PURCHASE AGREEMENT
Exhibit
10.1
Execution Version
THIS PURCHASE AGREEMENT (the
“Agreement”), dated as of
November 13, 2019, by and between AZURRX BIOPHARMA, INC., a Delaware
corporation (the “Company”), and
LINCOLN PARK
CAPITAL FUND, LLC, an
Illinois limited liability company (the “Investor”).
WHEREAS:
Subject
to the terms and conditions set forth in this Agreement, the
Company wishes to sell to the Investor, and the Investor wishes to
buy from the Company, up to Fifteen Million Dollars ($15,000,000)
of the Company’s common stock, $0.0001 par value per share
(the “Common
Stock”). The shares of Common Stock to be purchased
hereunder are referred to herein as the “Purchase
Shares.”
NOW
THEREFORE, in consideration of the mutual covenants contained in
this Agreement, and for other good and valuable consideration, the
receipt and adequacy of which are hereby acknowledged, the Company
and the Investor hereby agree as follows:
1.
CERTAIN DEFINITIONS.
For
purposes of this Agreement, the following terms shall have the
following meanings:
(a) “Accelerated
Purchase Date” means,
with respect to any Accelerated Purchase made pursuant to
Section
2(b)
hereof, the Business Day immediately
following the applicable Purchase Date with respect to the
corresponding Regular Purchase referred to in clause (i) of the
second sentence of Section
2(b)
hereof.
(b) “Accelerated
Purchase Floor Price”
means $0.25, which shall be appropriately adjusted for any
reorganization, recapitalization, non-cash dividend, stock split or
other similar transaction and, effective upon the consummation of
any such reorganization, recapitalization, non-cash dividend, stock
split or other similar transaction, the Accelerated Purchase Floor
Price shall mean the lower
of (i) the adjusted price and (ii)
$0.25.
(c) “Accelerated
Purchase Minimum Price Threshold” means, with respect to any Accelerated
Purchase made pursuant to Section
2(b)
hereof, any minimum per share price
threshold set forth in the applicable Accelerated Purchase
Notice.
(d) “Accelerated
Purchase Notice” means,
with respect to any Accelerated Purchase made pursuant to
Section
2(b)
hereof, an irrevocable written notice
from the Company to the Investor directing the Investor to buy a
specified Accelerated Purchase Share Amount on the applicable
Accelerated Purchase Date pursuant to Section
2(b)
hereof at the applicable Accelerated
Purchase Price on the Accelerated Purchase Date for such
Accelerated Purchase in accordance with this
Agreement, and specifying any
Accelerated Purchase Minimum Price Threshold determined by the
Company.
(e) “Accelerated
Purchase Price” means,
with respect to any particular Accelerated Purchase made pursuant
to Section
2(b)
hereof, the lower of (i) ninety-seven
percent (97%) of the VWAP for the period beginning at 9:30:01 a.m.,
Eastern time, on the applicable Accelerated Purchase Date, or such
other time publicly announced by the Principal Market as the
official open (or commencement)
of trading on the Principal Market on such applicable Accelerated
Purchase Date (the “Accelerated Purchase
Commencement Time”), and
ending at the earliest of (A) 4:00:00 p.m., Eastern time, on such
applicable Accelerated Purchase Date, or such other time publicly
announced by the Principal Market as the official close of trading
on the Principal Market on such applicable Accelerated Purchase
Date, (B) such time, from and after the Accelerated Purchase
Commencement Time for such Accelerated Purchase, that the total
number (or volume) of shares of Common Stock traded on the
Principal Market has exceeded the applicable Accelerated Purchase
Share Volume Maximum, and (C) such time, from and after the
Accelerated Purchase Commencement Time for such Accelerated
Purchase, that the Sale Price has fallen below the applicable
Accelerated Purchase Minimum Price Threshold (such earliest of
(i)(A), (i)(B) and (i)(C) above, the “Accelerated Purchase
Termination Time”), and
(ii) the Closing Sale Price of the Common Stock on such applicable
Accelerated Purchase Date (each to be appropriately adjusted for
any reorganization, recapitalization, non-cash dividend, stock
split, reverse stock split or other similar
transaction).
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(f) “Accelerated
Purchase Share Amount”
means, with respect to an Accelerated Purchase made pursuant
to Section
2(b)
hereof, the number of Purchase Shares
directed by the Company to be purchased by the Investor in an
Accelerated Purchase Notice, which number of Purchase Shares shall
not exceed the lesser of (i) 300% of the number of Purchase Shares
directed by the Company to be purchased by the Investor pursuant to
the corresponding Regular Purchase Notice for the corresponding
Regular Purchase referred to in clause (i) of the second sentence of
Section
2(b)
hereof (subject to the Purchase Share
limitations contained in Section
2(a)
hereof) and (ii) an amount equal to
(A) the Accelerated Purchase Share Percentage multiplied by (B) the
total number (or volume) of shares of Common Stock traded on the
Principal Market during the period on the applicable Accelerated
Purchase Date beginning at the Accelerated Purchase Commencement
Time for such Accelerated Purchase and ending at the Accelerated
Purchase Termination Time for such Accelerated
Purchase.
(g) “Accelerated
Purchase Share Percentage” means, with respect to any Accelerated
Purchase made pursuant to Section
2(b)
hereof, thirty percent
(30%).
(h) “Accelerated
Purchase Share Volume Maximum” means, with respect to an Accelerated
Purchase made pursuant to Section
2(b)
hereof, a number of shares of Common
Stock equal to (i) the applicable Accelerated Purchase Share Amount
to be purchased by the Investor pursuant to the applicable
Accelerated Purchase Notice for such Accelerated Purchase, divided
by (ii) the Accelerated Purchase Share Percentage (to be
appropriately adjusted for any reorganization, recapitalization,
non-cash dividend, stock split, reverse stock split or other
similar transaction).
(i) “Additional
Accelerated Purchase Date” means, with respect to an Additional
Accelerated Purchase made pursuant to Section
2(c)
hereof, the Business Day (i) that is
the Accelerated Purchase Date with respect to the corresponding
Accelerated Purchase referred to in Section 2(b)
hereof and (ii) on which the Investor
receives, prior to 1:00 p.m., Eastern time, on such Business Day, a
valid Additional Accelerated Purchase Notice for such Additional
Accelerated Purchase in accordance with this
Agreement.
(j) “Additional
Accelerated Purchase Minimum Price Threshold” means, with respect to an Additional
Accelerated Purchase made pursuant to Section
2(c)
hereof, any minimum per share price
threshold set forth in the applicable Additional Accelerated
Purchase Notice.
(k) “Additional
Accelerated Purchase Notice” means, with respect to an Additional
Accelerated Purchase made pursuant to Section
2(c)
hereof, an irrevocable written notice
from the Company to the Investor directing the Investor to purchase
the applicable Additional Accelerated Purchase Share Amount at the
Additional Accelerated Purchase Price for such Additional
Accelerated Purchase in accordance with this Agreement, and
specifying any Additional Accelerated Purchase Minimum Price
Threshold determined by the Company.
(l) “Additional
Accelerated Purchase Price” means, with respect to an Additional
Accelerated Purchase made pursuant to Section
2(c)
hereof, the lower of (i) ninety-seven
percent (97%) of the VWAP for the period on the applicable
Additional Accelerated Purchase Date, beginning at the latest of
(A) the applicable Accelerated Purchase Termination Time with
respect to the corresponding Accelerated Purchase referred to
in Section
2(b)
hereof on such Additional Accelerated
Purchase Date, (B) the applicable Additional Accelerated Purchase
Termination Time with respect to the most recently completed prior
Additional Accelerated Purchase on such Additional Accelerated
Purchase Date, as applicable, and (C) the time at which all
Purchase Shares subject to all prior Accelerated Purchases and
Additional Accelerated Purchases (as applicable), including,
without limitation, those that have been effected on the same
Business Day as the applicable Additional Accelerated Purchase Date
with respect to which the applicable Additional Accelerated
Purchase relates, have theretofore been received by the Investor as
DWAC Shares in accordance with this Agreement (such latest of
(i)(A), (i)(B) and (i)(C) above, the “Additional Accelerated
Purchase Commencement Time”), and ending at the earliest of (X) 4:00
p.m., Eastern time, on such Additional Accelerated Purchase Date,
or such other time publicly announced by the Principal Market as
the official close of trading on the Principal Market on such
Additional Accelerated Purchase Date, (Y) such time, from and after
the Additional Accelerated Purchase Commencement Time for such
Additional Accelerated Purchase, that the total number (or volume)
of shares of Common Stock traded on the Principal Market has
exceeded the applicable Additional Accelerated Purchase Share
Volume Maximum, and (Z) such time, from and after the Additional
Accelerated Purchase Commencement Time for such Additional
Accelerated Purchase, that the Sale Price has fallen below the
applicable Additional Accelerated Purchase Minimum Price Threshold
(if any) (such earliest of (i)(X), (i)(Y)
and (i)(Z) above, the
“Additional Accelerated
Purchase Termination Time”), and (ii) the Closing Sale Price of the
Common Stock on such Additional Accelerated Purchase Date (each to
be appropriately adjusted for any reorganization, recapitalization,
non-cash dividend, stock split, reverse stock split or other
similar transaction).
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(m) “Additional
Accelerated Purchase Share Amount” means, with respect to an Additional
Accelerated Purchase made pursuant to Section
2(c)
hereof, the number of Purchase Shares
directed by the Company to be purchased by the Investor on an
Additional Accelerated Purchase Notice, which number of Purchase
Shares shall not exceed the lesser of (i) 300% of the number of
Purchase Shares directed by the Company to be purchased by the
Investor pursuant to the corresponding Regular Purchase Notice for
the corresponding Regular Purchase referred to clause (i) of the second sentence of
Section
2(c) hereof (subject to the
Purchase Share limitations contained in Section
2(a)
hereof) and (ii) an amount equal to
(A) the Additional Accelerated Purchase Share Percentage multiplied
by (B) the total number (or volume) of shares of Common Stock
traded on the Principal Market during the period on the applicable
Additional Accelerated Purchase Date beginning at the Additional
Accelerated Purchase Commencement Time for such Additional
Accelerated Purchase and ending at the Additional Accelerated
Purchase Termination Time for such Additional Accelerated
Purchase.
(n) “Additional
Accelerated Purchase Share Percentage” means, with respect to an Additional
Accelerated Purchase made pursuant to Section
2(c)
hereof, thirty percent
(30%).
(o) “Additional
Accelerated Purchase Share Volume Maximum” means, with respect to an Additional
Accelerated Purchase made pursuant to Section
2(c)
hereof, a number of shares of Common
Stock equal to (i) the applicable Additional Accelerated Purchase
Share Amount to be purchased by the Investor pursuant to the
applicable Additional Accelerated Purchase Notice for such
Additional Accelerated Purchase, divided by (ii) the Additional
Accelerated Purchase Share Percentage (to be appropriately adjusted
for any reorganization, recapitalization, non-cash dividend, stock
split, or other similar transaction).
(p) “Alternate
Adjusted Regular Purchase Share Limit” means, with respect to a Regular Purchase
made pursuant to Section
2(a)
hereof, the maximum number of Purchase
Shares which, taking into account the applicable per share Purchase
Price therefor calculated in accordance with this Agreement, would
enable the Company to deliver to the Investor, on the applicable
Purchase Date for such Regular Purchase, a Regular Purchase Notice
for a Purchase Amount equal to, or as closely approximating without
exceeding, One Hundred Fifty Thousand Dollars
($150,000).
(q) “Available
Amount” means, initially,
Fifteen Million Dollars ($15,000,000) in the aggregate, which
amount shall be reduced by the Purchase Amount each time the
Investor purchases shares of Common Stock pursuant to
Section
2
hereof.
(r) “Average
Price” means a price per
Purchase Share (rounded to the nearest tenth of a cent) equal to
the quotient obtained by dividing (i) the aggregate gross purchase
price paid by the Investor for all Purchase Shares purchased
pursuant to this Agreement, by (ii) the aggregate number of
Purchase Shares issued pursuant to this
Agreement.
(s) “Bankruptcy
Law” means
Title 11, U.S. Code, or any similar federal or state law for
the relief of debtors.
(t) “Business
Day” means any day on
which the Principal Market is open for trading, including any day
on which the Principal Market is open for trading for a period of
time less than the customary time.
(u) “Closing
Sale Price” means, for
any security as of any date, the last closing sale price for such
security on the Principal Market as reported by the Principal
Market.
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(v) “Confidential
Information” means any
information disclosed by either party to the other party, either
directly or indirectly, in writing, orally or by inspection of
tangible objects (including, without limitation, documents,
prototypes, samples, plant and equipment), which is designated as
“Confidential,” “Proprietary” or some
similar designation. Information communicated orally shall be
considered Confidential Information if such information is
confirmed in writing as being Confidential Information within ten
(10) Business Days after the initial disclosure. Confidential
Information may also include information disclosed to a disclosing
party by third parties. Confidential Information shall not,
however, include any information which (i) was publicly known and
made generally available in the public domain prior to the time of
disclosure by the disclosing party; (ii) becomes publicly known and
made generally available after disclosure by the disclosing party
to the receiving party through no action or inaction of the
receiving party; (iii) is already in the possession of the
receiving party without confidential restriction at the time of
disclosure by the disclosing party as shown by the receiving
party’s files and records immediately prior to the time of
disclosure; (iv) is obtained by the receiving party from a third
party without a breach of such third party’s obligations of
confidentiality; (v) is independently developed by the receiving
party without use of or reference to the disclosing party’s
Confidential Information, as shown by documents and other competent
evidence in the receiving party’s possession; or (vi) is
required by law to be disclosed by the receiving party, provided
that the receiving party gives the disclosing party prompt written
notice of such requirement prior to such disclosure and assistance
in obtaining an order protecting the information from public
disclosure.
(w) “Custodian”
means any receiver, trustee, assignee, liquidator or similar
official under any Bankruptcy Law.
(x) “DTC”
means The Depository Trust Company, or any successor performing
substantially the same function for the
Company.
(y) “DWAC
Shares” means shares of
Common Stock that are (i) issued in electronic form, (ii) freely
tradable and transferable and without restriction on resale and
(iii) timely credited by the Company to the Investor’s or its
designee’s specified Deposit/Withdrawal at Custodian (DWAC)
account with DTC under its Fast Automated Securities Transfer
(FAST) Program, or any similar program hereafter adopted by DTC
performing substantially the same function.
(z) “Exchange
Act” means the Securities
Exchange Act of 1934, as amended, and the rules and regulations
promulgated thereunder.
