Act
and any state securities laws);
(iii) will
not have been issued or sold in violation of any preemptive or other similar
rights of the holders of any securities of the Company; and
(iv) will
not subject the holders thereof to personal liability by reason of being such
holders.
(g) Litigation. There
is no pending or, to the best knowledge of the Company, threatened action, suit,
proceeding inquiry, notice of violation, or investigation before any court,
governmental or administrative agency or regulatory body (federal, state,
county, local or foreign), or arbitrator having jurisdiction over the Company,
or any of its affiliates that would challenge the legality, validity or
enforceability of this Agreement and/or the Offering, or otherwise affect the
execution by the Company or the performance by the Company of its obligations
under this Agreement, and all other agreements entered into by the Company
relating hereto. Except as disclosed in the Reports or Other Written
Information, there is no pending or, to the best knowledge of the Company,
threatened action, suit, proceeding or investigation before any court,
governmental agency or body, or arbitrator having jurisdiction over the Company,
or any of its affiliates which litigation if adversely determined could have a
Material Adverse Effect on the Company.
(h) Reporting
Company. The Company is subject to reporting obligations
pursuant to Section 15(d) of the 1934 Act. Pursuant to the provisions
of the 1934 Act, the Company has filed all reports and other materials required
to be filed thereunder with the SEC during the preceding twelve
months.
(i) No Market
Manipulation. The Company has not taken, and will not take,
directly or indirectly, any action designed to, or that might reasonably be
expected to, cause or result in stabilization or manipulation of the price of
the common stock of the Company to facilitate the sale or resale of the
Securities or affect the price at which the Securities may be issued or
resold.
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(j) Information Concerning
Company. The Reports contain all material information relating
to the Company and its operations and financial condition from December 31, 2006
through their respective dates for which information is required to be disclosed
therein. Since the date of the financial statements included in the
Reports, and except as modified in the Other Written Information or in the
Schedules hereto, there has been no Material Adverse Effect on the Company’s
business, financial condition or affairs not disclosed in the
Reports. The Reports do not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading in light of the
circumstances when made. The Company has not
incurred any liabilities (contingent or otherwise) other than (A) trade payables
and accrued expenses incurred in the ordinary course of business consistent with
past practice and (B) liabilities not required to be reflected in the Company’s
financial statements pursuant to GAAP or required to be disclosed in filings
made with the SEC. The Company (i) has not altered its method of
accounting, (ii) has not declared or made any dividend or distribution of cash
or other property to its stockholders or purchased, redeemed or made any
agreements to purchase or redeem any shares of its capital stock and (iii) the
Company does not have pending before the SEC any request for confidential
treatment of information.
(k) SEC Action; Stop
Transfers. To the Company’s best knowledge there has not been,
there is not pending or contemplated, any investigation by the SEC involving the
Company. The SEC has not issued any stop order or other order suspending
the effectiveness of any registration statement filed by the Company or any
subsidiary under the 1933 Act or the 0000 Xxx. The Company will not
issue any stop transfer order or other order impeding the sale, resale or
delivery of any of the Securities, except as may be required by any applicable
federal or state securities laws. Except as described in this
Agreement, the Company will not issue any stop transfer or other order impeding
the sale, resale or delivery of the Securities unless contemporaneous notice of
such instruction is given to the Subscriber.
(l) Defaults. The
Company is not in violation of its Certificate of Incorporation or
ByLaws. The Company is (i) not in default under or in violation of
any other material agreement or instrument to which it is a party or by which it
or any of its properties are bound or affected, which default or violation would
have a Material Adverse Effect on the Company, (ii) not in default with respect
to any order of any court, arbitrator or governmental body or subject to or
party to any order of any court or governmental authority arising out of any
action, suit or proceeding under any statute or other law respecting antitrust,
monopoly, restraint of trade, unfair competition or similar matters, or (iii) to
its knowledge in violation of any statute, rule or regulation of any
governmental authority which violation would have a Material Adverse Effect on
the Company.
