SECOND AMENDED AND RESTATED CONVERTIBLE PROMISSORY NOTE PURCHASE AGREEMENT
Exhibit
10.1
SECOND AMENDED AND RESTATED CONVERTIBLE PROMISSORY NOTE
PURCHASE AGREEMENT
PURCHASE AGREEMENT
This SECOND AMENDED AND RESTATED CONVERTIBLE PROMISSORY NOTE PURCHASE AGREEMENT, dated as of
August 13, 2007 is made between the purchaser listed on the signature pages hereto (the
“Purchaser”), the Amended Note Purchasers (as defined below), and ALSERES PHARMACEUTICALS, INC., a
Delaware corporation (the “Company”).
RECITALS
WHEREAS, the Company entered into that certain Convertible Promissory Note Purchase Agreement,
dated as of March 22, 2007 (the “Original Agreement”) by and among the Company and the purchasers
listed therein (the “Original Convertible Note Purchasers”) pursuant to which the Company issued to
each of the Original Convertible Note Purchasers a convertible promissory note (collectively, the
“Original Notes”), and the Company obtained the right to borrow up to $15,000,000 (the “Original
Advance Amount”) from the Original Convertible Note Purchasers;
WHEREAS, the Company entered into that certain Amended and Restated Convertible Promissory
Note Purchase Agreement, dated as of May 1, 2007 by and among the Company and the purchasers listed
therein (the “Amended Note Purchasers”), pursuant to which the Original Convertible Note Purchasers
agreed not to request any additional Advances (as defined in the Original Agreement) under the
Original Agreement, and Highbridge International LLC (“Highbridge”) was added as a Purchaser (as
defined in the Original Agreement) and was issued a convertible promissory note (the “Highbridge
Note”);
WHEREAS, as of the date hereof, the Company has borrowed $15,000,000 of the Original Advance
Amount;
WHEREAS, the Company requires certain funds for the operation of its business; and
WHEREAS, the Purchaser is willing to provide the Company with such funds through the increase
of the Original Advance Amount and the purchase of the New Note (defined below) on the terms and
conditions hereafter provided, including certain registration rights relating to the Common Stock
issued and issuable upon the conversion of the Convertible Notes (defined below);
NOW, THEREFORE, in order to induce the Purchaser to purchase the New Note and for other good
and valuable consideration, the receipt and adequacy of which are hereby acknowledged, and
intending to be legally bound, the Purchaser, the Amended Note Purchasers and the Company hereby
agree as follows:
1. DEFINED TERMS. When used in this Agreement the following terms shall have the following
meanings (such meanings being equally applicable to both the singular and plural forms of the terms
defined):
“Affiliates” shall mean any corporation, company, partnership, joint venture and/or firm that
controls, is controlled by, or is under common control with the Company. For purposes of this
definition, “control” shall mean (a) in the case of corporate entities, direct or indirect
ownership of at least fifty percent (50%) of the stock or shares having the right to vote for the
election of directors and (b) in the case of non-corporate entities, direct or indirect ownership
of at least fifty percent (50%) of the equity interest with the power to direct the management and
policies of such non-corporate entities.
“Agreement” means this Second Amended and Restated Convertible Promissory Note Purchase
Agreement, as it may be amended or modified and in effect from time to time.
“Amended Note Purchasers” shall have the meaning set forth in the preamble.
“Business Day” means any day other than a Saturday, Sunday, or other day on which commercial
banks in the Commonwealth of Massachusetts are authorized or required to close.
“Commitment Percentage” shall have the meaning set forth in Section 2.1 hereof.
“Common Stock” means the common stock, $0.01 par value per share, of the Company.
“Convertible Notes” shall mean, collectively, the Original Notes, the Highbridge Note and the
New Note.
“Cut Back Shares” has the meaning set forth in Section 9.1(d).
“Effective Date” means the date that the Registration Statement is first declared effective by
the SEC.
“Effectiveness Period” has the meaning set forth in Section 9.1(b).
“Electing Purchaser” shall have the meaning set forth in Section 4.2
“Event of Default” shall have the meaning assigned to such term in Section 11 hereof.
“Exchange Act” means the Securities Exchange Act of 1934, as amended.
“First Commercial Sale” shall mean, with respect to each Molecular Imaging Product, the first
commercial sale in a country as part of a nationwide introduction by the Company, its Affiliates or
its or its Affiliates’ licensees or sublicensees.
“Highbridge Note” shall have the meaning set forth in the preamble.
“Highest Lawful Rate” means the maximum lawful interest rate, if any, that at any time or from
time to time may be contracted for, charged, or received under the laws applicable to the Amended
Note Purchasers or the Purchaser which are presently in effect or, to the extent allowed
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by law, under such applicable laws which allow a higher maximum nonusurious interest rate than
applicable laws now allow.
“Indemnified Party” has the meaning set forth in Section 9.4(c).
“Indemnifying Party” has the meaning set forth in Section 9.4(c).
“Loan Documents” means collectively, this Agreement and the Convertible Notes.
“Losses” means any and all losses, claims, damages, liabilities, settlement costs and
expenses, including, without limitation, reasonable attorneys’ fees.
“Maturity Date” means the earliest to occur of (a) December 31, 2010 and (b) the date on which
an Amended Note Purchaser or the Purchaser declares a Default (as defined in Section 11 below) to
have occurred.
“Molecular Imaging Products” shall mean products approved for sale by the appropriate U.S.
and/or foreign regulatory body containing as the active ingredient the Company’s radio-labeled
molecular imaging agents, currently in development or developed by the Company in the future,
including, without limitation, the ALTROPANE® and FLUORATEC molecular imaging agents,
for the diagnosis and monitoring of Xxxxxxxxx’x Disease and Attention Deficit Hyperactivity
Disorder using SPECT or PET camera imaging techniques.
“Net Sales” shall mean the gross amount received by the Company, its Affiliates and/or its or
its Affiliates’ licensees or sublicensees on sales or other dispositions of Molecular Imaging
Products to Third Parties (other than licensees or sublicensees) in bona fide, arm’s-length
transactions, less the following deductions:
(a) Trade, cash and/or quantity discounts actually allowed and taken directly with respect to
such sales, as reflected in the amount invoiced;
(b) Tariffs, duties, excises, sales taxes or other taxes imposed upon and paid directly by
the Company with respect to the production, sale, delivery or use of the Molecular Imaging Product
(excluding national, state or local taxes based on income), as reflected in the amount invoiced;
(c) Amounts repaid or credited by reason of rejections, defects, recalls or returns, or
because of chargebacks, refunds, rebates, retroactive price reductions or delayed ship orders;
(d) Amounts credited for uncollectible amounts on previously sold products;
(e) Freight, insurance and other transportation charges incurred in shipping a Molecular
Imaging Product to Third Parties, as reflected in the amount invoiced;
(f) Deduction of one percent (1%) for distribution and warehousing expenses; and
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(g) Any other reduction or specifically identifiable amounts included in the gross invoice
that are creditable for reasons substantially equivalent to those listed above.
Notwithstanding anything in this Agreement to the contrary, “Net Sales” shall exclude any
sales or other disposition of Molecular Imaging Products for test marketing, clinical trial
purposes or compassionate or similar use.
Net Sales amounts shall be determined from the books and records of the Company, its
Affiliates and/or its or its Affiliates’ licensees or sublicensees, maintained in accordance with
generally accepted accounting principles, consistently applied.
Sales between or among the Company, its Affiliates or their respective licensees and
sublicensees shall be disregarded for purposes of calculating Net Sales. In the case of any sale
or other disposal of a Molecular Imaging Product between or among the Company and its Affiliates,
licensees and sublicensees, for resale, Net Sales shall be calculated as above only on the value
charged or invoiced on the first arm’s-length sale thereafter to a Third Party.
In the case of any sale or other disposal for value, such as barter or counter-trade, of any
Molecular Imaging Product, or part thereof, other than in an arm’s-length transaction exclusively
for money, Net Sales shall be calculated as above on the value of the non-cash consideration
received or the fair market price (if higher) of the Molecular Imaging Product in the country of
sale or disposal.
In the event the Molecular Imaging Product is sold in a finished dosage form in combination
with one or more other active ingredients (a “Combination Product”), the Net Sales of the Molecular
Imaging Product, for the purposes of determining royalty payments, shall be determined by
multiplying the Net Sales (as defined above) of the Combination Product by the fraction, ‘A/(A+B)’
where ‘A’ is the weighted (by sales volume) average sale price in the relevant country of the
Molecular Imaging Product when sold separately in finished form and ‘B’ is the weighted average
sale price in that country of the other product(s) sold separately in finished form. In the event
that such average sale price cannot be determined for both the Molecular Imaging Product and the
other product(s) in the Combination Product, Net Sales for purposes of determining royalty payments
shall be agreed by the Parties based on the relative value contributed by each component, such
agreement not to be unreasonably withheld.
“New Note” shall have the meaning set forth in Section 2.1 hereof.
“Obligations” means all unpaid principal of and accrued and unpaid interest on the Convertible
Notes, and all other obligations, interest, fees, charges and expenses of the Company to the
Amended Note Purchasers and the Purchaser arising under the Loan Documents.
“Original Advance Amount” shall have the meaning set forth in the preamble.
“Person” means an individual, a limited liability company, a partnership, a joint venture, a
corporation, a trust, an unincorporated organization, a government or any department or agency
thereof.
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“Pre-Commercial Income” shall mean, with respect to each Molecular Imaging Product, all
license fees, milestone payments and other amounts received by the Company and/or its Affiliates
from Third Parties in connection with or related to the licensing or sublicensing to such Third
Parties of the Company’s and/or its Affiliate’s rights under the intellectual property covering the
Molecular Imaging Product. Notwithstanding anything in the foregoing to the contrary,
“Pre-Commercial Income” shall exclude (a) any royalty payments or milestone payments based upon
commercial sales levels, (b) amounts received for research and development activities undertaken
for, or in collaboration with, such Third Parties, (c) amounts received for debt or equity
securities of the Company and/or its Affiliates, provided that any amounts received in excess of
the then current fair market value of such debt or equity securities shall, to the extent of such
excess, be deemed to be Pre-Commercial Income, and (d) transfer pricing amounts paid in respect of
Molecular Imaging Products supplied to such Third Parties.
“Proceeding” means an action, claim, suit, investigation or proceeding (including, without
limitation, a partial proceeding, such as a deposition), whether commenced or threatened in
writing.
“Prospectus” means the prospectus included in the Registration Statement (including, without
limitation, a prospectus that includes any information previously omitted from a prospectus filed
as part of an effective registration statement in reliance upon Rule 430A promulgated under the
Securities Act), as amended or supplemented by any prospectus supplement, with respect to the terms
of the offering of any portion of the Registrable Securities covered by the Registration Statement,
and all other amendments and supplements to the Prospectus including post-effective amendments, and
all material incorporated by reference or deemed to be incorporated by reference in such
Prospectus.