(aa) “Fully
Adjusted Regular Purchase Share Limit” means, following any reorganization,
recapitalization, non-cash dividend, stock split or other similar
transaction from and after the date of this Agreement, the Regular
Purchase Share Limit (as defined in Section
2(a) hereof)
in effect on the applicable date of determination, after giving
effect to the full proportionate adjustment with respect to such
reorganization, recapitalization, non-cash dividend, stock split or
other similar transaction.
(bb) “Material
Adverse Effect” means any
material adverse effect on (i) the enforceability of any
Transaction Document, (ii) the results of operations, assets,
business or financial condition of the Company and its
Subsidiaries, taken as a whole, other than any material adverse
effect that resulted exclusively from (A) any change in the United
States or foreign economies or securities or financial markets in
general that does not have a disproportionate effect on the Company
and its Subsidiaries, taken as a whole, (B) any change that
generally affects the industry in which the Company and its
Subsidiaries operate that does not have a disproportionate effect
on the Company and its Subsidiaries, taken as a whole, (C) any
change arising in connection with earthquakes, other acts of God,
hostilities, acts of war, sabotage or terrorism or military actions
or any escalation or material worsening of any such hostilities,
acts of war, sabotage or terrorism or military actions existing as
of the date hereof, (D) any action taken by the Investor, its
affiliates or its or their successors and assigns with respect to
the transactions contemplated by this Agreement, (E) the effect of
any change in Applicable Laws or accounting rules that does not
have a disproportionate effect on the Company and its Subsidiaries,
taken as a whole, or (F) any change resulting from compliance with
terms of this Agreement or the consummation of the transactions
contemplated by this Agreement, or (iii) the Company’s
ability to perform in any material respect on a timely basis its
obligations under any Transaction Document to be performed as of
the date of determination.
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(cc) “Maturity
Date” means the first day
of the month immediately following the thirty (30) month
anniversary of the Commencement Date.
(dd) “PEA
Period” means the period
commencing at 9:30 a.m., Eastern time, on the twentieth (20th)
Business Day immediately prior to the filing of any post-effective
amendment to the Registration Statement (as defined herein)
or New Registration Statement
(as such term is defined in the Registration Rights Agreement), and
ending at 9:30 a.m., Eastern time, on the Business Day immediately
following the effective date of any post-effective amendment to the
Registration Statement (as defined herein) or New Registration Statement (as such term is
defined in the Registration Rights Agreement).
(ee) “Person”
means an individual or entity including but not limited to any
limited liability company, a partnership, a joint venture, a
corporation, a trust, an
unincorporated organization and a government or any department or
agency thereof.
(ff) “Principal
Market” means
The Nasdaq Capital Market (or any
nationally recognized successor thereto); provided, however, that
in the event the Company’s Common Stock is ever listed or
traded on The Nasdaq Global Market, The Nasdaq Global Select
Market, the New York Stock Exchange, the NYSE American, the NYSE Arca, the OTC Bulletin Board, the OTCQX operated by the OTC
Markets Group, Inc. or the OTCQB operated by the OTC Markets Group,
Inc. (or any nationally recognized successor to any of the
foregoing), then the “Principal Market” shall mean such
other market or exchange on which the Company’s Common Stock
is then listed or traded.
(gg) “Purchase
Amount” means, with
respect to any Regular Purchase, any Accelerated Purchase or any
Additional Accelerated Purchase made hereunder, the portion of the
Available Amount to be purchased by the Investor pursuant to
Section
2
hereof.
(hh) “Purchase
Date” means, with respect
to a Regular Purchase made pursuant to Section
2(a)
hereof, the Business Day on which the
Investor receives, after 4:00 p.m., Eastern time, but prior to 5:00
p.m., Eastern time, on such Business Day, a valid Regular Purchase
Notice for such Regular Purchase in accordance with this
Agreement.
(ii) “Purchase
Notice” means a Regular
Purchase Notice, an Accelerated Purchase Notice or an Additional
Accelerated Purchase Notice with respect to any Regular Purchase,
Accelerated Purchase or Additional Accelerated Purchase,
respectively.
(jj) “Purchase
Price” means, with
respect to any Regular Purchase made pursuant to
Section
2(a)
hereof, the lower of: (i) the lowest
Sale Price on the applicable Purchase Date and (ii) the arithmetic
average of the three (3) lowest Closing Sale Prices for the Common
Stock during the ten (10) consecutive Business Days ending on the
Business Day immediately preceding such Purchase Date (in each
case, to be appropriately adjusted for any reorganization,
recapitalization, non-cash dividend, stock split or other similar
transaction that occurs on or after the date of this
Agreement).
(kk) “Registration
Rights Agreement” means
that certain Registration Rights Agreement, of even date herewith
between the Company and the Investor.
(ll) “Regular
Purchase Notice” means,
with respect to any Regular Purchase pursuant to
Section
2(a)
hereof, an irrevocable written notice
from the Company to the Investor directing the Investor to buy such
applicable amount of Purchase Shares at the applicable Purchase
Price as specified by the Company therein on the applicable
Purchase Date for such Regular Purchase.
(mm) “Registration
Statement” has the
meaning set forth in the Registration Rights
Agreement.
(nn) “Sale
Price” means any trade
price for the shares of Common Stock on the Principal Market as
reported by the Principal Market.
(oo) “SEC”
means the U.S. Securities and Exchange
Commission.
(pp) “Securities”
means, collectively, the Purchase Shares and the Commitment
Shares.
(qq) “Securities
Act” means the Securities
Act of 1933, as amended, and the rules and regulations promulgated
thereunder.
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(rr) “Subsidiary”
means any Person the Company wholly-owns or controls, or in which
the Company, directly or indirectly, owns a majority of the voting
stock or similar voting interest, in each case that would be
disclosable pursuant to Item 601(b)(21) of Regulation S-K
promulgated under the Securities Act.
(ss) “Transaction
Documents” means,
collectively, this Agreement and the schedules and exhibits hereto,
the Registration Rights Agreement and the schedules and exhibits
thereto, and each of the other agreements, documents,
certificates and instruments entered
into or furnished by the parties hereto in connection with the
transactions contemplated hereby and thereby.
(tt) “Transfer
Agent” means Colonial
Stock Transfer, or such other Person who is then serving as the
transfer agent for the Company with respect to the Common
Stock.
(uu) “VWAP”
means with respect to an applicable Accelerated Purchase
Date and an Additional
Accelerated Purchase Date, as applicable, the volume weighted
average price of the Common Stock on the Principal Market, as
reported on the Principal Market or by another reputable source such as Bloomberg,
L.P.
Subject
to the terms and conditions set forth in this Agreement, the
Company has the right to sell to the Investor, and the Investor has
the obligation to purchase from the Company, Purchase Shares as
follows:
(a) Commencement of Regular Sales of
Common Stock. Upon the satisfaction of the conditions set
forth in Sections
7 and 8 hereof (the
“Commencement” and the
date of satisfaction of such conditions the “Commencement Date”), the
Company shall have the right, but not the obligation, to direct the
Investor, by its delivery to the Investor of a Regular Purchase
Notice from time to time, to purchase up to One Hundred Fifty
Thousand (150,000) Purchase Shares (such maximum number of Purchase
Shares, as may be adjusted from time to time, the
“Regular Purchase
Share Limit”), at the Purchase Price on the Purchase
Date (each such purchase a “Regular Purchase”);
provided,
however, that if,
the Fully Adjusted Regular Purchase Share Limit then in effect
would preclude the Company from delivering to the Investor a
Regular Purchase Notice hereunder for a Purchase Amount equal to or
greater the Alternate Adjusted Regular Purchase Share Limit, the
Alternate Adjusted Regular Purchase Share Limit shall apply in lieu
of the Fully Adjusted Regular Purchase Share Limit; and
provided,
further,
however, that the
Investor’s committed obligation under any single Regular
Purchase, other than any Regular Purchase with respect to which an
Alternate Adjusted Regular Purchase Share Limit shall apply, shall
not exceed One Million Dollars ($1,000,000). The Company may
deliver multiple Regular Purchase Notices to the Investor in a day
as often as every Business Day, so long as Purchase Shares for all
prior Regular Purchases, Accelerated Purchases and Additional
Accelerated Purchases, including, without limitation, those that
have been effected on the same Business Day as the applicable
Purchase Date, have theretofore been received by the Investor as
DWAC Shares in accordance with this Agreement. Notwithstanding the
foregoing, the Company shall not deliver a Regular Purchase Notice
to the Investor during the PEA Period.
(b) Accelerated Purchases. Subject
to the terms and conditions of this Agreement, beginning on the
Commencement Date, in addition to purchases of Purchase Shares as
described in Section 2(a) above, the
Company shall also have the right, but not the obligation, to
direct the Investor, by its delivery to the Investor of an
Accelerated Purchase Notice from time to time in accordance with
this Agreement, to purchase the applicable Accelerated Purchase
Share Amount at the Accelerated Purchase Price on the Accelerated
Purchase Date therefor in accordance with this Agreement (each such
purchase, an “Accelerated Purchase”).
The Company may deliver an Accelerated Purchase Notice to the
Investor only on a Purchase Date on which (i) the Company also
properly submitted a Regular Purchase Notice providing for a
Regular Purchase of a number of Purchase Shares not less than the
Regular Purchase Share Limit then in effect on such Purchase Date
in accordance with this Agreement, (ii) if all Purchase Shares
subject to all prior Regular Purchases, Accelerated Purchases and
Additional Accelerated Purchases, including, without limitation,
those that have been effected on the same Business Day as the
applicable Accelerated Purchase Date with respect to which the
applicable Accelerated Purchase relates, have theretofore been
received by the Investor as DWAC Shares in accordance with this
Agreement and (iii) the Closing Sale Price of the Common Stock is
not less than the Accelerated Purchase Floor Price. Within one (1)
Business Day after completion of each Accelerated Purchase Date for
an Accelerated Purchase, the Investor will provide to the Company a
written confirmation of such Accelerated Purchase setting forth the
applicable Accelerated Purchase Share Amount and Accelerated
Purchase Price for such Accelerated Purchase (each, an
“Accelerated
Purchase Confirmation”). Notwithstanding the
foregoing, the Company shall not deliver any Accelerated Purchase
Notices during the PEA Period.
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(c) Additional Accelerated
Purchases. Subject to the terms and conditions of this
Agreement, beginning one (1) Business Day following the
Commencement Date and thereafter, in addition to purchases of
Purchase Shares as described in Section 2(a) and Section 2(b) above, the
Company shall also have the right, but not the obligation, to
direct the Investor, by its timely delivery to the Investor of an
Additional Accelerated Purchase Notice on an Additional Accelerated
Purchase Date in accordance with this Agreement, to purchase the
applicable Additional Accelerated Purchase Share Amount at the
applicable Additional Accelerated Purchase Price therefor in
accordance with this Agreement (each such purchase, an
“Additional
Accelerated Purchase”). The Company may deliver
multiple Additional Accelerated Purchase Notices to the Investor on
an Additional Accelerated Purchase Date; provided, however, that the Company may
deliver an Additional Accelerated Purchase Notice to the Investor
only (i) on a Business Day that is also the Accelerated Purchase
Date for an Accelerated Purchase with respect to which the Company
properly submitted to the Investor an Accelerated Purchase Notice
in accordance with this Agreement on the applicable Purchase Date
for a Regular Purchase of a number of Purchase Shares not less than
the Regular Purchase Share Limit then in effect in accordance with
this Agreement and (ii) if all Purchase Shares subject to all prior
Regular Purchases, Accelerated Purchases and Additional Accelerated
Purchases, including, without limitation, those that have been
effected on the same Business Day as the applicable Additional
Accelerated Purchase Date with respect to which the applicable
Additional Accelerated Purchase relates, have theretofore been
received by the Investor as DWAC Shares in accordance with this
Agreement. Within one (1) Business Day after completion of each
Additional Accelerated Purchase Date, the Investor will provide to
the Company a written confirmation of each Additional Accelerated
Purchase on such Additional Accelerated Purchase Date setting forth
the applicable Additional Accelerated Purchase Share Amount and
Additional Accelerated Purchase Price for each such Additional
Accelerated Purchase on such Additional Accelerated Purchase Date
(each, an “Additional Accelerated Purchase
Confirmation”). Notwithstanding the foregoing, the
Company shall not deliver any Additional Accelerated Purchase
Notices during the PEA Period.
(d) Payment for Purchase Shares.
For each Regular Purchase, the Investor shall pay to
the Company an amount equal to the Purchase Amount with respect to
such Regular Purchase as full payment for such Purchase Shares via
wire transfer of immediately available funds on the same Business
Day that the Investor receives such Purchase Shares, if such
Purchase Shares are received by the Investor before 1:00 p.m.,
Eastern time, or, if such Purchase Shares are received by the
Investor after 1:00 p.m., Eastern time, the next Business Day. For
each Accelerated Purchase and each Additional Accelerated Purchase,
the Investor shall pay to the Company an amount equal to the
Purchase Amount with respect to such Accelerated Purchase and
Additional Accelerated Purchase, respectively, as full payment for
such Purchase Shares via wire transfer of immediately available
funds on the second Business Day following the date that the
Investor receives such Purchase Shares. If the Company or the
Transfer Agent shall fail for any reason or for no reason to
electronically transfer any Purchase Shares as DWAC Shares
submitted by the Investor or its agent with respect to any Regular
Purchase, Accelerated Purchase or Additional Accelerated Purchase
(as applicable) within two (2) Business Days following the receipt
by the Company of the Purchase Price, Accelerated Purchase Price or
Additional Accelerated Purchase Price, respectively, therefor in
compliance with this Section 2(d), and if on or
after such Business Day the Investor purchases (in an open market
transaction or otherwise) shares of Common Stock to deliver in
satisfaction of a sale by the Investor of such Purchase Shares that
the Investor anticipated receiving from the Company with respect to
such Regular Purchase, Accelerated Purchase or Additional
Accelerated Purchase (as applicable), then the Company shall,
within two (2) Business Days after the Investor’s request,
either (i) pay cash to the Investor in an amount equal to the
Investor’s total purchase price (including customary
brokerage commissions, if any) for the shares of Common Stock so
purchased (the “Cover Price”), at which
point the Company’s obligation to deliver such Purchase
Shares as DWAC Shares shall terminate, or (ii) promptly honor its
obligation to deliver to the Investor such Purchase Shares as DWAC
Shares and pay cash to the Investor in an amount equal to the
excess (if any) of the Cover Price over the total Purchase Amount
paid by the Investor pursuant to this Agreement for all of the
Purchase Shares to be purchased by the Investor in connection with
such purchases. The Company shall not issue any fraction of a
share of Common Stock upon any Regular Purchase, Accelerated
Purchase or Additional Accelerated Purchase. If the issuance
would result in the issuance of a fraction of a share of Common
Stock, the Company shall round such fraction of a share of Common
Stock up or down to the nearest whole share. All payments made
under this Agreement shall be made in lawful money of the United
States of America or wire transfer of immediately available funds
to such account as the Company may from time to time designate by
written notice in accordance with the provisions of this Agreement.