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(m) No General
Solicitation. Neither the Company, nor any of its affiliates,
nor to the Company’s knowledge, any person acting on its or their behalf, has
since September 30, 2007, directly or indirectly made any offers or sales of any
security or solicited any offers to buy any security that would cause the offer
of the Securities pursuant to this Agreement to be integrated with prior
offerings by the Company for purposes of the 1933 Act or any applicable
stockholder approval provisions. Neither the Company nor any of its affiliates
will take any action or steps that would cause the offer of the Securities to be
integrated with other offerings if such integration would eliminate the Offering
Exemption. The Company will not conduct any offering other than the
transactions contemplated hereby that will be integrated with the offer or
issuance of the Securities, unless otherwise advised by Nasdaq or the
SEC.
(n) Listing. The
Company’s common stock is listed for trading on the Over-The-Counter Bulletin
Board (“OTCBB”). Except for prior notices, which as of the date hereof have been
satisfied, and as provided for in Section 10(b) below, the Company has not
received any oral or written notice that its common stock will be delisted from
the OTCBB nor that its common stock does not meet all requirements for the
continuation of such quotation and the Company satisfies the requirements for
the continued listing of its common stock on the OTCBB.
(o) No Undisclosed
Liabilities. The Company has no liabilities or obligations
which are material, individually or in the aggregate, which are not disclosed in
the Reports and/or Other Written Information, other than those incurred in the
ordinary course of the Company’s businesses since September 30, 2007 which,
individually or in the aggregate, would reasonably be expected to have a
Material Adverse Effect on the Company’s financial condition, other than as set
forth in Schedule
6(p), or as described in the Reports.
(p) No Undisclosed Events or
Circumstances. There has been no event or circumstance that
has occurred or exists with respect to the Company or its businesses,
properties, operations or financial condition, that, under applicable law, rule
or regulation, requires public disclosure or announcement prior to the date
hereof by the Company but which has not been so publicly announced or disclosed
in the Reports.
(q) Capitalization. The
authorized and outstanding capital stock of the Company as of the date of this
Agreement and each Closing are set forth on Schedule
6(r). No person has any right of first refusal, preemptive
right, right of participation, or any similar right to participate in the
transactions contemplated by this Offering except as set forth on Schedule 6(r), or as
described in the Reports. Except as set forth on Schedule 6(r)
concerning proposed acquisitions and as described in the Reports and/or as a
result of the purchase and sale of the Securities and except for employee stock
options under the Company’s stock option plans and except for employee rights
under the Company’s employee stock purchase plan, and except as otherwise set
forth on Schedule
6(r), there are no outstanding options, warrants, script rights to
subscribe to, calls or commitments of any character whatsoever relating to, or
securities, rights or obligations convertible into or exchangeable for, or
giving any person any right to subscribe for or acquire, any shares of Common
Stock, or contracts, commitments, understandings or arrangements by which the
Company or any subsidiary is or may become bound to issue additional shares of
Common Stock, or securities or rights convertible or exchangeable into shares of
Common Stock. Except as required by agreements filed as exhibits to
the Reports, the issue and sale of the Units will not obligate the Company to
issue any securities to any person (other than the Subscribers) and will not
result in a right of any holder of Company securities to adjust the exercise,
conversion, exchange or reset price under such securities.
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(r) Title to
Assets. Except as disclosed in the Reports, the Company has
good and marketable title in fee simple to all real property owned by it that is
material to the business of the Company, and good and marketable title in all
personal property owned by it that is material to the business of the Company,
in each case free and clear of all liens, charges, security interests,
encumbrances, rights of first refusal or other restrictions (collectively
“Liens”) except for Liens as do not materially affect the value of such property
and do not materially interfere with the use made and proposed to be made of
such property by the Company and Liens for the payment of federal, state or
other taxes, the payment of which is neither delinquent nor subject to
penalties. Any real property and facilities held under lease by the
Company are held by them under valid, subsisting and enforceable leases with
which the Company is in material compliance.