“Registrable Securities” means the shares of Common Stock issued or issuable on the conversion
of any Convertible Notes pursuant to Section 9.
“Registration Statement” means each registration statement required to be filed under Section
9, including (in each case) the Prospectus, amendments and supplements to such registration
statement or Prospectus, including pre- and post-effective amendments, all exhibits thereto, and
all material incorporated by reference or deemed to be incorporated by reference in such
registration statement.
“Registration Statement Questionnaire” means a questionnaire in the form attached hereto as
Exhibit B.
“Required Effectiveness Date” means (i) if a Registration Statement does not become subject to
review by the SEC, the date which is the earlier of (a) ninety (90) days after the Required Filing
Date or (b) five (5) Trading Days after the Company receives notification from the SEC that such
Registration Statement will not become subject to review, or (ii) if a Registration Statement
becomes subject to review by the SEC, the date which is the earlier of (a) one hundred and twenty
(120) days after the Required Filing Date or (b) five (5) Trading Days after the Company receives
notification from the SEC that the SEC has no further comment to such Registration Statement.
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“Required Filing Date” has the meaning set forth in Section 9.1(a).
“Restriction Termination Date” has the meaning set forth in Section 9.1(d).
“Rule 144 Affiliate” means any Person that, directly or indirectly through one or more
intermediaries, controls or is controlled by or is under common control with a Person, as such
terms are used in and construed under Rule 144 under the Securities Act.
“SEC” means the United States Securities and Exchange Commission.
“SEC Reports” means all documents required to be filed by the Company under the Exchange Act,
including pursuant to Section 13(a) or 15(d) thereof, for the two years preceding the date hereof,
together with any other materials filed or furnished by the Company under the Exchange Act, whether
or not any such materials were required.
“SEC Restrictions” has the meaning set forth in Section 9.1(d).
“Securities Act” means the Securities Act of 1933, as amended.
“Stockholder Approval” shall have the meaning set forth in Section 4.1(b).
“Third Party” shall mean any person or entity other than the Company or any of its Affiliates.
“Total Converted Balance” shall have the meaning set forth in Section 4.2
“Trading Day” means (i) a day on which the Common Stock is traded on a Trading Market (other
than the OTC Bulletin Board), or (ii) if the Common Stock is not listed or quoted on a Trading
Market (other than the OTC Bulletin Board), a day on which the Common Stock is traded in the
over-the-counter market, as reported by the OTC Bulletin Board, or (iii) if the Common Stock is not
listed or quoted on any Trading Market, a day on which the Common Stock is quoted in the
over-the-counter market as reported by the Pink Sheets LLC (or any similar organization or agency
succeeding to its functions of reporting prices); provided, that in the event that the Common Stock
is not listed or quoted as set forth in (i), (ii) and (iii) hereof, then Trading Day shall mean a
Business Day.
“Trading Market” means whichever of the New York Stock Exchange, the American Stock Exchange,
the NASDAQ Global Select Market, the NASDAQ Global Market, the NASDAQ Capital Market or the OTC
Bulletin Board on which the Common Stock is listed or quoted for trading on the date in question.
“Transfer Agent” means Continental Stock Transfer & Trust Company, or any successor transfer
agent for the Company.
“Valid Claim” means a claim of any issued, unexpired United States or foreign patent, which
shall not be disclaimed, nor held invalid or unenforceable by a court of competent jurisdiction in
an unappealed or unappealable decision.
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2. CONVERTIBLE NOTE FACILITY.
2.1 Purchase and Sale of New Note. At each Closing (as defined below), the Purchaser
agrees on the terms of and subject to the conditions specified in this Agreement, to purchase from
the Company, according to the Purchaser’s pro rata share (based upon the respective “Commitment
Percentage” of the Purchaser as set forth on Schedule 2.1 attached hereto), and the Company agrees
to sell to the Purchaser listed on Schedule 2.1, convertible promissory notes dated as of the date
of such Closing in the form attached to this Agreement as Exhibit A (the “New Note”); provided,
however, that in no event shall the Purchaser be obligated hereunder to purchase, in the aggregate,
more than a principal amount of $10 million in New Notes.
2.2 Closing. The closing of the issuance and sale of the New Note issued hereunder
shall be held at the offices of counsel to the Company at 5:00 p.m. on the date and place as the
Company and the Purchaser mutually agree in writing (each such date, a “Closing”).
2.3 Payment of New Note Purchase Price. At each Closing, (i) the Company shall
deliver to the Purchaser a New Note at such Closing, and (ii) as payment in full for the New Note
being purchased by the Purchaser at such Closing, the Purchaser shall pay its purchase amount to
the Company by wire transfer of immediately available funds to an account designated by the
Company.
2.4 Interest. Interest shall accrue on each Convertible Note from the date of
issuance until such Convertible Note is paid in full or otherwise converted pursuant to Section 4
hereof. The Company promises to pay interest on the outstanding principal amount of each
Convertible Note (i) until the Maturity Date, or if earlier, conversion pursuant to Section 4
hereof, at a per annum interest rate equal to five percent (5%), (ii) from and after the Maturity
Date, or during the continuance of an Event of Default, at a per annum rate equal to ten percent
(10%) or (iii) if less than the rates applicable under both clauses (i) and (ii), the Highest
Lawful Rate. Interest shall be calculated on the basis of a 360-day year for the actual number of
days elapsed. Interest shall accrue until paid in full and all unpaid interest shall be due and
payable on the Maturity Date, unless otherwise converted pursuant to Section 4 hereof.
2.5 Method of Payment. All payments of principal, interest, and fees hereunder shall
be made on the date when due in immediately available funds in United States Dollars to the Amended
Note Purchasers or the Purchaser at the Amended Note Purchaser’s or Purchaser’s address specified
on the signature page hereof, or at such other address as shall be directed by the applicable
Amended Note Purchaser or Purchaser in a writing received by the Company.
2.6 Prepayments. The Company may not prepay any amounts under any Convertible Notes
whether principal or interest.
2.7 Usury Savings Clause. Notwithstanding any other provision herein, the aggregate
interest rate charged with respect to any of the Obligations, shall not exceed the Highest Lawful
Rate. If the rate of interest (determined without regard to the preceding sentence) under this
Agreement at any time exceeds the Highest Lawful Rate, the outstanding
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amount under the Convertible Notes issued hereunder shall bear interest at the Highest Lawful
Rate until the total amount of interest due hereunder equals the amount of interest which would
have been due hereunder if the stated rates of interest set forth in this Agreement had at all
times been in effect. In addition, if when the Convertible Notes issued hereunder are repaid in
full the total interest due hereunder is less than the total amount of interest which would have
been due hereunder if the stated rates of interest set forth in this Agreement had at all times
been in effect, then to the extent permitted by law, the Company shall pay to the Amended Note
Purchasers or the Purchaser, as the case may be, an amount equal to the difference between the
amount of interest paid and the amount of interest which would have been paid if the Highest Lawful
Rate had at all times been in effect. Notwithstanding the foregoing, it is the intention of the
Amended Note Purchasers, the Purchaser and the Company to conform strictly to any applicable usury
laws. Accordingly, if the Amended Note Purchasers or the Purchaser contract for, charge, or
receive any consideration which constitutes interest in excess of the Highest Lawful Rate, then any
such excess shall be cancelled automatically and, if previously paid, shall be applied to the
outstanding principal amount of the Convertible Notes issued hereunder or be refunded to the
Company.
3. CONDITIONS PRECEDENT. The obligations of Purchaser to purchase the New Note shall be
subject to the following conditions precedent that on the date of the Closing:
3.1 Each of the representations and warranties of the Company contained in this Agreement and
the New Note shall be true and correct in all material respects; and
3.2 At the time of, and immediately after giving effect to, the issuance of such New Note, no
Event of Default shall have occurred and be continuing.
4. OPTIONAL CONVERSION.
4.1 Conversion to Equity.
(a) After December 31, 2007, at any time during which Convertible Notes remain outstanding,
up to all of the outstanding principal and accrued interest under any particular Convertible Note
then outstanding may be converted, at the sole option of the holder thereof and by written notice
to the Company, into shares of Common Stock of the Company at a conversion price equal to $2.50
per share.
(b) Notwithstanding anything to the contrary contained herein, each Amended Note Purchaser
and the Purchaser shall be prohibited from effecting a conversion pursuant to this Section 4.1 if
at the time of such conversion (i) the Common Stock issuable to an Amended Note Purchaser or the
Purchaser pursuant to such conversion or as a result of such conversion, when taken together with
all shares of Common Stock then held or otherwise beneficially owned by an Amended Note Purchaser
or the Purchaser exceeds 19.9% of the total number of issued and outstanding shares of Common
Stock of the Company immediately prior to such conversion, (ii) the Common Stock issuable to an
Amended Note Purchaser or the Purchaser pursuant to such conversion or as a result of such
conversion, exceeds 19.9% of the total number of issued and outstanding shares of Common Stock of
the Company immediately prior to such conversion, in each case unless the stockholders of the
Company have approved
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the conversion of all of the shares of Common Stock issuable hereunder and the transactions
contemplated hereby pursuant to Nasdaq Marketplace Rule 4350(i)(1)(D)(ii) and any other applicable
rules and regulations (“Stockholder Approval”). The foregoing provision however shall not
restrict the number of shares of Common Stock which the Amended Note Purchaser or the Purchaser
may receive or beneficially own in order to determine the amount of securities or other
consideration that an Amended Note Purchaser or the Purchaser may receive in the event of a
merger, sale or other business combination involving the Company.
(c) The Company hereby covenants and agrees that in the event an Amended Note Purchaser or
the Purchaser is prohibited from effecting a conversion of Convertible Notes pursuant to this
Section 4.1, then upon receipt of written notice of such event from such Amended Note Purchaser or
the Purchaser, the Company shall use its best efforts to seek Stockholder Approval.