Whenever any amount expressed to be due by the terms of this
Agreement is due on any day that is not a Business Day, the same
shall instead be due on the next succeeding day that is a Business
Day.
-7-
(e) Compliance with Principal Market
Rules. Notwithstanding anything in this Agreement to the
contrary, and in addition to the limitations set forth in
Section 2(f), the Company
shall not issue more than 5,231,022 shares (including the
Commitment Shares) of Common Stock (the “Exchange Cap”) under this
Agreement, which equals 19.99% of the Company’s outstanding
shares of Common Stock as of the date hereof, unless stockholder
approval is obtained to issue in excess of the Exchange Cap;
provided,
however, that the
foregoing limitation shall not apply if at any time the Exchange
Cap is reached and at all times thereafter the average price paid
for all shares of Common Stock issued under this Agreement is equal
to or greater than $0.70 (the “Minimum Price”), a price
equal to the lower of (i) the Nasdaq Official Closing Price
immediately preceding the execution of this Agreement or (ii) the
arithmetic average of the five (5) Nasdaq Official Closing Prices
for the Common Stock immediately preceding the execution of this
Agreement, as calculated in accordance with the rules of the
Principal Market (in such circumstance, for purposes of the
Principal Market, the transaction contemplated hereby would not be
“below market” and the Exchange Cap would not apply).
Notwithstanding the foregoing, the Company shall not be required or
permitted to issue, and the Buyer shall not be required to
purchase, any shares of Common Stock under this Agreement if such
issuance would violate the rules or regulations of the Principal
Market. The Company may, in its sole discretion, determine whether
to obtain stockholder approval to issue more than 19.99% of its
outstanding shares of Common Stock hereunder if such issuance would
require stockholder approval under the rules or regulations of the
Principal Market. The Exchange Cap shall be reduced, on a
share-for-share basis, by the number of shares of Common Stock
issued or issuable that may be aggregated with the transactions
contemplated by this Agreement under applicable rules of the
Principal Market.
(f) Beneficial Ownership
Limitation. Notwithstanding anything to the contrary
contained in this Agreement, the Company shall not issue or
sell, and the Investor shall not purchase or acquire, any
Common Stock under this Agreement which, when aggregated with
all other shares of Common Stock then beneficially owned by the
Investor and its affiliates (as calculated pursuant to Section
13(d) of the Exchange Act and Rule 13d-3 promulgated thereunder)
would result in the beneficial ownership by the Investor and
its affiliates of more than 9.99% of the then issued and
outstanding Common Stock (the “Beneficial Ownership
Limitation”). Upon the written or oral request of the
Investor, the Company shall promptly (but not later than
twenty-four (24) hours) confirm orally or in writing to the
Investor the amount of Common Stock then outstanding. The Investor
and the Company shall each cooperate in good faith in the
determinations required hereby and the application
hereof.
(g) Excess Share Limitation. If the
Company delivers any Purchase Notice for a Purchase Amount in
excess of the limitations contained in this Section 2, such Purchase
Notice shall be void ab
initio to the extent of the amount by which the number of
Purchase Shares set forth in such Purchase Notice exceeds the
number of Purchase Shares which the Company is permitted to include
in such Purchase Notice in accordance herewith, and the Investor
shall have no obligation to purchase such excess Purchase Shares
with respect to such Purchase Notice; provided, however, that the Investor
shall remain obligated to purchase the number of Purchase Shares
which the Company is permitted to include in such Purchase
Notice.
(h) Adjustments for Shares. All
share-related numbers contained in this Section 2 shall be adjusted
to take into account any reorganization, recapitalization, non-cash
dividend, stock split or other similar transaction effected with
respect to the Common Stock except as specifically stated
herein.
The
Investor represents and warrants to the Company that as of the date
hereof and as of the Commencement Date:
(a) Organization,
Authority. Investor is an
entity duly organized, validly existing and in good standing under
the laws of the jurisdiction of its organization, with the
requisite power and authority to enter into and to consummate the
transactions contemplated by this Agreement and otherwise to carry
out its obligations hereunder and thereunder.
(b) Investment
Purpose. The Investor is
acquiring the Securities as principal for its own account and not
with a view to or for distributing or reselling such Securities or
any part thereof in violation of the Securities Act or any
applicable state securities law, has no present intention of
distributing any of such Securities in violation of the Securities
Act or any applicable state securities law and has no direct or
indirect arrangement or understandings with any other Persons to
distribute or regarding the distribution of such Securities in
violation of the Securities Act or any applicable state securities
law (this representation and warranty not limiting the
Investor’s right to sell the Securities at any time pursuant
to the Registration Statement described herein or otherwise in
compliance with applicable federal and state securities laws). The
Investor is acquiring the Securities hereunder in the ordinary
course of its business.
-8-
(c) Accredited
Investor Status. The Investor
is an “accredited investor” as that term is defined in
Rule 501(a)(3) of Regulation D promulgated under the Securities
Act.
(d) Reliance
on Exemptions. The Investor
understands that the Securities may be offered and sold to it in
reliance on specific exemptions from the registration requirements
of United States federal and state securities laws and that the
Company is relying in part upon the truth and accuracy of, and the
Investor’s compliance with, the representations, warranties,
agreements, acknowledgments and understandings of the Investor set
forth herein in order to determine the availability of such
exemptions and the eligibility of the Investor to acquire the
Securities.
(e) Information.
The Investor understands that its investment in the Securities
involves a high degree of risk. The Investor (i) is able to bear
the economic risk of an investment in the Securities including a
total loss thereof, (ii) has such knowledge and experience in
financial and business matters that it is capable of evaluating the
merits and risks of the proposed investment in the Securities and
(iii) has had an opportunity to ask questions of and receive
answers from the officers of the Company concerning the financial
condition and business of the Company and other matters related to
an investment in the Securities. Neither such inquiries nor any
other due diligence investigations conducted by the Investor or its
representatives shall modify, amend or affect the Investor’s
right to rely on the Company’s representations and warranties
contained in Section 4
below. The Investor has sought such
accounting, legal and tax advice as it has considered necessary to
make an informed investment decision with respect to its
acquisition of the Securities.
(f) No
Governmental Review. The
Investor understands that no U.S. federal or state agency or any
other government or governmental agency has passed on or made any
recommendation or endorsement of the Securities or the fairness or
suitability of an investment in the Securities nor have such
authorities passed upon or endorsed the merits of the offering of
the Securities.
(g) Transfer
or Sale. The Investor
understands that (i) the Securities may not be offered for sale,
sold, assigned or transferred unless (A) registered pursuant to the
Securities Act or (B) an exemption exists permitting such
Securities to be sold, assigned or transferred without such
registration and (ii) any sale of the Securities made in reliance
on Rule 144 may be made only in accordance with the terms of Rule
144 and further, if Rule 144 is not applicable, any resale of the
Securities under circumstances in which the seller (or the Person
through whom the sale is made) may be deemed to be an underwriter
(as that term is defined in the Securities Act) may require
compliance with some other exemption under the Securities Act or
the rules and regulations of the SEC
thereunder.
(h) Validity;
Enforcement. This Agreement has
been duly and validly authorized, executed and delivered on behalf
of the Investor and is a valid and binding agreement of the
Investor enforceable against the Investor in accordance with its
terms, subject as to enforceability to general principles of equity
and to applicable bankruptcy, insolvency, reorganization,
moratorium, liquidation and other similar laws relating to, or
affecting generally, the enforcement of applicable creditors’
rights and remedies.
(i) Residency.
The Investor is a resident of the State of
Illinois.
(j) No
Short Selling. The Investor
represents and warrants to the Company that at no time prior to the
date of this Agreement has any of the Investor, its agents,
representatives or affiliates engaged in or effected, in any manner
whatsoever, directly or indirectly, any (i) “short
sale” (as such term is defined in Rule 200 of Regulation SHO
of the Exchange Act) of the Common Stock or (ii) hedging
transaction, which establishes a net short position with respect to
the Common Stock.
The
Company represents and warrants to the Investor, except as set
forth in the disclosure schedules attached hereto, which exceptions
shall be deemed to be a part of the representations and warranties
made hereunder, that as of the date hereof and as of the
Commencement Date:
-9-
(a) Organization
and Qualification. The Company
and each of its Subsidiaries is an entity duly incorporated or
otherwise organized, validly existing and in good standing under
the laws of the jurisdiction of its incorporation or organization,
with the requisite corporate power and authority to own and use its
properties and assets and to carry on its business as currently
conducted. Neither the Company nor any of its Subsidiaries is in
violation or default of any of the provisions of its
respective certificate or
Certificate of Incorporation, bylaws or other organizational or
charter documents. Each of the Company and its Subsidiaries is duly
qualified to conduct business and is in good standing as a
foreign corporation or other
entity in each jurisdiction in which the nature of the business
conducted or property owned by it makes such qualification
necessary, except where the failure to be so qualified or in good
standing, as the case may be, could not have or reasonably be
expected to result in a Material Adverse Effect and no proceeding
has been instituted in any such jurisdiction revoking, limiting or
curtailing or seeking to revoke, limit or curtail such power and
authority or qualification. The Company has no Subsidiaries except
as set forth on Exhibit 21.1 to the Company’s Annual Report
on Form 10-K for the year ended December 31,
2018.
(b) Authorization;
Enforcement; Validity. (i) The
Company has the requisite corporate power and authority to enter
into and perform its obligations under this Agreement and each of
the other Transaction Documents, and to issue the Securities in
accordance with the terms hereof and thereof, (ii) the execution
and delivery of the Transaction Documents by the Company and the
consummation by it of the transactions contemplated hereby and
thereby, including without limitation, the issuance of the
Commitment Shares (as defined below in Section
5(e))
and the reservation for issuance and the issuance of the Purchase
Shares issuable under this Agreement, have been duly authorized by
the Company’s Board of Directors and no further consent or
authorization is required by the Company, its Board of Directors or
its stockholders, (iii) this Agreement has been, and each other
Transaction Document shall be on the Commencement Date, duly
executed and delivered by the Company and (iv) this Agreement
constitutes, and each other Transaction Document upon its execution
on behalf of the Company, shall constitute, the valid and binding
obligations of the Company enforceable against the Company in
accordance with their terms, except as such enforceability may be
limited by general principles of equity or applicable bankruptcy,
insolvency, reorganization, moratorium, liquidation or similar laws
relating to, or affecting generally, the enforcement of
creditors’ rights and remedies. The Board of Directors of the
Company has approved the resolutions (the
“Signing
Resolutions”)
substantially in the form as set forth as Exhibit C
attached hereto to authorize this
Agreement and the transactions contemplated hereby. The Signing
Resolutions are valid, in full force and effect and have not been
modified or supplemented in any respect. The Company has delivered
to the Investor a true and correct copy of a unanimous written
consent adopting the Signing Resolutions executed by all of the
members of the Board of Directors of the Company. Except as set
forth in this Agreement, no other approvals or consents of the
Company’s Board of Directors, any authorized committee
thereof, and/or stockholders is necessary under Applicable Laws and
the Company’s Certificate of Incorporation and/or Bylaws to
authorize the execution and delivery of this Agreement or any of
the transactions contemplated hereby, including, but not limited
to, the issuance of the Commitment Shares and the issuance of the
Purchase Shares.
(c) Capitalization.
As of the date hereof, the authorized capital stock of the Company
is set forth in Schedule
4(c) hereof. Except as disclosed in the SEC Documents
(as defined below), (i) no shares of the Company’s capital
stock are subject to preemptive rights or any other similar rights
or any liens, encumbrances and defects (“Liens”)
suffered or permitted by the Company, (ii) there are no outstanding
debt securities, (iii) there are no outstanding options, warrants,
scrip, rights to subscribe to, calls or commitments of any
character whatsoever relating to, or securities or rights
convertible into, any shares of capital stock of the Company or any
of its Subsidiaries, or contracts, commitments, understandings or
arrangements by which the Company or any of its Subsidiaries is or
may become bound to issue additional shares of capital stock of the
Company or any of its Subsidiaries or options, warrants, scrip,
rights to subscribe to, calls or commitments of any character
whatsoever relating to, or securities or rights convertible into,
any shares of capital stock of the Company or any of its
Subsidiaries, (iv) there are no agreements or arrangements under
which the Company or any of its Subsidiaries is obligated to
register the sale of any of their securities under the Securities
Act (except the Registration Rights Agreement), (v) there are no
outstanding securities or instruments of the Company or any of its
Subsidiaries which contain any redemption or similar provisions,
and there are no contracts, commitments, understandings or
arrangements by which the Company or any of its Subsidiaries is or
may become bound to redeem a security of the Company or any of its
Subsidiaries, (vi) there are no securities or instruments
containing anti-dilution or similar provisions that will be
triggered by the issuance of the Securities as described in this
Agreement and (vii) the Company does not have any stock
appreciation rights or “phantom stock” plans or
agreements or any similar plan or agreement. The Company has
furnished to the Investor true and correct copies of the
Certificate of Incorporation, and the Company’s Bylaws, as
amended and as in effect on the date hereof (the
“Bylaws”),
summaries of the terms of all securities convertible into or
exercisable for Common Stock, if any, and copies of any documents
containing the material rights of the holders thereof in respect
thereto.
-10-
(d) Issuance
of Securities. Upon issuance
and payment therefor in accordance with the terms and conditions of
this Agreement, the Purchase Shares shall be validly issued, fully
paid and nonassessable and free from all taxes, Liens, charges,
restrictions, rights of first refusal and preemptive rights with
respect to the issue thereof, with the holders being entitled to
all rights accorded to a holder of Common Stock.
24,000,000 shares of Common Stock have been duly authorized
and reserved for issuance upon purchase under this Agreement as
Purchase Shares. 487,168 shares of Common Stock (subject to
equitable adjustment for any reorganization, recapitalization,
non-cash dividend, stock split or other similar transaction) have
been duly authorized and reserved for issuance as Commitment Shares
(as defined below in Section
5(e)) in accordance with this
Agreement. The Commitment Shares shall be validly issued, fully
paid and nonassessable and free from all taxes, Liens, charges,
restrictions, rights of first refusal and preemptive rights with
respect to the issue thereof, with the holders being entitled to
all rights accorded to a holder of Common
Stock.