(s) Internal Accounting
Controls. The Company and 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 GAAP and to maintain
asset accountability, (iii) access to assets is permitted only in accordance
with management’s general or specific authorization, and (iv) the recorded
accountability for assets is compared with the existing assets at reasonable
intervals and appropriate action is taken with respect to any differences. The
Company has established disclosure controls and procedures (as defined in the
1934 Act Rules 13a-14 and 15d-14) for the Company and designed such disclosure
controls and procedures to ensure that material information relating to the
Company (but not any proposed acquisition), and each subsidiary, is made known
to the certifying officers by others within those entities, particularly during
the period in which the Company’s Form 10-KSB or 10-QSB, as the case may be, is
being prepared.
(t) Registration
Rights. Except as set forth in the Reports or on Schedule 6(t), no
person has any right to cause the Company to effect the registration under the
1933 Act of any securities of the Company.
7. Regulation D
Offering. This Offering is being made pursuant to the
exemption from the registration provisions of the 1933 Act afforded by Section
4(2) or Section 4(6) of the 1933 Act and/or Rule 506 of Regulation D promulgated
thereunder.
8. Reissuance of
Securities. The Company agrees to reissue certificates
representing the Shares and the Warrant Shares without the legends set forth in
Sections 5(e) and 5(f) above, (a) at such time as the holder thereof is
permitted to dispose of the Securities pursuant to Rule 144(d) and/or Rule
144(k) under the 1933 Act in the opinion of counsel reasonably satisfactory to
the Company, or (b) upon resale subject to an effective registration statement
after the shares of Common Stock issued pursuant to this Agreement and the
shares of Common Stock underlying the Warrants are registered under the 1933
Act. The Company agrees to cooperate with each Subscriber in
connection with all resales pursuant to Rule 144(d) and Rule 144(k) and to
provide legal opinions at the Company’s expense necessary to allow such resales
provided the Company and its counsel receive reasonably requested written
representations from each Subscriber and their selling broker, if
any.
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9. NASD Member Firm
Compensation. The Company on the one hand, and each Subscriber
on the other hand, agree to indemnify the other against and hold the other
harmless from any and all liabilities to any persons claiming brokerage
commissions other than Xxxxxx Associates, L.P. on account of services purported
to have been rendered on behalf of the indemnifying party in connection with
this Agreement or the transactions contemplated hereby and arising out of such
party’s actions.
10. Covenants of the
Company. The Company covenants and agrees with the Subscribers
that for one year following the Closing
(a) Stop
Orders. The Company will advise the Subscribers, promptly
after it receives notice of issuance by the SEC, any state securities commission
or any other regulatory authority of any stop order or of any order preventing
or suspending any offering of any securities of the Company, or of the
suspension of the qualification of the Common Stock of the Company for offering
or sale in any jurisdiction, or the initiation of any proceeding for any such
purpose.
(b) Listing. If
applicable, the Company shall use its reasonable best efforts to promptly secure
the listing of the shares of Common Stock to be purchased hereunder and the
shares of Common Stock to be issued under the Warrant upon each national
securities exchange, or automated quotation system, if any, upon which shares of
Common Stock are then listed (subject to official notice of issuance) and shall
use its reasonable best efforts to maintain such listing so long as any
Securities are outstanding. The Company shall use its reasonable best
efforts to maintain the listing of its Common Stock on the American Stock
Exchange, Nasdaq Capital Market, Nasdaq Global Market, OTC Bulletin Board, or
New York Stock Exchange (whichever of the foregoing is at the time the principal
trading exchange or market for the Common Stock (the “Principal Market”)), and
will comply in all material respects with the Company’s reporting, filing and
other obligations under the bylaws or rules of the Principal Market, as
applicable. The Company will provide the Subscribers copies of all
notices it receives notifying the Company of the threatened and actual delisting
of the Common Stock from any Principal Market.