(d) Notwithstanding anything to the contrary contained herein, the Company shall not effect
any conversion of the Highbridge Note or the New Note, and neither Highbridge nor the Purchaser,
nor any of their respective affiliates shall have the right to effect any conversion pursuant to
this Section 4.1, to the extent that after giving effect to such conversion, Highbridge (together
with its affiliates and any other person or entity acting as a group together with Highbridge) on
the one hand, or the Purchaser (together with its affiliates and any other person or entity acting
as a group together with the Purchaser) on the other hand, would beneficially own in excess of
9.99% of the number of shares of the Common Stock outstanding immediately after giving effect to
the issuance of shares of Common Stock issuable upon any such conversion. For purposes of the
foregoing sentence, the number of shares of Common Stock beneficially owned by Highbridge or the
Purchaser shall include the number of shares of Common Stock issuable upon the conversion with
respect to which such determination is being made, but shall exclude the number of shares of
Common Stock which would be issuable upon (A) exercise of the remaining, nonexercised portion of
the Highbridge Note or the New Note beneficially owned by Highbridge or the Purchaser or any of
their respective affiliates and (B) exercise or conversion of the unexercised or nonconverted
portion of any other securities of the Company (including, without limitation, any other
convertible notes or warrants) subject to a limitation on conversion or exercise analogous to the
limitation contained herein beneficially owned by Highbridge or the Purchaser or any of their
respective affiliates. Except as set forth in the preceding sentence, for purposes of this Section
4.1(d), beneficial ownership shall be calculated in accordance with Section 13(d) of the Exchange
Act and the rules and regulations promulgated thereunder. For purposes of this Section 4(d), in
determining the number of outstanding shares of Common Stock, Highbridge and the Purchaser may
rely on the number of outstanding shares of Common Stock as reflected in the later dated of (x)
the Company’s most recent Form 10-K (y) a more recent public announcement by the Company or (z)
any other notice by the Company or the Transfer Agent setting forth the number of shares of Common
Stock outstanding. Upon the written or oral request of Highbridge or the Purchaser, the Company
shall within two Trading Days confirm orally and in writing to Highbridge the number of shares of
Common Stock then outstanding. In any case, the number of outstanding shares of Common Stock shall
be determined after giving effect to the conversion or exercise of securities of the Company,
including the Highbridge Note or the New Note, since the date as of which such number of
outstanding shares of Common Stock was reported.
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4.2 Conversion to Royalty Stream.
(a) At any time all or any of the Amended Note Purchasers or the Purchaser may elect (as
such, collectively, the “Electing Purchasers”, and, individually, an “Electing Purchaser”), at
their sole option and by written notice to the Company, to convert, in $1 million increments, up
to the entire amount of the principal and accrued interest then outstanding on all Convertible
Notes then held by such Electing Purchaser (the “Total Converted Balance”), into the right to
receive from the Company the following payments related to the Company’s Molecular Imaging
Products:
(i) For each One Million ($1,000,000) of Total Converted Balance,
(A) 2% of
Pre-Commercial Income; plus
(B) a royalty at a
rate of one half of one percent (0.5%) of Net Sales of
Molecular Imaging Products.
By way of example only, if the Total Converted Balance being converted by the Electing
Purchaser is $3.5 million, the Company would be required to pay 7% of Pre-Commercial Income (2% x
3.5) to such Electing Purchaser plus a royalty of 1.75% on Net Sales of Molecular Imaging Products
(0.5% x 3.5).
(ii) The Company agrees to provide each Amended Note Purchaser and the Purchaser with
at least 30 days prior written notice of the execution of a partnership agreement for the
Molecular Imaging products to enable them to make an election to convert under this Section
4.2. Upon receipt of such notice, each Amended Note Purchaser and the Purchaser will have
30 days to elect such conversion. For purposes of clarity, any amounts which may be owed by
the Company under Section 4.2(a)(i) above after proper notice is given and no election is
made, shall be owed on a going-forward basis and shall not apply retroactively to any
Pre-Commercial Income received by the Company and/or its Affiliates or Net Sales of
Molecular Imaging Products prior to the date of such election to convert.
(b) The Company shall make the payments set forth in Section 4.2(a)(i) above on a calendar
quarterly basis to each Electing Purchaser.
(c) The Company shall deliver to each Electing Purchaser within sixty (60) days after the end
of each calendar quarter following such Electing Purchaser’s election to convert, reasonably
detailed written accountings of Pre-Commercial Income and Net Sales of Molecular Imaging Products
that are subject to payments due to such Electing Purchaser hereunder for such calendar quarter.
When the Company delivers such accountings to such Electing Purchaser, the Company shall also
deliver all payments due under Section 4.2(a)(i) for such calendar quarter.
(d) On a country-by-country and Molecular Imaging Product-by-Molecular Imaging Product basis,
the royalty obligation of the Company hereunder shall cease at the expiration of the
last-to-expire Valid Claim covering a Molecular Imaging Product in said
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country or, in the case of countries where no Valid Claims covering a Molecular Imaging
Product have been granted, ten (10) years after the First Commercial Sale of a Molecular Imaging
Product in said country. In no event will the Company’s royalty obligation hereunder cease so
long as royalties in excess of those owed hereunder are paid to the Company by its licensee of any
or all of the Molecular Imaging Products.
5. REPRESENTATIONS AND WARRANTIES. The Company represents and warrants to the Purchaser that
on the date hereof:
5.1 The Company is duly organized, validly existing, and in good standing under the laws of
its jurisdiction of incorporation and is duly qualified and in good standing in every other
jurisdiction where the nature of its business or the location or ownership of its properties
requires such qualification and where the failure to be so qualified would reasonably be expected
to have a material adverse effect on the Company’s business, operations, properties, assets or
condition (financial or otherwise).
5.2 The Company has the corporate power and authority to execute and deliver this Agreement
and the New Note and to perform all of the obligations hereunder, and all necessary corporate
action has been taken to execute and deliver this Agreement and the New Note and to issue and sell
the New Note hereunder.
5.3 This Agreement and the New Note constitute the legal, valid, and binding obligations of
the Company, enforceable against the Company in accordance with their respective terms, subject to
applicable bankruptcy, insolvency, reorganization or similar laws generally affecting the
enforcement of the rights of creditors.
5.4 The execution, delivery and performance by the Company of this Agreement and the New Note
does not (i) violate any provisions of the Company’s Certificate of Incorporation, as amended,
bylaws, as amended, or any material contract, agreement, law, regulation, order, decree or writ to
which the Company or any of its properties are subject or (ii) require the consent or approval of
any person, entity or authority, including, without limitation, any regulatory authority or
governmental body of the United States of America or any state thereof or any political subdivision
of any of the foregoing.
6. REPRESENTATIONS AND WARRANTIES OF PURCHASER. The Purchaser represents and warrants,
severally and not jointly, to the Company as follows:
6.1 Investment Intent. The Purchaser understands that the New Note has not been
registered under the Securities Act or any applicable state securities law and is acquiring the New
Note as principal for its own account for investment purposes only and not with a view to or for
distributing or reselling such New Note, has no present intention of distributing the New Note and
has no arrangement or understanding with any other persons regarding the distribution of the New
Note. The Purchaser is acquiring the New Note hereunder in the ordinary course of its business.
The Purchaser does not have any agreement or understanding, directly or indirectly, with any person
to distribute the New Note.
6.2 Purchaser Status. At the time the Purchaser was offered the New Note, it was, and
at the date hereof it is an “accredited investor” as defined in Rule 501(a) under the
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Securities Act. The Purchaser (if not already a registered broker-dealer under Section 15 of
the Exchange Act) is not required to be registered as a broker-dealer under Section 15 of the
Exchange Act.
6.3 Experience of Purchaser. The Purchaser, either alone or together with its
representatives, has such knowledge, sophistication and experience in business and financial
matters so as to be capable of evaluating the merits and risks of the prospective investment in the
New Note, and has so evaluated the merits and risks of such investment. The Purchaser is able to
bear the economic risk of an investment in the New Note and, at the present time, is able to afford
a complete loss of such investment.
6.4 General Solicitation. The Purchaser is not purchasing the New Note as a result of
any advertisement, article, notice or other communication regarding the New Note published in any
newspaper, magazine or similar media or broadcast over television or radio or presented at any
seminar or any other general solicitation or general advertisement.
6.5 Certain Fees. No brokerage or finder’s fees or commissions are or will be payable
by the Purchaser to any broker, financial advisor or consultant, finder, placement agent,
investment banker, bank or other person with respect to the transactions contemplated by this
Agreement. The Company shall have no obligation with respect to any fees or with respect to any
claims made by or on behalf of other persons for fees of a type contemplated in this Section 6.5
that may be due in connection with the transactions contemplated by this Agreement.
6.6 Acquiring Person. The Purchaser, after giving effect to the transactions
contemplated hereby, will not, either individually or with a group (as defined in Section 13(d)(3)
of the Exchange Act), become the beneficial owner of 20% or more of the Company’s outstanding
Common Stock. For purposes of this Section 6.6, beneficial ownership shall be determined pursuant
to Rule 13d-3 under the Exchange Act.
7. AFFIRMATIVE COVENANTS. During the term of this Agreement and while the Convertible Notes
remain outstanding, unless each Amended Note Purchaser and the Purchaser consents thereto in
writing:
7.1 The Company shall maintain its corporate existence, business and assets, keep its business
and assets adequately insured, maintain its chief executive office at the location listed on the
signature page hereof, and comply in all material respects with all requirements of applicable law.
7.2 The Company (a) shall provide each Amended Note Purchaser and the Purchaser at least 10
days prior written notice of the Company’s intent to change its name or its mailing address and (b)
shall not change its type of organization or jurisdiction of organization.
8. NEGATIVE COVENANTS. So long as any principal and interest remains outstanding under the
Convertible Notes, the Company shall not:
8.1 Create, incur, assume, guaranty, become liable with respect to (contingently or
otherwise), or permit to be outstanding any indebtedness for money borrowed (including, without
limitation, any indebtedness evidenced by any notes, instruments or
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agreements or in connection with any capitalized lease), except for obligations under this
Agreement and the Convertible Notes;
8.2 (i) Declare or pay any cash dividend, or make a distribution on, repurchase, or redeem,
any class of stock of the Company, other than pursuant to repurchase obligations under existing
employee stock purchase or option plans or (ii) Sell, lease, transfer or otherwise dispose of any
material assets or property of the Company; or
8.3 Dissolve or liquidate.
9. REGISTRATION RIGHTS.
9.1 Registration Statement.
(a) Subject to the receipt of necessary information from the Amended Note Purchasers and the
Purchaser, including the information requested in the Registration Statement Questionnaire, within
60 calendar days following the date hereof (the “Required Filing Date”), the Company shall prepare
and file with the SEC a Registration Statement covering the resale of all Registrable Securities
for an offering to be made on a continuous basis pursuant to Rule 415. The Registration Statement
shall be on Form S-3 (except if the Company is not then eligible to register for resale the
Registrable Securities on Form S-3, in which case such registration shall be on another appropriate
form in accordance with the Securities Act and the Exchange Act).
(b) The Company shall use reasonable best efforts to cause the Registration Statement to be
declared effective by the SEC as promptly as possible after the filing thereof, but in any event
prior to the Required Effectiveness Date, and shall use reasonable best efforts to keep the
Registration Statement continuously effective under the Securities Act until the earlier of the
date that all Registrable Securities covered by such Registration Statement have been sold or can
be sold publicly under Rule 144(k) (the “Effectiveness Period”); provided that, upon notification
by the SEC that a Registration Statement will not be reviewed or is no longer subject to further
review and comments, the Company shall request acceleration of such Registration Statement within
five (5) Trading Days after receipt of such notice and request that it become effective on 4:00
p.m. New York City time on the Effective Date and file a prospectus supplement for any Registration
Statement, if required under Rule 424 (or otherwise), by 9:00 a.m. New York City time the day after
the Effective Date.