(e) No
Conflicts. The execution,
delivery and performance of the Transaction Documents by the
Company and the consummation by the Company of the transactions
contemplated hereby and thereby (including, without limitation, the
reservation for issuance and issuance of the Purchase Shares and the Commitment Shares) will
not (i) result in a violation of the Certificate of Incorporation
(including any Certificate of Designations, Preferences and Rights
of any outstanding series of preferred stock of the Company) or the
Bylaws or (ii) conflict with, or constitute a default (or an event
which with notice or lapse of time or both would become a default)
under, or give to others any rights of termination, amendment,
acceleration or cancellation of, any agreement, indenture or
instrument to which the Company or any of its Subsidiaries is a
party, or result in a violation of any law, rule, regulation,
order, judgment or decree (including federal and state securities
laws and regulations and the rules and regulations of the Principal
Market applicable to the Company or any of its Subsidiaries) or by
which any property or asset of the Company or any of its
Subsidiaries is bound or affected, except in the case of conflicts,
defaults, terminations, amendments, accelerations, cancellations
and violations under clause (ii), which could not reasonably be
expected to result in a Material Adverse Effect. Neither the
Company nor any Subsidiary is in violation or default of or under
(i) any provision of the Certificate of Incorporation or Bylaws or
under its respective certificate or articles of incorporation, any
certificate of designation, preferences and rights of any
outstanding series of preferred stock, organizational charter or
bylaws, respectively, (ii) the terms of any indenture, contract,
lease, mortgage, deed of trust, note agreement, loan agreement or
other agreement, obligation, condition, covenant or instrument to
which it is a party or bound or to which its property is subject,
or (iii) any judgment, order or decree of any court, regulatory
body, administrative agency, governmental body, arbitrator or other
authority having jurisdiction over the Company or any of its
properties, which, in the case of clauses (ii) or (iii), could be
reasonably expected to have a Material Adverse Effect. Except as
specifically contemplated by this Agreement and as required under
the Securities Act or applicable state securities laws and the
rules and regulations of the Principal Market, the Company is not
required to obtain any consent, Authorization or order of, or make
any filing or registration with, any court or governmental agency
or any regulatory or self-regulatory agency in order for it to
execute, deliver or perform any of its obligations under or
contemplated by the Transaction Documents in accordance with the
terms hereof or thereof. Except as set forth elsewhere in this
Agreement, all consents, Authorizations, orders, filings and
registrations which the Company is required to obtain pursuant to
the preceding sentence shall be obtained or effected on or prior to
the Commencement Date.
(f) SEC
Documents; Financial Statements. The Company has filed all reports, schedules,
forms, statements and other documents required to be filed by the
Company under the Securities Act and the Exchange Act, including
pursuant to Section 13(a)
or 15(d) thereof, for the 24
months preceding the date hereof (or such shorter period as the
Company was required by law or regulation to file such material)
(the foregoing materials, including the exhibits thereto and
documents incorporated by reference therein, being collectively
referred to herein as the “SEC
Documents”) on a timely
basis or has received a valid extension of such time of filing and
has filed any such SEC Documents prior to the expiration of any
such extension. As of their respective dates, the SEC Documents
complied in all material respects with the requirements of the
Securities Act and the Exchange Act, as applicable. None of the SEC
Documents, when filed, contained any untrue statement of a material
fact or omitted to state a material fact required to be stated
therein or necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not
misleading. The financial statements of the Company included in the
SEC Documents comply in all material respects with applicable
accounting requirements and the rules and regulations of the SEC
with respect thereto as in effect at the time of filing. Such
financial statements have been prepared in accordance with United
States generally accepted accounting principles applied on a
consistent basis during the
-11-
periods involved (“GAAP”),
except as may be otherwise specified in such financial statements
or the notes thereto and except that unaudited financial statements
may not contain all footnotes required by GAAP, and fairly present
in all material respects the financial position of the Company and
its consolidated Subsidiaries as of and for the dates thereof and
the results of operations and cash flows for the periods then
ended, subject, in the case of unaudited statements, to normal,
immaterial, year-end audit adjustments. Except as set forth in the
SEC Documents, the Company has received no notices or
correspondence from the SEC for the one year preceding the date
hereof. The SEC has not commenced any enforcement proceedings
against the Company or any of its Subsidiaries.
(g) Absence
of Certain Changes. Except as
disclosed in the SEC Documents, since December 31, 2018, there has
been no material adverse change in the business, properties,
operations, financial condition or results of operations of the
Company or its Subsidiaries. The Company has not taken any steps,
and does not currently expect to take any steps, to seek protection
pursuant to any Bankruptcy Law nor does the Company or any of its
Subsidiaries have any knowledge or reason to believe that its
creditors intend to initiate involuntary
bankruptcy or insolvency proceedings. The Company is financially solvent and is
generally able to pay its debts as they become
due.
(h) Absence
of Litigation. There is no
action, suit, proceeding, inquiry or investigation before or by any
court, public board, government agency, self-regulatory
organization or body pending or, to the knowledge of the Company or
any of its Subsidiaries, threatened against or affecting the
Company, the Common Stock or any of the Company’s or its
Subsidiaries’ officers or directors in their capacities as
such, which could reasonably be expected to have a Material Adverse
Effect.
(i) Acknowledgment
Regarding Investor’s
Status. The Company
acknowledges and agrees that the Investor is acting solely in the
capacity of arm’s length purchaser with respect to the
Transaction Documents and the transactions contemplated hereby and
thereby. The Company further acknowledges that the Investor is not
acting as a financial advisor or fiduciary of the Company (or in
any similar capacity) with respect to the Transaction Documents and
the transactions contemplated hereby and thereby and any advice
given by the Investor or any of its representatives or agents in
connection with the Transaction Documents and the transactions
contemplated hereby and thereby is merely incidental to the
Investor’s purchase of the Securities. The Company further
represents to the Investor that the Company’s decision to
enter into the Transaction Documents has been based solely on the
independent evaluation by the Company and its representatives and
advisors.
(j) No
Aggregated Offering. Neither
the Company, nor any of its affiliates, nor any Person acting on
its or their behalf has, directly or indirectly, made any offers or
sales of any security or solicited any offers to buy any security,
under circumstances that would cause the transactions contemplated
hereby to be integrated or aggregated with prior offerings by the
Company in a manner that would require stockholder approval
pursuant to the rules of the Principal Market on which any of the
securities of the Company are listed or
designated.
(k) Intellectual
Property Rights. The Company
and its Subsidiaries own or possess adequate rights or licenses to
use all material trademarks, trade names, service marks, service
xxxx registrations, service names, patents, patent rights,
copyrights, inventions, licenses, approvals, governmental
authorizations, trade secrets and rights necessary to conduct their
respective businesses as now conducted. None of the Company’s
material trademarks, trade names, service marks, service xxxx
registrations, service names, patents, patent rights, copyrights,
inventions, licenses, approvals, government authorizations, trade
secrets or other intellectual property rights have expired or
terminated, or, by the terms and conditions thereof, could expire
or terminate within two years from the date of this Agreement. The
Company and its Subsidiaries do not have any knowledge of any
infringement by the Company or its Subsidiaries of any material
trademark, trade name rights, patents, patent rights, copyrights,
inventions, licenses, service names, service marks, service xxxx
registrations, trade secret or other similar rights of others, or
of any such development of similar or identical trade secrets or
technical information by others, and there is no claim, action or
proceeding being made or brought against, or to the Company’s
knowledge, being threatened against, the Company or its
Subsidiaries regarding trademark, trade name, patents, patent
rights, invention, copyright, license, service names, service
marks, service xxxx registrations, trade secret or other
infringement, which could reasonably be expected to have a Material
Adverse Effect.
-12-
(l) Environmental
Laws. The Company and its
Subsidiaries (i) are in compliance with any and all applicable
foreign, federal, state and local laws and regulations relating to
the protection of human health and safety, the environment or
hazardous or toxic substances or wastes, pollutants or contaminants
(“Environmental
Laws”), (ii) have
received all permits, licenses or other approvals required of them
under applicable Environmental Laws to conduct their respective
businesses and (iii) are in compliance with all terms and
conditions of any such permit, license or approval, except where,
in each of the three foregoing clauses, the failure to so comply
could not reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect.
(m) Title.
The Company and its Subsidiaries own no real property. Except as
disclosed in the SEC Documents, the Company and its Subsidiaries
have good and marketable title in fee simple to all real property
owned by them and good and marketable title in all personal
property owned by them that is material to the business of the
Company and its Subsidiaries, in each case free and clear of all
Liens and, except for Liens as do not materially affect the value
of such property and do not materially interfere with the use made
and proposed to be made of such property by the Company and its
Subsidiaries and Liens for the payment of federal, state or other
taxes, the payment of which is neither delinquent nor subject to
penalties. Any real property and facilities held under lease by the
Company and its Subsidiaries are held by them under valid,
subsisting and enforceable leases with which the Company and its
Subsidiaries are in compliance with such exceptions as are not
material and do not interfere with the use made and proposed to be
made of such property and buildings by the Company and its
Subsidiaries.
(n) Insurance.
The Company and each of its Subsidiaries are insured by insurers of
recognized financial responsibility against such losses and risks
and in such amounts as management of the Company believes to be
prudent and customary in the businesses in which the Company and
its Subsidiaries are engaged. Neither the Company nor any such
Subsidiary has been refused any insurance coverage sought or
applied for and neither the Company nor any such Subsidiary has any
reason to believe that it will not be able to renew its existing
insurance coverage as and when such coverage expires or to obtain
similar coverage from similar insurers as may be necessary to
continue its business at a cost that could not reasonably be
expected to have a Material Adverse Effect.
(o) Regulatory
Permits. The Company and its
Subsidiaries possess all material certificates, authorizations and permits issued by
the appropriate federal, state, local or foreign regulatory
authorities necessary to conduct their respective businesses, and
neither the Company nor any such Subsidiary has received any notice
of proceedings relating to the revocation or modification of any
such certificate, authorization
or permit.
(p) Tax
Status. The Company and each of
its Subsidiaries has made or filed all federal and state income and
all other material tax returns, reports and declarations required
by any jurisdiction to which it is subject (unless and only to the
extent that the Company and each of its Subsidiaries has set aside
on its books provisions reasonably adequate for the payment of all
unpaid and unreported taxes) and has paid all taxes and other
governmental assessments and charges that are material in amount,
shown or determined to be due on such returns, reports and
declarations, except those being contested in good faith and has
set aside on its books provision reasonably adequate for the
payment of all taxes for periods subsequent to the periods to which
such returns, reports or declarations apply. There are no unpaid
taxes in any material amount claimed to be due by the taxing
authority of any jurisdiction, and the officers of the Company know
of no basis for any such claim.
(q) Transactions
With Affiliates. Except as set
forth in the SEC Documents, none of the officers or directors of
the Company and, to the knowledge of the Company, none of
the Company’s
stockholders, the officers or directors of any stockholder of the
Company, or any family member or affiliate of any of the foregoing,
has either directly or indirectly any interest in, or is a party
to, any transaction that is required to be disclosed as a related
party transaction pursuant to Item 404 of Regulation S-K
promulgated under the Securities Act.
(r) Application
of Takeover Protections. The
Company and its Board of Directors have taken or will take prior to
the Commencement Date all necessary action, if any, in order to
render inapplicable any control share acquisition, business
combination, poison pill (including any distribution under a rights
agreement) or other similar anti-takeover provision under the
Certificate of Incorporation or the laws of the state of its
incorporation which is or could become applicable to the Investor
as a result of the transactions contemplated by this Agreement,
including, without limitation, the Company’s issuance of the
Securities and the Investor’s ownership of the
Securities.
-13-
(s) Disclosure.
Except with respect to the material terms and conditions of the
transactions contemplated by the Transaction Documents that will be
timely publicly disclosed by the Company, the Company confirms that
neither it nor any other Person acting on its behalf has provided
the Investor or its agents or counsel with any information that it
believes constitutes or might constitute material, non-public
information which is not otherwise disclosed in the Registration
Statement or the SEC Documents. The Company understands and
confirms that the Investor will rely on the foregoing
representation in effecting purchases and sales of securities of
the Company. All of the disclosure furnished by or on behalf of the
Company to the Investor regarding the Company, its business and the
transactions contemplated hereby, including the disclosure
schedules to this Agreement, is true and correct and does not
contain any untrue statement of a material fact or omit to state
any material fact necessary in order to make the statements made
therein, in light of the circumstances under which they were made,
not misleading. The press releases disseminated by the Company
during the twelve (12) months preceding the date of this Agreement
taken as a whole do not contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein
or necessary in order to make the statements therein, in light of
the circumstances under which they were made and when made, not
misleading. The Company acknowledges and agrees that the Investor
neither makes nor has made any representations or warranties with
respect to the transactions contemplated hereby other than those
specifically set forth in Section
3
hereof.
(t) Foreign
Corrupt Practices. Neither the
Company nor any of the Subsidiaries nor, to the knowledge of the
Company, any director, officer, agent, employee or affiliate of the
Company or any of the Subsidiaries is aware of or has taken any
action, directly or indirectly, that would result in a violation by
such persons of the Foreign Corrupt Practices Act of 1977, as
amended, and the rules and regulations thereunder (the
“FCPA”),
including, without limitation, making use of the mails or any means
or instrumentality of interstate commerce corruptly in furtherance
of an offer, payment, promise to pay or authorization of the
payment of any money, or other property, gift, promise to give, or
authorization of the giving of anything of value to any
“foreign official” (as such term is defined in the
FCPA) or any foreign political party or official thereof or any
candidate for foreign political office, in contravention of the
FCPA; and the Company, the Subsidiaries and, to the knowledge of
the Company, its affiliates have conducted their businesses in
compliance with the FCPA and have instituted and maintain policies
and procedures designed to ensure, and which are reasonably
expected to continue to ensure, continued compliance therewith. The
operations of the Company and the Subsidiaries are and have been
conducted at all times in compliance with applicable financial
recordkeeping and reporting requirements and the money laundering
statutes and the rules and regulations thereunder and any related
or similar rules, regulations or guidelines, issued, administered
or enforced by any applicable governmental agency, including,
without limitation, Title 18 U.S. Code section 1956 and 1957, the Patriot Act,
the Bank Secrecy Act, and international anti-money laundering
principles or procedures by an intergovernmental group or
organization, such as the Financial Action Task Force on Money
Laundering, of which the United
States is a member and with which designation the
United States representative to the
group or organization continues to concur, all as amended, and any
Executive order, directive or regulation pursuant to the authority
of any of the foregoing, or any orders or licenses issued
thereunder (collectively, the “Money Laundering
Laws”), and no action,
suit or proceeding by or before any court or governmental agency,
authority or body or any arbitrator involving the Company or any of
its Subsidiaries with respect
to the Money Laundering Laws is pending or, to the knowledge of the
Company, threatened. Neither the Company nor any of its
Subsidiaries, nor to the knowledge of the Company any of the
directors, officers or employees, agents, affiliates or
representatives of the Company or its Subsidiaries, is an
individual or entity that is, or is owned or controlled by an
individual or entity that is: (i) the subject of any sanctions
administered or enforced by the U.S. Department of Treasury's
Office of Foreign Assets Control, the United Nations Security
Council, the European Union, Her Majesty’s Treasury, or other
relevant sanctions authority (collectively,
“Sanctions”),
nor (ii) located, organized or resident in a country or territory
that is the subject of Sanctions (including, without limitation,
the Balkans, Belarus, Burma/Myanmar, Cote D’Ivoire, Cuba,
Democratic Republic of Congo, Iran, Iraq, Liberia, Libya, North
Korea, Sudan, Syria, Venezuela and Zimbabwe). Neither the Company
nor any of its Subsidiaries will, directly or indirectly, use the
proceeds of the transactions contemplated hereby, or lend,
contribute or otherwise make available such proceeds to any
subsidiary, joint venture partner or other individual or entity:
(i) to fund or facilitate any activities or business of or with any
individual or entity or in any country or territory that, at the
time of such funding or facilitation, is the subject of Sanctions
or (ii) in any other manner that will result in a violation of
Sanctions by any individual or entity (including any individual or
entity participating in the transactions contemplated hereby,
whether as underwriter, advisor, investor or otherwise). For the
past five years, neither the
Company nor any of its Subsidiaries has knowingly engaged in, and
is not now knowingly engaged in, any dealings or transactions with
any individual or entity, or in any country or territory, that at
the time of the dealing or transaction is or was the subject of
Sanctions.