(c) Market
Regulations. If required, the Company shall notify the SEC,
the Principal Market and applicable state authorities, in accordance with their
requirements, if any, of the transactions contemplated by this Agreement, and
shall take all other necessary action and proceedings as may be required and
permitted by applicable law, rule and regulation, for the legal and valid
issuance of the Securities to the Subscribers and promptly provide copies
thereof to Subscriber.
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(d) Reporting
Requirements. The Company will (i) cause its Common Stock to
remain registered under Section 12(b) or 12(g) of the 1934 Act following the
completion of the Offering, (ii) comply in all respects with its reporting and
filing obligations under the 1934 Act, (iii) comply with all reporting
requirements that are applicable to an issuer with a class of shares registered
pursuant to Section 15(d) of the 1934 Act, as applicable, and (iv) comply with
all requirements related to any registration statement filed pursuant to this
Agreement. The Company will use its best efforts to not take any
action or file any document (whether or not permitted by the 1933 Act or the
1934 Act or the rules thereunder) to terminate or suspend such registration or
to terminate or suspend its reporting and filing obligations under said
acts.
(e) Use of
Proceeds. The proceeds of this Offering will be used by the
Company for our research and development activities, licensing and other general
working capital purposes, and may not and will not be used for accrued and
unpaid officer and director salaries, except as in the ordinary course of
business, payment of financing related debt, redemption of redeemable notes or
equity instruments of the Company.
(f) Reservation of Common
Stock. The Company undertakes to reserve from its authorized
but unissued common stock, at all times Warrants remain outstanding, a number of
shares of Common Stock equal to the amount of Common Stock issuable upon
exercise of the Warrants.
(g) Taxes. The
Company will promptly pay and discharge, or cause to be paid and discharged,
when due and payable, all lawful taxes, assessments and governmental charges or
levies imposed upon the income, profits, property or business of the Company;
provided, however, that any such tax, assessment, charge or levy need not be
paid if the validity thereof shall currently be contested in good faith by
appropriate proceedings and if the Company shall have set aside on its books
adequate reserves with respect thereto, and provided, further, that the Company
will pay all such taxes, assessments, charges or levies forthwith upon the
commencement of proceedings to foreclose any lien which may have attached as
security therefore.
(h) Insurance. The
Company is insured by insurers of recognized financial responsibility against
such losses and risks and in such amounts as are prudent and customary in the
businesses in which the Company is engaged. The Company has no reason to
believe that it will not be able to renew its existing insurance coverage as and
when such coverage expires or to obtain similar coverage from similar insurers
as may be necessary to continue its business without a significant increase in
cost. The Company will keep its assets which are of an insurable
character insured by financially sound and reputable insurers against loss or
damage by fire, explosion and other risks customarily insured against by
companies in the Company’s line of business, in amounts sufficient to prevent
the Company from becoming a co-insurer and not in any event less than 100% of
the insurable value of the property insured; and the Company will maintain, with
financially sound and reputable insurers, insurance against other hazards and
risks and liability to persons and property to the extent and in the manner
customary for companies in similar businesses similarly situated and to the
extent available on commercially reasonable terms.
12
(i) Books and
Records. The Company will keep true records and books of
account in which full, true and correct entries will be made of all dealings or
transactions in relation to its business and affairs in accordance with
generally accepted accounting principles applied on a consistent
basis.
(j) Governmental
Authorities. The Company shall duly observe and conform in all
material respects to all valid requirements of governmental authorities relating
to the conduct of its business or to its properties or assets.