(c) Notwithstanding anything in this Agreement to the contrary, after 60 consecutive Trading
Days of continuous effectiveness of the initial Registration Statement filed and declared effective
pursuant to this Agreement, the Company may, by written notice to the Amended Note Purchasers and
the Purchaser, suspend sales under a Registration Statement after the Effective Date thereof and/or
require that the Amended Note Purchasers and the Purchaser immediately cease the sale of shares of
Common Stock pursuant thereto and/or defer the filing of any subsequent Registration Statement if
(i) the Company is engaged in a merger, acquisition or sale and the Board of Directors of the
Company determines in good faith, by appropriate resolutions, that, as a result of such activity,
(A) it would be materially detrimental to the Company (other than as relating solely to the price
of the Common Stock) to maintain a
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Registration Statement at such time or (B) it is in the best interests of the Company to
suspend sales under such registration at such time, (ii) requested by the SEC or any other federal
or state governmental authority during the Effectiveness Period of the Registration Statement for
amendments or supplements to a Registration Statement or related Prospectus or for additional
information; (iii) the SEC or any other federal or state governmental authority issued any stop
order suspending the effectiveness of a Registration Statement or the initiation of any proceedings
for that purpose; (iv) the Company receives any notification with respect to the suspension of the
qualification or exemption from qualification of any of the Registrable Securities for sale in any
jurisdiction or the initiation or threatening of any proceeding for such purpose, (v) the Company
elected to delay the disclosure of material non-public information concerning the Company, the
disclosure of which at the time is not, in the good faith judgment of the Board of Directors of the
Company, in the best interest of the Company; or (vi) any event or circumstance which necessitates
the making of any changes in the Registration Statement or Prospectus, or any document incorporated
or deemed to be incorporated therein by reference, so that, in the case of the Registration
Statement, it will 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, or
that in the case of the Prospectus, it will not contain any untrue statement of a material fact or
omit to state a material fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading. Upon receipt of such notice, each
Amended Note Purchaser and the Purchaser shall immediately discontinue any sales of Registrable
Securities pursuant to such registration until such Amended Note Purchaser or the Purchaser is
advised in writing by the Company that the current Prospectus or amended Prospectus, as applicable,
may be used. In no event, however, shall this right be exercised to suspend sales beyond the
period during which (in the good faith determination of the Company’s Board of Directors) the
failure to require such suspension would be materially detrimental to the Company. The Company’s
rights under this Section 9.1(c) may be exercised for a period of no more than 20 Trading Days at a
time and not more than three times in any twelve-month period. Immediately after the end of any
suspension period under this Section 9.1(c), the Company shall take all necessary actions
(including filing any required supplemental prospectus) to restore the effectiveness of the
applicable Registration Statement and the ability of the Amended Note Purchasers and the Purchaser
to publicly resell their Registrable Securities pursuant to such effective Registration Statement.
(d) Notwithstanding the other provisions of this Agreement, if at any time the SEC takes the
position that some or all of the Registrable Securities may not be included in the Registration
Statement because (i) the inclusion of such Registrable Securities violates the provisions of Rule
415 as a result of the number of shares included in such Registration Statement, and/or (ii) the
Registrable Securities cannot be sold as an “at the market offering,” the Company shall (A) remove
from the Registration Statement such portion of the Registrable Securities (the “Cut Back Shares”)
and/or (B) agree to such restrictions and limitations on the registration and resale of the
Registrable Securities as the SEC may require to assure the Company’s compliance with the
requirements of Rule 415 (collectively, the “SEC Restrictions”). Any cut-back imposed pursuant to
this Section 9.1(d) shall be allocated among the Amended Note Purchasers and the Purchaser on a pro
rata basis. From and after such time as the Company is able to effect the registration of the Cut
Back Shares in accordance with any SEC Restrictions (such date, the “Restriction Termination
Date”), all of the provisions of this
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Section 9.1 shall again be applicable to the Cut Back Shares; provided, however, that for such
purposes the Required Filing Date shall be deemed to be the Restriction Termination Date.
9.2 Registration Procedures. In connection with the Company’s registration
obligations hereunder, the Company shall:
(a) Not less than three Trading Days prior to the filing of a Registration Statement or any
related Prospectus or any amendment or supplement thereto, furnish via email to those Amended Note
Purchasers and the Purchaser who have supplied the Company with email addresses copies of all such
documents proposed to be filed, which documents (other than any document that is incorporated or
deemed to be incorporated by reference therein) will be subject to the review (but not approval) of
such Amended Note Purchasers and the Purchaser; provided that, the failure of any Amended Note
Purchaser or Purchaser or his, her or its counsel to respond to such proposed documents within two
Trading Days after the Amended Note Purchasers and the Purchaser have been so furnished with copies
of such documents shall be deemed approval of same; and provided, further, that no such review and
comment shall inhibit the Company from filing the Registration Statement, any Prospectus or any
such amendment or supplement within five Business Days after such notice has been provided or
otherwise from complying with its obligations hereunder.
(b) (i) Subject to Section 9.1(c), prepare and file with the SEC such amendments, including
post-effective amendments, to each Registration Statement and the Prospectus used in connection
therewith as may be necessary to keep the Registration Statement continuously effective, as to the
applicable Registrable Securities for the Effectiveness Period and prepare and file with the SEC
such additional Registration Statements in order to register for resale under the Securities Act
all of the Registrable Securities; (ii) cause the related Prospectus to be amended or supplemented
by any required Prospectus supplement, and as so supplemented or amended to be filed pursuant to
Rule 424; (iii) respond as promptly as reasonably possible to any comments received from the SEC
with respect to the Registration Statement or any amendment thereto; and (iv) comply in all
material respects with the provisions of the Securities Act and the Exchange Act with respect to
the disposition of all Registrable Securities covered by the Registration Statement during the
applicable period in accordance with the intended methods of disposition by the Amended Note
Purchasers and the Purchaser thereof set forth in the Registration Statement as so amended or in
such Prospectus as so supplemented.
(c) During the Effectiveness Period, notify the Amended Note Purchasers and the Purchaser as
promptly as reasonably possible, and if requested by the Amended Note Purchasers or the Purchaser
confirm such notice in writing no later than two Trading Days thereafter, of any of the following
events: (i) the SEC notifies the Company whether there will be a “review” of any Registration
Statement; (ii) the SEC comments in writing on any Registration Statement; (iii) any Registration
Statement or any post-effective amendment is declared effective; (iv) the SEC or any other federal
or state governmental authority requests any amendment or supplement to any Registration Statement
or Prospectus or requests additional information related thereto; (v) the SEC issues any stop order
suspending the effectiveness of any Registration Statement or initiates any Proceedings for that
purpose; (vi) the Company receives notice of any suspension of the qualification or exemption from
qualification of any Registrable Securities for sale in any jurisdiction, or the initiation or
threat of any
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Proceeding for such purpose; or (vii) the financial statements included in any Registration
Statement become ineligible for inclusion therein or any Registration Statement or Prospectus or
other document contains any untrue statement of a material fact or omits to state any material fact
required to be stated therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
(d) Use reasonable best efforts to avoid the issuance of or, if issued, obtain the withdrawal
of (i) any order suspending the effectiveness of any Registration Statement, or (ii) any suspension
of the qualification (or exemption from qualification) of any of the Registrable Securities for
sale in any jurisdiction, as soon as possible.
(e) Prior to any public offering of Registrable Securities, use reasonable best efforts to
register or qualify or cooperate with the selling Amended Note Purchasers or the selling Purchaser
in connection with the registration or qualification (or exemption from such registration or
qualification) of such Registrable Securities for offer and sale under the securities or Blue Sky
laws of such jurisdictions within the United States as any Amended Note Purchaser or the Purchaser
requests in writing, to keep each such registration or qualification (or exemption therefrom)
effective for so long as required, but not to exceed the duration of the Effectiveness Period, and
to do any and all other acts or things reasonably necessary or advisable to enable the disposition
in such jurisdictions of the Registrable Securities covered by a Registration Statement; provided,
however, that the Company shall not be obligated to file any general consent to service of process
or to qualify as a foreign corporation or as a dealer in securities in any jurisdiction in which it
is not so qualified or to subject itself to taxation in respect of doing business in any
jurisdiction in which it is not otherwise so subject or provide any undertaking that causes the
Company undue expense or burden.
(f) Upon any sale of Registrable Securities pursuant to the Registration Statement for the
account of an Amended Note Purchaser or the Purchaser, cooperate with the Amended Note Purchasers
or the Purchaser to facilitate the timely preparation and delivery of certificates representing
such Registrable Securities to be delivered to a transferee pursuant to a Registration Statement,
which certificates shall be free, to the extent permitted by this Agreement and under law, of all
restrictive legends, and to enable such certificates to be in such denominations and registered in
such names as any such Amended Note Purchasers or the Purchaser may reasonably request; provided,
that, the delivery of such certificates shall be subject to the payment by the Amended Note
Purchaser or the Purchaser of any transfer taxes, if applicable.
(g) The Company, as promptly as reasonably possible, shall prepare a supplement or amendment,
including a post-effective amendment, to the Registration Statement or a supplement to the related
Prospectus or any document incorporated or deemed to be incorporated therein by reference, and file
any other required document so that, as thereafter delivered, neither the Registration Statement
nor such Prospectus will contain an 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, in the light of the
circumstances under which they were made, not misleading.
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(h) Comply in all material respects with all rules and regulations of the SEC with respect to
the Registration Statement and the disposition of all Registrable Securities covered by the
Registration Statement.
(i) It shall be a condition precedent to the obligations of the Company to complete the
registration pursuant to this Agreement with respect to the Registrable Securities of any
particular Amended Note Purchaser or the Purchaser that such Amended Note Purchaser or the
Purchaser furnish to the Company a completed Registration Statement Questionnaire and such other
information regarding itself, the Registrable Securities and other shares of Common Stock held by
it and the intended method of disposition of the Registrable Securities held by it as shall be
reasonably required to effect the registration of such Registrable Securities and shall complete
and execute such documents in connection with such registration as the Company may reasonably
request. Upon the Company’s reasonable written request, an Amended Note Purchaser or the Purchaser
will promptly notify the Company of any changes in the information set forth in the Registration
Statement or the Registration Statement Questionnaire regarding such Amended Note Purchaser or the
Purchaser or its plan of distribution or other information as the Company may reasonably request in
connection with any registration referred to in Section 9. The Company shall not be required to
include any Registrable Securities held by an Amended Note Purchaser or the Purchaser in the
Registration Statement if such Amended Note Purchaser or the Purchaser fails to complete or update
the Registration Statement Questionnaire or provide the information requested in the Registration
Statement Questionnaire in accordance with this Section 9.2(i).