(u) DTC
Eligibility. The Company,
through the Transfer Agent, currently participates in the DTC Fast
Automated Securities Transfer (FAST) Program and the Common Stock
can be transferred electronically to third parties via the DTC Fast
Automated Securities Transfer (FAST) Program.
-14-
(v) Accounting
Controls; Xxxxxxxx-Xxxxx. The
Company maintains a system of internal accounting controls
sufficient to provide reasonable assurances that (A) transactions
are executed in accordance with management’s general or
specific authorization; (B) transactions are recorded as necessary
to permit preparation of financial statements in conformity with
GAAP and to maintain accountability for assets; (C) access to
assets is permitted only in accordance with management’s
general or specific authorization; and (D) the recorded
accountability for assets is compared with existing assets at
reasonable intervals and appropriate action is taken with respect
to any differences. Except as disclosed in the SEC Documents, the
Company has concluded that its internal control over financial
reporting is effective and the Company is not aware of any
“significant deficiencies” or “material
weaknesses” (each as defined by the rules adopted by the SEC)
in its internal control over financial reporting, or any fraud,
whether or not material, that involves management or other
employees of the Company and its Subsidiaries who have a
significant role in the Company’s internal controls; and
since the end of the latest audited fiscal year, there has been no change in the
Company’s internal control over financial reporting (whether
or not remediated) that has materially affected, or is reasonably
likely to materially affect, the Company’s internal control
over financial reporting. The Board of Directors has, subject to the exceptions, cure
periods and the phase in periods specified in the applicable stock
exchange rules of the Principal Market (“Exchange
Rules”), validly appointed an audit committee to oversee
internal accounting controls whose composition satisfies the
applicable independence and other requirements of the Exchange
Rules and the rules under the Exchange Act, and the Board of
Directors has adopted a charter for
the audit committee that satisfies the requirements of the Exchange
Rules and the rules under the Exchange Act. No relationship, direct
or indirect, exists between or among the Company, on the one hand,
and the directors, officers, stockholders, customers or suppliers
of the Company, on the other hand, which is required to be
described in the Registration Statement which is not so described.
The Company has not, directly or indirectly, extended or maintained
credit, or arranged for the extension of credit, or renewed an
extension of credit, in the form of a personal loan to or for any
of its directors or executive officers in violation of Applicable Laws, including Section
402 of the Xxxxxxxx-Xxxxx Act of 2002 and the rules and regulations
promulgated in connection therewith.
(w) Certain
Fees. Except as disclosed
on Schedule
4(x), no brokerage or
finder’s fees or commissions are or will be payable by the
Company to any broker, financial advisor or consultant, finder,
placement agent, investment banker, bank or other Person with
respect to the transactions contemplated by the Transaction
Documents. Except as disclosed on Schedule
4(x), the Investor 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 4(x)
that may be due in connection with the
transactions contemplated by the Transaction
Documents.
(x) Investment
Company. The Company is not,
and immediately after giving effect to the sale of the Purchase
Shares in accordance with this Agreement and the application of the
proceeds as described in the Registration Statement under the
caption “Use of Proceeds,” will not be, an
“investment company” within the meaning of the
Investment Company Act of 1940, as amended (the
“Investment Company
Act”).
(y) Listing
and Maintenance Requirements.
The Common Stock is registered pursuant to Section 12(b) of the
Exchange Act, and the Company has taken no action designed to, or
which to its knowledge is likely to have the effect of, terminating
the registration of the Common Stock pursuant to the Exchange Act
nor has the Company received any notification that the SEC is
currently contemplating terminating such registration. Except as
disclosed in the SEC Documents, the Company has not, in the twelve
(12) months preceding the date hereof, received any notice from any
Person to the effect that the Company is not in compliance with the
listing or maintenance requirements of the Principal Market. Except
as disclosed in the SEC Documents, the Company is, and has no
reason to believe that it will not in the foreseeable future
continue to be, in compliance with all such listing and maintenance
requirements.
(z) Accountants.
The Company’s accountants are set forth in the SEC Documents
and, to the knowledge of the Company, such accountants are an
independent registered public accounting firm as required by the
Securities Act.
(aa) No
Market Manipulation. The
Company has not, and to its knowledge no Person acting on its
behalf has, (i) taken, directly or indirectly, any action designed
to cause or to result in the stabilization or manipulation of the
price of any security of the Company to facilitate the sale or
resale of any of the Securities, (ii) sold, bid for, purchased, or,
paid any compensation for soliciting purchases of, any of the
Securities, or (iii) paid or agreed to pay to any Person any
compensation for soliciting another to purchase any other
securities of the Company.
(bb) Shell
Company Status. The Company is
not currently, and has never been, an issuer identified in Rule
144(i)(1) under the Securities Act.
-15-
(cc) Benefit
Plans; Labor Matters. Each
benefit and compensation plan, agreement, policy and arrangement
that is maintained, administered or contributed to by the Company
for current or former employees or directors of, or independent
contractors with respect to, the Company has been maintained in
compliance with its terms and the requirements of any applicable
statutes, orders, rules and regulations, and the Company has
complied in all material respects with all applicable statutes,
orders, rules and regulations in regard to such plans, agreements,
policies and arrangements. Each stock option granted under any
equity incentive plan of the Company (each, a
“Stock
Plan”) was granted with a
per share exercise price no less than the market price per common
share on the grant date of such option in accordance with the rules
of the Principal Market, and no such grant involved any
“back-dating,” “forward-dating” or similar
practice with respect to the effective date of such grant; each
such option (i) was
granted in compliance in all material respects with Applicable Laws
and with the applicable Stock Plan(s), (ii) was duly approved by
the Board of Directors or a
duly authorized committee thereof, and (iii) has been (or will
be, if granted after September 30, 2019) properly accounted for in
the Company’s financial statements and disclosed, to the
extent required, in the Company’s filings or submissions with
the SEC, and the Principal Market. No labor problem or dispute with
the employees of the Company exists or is threatened or imminent,
and the Company is not aware of any existing or imminent labor
disturbance by the employees of any of its principal suppliers or
contractors, that would have a Material Adverse
Effect.
(dd) Regulatory.
During the 12-month period immediately preceding the date hereof,
except as described in the SEC Documents, the Company and each of
its Subsidiaries: (A) is and at all times has been in material
compliance with all applicable U.S. and foreign statutes, rules, regulations, or
guidance applicable to Company and its Subsidiaries
(“Applicable
Laws”), except as would
not, individually or in the aggregate, reasonably be expected to
result in a Material Adverse Effect; (B) have not received any
notice of adverse finding, warning letter, untitled letter or other
correspondence or notice from the U.S. Food and Drug Administration
or any other federal, state, or foreign governmental authority
having authority over the Company (“Governmental
Authority”) alleging or
asserting noncompliance with any Applicable Laws or any licenses,
certificates, approvals, clearances, authorizations, permits and
supplements or amendments thereto required by any such Applicable
Laws (“Authorizations”); (C)
possess all material Authorizations and such material
Authorizations are valid and in full force and effect and are not
in violation of any term of any such material Authorizations; (D)
have not received notice of any claim, action, suit, proceeding,
hearing, enforcement, investigation, arbitration or other action
from any Governmental Authority or third party alleging that any
product, operation or activity is in violation of any Applicable
Laws or Authorizations and have no knowledge that any such
Governmental Authority or third party is considering any such
claim, litigation, arbitration, action, suit, investigation or
proceeding; (E) have not received notice that any Governmental
Authority has taken, is taking or intends to take action to limit,
suspend, modify or revoke any Authorizations and the Company has no
knowledge that any such Governmental Authority is considering such
action; and (F) have filed, obtained, maintained or submitted all
material reports, documents, forms, notices, applications, records,
claims, submissions and supplements or amendments as required by
any Applicable Laws or material Authorizations and that all such
reports, documents, forms, notices, applications, records, claims,
submissions and supplements or amendments were complete and correct
in all material respects on the date filed (or were corrected or
supplemented by a subsequent submission). During the 12-month
period immediately preceding the date hereof, to the
Company’s knowledge, the studies, tests and preclinical and
clinical trials conducted by or on behalf of the Company were and,
if still pending, are, in all material respects, being conducted in
accordance with experimental protocols, procedures and controls
pursuant to accepted professional scientific standards and all
Applicable Laws, including, without limitation, the United States
Federal Food, Drug and Cosmetic Act and the laws, rules and
regulations of the Therapeutic Products Directorate, the European
Medicines Agency, the European Commission's Enterprise Directorate
General and the regulatory agencies within each Member State
granting Marketing Authorization through the Mutual Recognition
Procedure or any other federal, provincial, state, local or foreign
governmental or quasi-governmental body exercising comparable
authority; the descriptions of the results of such studies, tests
and trials contained in the SEC Documents are accurate and complete
in all material respects and fairly present the data derived from
such studies, tests and trials; the descriptions in the SEC
Documents of the results of such clinical trials are consistent in
all material respects with such results and to the Company’s
knowledge there are no other studies or other clinical trials whose
results are materially inconsistent with or otherwise materially
call into question the results described or referred to in the SEC
Documents; and the Company has not received any notices or
correspondence from any Governmental Authority requiring the termination,
suspension or material modification of any studies, tests or
preclinical or clinical trials conducted by or on behalf of the
Company or its Subsidiaries. The Company has concluded that it uses
commercially reasonable efforts to review, from time to time, the
progress and results of the studies, tests and preclinical and
clinical trials and, based upon (i) the information provided to the
Company by the third parties conducting such studies, tests,
preclinical studies and clinical trials that are described in the
SEC Documents and the Company’s review of such information,
and (ii) the Company’s actual knowledge, the Company
reasonably believes that the descriptions of the results of such
studies, tests, preclinical studies and clinical trials are
accurate and complete in all material respects.
-16-
(ee) No
Disqualification Events. None
of the Company, any of its predecessors, any affiliated issuer, any
director, executive officer, other officer of the Company
participating in the transactions contemplated hereby, any
beneficial owner of 20% or more of the Company’s outstanding
voting equity securities, calculated on the basis of voting power,
nor any promoter (as that term is defined in Rule 405 under the
Securities Act) connected with the Company in any capacity at the
time of sale (each, an “Issuer Covered
Person”) is subject to
any of the “Bad Actor” disqualifications described in
Rule 506(d)(1)(i) to (viii) under the Securities Act (a
“Disqualification
Event”), except for a
Disqualification Event covered by Rule 506(d)(2) or (d)(3) under
the Securities Act. The Company has exercised reasonable care to
determine whether any Issuer Covered Person is subject to a
Disqualification Event.
(ff) Absence
of Schedules. In the event of
an undelivered disclosure schedule to any of the representations
and warranties set forth in this Section 4, the Company hereby
acknowledges and agrees that each such undelivered disclosure
schedule shall be deemed to read as follows: “Nothing to
Disclose”.
5.
COVENANTS.
(a) Filing of Current
Report and Registration Statement. The Company agrees that it shall, within the
time required under the Exchange Act, file with the SEC a report on
Form 8-K relating to the transactions contemplated by, and
describing the material terms and conditions of, the Transaction
Documents (the “Current
Report”). The Company
shall also file with the SEC, by January 13, 2020, a new
registration statement (the “Registration
Statement”) covering the
resale of 24,000,000 Purchase Shares and 487,168 Commitment Shares
in accordance with the terms of the Registration Rights Agreement.
The Company shall permit the Investor to review and comment upon
the final pre-filing draft version of the Current Report at least
two (2) Business Days prior to its filing with the SEC, and the
Company shall not file the
Current Report or the Registration Statement with the SEC in a form
to which the Investor reasonably objects. The Investor shall use
its reasonable best efforts to comment upon the final pre-filing
draft version of the Current Report within one (1) Business Day
from the date the Investor receives it from the
Company.
(b) Blue
Sky. The Company shall take all
such action, if any, as is reasonably necessary in order to obtain
an exemption for or to register or qualify (i) the issuance of the
Commitment Shares and the sale of the Purchase Shares to the
Investor under this Agreement and (ii) any subsequent resale of all
Commitment Shares and all Purchase Shares by the Investor, in each
case, under applicable securities or “Blue Sky” laws of
the states of the United States in such states as is reasonably
requested by the Investor from time to time, and shall provide
evidence of any such action so taken to the
Investor.
(c) Listing/DTC.