(k) Intellectual
Property. To the knowledge of the Company, the Company has, or
has rights to use, all patents, patent applications, trademarks, trademark
applications, service marks, trade names, copyrights, licenses necessary to
conduct business and other similar rights that are necessary or material for use
in connection with its business as described in the Reports and which the
failure to so have could have or reasonably be expected to result in a Material
Adverse Effect (collectively, the “Intellectual Property
Rights”). In the last three years, the Company has not received a
written notice that the Intellectual Property Rights used by the Company or any
subsidiary violates or infringes the rights of any person. The Company
shall maintain in full force and effect its corporate existence, rights and
franchises and all licenses necessary to conduct business and other rights to
use intellectual property owned or possessed by it and reasonably deemed to be
necessary to the conduct of its business.
(l) Properties. The
Company will keep its properties in good repair, working order and condition,
reasonable wear and tear excepted, and from time to time make all needful and
proper repairs, renewals, replacements, additions and improvements thereto; and
the Company will at all times comply with each provision of all leases to which
it is a party or under which it occupies property if the breach of such material
provision could reasonably be expected to have a Material Adverse
Effect.
(m) Confidentiality. The
Company agrees that it will not disclose publicly or privately the identity of
any Subscriber unless expressly agreed to in writing by that Subscriber or only
to the extent required by law; provided, however, the Subscribers consent to
being named in the Company’s SEC filings in connection with the sale of the
Securities.
(n) Press Release; Form
8-K. The Company shall issue a press release through a
national news service on the morning immediately following the Subscription
Acceptance Date (defined below). Such press release shall be issued
in compliance with Rule 135(c) under the 1933 Act. Such press
release, along with all other material information, shall be filed on a timely
basis with the SEC as a current report on Form 8-K.
13
11. Covenants of the Company and
Subscriber Regarding Indemnification.
(a) The
Company agrees to indemnify, hold harmless, reimburse and defend the
Subscribers, the Subscribers’ officers, directors, agents, affiliates, control
persons, and principal shareholders, against any claim, cost, expense,
liability, obligation, loss or damage (including reasonable legal fees) of any
nature, incurred by or imposed upon the Subscriber or any such person which
results, arises out of or is based upon (i) any material misrepresentation by
Company or breach of any warranty by Company in this Agreement or in any
Exhibits or Schedules attached hereto, or other agreement delivered pursuant
hereto; or (ii) after any applicable notice and/or cure periods, any breach or
default in performance by the Company of any covenant or undertaking to be
performed by the Company hereunder, or any other agreement entered into by the
Company and Subscriber relating hereto.
(b) Each
Subscriber agrees to indemnify, hold harmless, reimburse and defend the Company
and each of the Company’s officers, directors, agents, affiliates, control
persons, and principal shareholders against any claim, cost, expense, liability,
obligation, loss or damage (including reasonable legal fees) of any nature,
incurred by or imposed upon the Company or any such person which results, arises
out of or is based upon (i) any material misrepresentation by such Subscriber in
this Agreement or in any Exhibits or Schedules attached hereto, or other
agreement delivered pursuant hereto; or (ii) after any applicable notice and/or
cure periods, any breach or default in performance by such Subscriber of any
covenant or undertaking to be performed by such Subscriber hereunder, or any
other agreement entered into by the Company and Subscribes relating
hereto.
(c) The
procedures set forth in Section 12.6 shall apply to the indemnifications set
forth in Sections 11(a) and 11(b) above.
12. Registration
Rights. The Company and the Subscribers will execute a
Registration Rights Agreement, dated as of the date hereof, prior to
Closing. The respective rights and obligations of the Company and the
Subscribers relating to the registration of the Securities are delineated
therein.