(j) The Company shall use reasonable best efforts to comply with all applicable rules and
regulations of the SEC under the Securities Act and the Exchange Act, including, without
limitation, Rule 172 under the Securities Act, file any final Prospectus, including any supplement
or amendment thereof, with the SEC pursuant to Rule 424 under the Securities Act, promptly inform
the Amended Note Purchasers and the Purchaser in writing if, at any time during the Effectiveness
Period, the Company does not satisfy the conditions specified in Rule 172(c) and, as a result
thereof, the Amended Note Purchasers or the Purchaser are required to deliver a Prospectus in
connection with any disposition of Registrable Securities and take such other actions as may be
reasonably necessary to facilitate the registration of the Registrable Securities hereunder.
9.3 Registration Expenses. The Company shall pay all fees and expenses incident to
the performance of or compliance with Section 9 by the Company, including without limitation (a)
all registration and filing fees and expenses, including without limitation those related to
filings with the SEC, any Trading Market and in connection with applicable state securities or Blue
Sky laws, (b) printing expenses (including without limitation expenses of printing certificates for
Registrable Securities), (c) messenger, telephone and delivery expenses, (d) fees and disbursements
of counsel for the Company, (e) fees and expenses of all other Persons retained by the Company in
connection with the consummation of the transactions contemplated by this Agreement, and (f) all
listing fees to be paid by the Company to the Trading Market.
9.4 Indemnification.
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(a) Indemnification by the Company. The Company shall, notwithstanding any
termination of this Agreement, indemnify and hold harmless each Amended Note Purchaser and the
Purchaser, the officers, directors, partners, members, agents and employees of each of them, each
Person who controls any such Amended Note Purchaser and the Purchaser (within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange Act) and the officers, directors,
partners, members, agents and employees of each such controlling Person, to the fullest extent
permitted by applicable law, from and against any and all Losses (as determined by a court of
competent jurisdiction in a final judgment not subject to appeal or review), as incurred, arising
out of or relating to (i) any misrepresentation or breach of any representation or warranty made by
the Company in the Loan Documents or any other certificate, instrument or document contemplated
hereby or thereby, (ii) any breach of any covenant, agreement or obligation of the Company
contained in the Loan Documents or any other certificate, instrument or document contemplated
hereby or thereby or (iii) any untrue or alleged untrue statement of a material fact contained in
the Registration Statement, any Prospectus or any form of prospectus or in any amendment or
supplement thereto, or arising out of or relating to any omission or alleged omission of a material
fact required to be stated therein or necessary to make the statements therein (in the case of any
Prospectus or form of prospectus or supplement thereto, in the light of the circumstances under
which they were made) not misleading; provided however that the Company will not be liable in any
such case to the extent that (A) such untrue statements, alleged untrue statements, omissions or
alleged omissions are based solely upon information regarding such Amended Note Purchaser or the
Purchaser furnished in writing to the Company by such Amended Note Purchaser or the Purchaser for
use therein, or to the extent that such information relates to such Amended Note Purchaser or the
Purchaser or such Amended Note Purchaser’s or the Purchaser’s proposed method of distribution of
Registrable Securities and was reviewed and expressly approved by such Amended Note Purchaser or
the Purchaser in writing expressly for use in the Registration Statement (including without
limitation the information set forth in the Registration Statement Questionnaire), (B) the failure
of the Amended Note Purchaser or the Purchaser to comply with the covenants and agreements
contained in Section 10.3 or 9.2(j) with respect to resale of Registrable Securities, or (C) with
respect to any prospectus used by an Amended Note Purchaser or the Purchaser, an untrue statement
or omission of material fact contained in such prospectus that was corrected on a timely basis in
the prospectus, as then amended or supplemented, if such corrected prospectus was timely made
available by the Company to the Amended Note Purchaser or the Purchaser, and the Amended Note
Purchaser or the Purchaser seeking indemnity hereunder was advised in writing not to use the
incorrect prospectus prior to the use giving rise to Losses.
(b) Indemnification by the Amended Note Purchasers and the Purchaser. Each of the
Amended Note Purchasers and the Purchaser shall, severally and not jointly, indemnify and hold
harmless the Company and its directors and officers, and each Person, if any, that controlled the
Company within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act,
to the fullest extent permitted by applicable law, from and against all Losses (as determined by a
court of competent jurisdiction in a final judgment not subject to appeal or review), as incurred,
arising out of or relating to any untrue statement of a material fact contained in the Registration
Statement, any Prospectus, or any form of prospectus, or in any amendment or supplement thereto, or
arising out of or relating to any omission of a material fact required to be stated therein or
necessary to make the statements therein (in the case of any Prospectus or form of prospectus or
supplement thereto, in the light of the circumstances
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under which they were made) not misleading, but only to the extent that such untrue
statements, alleged untrue statements, omissions or alleged omissions are based solely upon
information regarding such Amended Note Purchaser or the Purchaser furnished in writing to the
Company by such Amended Note Purchaser or the Purchaser for use therein. In no event shall the
liability of any selling Amended Note Purchaser or the selling Purchaser hereunder be greater in
amount than the dollar amount of the net proceeds received by such Amended Note Purchaser or the
Purchaser upon the sale of the Registrable Securities giving rise to such indemnification
obligation.
(c) Conduct of Indemnification Proceedings. If any Proceeding shall be brought or
asserted against any Person entitled to indemnity hereunder (an “Indemnified Party”), such
Indemnified Party shall promptly notify the Person from whom indemnity is sought (the “Indemnifying
Party”) in writing, and the Indemnifying Party shall assume the defense thereof, including the
employment of counsel reasonably satisfactory to the Indemnified Party and the payment of all fees
and expenses incurred in connection with defense thereof; provided, that the failure of any
Indemnified Party to give such notice shall not relieve the Indemnifying Party of its obligations
or liabilities pursuant to this Agreement, except (and only) to the extent that it shall be finally
determined by a court of competent jurisdiction (which determination is not subject to appeal or
further review) that such failure shall have proximately and materially adversely prejudiced the
Indemnifying Party.
An Indemnified Party shall have the right to employ separate counsel in any such Proceeding
and to participate in the defense thereof, but the fees and expenses of such counsel shall be at
the expense of such Indemnified Party or Parties unless: (i) the Indemnifying Party has agreed in
writing to pay such fees and expenses; or (ii) the Indemnifying Party shall have failed promptly to
assume the defense of such Proceeding and to employ counsel reasonably satisfactory to such
Indemnified Party in any such Proceeding; or (iii) the named parties to any such Proceeding
(including any impleaded parties) include both such Indemnified Party and the Indemnifying Party,
and such Indemnified Party shall have been advised by counsel that a conflict of interest is likely
to exist if the same counsel were to represent such Indemnified Party and the Indemnifying Party
(in which case, if such Indemnified Party notifies the Indemnifying Party in writing that it elects
to employ separate counsel at the expense of the Indemnifying Party, the Indemnifying Party shall
not have the right to assume the defense thereof and the reasonable fees and expenses of separate
counsel shall be at the expense of the Indemnifying Party). It shall be understood, however, that
the Indemnifying Party shall not, in connection with any one such Proceeding (including separate
Proceedings that have been or will be consolidated before a single judge) be liable for the fees
and expenses of more than one separate firm of attorneys at any time for all Indemnified Parties,
which firm shall be appointed by a majority of the Indemnified Parties. The Indemnifying Party
shall not be liable for any settlement of any such Proceeding effected without its written consent,
which consent shall not be unreasonably withheld or delayed. No Indemnifying Party shall, without
the prior written consent of the Indemnified Party, effect any settlement of any pending Proceeding
in respect of which any Indemnified Party is a party, unless such settlement includes an
unconditional release of such Indemnified Party from all liability on claims that are the subject
matter of such Proceeding.
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All reasonable fees and expenses of the Indemnified Party (including reasonable fees and
expenses to the extent incurred in connection with investigating or preparing to defend such
Proceeding in a manner not inconsistent with this Section) shall be paid to the Indemnified Party,
as incurred, within 20 Trading Days of written notice thereof to the Indemnifying Party (regardless
of whether it is ultimately determined that an Indemnified Party is not entitled to indemnification
hereunder; provided, that the Indemnifying Party may require such Indemnified Party to undertake to
reimburse all such fees and expenses to the extent it is finally judicially determined that such
Indemnified Party is not entitled to indemnification hereunder).
(d) Contribution. If a claim for indemnification under Section 9.4(a) or (b) is
unavailable to an Indemnified Party (by reason of public policy or otherwise), then each
Indemnifying Party, in lieu of indemnifying such Indemnified Party, shall contribute to the amount
paid or payable by such Indemnified Party as a result of such Losses, in such proportion as is
appropriate to reflect the relative fault of the Indemnifying Party and Indemnified Party in
connection with the actions, statements or omissions that resulted in such Losses as well as any
other relevant equitable considerations. The relative fault of such Indemnifying Party and
Indemnified Party shall be determined by reference to, among other things, whether any action in
question, including any untrue or alleged untrue statement of a material fact or omission or
alleged omission of a material fact, has been taken or made by, or relates to information supplied
by, such Indemnifying Party or Indemnified Party, and the parties’ relative intent, knowledge,
access to information and opportunity to correct or prevent such action, statement or omission.
The amount paid or payable by a party as a result of any Losses shall be deemed to include, subject
to the limitations set forth in Section 9.4(c), any reasonable attorneys’ or other reasonable fees
or expenses incurred by such party in connection with any Proceeding to the extent such party would
have been indemnified for such fees or expenses if the indemnification provided for in this Section
was available to such party in accordance with its terms.
The parties hereto agree that it would not be just and equitable if contribution pursuant to
this Section 9.4(d) were determined by pro rata allocation or by any other method of allocation
that does not take into account the equitable considerations referred to in the immediately
preceding paragraph. Notwithstanding the provisions of this Section 9.4(d), neither an Amended
Note Purchaser nor the Purchaser shall be required to contribute, in the aggregate, any amount in
excess of the amount by which the net proceeds actually received by an Amended Note Purchaser or
the Purchaser from the sale of the Registrable Securities subject to the Proceeding exceed the
amount of any damages that an Amended Note Purchaser or the Purchaser has otherwise been required
to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. No
Person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any Person who was not guilty of such
fraudulent misrepresentation.
The indemnity and contribution agreements contained in this Section are in addition to any
liability that the Indemnifying Parties may have to the Indemnified Parties.
9.5 Dispositions. Each of the Amended Note Purchasers and the Purchaser agree that it
will comply with the prospectus delivery requirements of the Securities Act as applicable to it in
connection with sales of Registrable Securities pursuant to the Registration
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Statement and shall sell its Registrable Securities in accordance with the Plan of
Distribution set forth in the Prospectus. Each of the Amended Note Purchasers and the Purchaser
further agree that, upon receipt of a notice from the Company of the occurrence of any event of the
kind described in Sections 9.2(c)(v), (vi) or (vii), such Amended Note Purchaser and Purchaser will
discontinue disposition of such Registrable Securities under the Registration Statement until such
Amended Note Purchaser and such Purchaser are advised in writing by the Company that the use of the
Prospectus, or amended Prospectus, as applicable, may be resumed. The Company may provide
appropriate stop orders to enforce the provisions of this paragraph. Each of the Amended Note
Purchasers and the Purchaser, severally and not jointly with the other Amended Note Purchasers,
agree that the removal of the restrictive legend from certificates representing Registrable
Securities as set forth in Section 10.1 is predicated upon the Company’s reliance that each Amended
Note Purchaser and the Purchaser will comply with the provisions of this subsection. Both the
Company and the Transfer Agent, and their respective directors, officers, employees and agents, may
rely on this Section.