The Company shall promptly secure the listing of all of the
Purchase Shares and Commitment Shares to be issued to the Investor
hereunder on the Principal Market (subject to official notice of
issuance) and upon each other national securities exchange or
automated quotation system, if any, upon which the Common Stock is
then listed, and shall maintain, so long as any shares of Common
Stock shall be so listed, such listing of all such Securities from
time to time issuable hereunder. The Company shall maintain the
listing of the Common Stock on the Principal Market and shall
comply in all respects with the Company’s reporting, filing
and other obligations under the bylaws or rules and regulations of
the Principal Market. Neither
the Company nor any of its Subsidiaries shall take any action that
would reasonably be expected to result in the delisting or
suspension of the Common Stock on the Principal Market. The Company
shall promptly, and in no event later than the following Business
Day, provide to the Investor copies of any notices it receives from
any Person regarding the continued eligibility of the Common Stock
for listing on the Principal Market; provided, however, that the
Company shall not provide the Investor copies of any such notice
that the Company reasonably believes constitutes material
non-public information, and the Company would not be required to
publicly disclose such notice in any report or statement filed with
the SEC under the Exchange Act (including on Form 8-K) or the
Securities Act. The Company shall pay all fees and expenses in
connection with satisfying its obligations under this
Section
5(c). The Company shall take all action necessary to
ensure that its Common Stock can be transferred electronically as
DWAC Shares.
(d) Prohibition
of Short Sales and Hedging Transactions. The Investor agrees that beginning on the date
of this Agreement and ending on the date of termination of this
Agreement as provided in Section
11, the Investor and its
agents, representatives and affiliates shall not in any manner
whatsoever enter into or effect, directly or indirectly, any (i)
“short sale” (as such term is defined in Rule 200 of
Regulation SHO of the Exchange Act) of the Common Stock or (ii)
hedging transaction, which establishes a net short position with
respect to the Common Stock.
-17-
(e) Issuance
of Commitment Shares. In
consideration for the Investor’s execution and delivery of
this Agreement, the Company shall cause the Transfer Agent to issue
on the date of this Agreement 487,168 shares of Common Stock (the
“Commitment
Shares”) directly to the
Investor and shall deliver to the Transfer Agent the Irrevocable
Transfer Agent Instructions (as defined below). For the avoidance
of doubt, all of the Commitment Shares shall be fully earned as of
the date of this Agreement, whether or not the Commencement shall
occur or any Purchase Shares are purchased by the Investor under
this Agreement and irrespective of any termination of this
Agreement.
(f) Due Diligence;
Non-Public Information. The
Investor shall have the right, from time to time as the Investor
may reasonably deem appropriate, to perform reasonable due
diligence on the Company during normal business hours. The Company
and its officers and employees shall provide information and
reasonably cooperate with the Investor in connection with any
reasonable request by the Investor related to the Investor’s
due diligence of the Company. Each party hereto agrees not to
disclose any Confidential Information of the other party to any
third party and shall not use the Confidential Information for any
purpose other than in connection with, or in furtherance of, the
transactions contemplated hereby in full compliance with applicable
securities laws. Each party hereto acknowledges that the
Confidential Information shall remain the property of the
disclosing party and agrees that it shall take all reasonable
measures to protect the secrecy of any Confidential Information
disclosed by the other party. The Company confirms that neither it
nor any other Person acting on its behalf shall provide the
Investor or its agents or counsel with any information that
constitutes or might constitute material, non-public information,
unless a simultaneous public announcement thereof is made by the
Company in the manner contemplated by Regulation FD under the
Exchange Act. In the event of a breach of the foregoing covenant by
the Company or any Person acting on its behalf (as determined in
the reasonable good faith judgment of the Investor), in addition to
any other remedy provided herein or in the other Transaction
Documents, the Investor shall have the right to make a public
disclosure, in the form of a press release, public advertisement or
otherwise, of such material, non-public information without the
prior approval by the Company; provided the Investor shall have
first provided notice to the Company that it believes it has
received information that constitutes material, non-public
information, the Company shall have at least twenty-four (24) hours
to publicly disclose such material, non-public information prior to
any such disclosure by the Investor, and the Company shall have
failed to publicly disclose such material, non-public information
within such time period. The Investor shall not have any liability
to the Company, any of its Subsidiaries, or any of their respective
directors, officers, employees, stockholders or agents, for any
such disclosure. The Company understands and confirms that the
Investor shall be relying on the foregoing covenants in effecting
transactions in securities of the Company.
(g) Purchase
Records. The Investor and the
Company shall each maintain records showing the remaining Available
Amount at any given time and the dates and Purchase Amounts for
each Regular Purchase,
Accelerated Purchase and Additional Accelerated Purchase or shall
use such other method, reasonably satisfactory to the Investor and
the Company.
(h) Taxes.
The Company shall pay any and all transfer, stamp or similar taxes
that may be payable with respect to the issuance and delivery of
any shares of Common Stock to the Investor made under this
Agreement.
(i) Aggregation.
From and after the date of this Agreement, neither the
Company, nor or any of its affiliates will, and the Company shall
use its reasonable best efforts to ensure that no Person acting on
their behalf will, directly or indirectly, make any offers or sales
of any security or solicit any offers to buy any security, under
circumstances that would cause this offering of the Securities by
the Company to the Investor to be aggregated with other offerings
by the Company in a manner that would require stockholder approval
pursuant to the rules of the Principal Market on which any of the
securities of the Company are listed or designated, unless
stockholder approval is obtained before the closing of such
subsequent transaction in accordance with the rules of such
Principal Market.
(j) Use
of Proceeds. The Company will
use the net proceeds from the offering for any corporate purpose at
the sole discretion of the Company.
(k) Other
Transactions. The Company shall
not enter into, announce or recommend to its stockholders any
agreement, plan, arrangement or transaction in or of which the
terms thereof would restrict, materially delay, conflict with or
impair the ability or right of the Company to perform its
obligations under the Transaction Documents, including, without
limitation, the obligation of the Company to deliver the Purchase
Shares and the Commitment Shares to the Investor in accordance with
the terms of the Transaction Documents.
(l) Integration.
From and after the date of this Agreement, neither the Company, nor
or any of its affiliates will, and the Company shall use its
reasonable best efforts to ensure that no Person acting on their
behalf will, directly or indirectly, make any offers or sales of
any security or solicit any offers to buy any security, under
circumstances that would require registration of the offer and sale
of any of the Securities under the Securities
Act.
-18-
(m) Limitation
on Variable Rate Transactions.
From and until the later of (i) thirty (30) months from the date hereof or (ii)
the Maturity Date (irrespective of any earlier termination of this
Agreement), the Company shall be prohibited from effecting or
entering into an agreement to effect any issuance by the Company or
any of its Subsidiaries of Common Stock or Common Stock Equivalents
(or a combination of units thereof) involving a Variable Rate
Transaction, other than in connection with an Exempt Issuance. The
Investor shall be entitled to seek injunctive relief against the
Company and its Subsidiaries to preclude any such issuance, which
remedy shall be in addition to any right to collect damages,
without the necessity of showing economic loss and without any bond
or other security being required. “Common Stock
Equivalents” means any
securities of the Company or its Subsidiaries which entitle the
holder thereof to acquire at any time Common Stock, including,
without limitation, any debt, preferred stock, rights, options,
warrants or other instrument that is at any time convertible into
or exercisable or exchangeable for, or otherwise entitles the
holder thereof to receive, Common Stock. “Variable Rate
Transaction” means a
transaction in which the Company (i) issues or sells any equity or
debt securities that are convertible into, exchangeable or
exercisable for, or include the right to receive additional shares
of Common Stock or Common Stock Equivalents either (A) at a
conversion price, exercise price, exchange rate or other price that
is based upon and/or varies with the trading prices of or
quotations for the Common Stock at any time after the initial
issuance of such equity or debt securities (including, without
limitation, pursuant to any “cashless exercise”
provision), or (B) with a conversion, exercise or exchange price
that is subject to being reset at some future date after the
initial issuance of such equity or debt security or upon the
occurrence of specified or contingent events directly or indirectly
related to the business of the Company or the market for the Common
Stock (including, without limitation, any “full ratchet” or
“weighted average” anti-dilution provisions, but not
including any standard anti-dilution protection for any
reorganization, recapitalization, non-cash dividend, stock split,
reverse stock split or other similar transaction), (ii) issues or
sells any equity or debt securities, including without limitation,
Common Stock or Common Stock Equivalents, either (A) at a
price that is subject to being reset at some future date after the
initial issuance of such debt or equity security or upon the
occurrence of specified or contingent events directly or indirectly
related to the business of the Company or the market for the Common
Stock (other than standard anti-dilution protection for any
reorganization, recapitalization, non-cash dividend, stock split,
reverse stock split or other similar transaction), or (B) that is
subject to or contains any put, call, redemption, buy-back,
price-reset or other similar provision or mechanism (including,
without limitation, a “Black-Scholes” put or call right) that provides
for the issuance of additional equity securities of the Company or
the payment of cash by the Company, or (iii) enters into any
agreement, including, but not limited to, an “equity
line”, “at-the-market offering” that is not an
Exempt Issuance or other continuous offering or similar offering of
Common Stock or Common Stock Equivalents, whereby the Company may
sell Common Stock or Common Stock Equivalents at a future
determined price. “Exempt
Issuance” means the
issuance of (a) Common Stock, options, restricted stock units or
other equity incentive awards to employees, officers, directors or
vendors of the Company pursuant to any equity incentive plan duly
adopted for such purpose, by the Board of Directors of the Company or a majority of the
members of a committee of directors established for such purpose,
(b) any Securities issued to the Investor pursuant to this
Agreement, (c) shares of Common Stock, Common Stock Equivalents or
other securities issued to the Investor pursuant to any other
existing or future contract, agreement or arrangement between the
Company and the Investor, (d) shares of Common Stock, Common Stock
Equivalents or other securities upon the exercise, exchange or
conversion of any shares of Common Stock, Common Stock Equivalents
or other securities held by the Investor at any time, (e) any
securities issued upon the exercise or exchange of or conversion of
any Common Stock Equivalents issued and outstanding on the date
hereof, provided that such securities or Common Stock Equivalents
referred to in this clause (e) have not been amended since the date
hereof to increase the number of such securities or Common Stock
underlying such securities or to decrease the exercise price,
exchange price or conversion price of such securities, (f) Common
Stock Equivalents that are convertible into, exchangeable or
exercisable for, or include the right to receive shares of Common
Stock at a conversion price, exercise price, exchange rate or other
price (which may be below the then current market price of the
Common Stock) that is fixed at the time of initial issuance of such
Common Stock Equivalents (subject only to standard anti-dilution
protection for any reorganization, recapitalization, non-cash
dividend, stock split, reverse stock split or other similar
transaction), which fixed conversion price, exercise price,
exchange rate or other price shall not at any time after the
initial issuance of such Common Stock Equivalent be based upon or
varying with the trading prices of or quotations for the Common
Stock or subject to being reset at some future date, (g) securities
issued pursuant to acquisitions, divestitures, licenses,
partnerships, collaborations or strategic transactions approved by
the Board of Directors of the
Company or a majority of the members of a committee of directors
established for such purpose, which acquisitions, divestitures,
licenses, partnerships, collaborations or strategic transactions
can have a Variable Rate Transaction component, provided that any
such issuance shall only be to a Person (or to the equity holders
of a Person) which is, itself or through its subsidiaries, an
operating company or an asset in a business synergistic with the
business of the Company and shall provide to the Company additional
benefits in addition to the investment of funds, but shall not
include a transaction in which the Company is issuing securities
primarily for the purpose of raising capital or to an entity whose
primary business is investing in securities, (h) Common Stock
issued pursuant to an “at-the-market offering” by the
Company exclusively through a registered broker-dealer acting as
agent of the Company pursuant to a written agreement between the
Company and such registered broker-dealer or (i) securities (such
as warrants) or Common Stock issued in connection with future
financings or offerings of the Company, such as but not limited to,
registered direct offerings, rights offerings, and confidentially
marketed public offerings; provided such underlying transactions do
not involve a Variable Rate Transaction.
-19-
6.
TRANSFER AGENT INSTRUCTIONS.
(a) On
the date of this Agreement, the Company shall issue irrevocable
instructions to the Transfer Agent substantially in the form
attached hereto as Exhibit
E to issue the Commitment
Shares in accordance with the terms of this Agreement (the
“Irrevocable Transfer
Agent Instructions”).
The certificate(s)
or book-entry statement(s) representing the Commitment Shares,
except as set forth below, shall bear the following restrictive
legend (the “Restrictive
Legend”):
THE SECURITIES REPRESENTED BY THIS CERTIFICATE
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS.
THE SECURITIES HAVE BEEN ACQUIRED
FOR INVESTMENT AND MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN
EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE
SECURITIES ACT OF 1933, AS
AMENDED, OR APPLICABLE STATE
SECURITIES LAWS, UNLESS SOLD
PURSUANT TO: (1)
RULE 144 UNDER THE SECURITIES ACT
OF 1933, AS AMENDED,
OR (2) AN
OPINION OF HOLDER’S
COUNSEL, IN A CUSTOMARY
FORM, THAT REGISTRATION IS
NOT REQUIRED UNDER SAID ACT OR APPLICABLE STATE SECURITIES
LAWS.
(b) On
the earlier of (i) the Commencement Date and (ii) such time that
the Investor shall request, provided all conditions of Rule 144
under the Securities Act are met, the Company shall, no later than
one (1) Business Day following the delivery by the Investor to the
Company or the Transfer Agent of one or more legended
certificates or book-entry statements representing the
Commitment Shares (which certificates or book-entry statements the Investor shall
promptly deliver on or prior to the first to occur of the events
described in clauses (i) and (ii) of this sentence), as directed by
the Investor, issue and deliver (or cause to be issued and
delivered) to the Investor, as requested by the Investor, either:
(A) a certificate or book-entry
statement representing such Commitment Shares that is free from all
restrictive and other legends or (B) a number of shares of Common
Stock equal to the number of Commitment Shares represented by
the certificate(s) or
book-entry statement(s) so delivered by the Investor as DWAC
Shares. The Company shall take all actions to carry out the intent
and accomplish the purposes of the immediately preceding sentence,
including, without limitation, delivering all such legal opinions,
consents, certificates,
resolutions and instructions to the Transfer Agent, and any
successor transfer agent of the Company, as may be requested from
time to time by the Investor or necessary or desirable to carry out
the intent and accomplish the purposes of the immediately preceding
sentence. On the Commencement Date, the Company shall issue to the
Transfer Agent, and any subsequent transfer agent, (i) irrevocable
instructions in the form substantially similar to those used by the
Investor in substantially similar transactions (the
“Commencement
Irrevocable Transfer Agent Instructions”) and (ii) the notice of effectiveness of
the Registration Statement in the form attached as an exhibit to
the Registration Rights Agreement (the “Notice of
Effectiveness of Registration Statement”), in each case to issue the Commitment
Shares, and the Purchase Shares in accordance with the terms of
this Agreement and the Registration Rights Agreement. All Purchase
Shares to be issued from and after Commencement to or for the
benefit of the Investor pursuant to this Agreement shall be issued
only as DWAC Shares. The Company represents and warrants to the
Investor that, while this Agreement is effective, no instruction
other than the Commencement Irrevocable Transfer Agent Instructions
and the Notice of Effectiveness of Registration Statement referred
to in this Section
6(b) will be given by the Company to the Transfer
Agent with respect to the Commitment Shares or the Purchase Shares
from and after Commencement, and the Commitment Shares and the
Purchase Shares covered by the Registration Statement shall
otherwise be freely transferable on the books and records of the
Company. The Company agrees that if the Company fails to fully
comply with the provisions of this Section
6(b) within five (5) Business Days of the Investor
providing the deliveries referred to above, the Company shall, at
the Investor’s written instruction, purchase such shares of
Common Stock containing the Restrictive Legend from the Investor at
the greater of the (i) Purchase Price or Accelerated Purchase Price
paid for such shares of Common Stock (as applicable) and (ii) the
Closing Sale Price of the Common Stock on the date of the
Investor’s written instruction.