13. Miscellaneous.
(a) Notices. All
notices, demands, requests, consents, approvals, and other communications
required or permitted hereunder shall be in writing and, unless otherwise
specified herein, shall be either (i) personally served, (ii) deposited in the
mail, registered or certified, return receipt requested, postage prepaid, (iii)
delivered by reputable air courier service with charges prepaid, or (iv)
transmitted by hand delivery, electronic mail, or facsimile, addressed as set
forth below or to such other address as such party shall have specified most
recently by written notice. Any notice or other communication
required or permitted to be given hereunder shall be deemed effective (a) upon
hand delivery or delivery by facsimile, with accurate confirmation generated by
the transmitting facsimile machine, at the address or number designated below
(if delivered on a business day during normal business hours where such notice
is to be received), or the first business day following such delivery (if
delivered other than on a business day during normal business hours where such
notice is to be received), (b) on the second business day following the date of
mailing by express courier service, fully prepaid, addressed to such address, or
upon actual receipt of such mailing, or (c) upon acknowledgment of by the
recipient of receipt by electronic mail, whichever shall first
occur. The addresses for such communications shall be:
14
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(i)
if to the Company, to:
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0000
Xxxxxx Xxxxxx Xxxx
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Xxxxx
0000-Xxxx
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Xxxxxx,
Xxxxx 00000
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Attention:
Xx. Xxxxxx X. Xxxxxx, Ph.D.
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Telephone:
(000) 000-0000
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With a copy
to: Xxxxxx
X. Xxxxx, Esq.
Xxxxxxxxx Xxxxxxx, LLP
000 Xxxx Xxxxxx
Xxx Xxxx,
X.X. 00000
Email: xxxxxx@xxxxx.xxx
Fax: (000) 000-0000
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(ii)
if to the Subscribers, to the address and facsimile number indicated on
the signature pages hereto
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with
a copy to:
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Xxxxxx
Associates, L.P.
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00 Xxxxxxxx, 0xx
Xxxxx
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Xxx Xxxx, X.X. 00000
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Email:
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Fax: (000) 000-0000
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(b) Entire
Agreement. This Agreement and other documents delivered in
connection herewith represent the entire agreement between the parties hereto
with respect to the subject matter hereof and may be amended only by a writing
executed by all parties. Neither the Company nor the Subscribers have
relied on any representations not contained or referred to in this Agreement and
the documents delivered herewith, except as contained in the
Reports.
(c) Assignment. No
right or obligation of any party may be assigned by that party without the prior
written consent of all other parties. This Agreement will be binding
on the successors and assigns of all parties hereto.
(d) Counterparts. This
Agreement may be executed by facsimile transmission, and in counterparts, all of
which together will be deemed one original.
(e) Law Governing this
Agreement. This Agreement shall be governed by
and construed in accordance with the laws of the State of
Delaware without regard to principles of conflicts of
laws. Any action brought by any party hereto concerning the
transactions contemplated by this Agreement shall be brought only before the
United States District Court for the District of Delaware or the state courts of
Delaware, as appropriate. All parties to this Agreement hereby submit
to the jurisdiction of such courts and hereby waive their right to a trial by
jury.
15
(f) Severability. In
the event that any provision of this Agreement or any other agreement delivered
in connection herewith is invalid or unenforceable under any applicable statute
or rule of law, then such provision shall be deemed inoperative to the extent
that it may conflict therewith and shall be deemed modified to conform with such
statute or rule of law. Any such provision which may prove invalid or
unenforceable under any law shall not affect the validity or enforceability of
any other provision of any agreement.
(g) Headings. All
headings contained herein are inserted only for convenience and ease of
reference and are not to be considered in the construction or interpretation of
any provision of this Agreement.
[Signature
page to follow]
16
SIGNATURE PAGE TO
SUBSCRIPTION AGREEMENT
In
Witness Whereof, the parties have entered into this Agreement as of the
date first written above.
A Delaware
corporation
By:________________________________
Xx. Xxxxxx X. Xxxxxx,
Ph.D.
Chief Executive
Officer
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SUBSCRIBER
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PURCHASE
PRICE
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UNITS
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_______________________________________
(Signature)
Name:
Address:
Fax:
Email:
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$
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