9.6 Registration of Other Securities. Notwithstanding anything contained herein to
the contrary and for the avoidance of doubt, the parties hereto acknowledge that (a) the Company
has granted registration rights to other security holders, and (b) any Registration Statement
prepared, filed and made effective under this Section 9 may also cover the resale of securities
held by such security holders to the extent that the Company has an obligation to register such
securities under any of the agreements listed in the SEC Reports.
9.7 Withdrawal of Registration Statement. After the termination of the Effectiveness
Period, the Company shall be entitled to withdraw the Registration Statement, and the Amended Note
Purchasers and the Purchaser shall have no further right to offer or sell any of the Registrable
Securities pursuant to the Registration Statement.
10. OTHER AGREEMENTS OF THE PARTIES
10.1 Transfer Restrictions.
(a) Each of the Amended Note Purchasers and the Purchaser, severally but not jointly, covenant
to the Company that the Registrable Securities will only be disposed of pursuant to an effective
registration statement under, and in compliance with the requirements of, the Securities Act or
pursuant to an available exemption from the registration requirements of the Securities Act, and in
compliance with any applicable state securities laws. In connection with any transfer of
Registrable Securities other than pursuant to an effective registration statement or to the
Company, or pursuant to Rule 144(k), the Company may require the transferor to provide to the
Company an opinion of counsel selected by the transferor, the form and substance of which opinion
shall be reasonably satisfactory to the Company, to the effect that such transfer does not require
registration under the Securities Act. Notwithstanding the foregoing, the Company hereby consents
to and agrees to register on the books of the Company and with its Transfer Agent, without any such
legal opinion, except to the extent that the Transfer Agent requests such legal opinion, any
transfer of Registrable Securities by an Amended Note Purchaser or the Purchaser to a Rule 144
Affiliate of such Amended Note Purchaser or such Purchaser, provided that the transferee certifies
to the Company that it is an “accredited investor” as defined in Rule 501(a) under the Securities
Act and provided that such Rule 144 Affiliate does
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not request any removal of any existing legends on any certificate evidencing the Registrable
Securities.
(b) Each of the Amended Note Purchasers and the Purchaser, severally but not jointly, agree to
the imprinting, until no longer required by this Section 10.1(b), of the following legend on any
certificate evidencing any of the Registrable Securities:
THESE SECURITIES HAVE NOT 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”), OR ANY APPLICABLE STATE
SECURITIES LAWS AND, ACCORDINGLY, MAY NOT BE OFFERED, SOLD, TRANSFERRED, ASSIGNED, PLEDGED
OR HYPOTHECATED 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 COMPLIANCE WITH APPLICABLE STATE
SECURITIES LAWS OR BLUE SKY LAWS. THESE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA
FIDE MARGIN ACCOUNT WITH A REGISTERED BROKER-DEALER OR OTHER LOAN WITH A FINANCIAL
INSTITUTION THAT IS AN “ACCREDITED INVESTOR” AS DEFINED IN RULE 501(a) UNDER THE SECURITIES
ACT OR OTHER LOAN SECURED BY SUCH SECURITIES.
Certificates evidencing the Registrable Securities shall not be required to contain such
legend or any other legend (i) while a registration statement (including the Registration
Statement) covering the Registrable Securities is effective under the Securities Act and a
prospectus meeting the requirements of Section 10 of the Securities Act is available with respect
to such Registrable Securities, (ii) following any sale of such Registrable Securities pursuant to
Rule 144 if the holder provides the Company with a legal opinion (and the documents upon which the
legal opinion is based) reasonably acceptable to the Company to the effect that the Registrable
Securities can be sold under Rule 144, (iii) if the Registrable Securities are eligible for sale
under Rule 144(k), or (iv) if the holder provides the Company with a legal opinion (and the
documents upon which the legal opinion is based) reasonably acceptable to the Company to the effect
that the legend is not required under applicable requirements of the Securities Act (including
controlling judicial interpretations and pronouncements issued by the Staff of the SEC). Following
the Effective Date and provided the registration statement referred to in clause (i) above is then
in effect, or at such earlier time as a legend is no longer required for certain Registrable
Securities, the Company will no later than three Trading Days following the delivery by an Amended
Note Purchaser or the Purchaser to the Company or the Transfer Agent (if delivery is made to the
Transfer Agent a copy shall be contemporaneously delivered to the Company) of (i) a legended
certificate representing such Registrable Securities (and, in the case of a requested transfer,
endorsed or with stock powers attached, signatures guaranteed, and otherwise in form necessary to
affect transfer), and (ii) an opinion of counsel to the extent required by Section 10.1(a), deliver
or cause to be delivered to such Amended Note Purchaser or the Purchaser a certificate representing
such Registrable Securities that is free from all restrictive
-22-
and other legends. The Company may not make any notation on its records or give instructions
to the Transfer Agent that enlarge the restrictions on transfer set forth in this Section 10.1(b).
(c) The Company will not object to and shall permit (except as prohibited by law) an Amended
Note Purchaser or the Purchaser to pledge or grant a security interest in some or all of the
Registrable Securities in connection with a bona fide margin agreement with a registered
broker-dealer or grant a security interest in some or all of the Registrable Securities to a
financial institution that is an “accredited investor” as defined in Rule 501(a) under the
Securities Act and who agrees to be bound by the provisions of this Agreement, and if required
under the terms of such arrangement, the Company will not object to and shall permit (except as
prohibited by law) such Amended Note Purchaser or the Purchaser to transfer pledged or secured
Registrable Securities to the pledgees or secured parties. Except as required by law, such a
pledge or transfer would not be subject to approval of the Company, no legal opinion of the
pledgee, secured party or pledgor shall be required in connection therewith (but such legal opinion
shall be required in connection with a subsequent transfer or foreclosure following default by the
Amended Note Purchaser or the Purchaser transferee of the pledge), and no notice shall be required
of such pledge. Each of the Amended Note Purchasers and the Purchaser acknowledge that the Company
shall not be responsible for any pledges relating to, or the grant of any security interest in, any
of the Registrable Securities or for any agreement, understanding or arrangement between any
Amended Note Purchaser and the Purchaser and its pledgee or secured party. At the appropriate
Amended Note Purchaser’s or Purchaser’s expense, the Company will execute and deliver such
reasonable documentation as a pledgee or secured party of Registrable Securities may reasonably
request in connection with a pledge or transfer of the Registrable Securities, including the
preparation and filing of any required prospectus supplement under Rule 424(b)(3) of the Securities
Act or other applicable provision of the Securities Act to appropriately amend the list of Selling
Stockholders thereunder. Provided that the Company is in compliance with the terms of this Section
10.1(c), the Company’s indemnification obligations pursuant to Section 9.4 shall not extend to any
Proceeding or Losses arising out of or related to this Section 10.1(c).
10.2 Registration Questionnaire. Each of the Amended Note Purchasers and the
Purchaser will complete or cause to be completed the Registration Statement Questionnaire attached
hereto as Exhibit B (or has otherwise provided in a written form the information requested in such
Registration Statement Questionnaire) for use in preparation of the Registration Statement, and the
information contained in such completed Registration Statement Questionnaire (or such other form
provided by the Amended Note Purchaser or the Purchaser) will be true and correct on the effective
date of the Registration Statement. Each of Amended Note Purchasers and the Purchaser covenant
that, upon the Company’s reasonable written request, it will promptly notify the Company of any
changes in such information or other information as the Company may reasonably request in
connection with any registration referred to in Section 9.
10.3 No Sale of Registrable Securities. Each of the Amended Note Purchasers and the
Purchaser hereby, severally but not jointly, covenant with the Company not to make any sale of the
Registrable Securities without (i) complying with the provisions of this Agreement and (ii)
satisfying the requirements of the Securities Act and the rules and regulations promulgated
thereunder, including, without limitation, causing the prospectus delivery
-23-
requirement under the Securities Act to be satisfied if the Amended Note Purchaser or the
Purchaser is notified by the Company pursuant to Section 9.2(j) hereof that the conditions
specified in Rule 172(c) of the Securities Act were not satisfied and, as a result thereof, the
Amended Note Purchasers or Purchaser are required to deliver a Prospectus in connection with any
disposition of Registrable Securities. Each of the Amended Note Purchasers and the Purchaser
acknowledge that there may occasionally be times when the Company determines that, subject to the
limitations of Section 9.1, it must suspend the use of the prospectus forming a part of the
Registration Statement until such time as an amendment to the Registration Statement has been filed
by the Company and declared effective by the SEC, an appropriate report has been filed by the
Company with the SEC pursuant to the Exchange Act or until the Company has amended or supplemented
such prospectus. Each of the Amended Note Purchasers and the Purchaser hereby, severally but not
jointly, covenant that it will not sell any Registrable Securities pursuant to the Registration
Statement during the period commencing at the time at which the Company gives each Amended Note
Purchaser and the Purchaser written notice of any suspension of the use of the Registration
Statement and ending at the time the Company gives each Amended Note Purchaser and the Purchaser
written notice that each Amended Note Purchaser and the Purchaser may thereafter effect sales
pursuant to the Registration Statement.
11. DEFAULTS. The occurrence of any one or more of the following events shall constitute a
“Default” or an “Event of Default”:
11.1 The Company fails to pay any of the principal, interest or any other amounts payable
under this Agreement or any of the Convertible Notes when and as the same becomes due and payable;
11.2 The Company files any petition or action for relief under any bankruptcy, reorganization,
insolvency or moratorium law or any other law for the relief of, or relating to, Company, now or
hereafter in effect, or seeks the appointment of a custodian, receiver, trustee (or other similar
official) of the Company or all or any substantial portion of the Company’s assets, or makes any
assignment for the benefit of creditors or takes any action in furtherance of any of the foregoing,
or fails to generally pay its debts as they become due;
11.3 An involuntary petition is filed, or any proceeding or case is commenced, against the
Company (unless such proceeding or case is dismissed or discharged within ninety (90) days of the
filing or commencement thereof) under any bankruptcy, reorganization, arrangement, insolvency,
adjustment of debt, liquidation or moratorium statute now or hereafter in effect, or a custodian,
receiver, trustee, assignee for the benefit of creditors (or other similar official) is applied
for, appointed for the Company or to take possession, custody or control of any property of the
Company, or an order for relief is entered against the Company in any of the foregoing; or
11.4 Any representation or warranty made by the Company under this Agreement shall have been
false or misleading in any material respect when made or deemed made.