SALES OF SHARES OF COMMON
STOCK.
The
right of the Company hereunder to commence sales of the Purchase
Shares on the Commencement Date is subject to the satisfaction of
each of the following conditions:
(a) The
Investor shall have executed each of the Transaction Documents and
delivered the same to the Company;
(b) The
Registration Statement covering the resale of the Commitment
Shares and Purchase Shares shall have been declared
effective under the Securities Act by the SEC and no stop order
with respect to the Registration Statement shall be pending or
threatened by the SEC;
-20-
(c) All
Securities to be issued by the Company to the Investor under the
Transaction Documents shall have been approved for listing on the
Principal Market in accordance with the applicable rules and
regulations of the Principal Market, subject only to official
notice of issuance; and
(d) The
representations and warranties of the Investor shall be true and
correct in all material respects as of the date hereof and as of
the Commencement Date as though made at that time.
The
obligation of the Investor to buy Purchase Shares under this
Agreement is subject to the satisfaction of each of the following
conditions on or prior to the Commencement Date and, once such
conditions have been initially satisfied, there shall not be any
ongoing obligation to satisfy such conditions after the
Commencement has occurred:
(a) The
Company shall have executed each of the Transaction Documents and
delivered the same to the Investor;
(b) The
Company shall have caused the Commitment Shares to be delivered as
DWAC Shares or (ii) removed all restrictive and other legends from
the certificates or book-entry statements representing the
Commitment Shares, in each case in accordance with
Section
6(b);
(c) The
Common Stock shall be listed or quoted on the Principal Market,
trading in the Common Stock shall not have been within the last 365
days suspended by the SEC or the Principal Market, and all
Securities to be issued by the Company to the Investor pursuant to
this Agreement shall have been approved for listing or quotation on
the Principal Market in accordance with the applicable rules and
regulations of the Principal Market, subject only to official
notice of issuance;
(d) The
Investor shall have received the opinion letter and the negative
assurances letter of the Company’s legal counsel dated as of
the Commencement Date substantially in the form of
Exhibit
A attached
hereto;
(e) The
representations and warranties of the Company shall be true and
correct in all material respects (except to the extent that any of
such representations and warranties is already qualified as to
materiality in Section
4
above, in which case, such
representations and warranties shall be true and correct without
further qualification) as of the date hereof and as of the
Commencement Date as though made at that time (except for
representations and warranties that speak as of a specific date,
which shall be true and correct as of such date) and the Company
shall have performed, satisfied and complied with the covenants,
agreements and conditions required by the Transaction Documents to
be performed, satisfied or complied with by the Company at or prior
to the Commencement Date. The Investor shall have received a
certificate, executed by the CEO,
President or CFO of the Company, dated as of the Commencement Date,
to the foregoing effect in the form attached hereto as
Exhibit
B;
(f) The
Board of Directors of the Company shall have adopted the Signing
Resolutions, which shall be in full force and effect without any
amendment or supplement thereto as of the Commencement
Date;
(g) As
of the Commencement Date, the Company shall have reserved out of
its authorized and unissued Common Stock, (i) solely for the
purpose of effecting purchases of Purchase Shares hereunder,
24,000,000 shares of Common Stock;
(h) The
Commencement Irrevocable Transfer Agent Instructions and the Notice
of Effectiveness of Registration Statement each shall have been
delivered to and acknowledged in writing by the Company and the
Company’s Transfer Agent (or any successor transfer
agent);
(i) The
Company shall have delivered to the Investor a certificate evidencing the incorporation and good
standing of the Company in the State of Delaware issued by the
Secretary of State of the State of Delaware and (ii) a certificate
or its equivalent evidencing the good standing of the Company as a
foreign corporation in the State of New York, issued by the
Secretary of State of the State of New York, and in any other
jurisdiction where the Company is duly qualified to conduct
business, in each case, as of a date within ten (10) Business Days
of the Commencement Date;
(j) The
Company shall have delivered to the Investor a certified copy of
the Certificate of Incorporation as certified by the Secretary of
State of the State of Delaware within ten (10) Business Days of the
Commencement Date;
-21-
(k) The
Company shall have delivered to the Investor a
secretary’s certificate
executed by the Secretary of the Company, dated as of the
Commencement Date, in the form attached hereto as
Exhibit
D;
(l) The
Registration Statement covering the resale of the Commitment
Shares and Purchase Shares shall have been declared
effective under the Securities Act by the SEC and no stop order
with respect to the Registration Statement shall be pending or
threatened by the SEC. The Company shall have prepared and filed
with the SEC, not later than one (1) Business Day after the
effective date of the Registration Statement, a final and complete
prospectus (the preliminary form of which shall be included in the
Registration Statement) and shall have delivered to the Investor a
true and complete copy thereof. Such prospectus shall be current
and available for the resale by the Investor of all of the
Securities covered thereby. The Current Report shall have been
filed with the SEC, as required pursuant to Section
5(a).
All reports, schedules, registrations, forms, statements,
information and other documents required to have been filed by the
Company with the SEC at or prior to the Commencement Date pursuant
to the reporting requirements of the Exchange Act shall have been
filed with the SEC within the applicable time periods prescribed
for such filings under the Exchange Act;
(m) No
Event of Default has occurred, or any event which, after notice
and/or lapse of time, would become an Event of Default has
occurred;
(n) All
federal, state and local governmental laws, rules and regulations
applicable to the transactions contemplated by the Transaction
Documents and necessary for the execution, delivery and performance
of the Transaction Documents and the consummation of the
transactions contemplated thereby in accordance with the terms
thereof shall have been complied with, and all consents,
Authorizations and orders of, and all filings and registrations
with, all federal, state and local courts or governmental agencies
and all federal, state and local regulatory or self-regulatory
agencies necessary for the execution, delivery and performance of
the Transaction Documents and the consummation of the transactions
contemplated thereby in accordance with the terms thereof shall
have been obtained or made, including, without limitation, in each
case those required under the Securities Act, the Exchange Act,
applicable state securities or “Blue Sky” laws or
applicable rules and regulations of the Principal Market, or
otherwise required by the SEC, the Principal Market or any state
securities regulators;
(o) No
statute, regulation, order, decree, writ, ruling or injunction
shall have been enacted, entered, promulgated, threatened or
endorsed by any federal, state, local or foreign court or
Governmental Authority of competent jurisdiction which prohibits
the consummation of or which would materially modify or delay any
of the transactions contemplated by the Transaction
Documents;
(p) No
action, suit or proceeding before any federal, state, local or
foreign arbitrator or any court or Governmental Authority of
competent jurisdiction shall have been commenced or threatened, and
no inquiry or investigation by any federal, state, local or foreign
Governmental Authority of competent jurisdiction shall have been
commenced or threatened, against the Company, or any of the
officers, directors or affiliates of the Company, seeking to
restrain, prevent or change the transactions contemplated by the
Transaction Documents, or seeking material damages in connection
with such transactions; and
(q) The
Company shall have provided the Investor with the information
requested by the Investor in connection with its due diligence
requests in accordance with the terms of Section
5(f)
hereof.
-22-
9.
INDEMNIFICATION.
In
consideration of the Investor’s execution and delivery of the
Transaction Documents and acquiring the Securities hereunder and in
addition to all of the Company’s other obligations under the
Transaction Documents, the Company shall defend, protect, indemnify
and hold harmless the Investor and all of its affiliates,
stockholders, officers, directors, members, managers, employees and
direct or indirect investors and any of the foregoing
Person’s agents or other representatives (including, without
limitation, those retained in connection with the transactions
contemplated by this Agreement) (collectively, the
“Indemnitees”) from and
against any and all actions, causes of action, suits, claims,
losses, costs, penalties, fees, liabilities and damages, and
expenses in connection therewith (irrespective of whether any such
Indemnitee is a party to the action for which indemnification
hereunder is sought), and including reasonable attorneys' fees and
disbursements (the “Indemnified
Liabilities”), incurred by any Indemnitee as a result
of, or arising out of or relating to: (a) any misrepresentation or
breach of any representation or warranty made by the Company in the
Transaction Documents or any other certificate, instrument or
document contemplated hereby or thereby, (b) any breach of any
covenant, agreement or obligation of the Company contained in the
Transaction Documents or any other certificate, instrument or
document contemplated hereby or thereby, (c) any cause of action,
suit or claim brought or made against such Indemnitee and arising
out of or resulting from the execution, delivery, performance or
enforcement of the Transaction Documents or any other certificate,
instrument or document contemplated hereby or thereby, (d) any
violation of the Securities Act, the Exchange Act, state securities
or “Blue Sky” laws, or the rules and regulations of the
Principal Market in connection with the transactions contemplated
by the Transaction Documents by the Company or any of its
Subsidiaries, affiliates, officers, directors or employees, (e) any
untrue statement or alleged untrue statement of a material fact
contained, or incorporated by reference, in the Registration
Statement or any amendment thereto or any omission or alleged
omission to state therein, or in any document incorporated by
reference therein, a material fact required to be stated therein or
necessary to make the statements therein not misleading, or (f) any
untrue statement or alleged untrue statement of a material fact
contained, or incorporated by reference, in the Registration
Statement, or any omission or alleged omission to state therein, or
in any document incorporated by reference therein, a material fact
required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made,
not misleading; provided, however, that (I) the indemnity
contained in clause (c) of this Section 9 shall not apply to any
Indemnified Liabilities which directly and primarily result from
the fraud, gross negligence or willful misconduct of an Indemnitee,
(II) the indemnity contained in clauses (d), (e) and (f) of this
Section
9 shall not
apply to any Indemnified Liabilities to the extent, but only to the
extent, arising out of or based upon any untrue statement or
alleged untrue statement or omission or alleged omission made in
reliance upon and in conformity with written information furnished
to the Company by or on behalf of the Investor expressly for use in
any Registration Statement and (III) the indemnity in this
Section
9 shall not
apply to amounts paid in settlement of any claim if such settlement
is effected without the prior written consent of the Company, which
consent shall not be unreasonably withheld, conditioned or delayed.
To the extent that the foregoing undertaking by the Company may be
unenforceable for any reason, the Company shall make the maximum
contribution to the payment and satisfaction of each of the
Indemnified Liabilities which is permissible under applicable law,
provided that no seller of Securities guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any seller
of Securities who was not guilty of fraudulent misrepresentation.
Payment under this indemnification shall be made within thirty (30)
days from the date the Indemnitee makes written request for it. A
certificate containing reasonable detail as to the amount of such
indemnification submitted to the Company by the Indemnitee shall be
conclusive evidence, absent manifest error, of the amount due from
the Company to the Indemnitee. If any action shall be brought
against any Indemnitee with respect to which indemnity may be
sought pursuant to this Agreement, such Indemnitee shall promptly
notify the Company in writing, and the Company shall have the right
to assume the defense thereof with counsel of its own choosing
reasonably acceptable to the Indemnitee. Any Indemnitee shall have
the right to employ separate counsel in any such action and
participate in the defense thereof, but the fees and expenses of
such counsel shall be at the expense of such Indemnitee, except to
the extent that (i) the employment thereof has been
specifically authorized by the Company in writing, (ii) the
Company has failed after a reasonable period of time to assume such
defense and to employ counsel or (iii) in such action there
is, in the reasonable opinion of such separate counsel, a material
conflict on any material issue between the position of the Company
and the position of such Indemnitee, in which case the Company
shall be responsible for the reasonable fees and expenses of no
more than one such separate counsel.
-23-
10.
EVENTS OF DEFAULT.
An
“Event of
Default” shall be deemed to have occurred at any time
as any of the following events occurs:
(a) the
effectiveness of a registration statement registering the resale of
the Securities lapses for any reason (including, without
limitation, the issuance of a stop order or similar order) or such
registration statement (or the prospectus forming a part thereof)
is unavailable to the Investor for resale of any or all of the
Securities to be issued to the Investor under the Transaction
Documents, and such lapse or unavailability continues for a period
of ten (10) consecutive Business Days or for more than an aggregate
of thirty (30) Business Days in any 365-day period, but excluding a
lapse or unavailability where (i) the Company terminates a
registration statement after the Investor has confirmed in writing
that all of the Securities covered thereby have been resold or (ii)
the Company supersedes one registration statement with another
registration statement, including (without limitation) by
terminating a prior registration statement when it is effectively
replaced with a new registration statement covering Securities
(provided in the case of this clause (ii) that all of the
Securities covered by the superseded (or terminated) registration
statement that have not theretofore been resold are included in the
superseding (or new) registration statement);
(b) the
suspension of the Common Stock from trading on the Principal Market
for a period of one (1) Business Day, provided that the Company may
not direct the Investor to purchase any shares of Common Stock
during any such suspension;
(c) the
delisting of the Common Stock from The Nasdaq Capital Market,
provided, however, that the Common Stock is not immediately
thereafter trading on the New York Stock Exchange, The Nasdaq
Global Market, The Nasdaq Global Select Market, the
NYSE American, the NYSE Arca, the OTC Bulletin Board, the OTCQX operated by the OTC
Markets Group, Inc. or the OTCQB operated by the OTC Markets Group,
Inc. (or nationally recognized successor to any of the
foregoing);
(d) If
at any time after the Commencement Date, the Exchange Cap is
exceeded unless and until stockholder approval is obtained pursuant
to Section
2(e)
hereof. The Exchange Cap shall be
deemed to be exceeded at such time if, upon submission of a Regular
Purchase Notice or Accelerated Purchase Notice under this
Agreement, the issuance of such shares of Common Stock would exceed
that number of shares of Common Stock which the Company may issue
under this Agreement without breaching the Company’s
obligations under the rules or regulations of the Principal
Market;
(e) the
failure for any reason by the Transfer Agent to issue Purchase
Shares to the Investor within three (3) Business Days after the
applicable Purchase Date,
Accelerated Purchase Date or Additional Accelerated Purchase Date
(as applicable) on which the Investor is entitled to receive such
Purchase Shares;
(f) the
Company breaches any representation, warranty, covenant or other
term or condition under any Transaction Document if such breach has
or could have a Material Adverse Effect and except, in the case of
a breach of a covenant which is reasonably curable, only if such
breach continues for a period of at least five (5) Business
Days;
(g) if
any Person commences a proceeding against the Company pursuant to
or within the meaning of any Bankruptcy Law;
(h) if
the Company is at any time
insolvent, or, pursuant to or within the meaning of any Bankruptcy
Law, (i) commences a voluntary case, (ii) consents to the entry of
an order for relief against it in an involuntary case, (iii)
consents to the appointment of a Custodian of it or for all or
substantially all of its property, or (iv) makes a general
assignment for the benefit of its creditors or is generally unable
to pay its debts as the same become due;
(i) a
court of competent jurisdiction enters an order or decree under any
Bankruptcy Law that (i) is for relief against the Company in an
involuntary case, (ii) appoints a Custodian of the Company or for
all or substantially all of its property, or (iii) orders the
liquidation of the Company or any Subsidiary;
or
(j) if
at any time the Company is not eligible to transfer its Common
Stock electronically as DWAC Shares.