-24-
12. REMEDIES.
12.1 Upon the occurrence and during the continuance of an Event of Default hereunder, the
Amended Note Purchasers and the Purchaser may, without notice or demand upon the Company, do any or
all of the following:
(a) Declare all unpaid principal and accrued interest owing under the Convertible Notes held
by the Amended Note Purchaser or the Purchaser, and, in the case of an Event of Default pursuant to
Section 11.2 or 11.3 above, automatically, to be immediately due, payable and collectible by the
Amended Note Purchaser or the Purchaser pursuant to applicable law;
(b) Declare any and all unpaid principal and accrued interest due under the Convertible Notes
held by the Amended Note Purchaser or the Purchaser to thereafter bear interest at the maximum rate
set forth in Section 2.4 hereof;
(c) Terminate any and all of such Amended Note Purchaser’s or such Purchaser’s obligations to
purchase any additional New Note hereunder; and
(d) Exercise any and all rights and remedies it may have under this Agreement, under the
Convertible Notes held by any Amended Note Purchaser or the Purchaser or under applicable law.
12.2 All of the foregoing rights and remedies shall be cumulative and not exclusive. The
failure to exercise all or any rights, remedies, powers or privileges hereunder, under the
Convertible Notes or under applicable law, in any instance shall not constitute a waiver thereof in
that or any other instance.
13. WAIVERS, AMENDMENTS AND OTHER PROVISIONS.
13.1 Entire Agreement; Amendments; Invalidity. This Agreement and the Convertible
Notes constitute the entire agreement and understanding of the parties, and supercedes and replaces
in their entirety any prior discussions or agreements, all of which are merged herein and therein.
None of the terms of this Agreement or any Convertible Note may be amended or otherwise modified
except by an instrument executed by the Company and each Amended Note Purchaser and the Purchaser.
If any term of this Agreement or any Convertible Notes shall be held to be invalid, illegal or
unenforceable, the validity of all other terms hereof shall in no way be affected thereby, and this
Agreement and the Convertible Notes shall be construed and be enforceable as if such invalid,
illegal or unenforceable term had not been included herein.
13.2 Expenses. The Company agrees to and shall pay to the Amended Note Purchasers or
the Purchaser on demand, any and all expenses, including, without limitation, reasonable attorney’s
fees and disbursements, incurred or paid by the Amended Note Purchasers or the Purchaser in
connection with the collection on or enforcement of amounts outstanding hereunder, for protecting,
preserving or enforcing the Amended Note Purchaser’s or the Purchaser’s rights or remedies
(including fees, costs and expenses relating to any proceedings
-25-
with respect to the bankruptcy, reorganization, insolvency, readjustment of debt, dissolution
or liquidation of the Company).
13.3 Nonliability of the Amended Note Purchasers and the Purchaser; Several
Obligation. The relationship between the Company, on the one hand, and the Amended Note
Purchasers and the Purchaser, on the other hand, shall be solely that of Company and the Amended
Note Purchasers and the Purchaser. The Amended Note Purchasers and the Purchaser shall have no
fiduciary responsibilities to the Company as holders of Convertible Notes.
13.4 Governing Law; Consent to Jurisdiction. THIS AGREEMENT AND THE CONVERTIBLE NOTES
ARE INTENDED TO TAKE EFFECT AS A SEALED INSTRUMENT AND SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS (AND NOT THE LAWS OF CONFLICT) OF THE COMMONWEALTH OF MASSACHUSETTS. THE
COMPANY HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF THE COURTS OF THE COMMONWEALTH OF
MASSACHUSETTS AND THE UNITED STATES DISTRICT COURT FOR THE COMMONWEALTH OF MASSACHUSETTS FOR THE
PURPOSE OF ANY SUIT, ACTION OR OTHER PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT AND
THE CONVERTIBLE NOTES AND THE COMPANY HEREBY IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT OF SUCH
ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN ANY SUCH COURT AND IRREVOCABLY WAIVES ANY
OBJECTION IT MAY NOW OR HEREAFTER HAVE AS TO THE VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING
BROUGHT IN ANY SUCH COURT OR THAT SUCH COURT IS AN INCONVENIENT FORUM. NOTHING HEREIN SHALL LIMIT
THE RIGHT OF THE AMENDED NOTE PURCHASERS AND THE PURCHASER TO BRING PROCEEDINGS AGAINST THE COMPANY
IN THE COURTS OF ANY OTHER JURISDICTION. ANY JUDICIAL PROCEEDING BY THE COMPANY AGAINST ANY
AMENDED NOTE PURCHASER, THE PURCHASER OR ANY AFFILIATE OF ANY AMENDED NOTE PURCHASER OR THE
PURCHASER UNDER OR INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER IN ANY WAY ARISING OUT OF, RELATED
TO, OR CONNECTED WITH THIS AGREEMENT OR ANY CONVERTIBLE NOTE SHALL BE BROUGHT ONLY IN A COURT IN
THE COMMONWEALTH OF MASSACHUSETTS.
13.5 Waiver of Jury Trial and Certain Damages. THE COMPANY, EACH AMENDED NOTE
PURCHASER AND THE PURCHASER WAIVES ITS RIGHT TO A JURY TRIAL WITH RESPECT TO ANY ACTION OR CLAIM
ARISING OUT OF ANY DISPUTE IN CONNECTION WITH THIS AGREEMENT OR ANY CONVERTIBLE NOTE, ANY RIGHTS OR
OBLIGATIONS HEREUNDER OR THEREUNDER OR THE PERFORMANCE OF ANY SUCH RIGHTS OR OBLIGATIONS. Except
as prohibited by law, the Company waives any right which it may have to claim or recover in any
litigation referred to in the preceding sentence any special, exemplary, punitive or consequential
damages or any damages other than, or in addition to, actual damages. The Company (i) certifies
that neither the Purchaser nor any representative, agent or attorney of the Purchaser has
represented, expressly or otherwise, that the Purchaser would not, in the event of litigation, seek
to enforce the foregoing waivers and (ii) acknowledges that, in entering into this Agreement and
the New
-26-
Note, the Purchaser are relying upon, among other things, the foregoing waivers and
certifications.
13.6 Successors and Assigns. This Agreement and the other Loan Documents and all
obligations of the Company hereunder and thereunder shall be binding upon the successors and
assigns of the Company, and shall, together with the rights and remedies of the Amended Note
Purchasers and Purchaser hereunder, inure to the benefit of the Amended Note Purchasers and
Purchaser, any future holder of this Agreement or any other Loan Document and their respective
successors and assigns, provided, however, the Company may not transfer or assign its rights or
obligations hereunder or thereunder without the express written consent of each Amended Note
Purchaser and the Purchaser, and any purported transfer or assignment by the Company without the
approval of each Amended Note Purchaser and the Purchaser shall be null and void. Each Amended
Note Purchaser and the Purchaser may assign, transfer, participate or endorse its rights under this
Agreement or any of the other Loan Documents without the consent or approval of the Company, and
all such rights shall inure to the Amended Note Purchasers’ and the Purchasers’ successors and
assigns; provided, that such transferee agrees in writing to be bound by all of the terms of this
Agreement. No sales of participations, other sales, assignments, transfers, endorsements or other
dispositions of any rights hereunder or thereunder or any portion hereof or thereof or interest
herein or therein shall in any manner affect the obligations of the Company under this Agreement or
the other Loan Documents. The Company agrees that in connection with any such assignment, to
execute and deliver such additional documents or agreements, including, without limitation, new
Convertible Notes, as may be reasonably requested.
13.7 Counterparts. This Agreement may be executed in any number of separate
counterparts, all of which, when taken together, shall constitute one and the same instrument,
notwithstanding the fact that all parties did not sign the same counterpart.
13.8 No Reliance. Each of the Amended Note Purchasers and the Purchaser hereby
acknowledge (i) that Xxxxxx Xxxxxx Xxxxxxxxx Xxxx and Xxxx LLP has served as counsel solely to the
Company in connection with entering into this Agreement and the Convertible Notes and the
transactions contemplated hereby and thereby and not as counsel to any of the Amended Note
Purchasers or the Purchaser, and (ii) that each Amended Note Purchaser and the Purchaser (a) has
sought the advice of his own legal counsel and has not relied upon Xxxxxx Xxxxxx Xxxxxxxxx Xxxx and
Xxxx LLP, (b) has had an opportunity to fully discuss and review the terms of this Agreement and
the Convertible Notes and the transactions contemplated hereby and thereby with such Amended Note
Purchaser’s and the Purchaser’s counsel, and (c) understands the contents herein and freely and
voluntarily assents to all of the terms and conditions hereof and the transactions contemplated
hereby.
13.9 Independent Nature of Amended Note Purchasers’ and Purchaser’s Obligations and
Rights. The obligations of each Amended Note Purchaser and the Purchaser under this Agreement
are several and not joint with the obligations of any other Amended Note Purchaser or Purchaser,
and no Amended Note Purchaser or Purchaser shall be responsible in any way for the performance of
the obligations of any other Amended Note Purchaser or Purchaser under this Agreement. Nothing
contained herein, and no action taken by any Amended Note Purchaser or the Purchaser pursuant
hereto or thereto, shall be deemed to
-27-
constitute the Amended Note Purchasers or the Purchaser as a partnership, an association, a
joint venture or any other kind of entity, or create a presumption that the Amended Note Purchasers
and the Purchaser are in any way acting in concert or as a group with respect to such obligations
or the transactions contemplated hereby and the Company acknowledges that the Amended Note
Purchasers and the Purchaser are not acting in concert or as a group with respect to such
obligations or the transactions contemplated by hereby. Each of the Amended Note Purchasers and
the Purchaser confirm that it has independently participated in the negotiation of the transaction
contemplated hereby with the advice of its own counsel and advisors. Each of the Amended Note
Purchasers and the Purchaser shall be entitled to independently protect and enforce its rights,
including, without limitation, the rights arising out of this Agreement, and it shall not be
necessary for any other Amended Note Purchaser to be joined as an additional party in any
proceeding for such purpose.
[Remainder of Page Intentionally Left Blank]
-28-
IN WITNESS WHEREOF, this Agreement has been duly executed as an instrument under seal as of
the date first set forth above.
| COMPANY: | PURCHASER: | |||||||||||
| ALSERES PHARMACEUTICALS, INC. | XXXXXXX & XXXXXX VALUE PARTNERS, L.P. | |||||||||||
| By: | /s/ Xxxxxxx X. Xxxx, Xx. | Signature: | /s/ Xxxxxx X. Xxxxxxx Xx. | |||||||||
| Printed Name: Xxxxxxx X. Xxxx, Xx. | Address: | By Xxxxxx X. Xxxxxxx Xx. General Partner c/o Ingalls & Xxxxxx LLC |
||||||||||
| Title: EVP & CFO | 00 Xxxxxxxx, XX, XX 00000 | |||||||||||
| Address: | 00 Xxxx Xxxxxx Xxxxxxxxx, Xxxxxxxxxxxxx 00000 |
|||||||||||
| AMENDED NOTE PURCHASERS: | ||||||||||||
| XXXXXX XXXXXX | ||||||||||||
| Signature: | /s/ Xxxxxx Xxxxxx | |||||||||||
| Address: | c/o Ingalls & Xxxxxx LLC 00 Xxxxxxxx, XX, XX 00000 |
|||||||||||
| XXXXXX XXXXXX | ||||||||||||
| Signature: | /s/ Xxxxxx X. Xxxxxxx Xx. | |||||||||||
| Address: | By Xxxxxx X. Xxxxxxx Xx. His Attorney In Fact c/x Xxxxxxx & Xxxxxx LLC 61 Broadway, NY, NY 10006 |
|||||||||||
| XXXXXX XXXXXX | ||||||||||||
| Signature: | /s/ Xxxxxx X. Xxxxxxx Xx. | |||||||||||
| Address: | By Xxxxxx X. Xxxxxxx Xx. His Attorney In Fact c/o Xxxxxx Xxxxxxx & Xxxxxx LLC 61 Broadway, NY, NY 10006 |
|||||||||||
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| XXXXXXXXXX XXXXXXXXXXXXX XLC | ||||||||||||
| By: Highbridge Capital Management, LLC | ||||||||||||
| By: | /s/ Xxxx X. Chill | |||||||||||
| Printed Name: Xxxx X. Chill | ||||||||||||
| Title: Managing Director | ||||||||||||
-30-
Schedule 2.1
| Purchaser Name | Commitment Percentage | |
Xxxxxxx & Xxxxxx Value Partners, L.P., |
100% |
EXHIBIT A
THIS CONVERTIBLE PROMISSORY NOTE AND THE SECURITIES ISSUABLE UPON CONVERSION OF THIS NOTE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), NOR UNDER ANY STATE
SECURITIES LAWS AND MAY NOT BE PLEDGED, SOLD, ASSIGNED OR OTHERWISE TRANSFERRED UNTIL A (1)
REGISTRATION STATEMENT UNDER THE ACT AND ANY APPLICABLE STATE SECURITIES LAW HAS BECOME EFFECTIVE
WITH RESPECT THERETO, OR (2) RECEIPT BY THE COMPANY OF AN OPINION OF COUNSEL TO THE COMPANY TO THE
EFFECT THAT REGISTRATION UNDER THE ACT OR APPLICABLE STATE SECURITIES LAW IS NOT REQUIRED IN
CONNECTION WITH THE PROPOSED TRANSFER.
CONVERTIBLE PROMISSORY NOTE
| $[ ] | ___, 2007 | |
| Hopkinton, Massachusetts |
FOR VALUE RECEIVED, on the Maturity Date, Alseres Pharmaceuticals, Inc., a Delaware
corporation having a principal place of business at 85 Xxxx Xxxxxx, Xxxxxxxxx, Xxxxxxxxxxxxx 00000
(the “Company”), hereby unconditionally promises to pay to [Purchaser] (the “Purchaser”),
or order, at [___], or such other place as Purchasers or any holder hereof may from time to time
designate, the principal sum of [___] Dollars [($___)], in United States Dollars and in immediately
available funds as provided in the Convertible Promissory Note Purchase Agreement of even date
among the Company and the Purchasers (the “Agreement”), together with interest on the unpaid
principal amount hereof from time to time outstanding at the rate and on the dates set forth in the
Agreement. This Convertible Promissory Note is one of a series of Convertible Promissory Notes
issued pursuant to the Agreement and each such Convertible Promissory Note shall rank pari passu in
right of repayment to such other Convertible Promissory Note.
This Convertible Promissory Note is issued pursuant to, and is entitled to the benefits of,
the Agreement, as it may be amended from time to time. Reference is hereby made thereto for a
statement of the terms and conditions under which this Convertible Promissory Note may be
converted, prepaid or its maturity date accelerated. This Convertible Promissory Note is
convertible at the election of the Purchaser pursuant to Sections 4.1 and 4.2 of the Agreement.
Capitalized terms used herein and not otherwise defined herein are used with the meanings
attributed to them in the Agreement.
No delay or omission on the part of the Purchaser in exercising any right hereunder shall
operate as a waiver of such right or of any other right of Purchaser, nor shall any delay, omission
or waiver on any one occasion be deemed a bar to or waiver of the same or any other right on any
future occasion. The Company and every endorser or guarantor of this Convertible Promissory Note
regardless of the time, order or place of signing waives presentment, demand, protest and notices
of every kind and assents to any extension or postponement of the time of
1
payment or any other indulgence, and to the addition or release of any other party or person
primarily or secondarily liable.
The terms and provisions of this Convertible Promissory Note may be excluded, modified, or
amended only as set forth in the Agreement. This Convertible Promissory Note shall be binding upon
the successors and assigns of the Company and inure to the benefit of Purchaser and its successors,
endorsees and assigns as set forth in the Agreement. If any term or provision of this Convertible
Promissory Note shall be held to be invalid or unenforceable, in whole or in part in any
jurisdiction, then such invalidity or unenforceability shall only effect such term or provision,
and shall not effect such term or provision in any other jurisdiction or any other term or
provision of this Convertible Promissory Note.
The Company hereby waives its right to a jury trial with respect to any action or claim
arising out of any dispute in connection with this Convertible Promissory Note or any of the other
Loan Documents, any rights or obligations hereunder or thereunder or the performance of such rights
and obligations.
All rights and obligations hereunder shall be governed by the laws of the Commonwealth of
Massachusetts (without giving effect to principles of conflicts or choice of laws) and this
Convertible Promissory Note shall be deemed to be made under seal.
| Alseres Pharmaceuticals, Inc. | ||||||
| By | ||||||
| Name: | ||||||
| Title: | ||||||
2
EXHIBIT B
ALSERES PHARMACEUTICALS, INC.
REGISTRATION STATEMENT QUESTIONNAIRE
In connection with the Registration Statement, please provide us with the following information
regarding the Purchaser.
| 1. | Please state your organization’s name exactly as it should appear in the Registration Statement: |
|||
| Except as set forth below, your organization does not hold any equity securities of the Company on behalf of another person or entity. | ||||
| State any exceptions here: |
||||
| If the Purchaser is not a natural person, please identify the natural person or persons who will have voting and investment control over the Securities owned by the Purchaser: | ||||
2.
|
Address of your organization: | |||
| Telephone: | ||||
|
|
||||
| Fax: | ||||
|
|
||||
| Contact Person: | ||||
|
|
||||
| Email: | ||||
|
|
||||
| 3. | Have you or your organization had any position, office or other material relationship within the past three years with the Company or its affiliates? (Include any relationships involving you or any of your affiliates, officers, directors, or principal equity holders (5% or more) that has held any position or office or has had any other material relationship with the Company (or its predecessors or affiliates) during the past three years.) | |||
Yes No
If yes, please indicate the nature of any such relationship below:
1
| 4. | Are you the beneficial or registered owner of any other securities of the Company? (Include any equity securities that you beneficially own or have a right to acquire within 60 days after the date hereof, and as to which you have sole voting power, shared voting power, sole investment power or shared investment power.) | |
| Yes No |
| If yes, please describe the nature and amount of such ownership as of a recent date. | ||
| 5. | Except as set forth below, you wish that all the shares of the Company’s common stock beneficially owned by you or that you have the right to acquire from the Company be offered for your account in the Registration Statement. | |
| State any exceptions here: | ||
| 6. | Do you intend to distribute the Registrable Securities in accordance with the “Plan of Distribution” section set forth in the Registration Statement? | |
| Yes No |
| If yes, please describe the nature and amount of such arrangements. | ||
| 7. | NASD Matters | |
| (a) | State below whether (i) you or any associate or affiliate of yours are a member of the NASD, a controlling shareholder of an NASD member, a person associated with a member, a direct or indirect affiliate of a member, or an underwriter or related person with respect to the proposed offering; (ii) you or any associate or affiliate of yours owns any stock or other securities of any NASD member not purchased in the open market; or (iii) you or any associate or affiliate of yours has made any outstanding subordinated loans to any NASD member. If you are a general or limited partnership, a no answer asserts that no such relationship exists for you as well as for each of your general or limited partners. | |
| Yes: No: |
If “yes,” please identify the NASD member and describe your relationship, including, in the
case of a general or limited partner, the name of the partner:
2
If you answer “no” to Question 7(a), you need not respond to Question 7(b).
(b) State below whether you or any associate or affiliate of yours has been an underwriter,
or a controlling person or member of any investment banking or brokerage firm which has been
or might be an underwriter for securities of the Corporation or any affiliate thereof
including, but not limited to, the common stock now being registered.
Yes:
No:
| If “yes,” please identify the NASD member and describe your relationship, including, in the case of a general or limited partner, the name of the partner. | ||
| 8. | Selling Stockholder Affiliations |
(a) Is the Selling Stockholder a registered broker-dealer?
Yes:
No:
(b) Is the Selling Stockholder an affiliate of a registered broker-dealer(s)?
Yes:
No:
(c) If the answer to Item (8)(b) is yes, identify the registered broker-dealer(s) and
describe the nature of the affiliation(s):
(d) If the answer to Item (6)(b) is yes, did the Selling Stockholder acquire the
Registrable Securities in the ordinary course of business (if not, please explain)?
(e) If the answer to Item (8)(b) is yes, did the Selling Stockholder, at the time of
purchase of the Registrable Securities, have any agreements, plans or understandings,
directly or indirectly, with any person to distribute the Registrable Securities (if yes,
please explain)?
3
ACKNOWLEDGEMENT
The undersigned hereby agrees to notify the Company promptly of any changes in the foregoing
information which should be made as a result of any developments, including the passage of time.
The undersigned also agrees to provide the Company and the Company’s counsel any and all such
further information regarding the undersigned promptly upon request in connection with the
preparation, filing, amending, and supplementing of the Registration Statement (or any prospectus
contained therein). The undersigned hereby consents to the use of all such information in the
Registration Statement.
The undersigned understands and acknowledges that the Company will rely on the information set
forth herein for purposes of the preparation and filing of the
Registration Statement. The undersigned understands that the undersigned may be subject to serious civil and criminal
liabilities if the Registration Statement, when it becomes effective, either contains an untrue
statement of a material fact or omits to state a material fact required to be stated in the
Registration Statement or necessary to make the statements in the Registration Statement not
misleading. The undersigned represents and warrants that all information it provides to the
Company and its counsel is currently accurate and complete and will be accurate and complete at the
time the Registration Statement becomes effective and at all times subsequent thereto, and agrees
during the Effectiveness Period and any additional period in which the undersigned is making sales
of Shares under and pursuant to the Registration Statement, and agrees during such periods to
notify the Company immediately of any misstatement of a material fact in the Registration
Statement, and of the omission of any material fact necessary to make the statements contained
therein not misleading.
Dated:
Name
Signature
Name and Title of Signatory
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