-24-
In
addition to any other rights and remedies under applicable law and
this Agreement, so long as an Event of Default has occurred and is
continuing, or if any event which, after notice and/or lapse of
time, would become an Event of Default, has occurred and is
continuing, the Company shall not deliver to the Investor any
Regular Purchase Notice or Accelerated Purchase Notice.
Notwithstanding the foregoing, the foregoing sentence shall not be
deemed to apply to any notice from Nasdaq previously received or
received in the future regarding the Company’s failure to
comply with the continuing listing standards of The Nasdaq Capital
Market, and to the fact of each such failure, unless and unless all
compliance and appeal periods for such failure have lapsed or
expired.
11.
TERMINATION
This
Agreement may be terminated only as follows:
(a) If
pursuant to or within the meaning of any Bankruptcy Law, the
Company commences a voluntary case or any Person commences a
proceeding against the Company, a Custodian is appointed for the
Company or for all or substantially all of its property, or the
Company makes a general assignment for the benefit of its creditors
(any of which would be an Event of Default as described in
Sections
10(g),
10(h)
and 10(i)
hereof), this Agreement shall
automatically terminate without any liability or payment to the
Company (except as set forth below) without further action or
notice by any Person.
(b) In
the event that the Commencement shall not have occurred on or
before January13, 2020, due to the failure to satisfy the
conditions set forth in Sections 7
and 8 above with respect to the Commencement, either the
Company or the Investor shall have the option to terminate this
Agreement at the close of business on such date or thereafter
without liability of any party to any other party (except as set
forth below); provided, however, that the right to terminate this
Agreement under this Section
11(b) shall not be available to any party if such
party is then in breach of any covenant or agreement contained in
this Agreement or any representation or warranty of such party
contained in this Agreement fails to be true and correct such that
the conditions set forth in Section
7(d) or Section
8(e), as applicable, could not then be
satisfied.
(c) At
any time after the Commencement Date, the Company shall have the
option to terminate this Agreement for any reason or for no reason
by delivering notice (a “Company Termination
Notice”) to the Investor
electing to terminate this Agreement without any liability
whatsoever of any party to any other party under this Agreement
(except as set forth below). The Company Termination Notice shall
not be effective until one (1) Business Day after it has been
received by the Investor.
(d) This
Agreement shall automatically terminate on the date that the
Company sells and the Investor purchases the full Available Amount
as provided herein, without any action or notice on the part of any
party and without any liability whatsoever of any party to any
other party under this Agreement (except as set forth
below).
(e) If,
for any reason or for no reason, the full Available Amount has not
been purchased in accordance with Section 2
of this Agreement by the Maturity
Date, this Agreement shall automatically terminate on the Maturity
Date, without any action or notice on the part of any party and
without any liability whatsoever of any party to any other party
under this Agreement (except as set forth
below).
Except
as set forth in Sections
11(a) (with
respect to an Event of Default under Sections 10(g), 10(h) and 10(i)), 11(d) and 11(e), any termination of this
Agreement pursuant to this Section 11 shall be effected by
written notice from the Company to the Investor, or the Investor to
the Company, as the case may be, setting forth the basis for the
termination hereof. The representations and warranties and
covenants of the Company and the Investor contained in Sections 3, 4, 5, and 6 hereof, the indemnification
provisions set forth in Section 9 hereof and the
agreements and covenants set forth in Sections 10,
11 and 12 shall survive the
Commencement and any termination of this Agreement. No termination
of this Agreement shall (i) affect the Company’s or the
Investor’s rights or obligations under (A) this Agreement
with respect to pending Regular Purchases, Accelerated Purchases,
and Additional Accelerated
Purchases and the Company and the Investor shall complete their
respective obligations with respect to any pending Regular
Purchases, Accelerated Purchases and Additional Accelerated
Purchases under this Agreement and (B) the Registration Rights
Agreement, which shall survive any such termination, or (ii) be
deemed to release the Company or the Investor from any liability
for intentional misrepresentation or willful breach of any of the
Transaction Documents.
-25-
12.
MISCELLANEOUS.
(a) Governing
Law; Jurisdiction; Jury Trial.
The corporate laws of the State of Delaware shall govern all issues
concerning the relative rights of the Company and its stockholders.
All other questions concerning the construction, validity,
enforcement and interpretation of this Agreement and the other
Transaction Documents shall be governed by the internal laws of the
State of Illinois, without giving effect to any choice of law or
conflict of law provision or rule (whether of the State of Illinois
or any other jurisdictions) that would cause the application of the
laws of any jurisdictions other than the State of Illinois. Each
party hereby irrevocably submits to the exclusive jurisdiction of
the state and federal courts sitting in the State of Illinois,
County of Xxxx, for the adjudication of any dispute hereunder or
under the other Transaction Documents or in connection herewith or
therewith, or with any transaction contemplated hereby or discussed
herein, and hereby irrevocably waives, and agrees not to assert in
any suit, action or proceeding, any claim that it is not personally
subject to the jurisdiction of any such court, that such suit,
action or proceeding is brought in an inconvenient forum or that
the venue of such suit, action or proceeding is improper. Each
party hereby irrevocably waives personal service of process and
consents to process being served in any such suit, action or
proceeding by mailing a copy thereof to such party at the address
for such notices to it under this Agreement and agrees that such
service shall constitute good and sufficient service of process and
notice thereof. Nothing contained herein shall be deemed to limit
in any way any right to serve process in any manner permitted by
law. EACH
PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY
HAVE, AND AGREES NOT TO
REQUEST, A JURY TRIAL FOR THE
ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION HEREWITH OR
ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED
HEREBY.
(b) Counterparts.
This Agreement may be executed in two or more identical
counterparts, all of which shall be considered one and the same
agreement and shall become effective when counterparts have been
signed by each party and delivered to the other party; provided
that a facsimile signature or signature delivered by e-mail in a
“.pdf” format data file shall be considered due
execution and shall be binding upon the signatory thereto with the
same force and effect as if the signature were an original
signature.
(c) Headings.
The headings of this Agreement are for convenience of reference and
shall not form part of, or affect the interpretation of, this
Agreement.
(d) Severability.
If any provision of this Agreement shall be invalid or
unenforceable in any jurisdiction, such invalidity or
unenforceability shall not affect the validity or enforceability of
the remainder of this Agreement in that jurisdiction or the
validity or enforceability of any provision of this Agreement in
any other jurisdiction.
(e) Entire
Agreement. The Transaction
Documents supersede all other prior oral or written agreements
between the Investor, the Company, their affiliates and Persons
acting on their behalf with respect to the subject matter thereof,
and this Agreement, the other Transaction Documents and the
instruments referenced herein contain the entire understanding of
the parties with respect to the matters covered herein and therein
and, except as specifically set forth herein or therein, neither
the Company nor the Investor makes any representation, warranty,
covenant or undertaking with respect to such matters. The Company
acknowledges and agrees that is has not relied on, in any manner
whatsoever, any representations or statements, written or oral,
other than as expressly set forth in the Transaction
Documents.
(f) Notices.
Any notices, consents or other communications required or permitted
to be given under the terms of this Agreement must be in writing
and will be deemed to have been delivered: (i) upon receipt when
delivered personally; (ii) upon receipt when sent by facsimile or
email (provided confirmation of transmission is mechanically or
electronically generated and kept on file by the sending party); or
(iii) one Business Day after deposit with a nationally recognized
overnight delivery service, in each case properly addressed to the
party to receive the same. The addresses for such communications
shall be:
-26-
If to
the Company:
000
Xxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxx,
XX 00000
Phone:
E-mail:
Attention:
Xxxxx
Xxxxxxxxxx
With a
copy to (which shall not constitute notice or service of
process):
Disclosure Law
Group, a Professional Corporation
000
Xxxx Xxxxxxxx, Xxxxx 000
Xxx
Xxxxx, XX 00000
Telephone:
Facsimile:
E-mail:
Attention:
Xxxxxx X.
Xxxxxx
If to
the Investor:
Lincoln
Park Capital Fund, LLC
000
Xxxxx Xxxxx, Xxxxx 000
Xxxxxxx, XX
00000
Telephone:
Facsimile:
E-mail:
Attention:
Xxxx
Xxxxxxxxxx/Xxxxxxxx Xxxx
With a
copy to (which shall not constitute notice or service of
process):
K&L
Gates, LLP
000 X.
Xxxxxxxx Xxxx., Xxx. 0000
Xxxxx,
Xxxxxxx 00000
Telephone:
Facsimile:
E-mail:
Attention:
Xxxxxxx X. Xxxxxx,
Esq.
If to
the Transfer Agent:
Colonial Stock
Transfer Co, Inc.
00
Xxxxxxxx Xxxxx, Xxxxx 000
Xxxx
Xxxx Xxxx, XX 00000
Tel:
E-mail:
Attention:
or at
such other address and/or facsimile number and/or to the attention
of such other Person as the recipient party has specified by
written notice given to each other party three (3) Business Days
prior to the effectiveness of such change. Written confirmation of
receipt (A) given by the recipient of such notice, consent or other
communication, (B) mechanically or electronically generated by the
sender’s facsimile machine or email account containing the
time, date, and recipient facsimile number or email address, as
applicable, and an image of the first page of such transmission or
(C) provided by a nationally recognized overnight delivery service,
shall be rebuttable evidence of personal service, receipt by
facsimile or receipt from a nationally recognized overnight
delivery service in accordance with clause (i), (ii) or (iii)
above, respectively.
-27-
(g) Successors
and Assigns. This Agreement
shall be binding upon and inure to the benefit of the parties and
their respective successors and assigns. The Company shall not
assign this Agreement or any rights or obligations hereunder
without the prior written consent of the Investor, including by
merger or consolidation. The Investor may not assign its rights or
obligations under this Agreement.
(h) No
Third Party Beneficiaries. This
Agreement is intended for the benefit of the parties hereto and
their respective permitted successors and assigns, and, except as
set forth in Section
9, is not for the benefit of,
nor may any provision hereof be enforced by, any other
Person.
(i) Publicity.
The Company shall afford the Investor and its counsel with the
opportunity to review and comment upon, shall consult with the
Investor and its counsel on the form and substance of, and shall
give due consideration to all such comments from the Investor or
its counsel on, any press release, SEC filing or any other public
disclosure by or on behalf of the Company relating to the Investor,
its purchases hereunder or any aspect of the Transaction Documents
or the transactions contemplated thereby, not less than 24 hours
prior to the issuance, filing or public disclosure thereof. The
Investor must be provided with a final version of any such press
release, SEC filing or other public disclosure at least 24 hours
prior to any release, filing or use by the Company thereof. The
Company agrees and acknowledges that its failure to fully comply
with this provision constitutes a Material Adverse
Effect.
(j) Further
Assurances. Each party shall do
and perform, or cause to be done and performed, all such further
acts and things, and shall execute and deliver all such other
agreements, certificates,
instruments and documents, as the other party may reasonably
request in order to consummate and make effective, as soon as
reasonably possible, the Commencement, and to carry out the intent
and accomplish the purposes of this Agreement and the consummation
of the transactions contemplated hereby.
(k) No
Financial Advisor,
Placement
Agent, Broker or
Finder. The Company represents
and warrants to the Investor that, except as disclosed in Schedule
4(x), it has not engaged any
financial advisor, placement agent, broker or finder in connection
with the transactions contemplated hereby. The Investor represents
and warrants to the Company that it has not engaged any financial
advisor, placement agent, broker or finder in connection with the
transactions contemplated hereby. The Company shall be responsible
for the payment of any fees or commissions, if any, of any
financial advisor, placement agent, broker or finder relating to or
arising out of the transactions contemplated hereby. The Company
shall pay, and hold the Investor harmless against, any liability,
loss or expense (including, without limitation, attorneys’
fees and out of pocket expenses) arising in connection with any
such claim.
(l) No
Strict Construction. The
language used in this Agreement will be deemed to be the language
chosen by the parties to express their mutual intent, and no rules
of strict construction will be applied against any
party.
(m) Remedies,
Other
Obligations,
Breaches
and Injunctive Relief. The
Investor’s remedies provided in this Agreement, including,
without limitation, the Investor’s remedies provided
in Section
9, shall be cumulative and in
addition to all other remedies available to the Investor under this
Agreement, at law or in equity (including a decree of specific
performance and/or other injunctive relief), no remedy of the
Investor contained herein shall be deemed a waiver of compliance
with the provisions giving rise to such remedy and nothing herein
shall limit the Investor’s right to pursue actual damages for
any failure by the Company to comply with the terms of this
Agreement. The Company acknowledges that a breach by it of its
obligations hereunder will cause irreparable harm to the Investor
and that the remedy at law for any such breach may be inadequate.
The Company therefore agrees that, in the event of any such breach
or threatened breach, the Investor shall be entitled, in addition
to all other available remedies, to an injunction restraining any
breach, without the necessity of showing economic loss and without
any bond or other security being required.
-28-
(n) Enforcement
Costs. If: (i) this Agreement
is placed by the Investor in the hands of an attorney for
enforcement or is enforced by the Investor through any legal
proceeding; (ii) an attorney is retained to represent the Investor
in any bankruptcy, reorganization, receivership or other
proceedings affecting creditors’ rights and involving a claim
under this Agreement; or (iii) an attorney is retained to represent
the Investor in any other proceedings whatsoever in connection with
this Agreement, then the Company shall pay to the Investor, as
incurred by the Investor, all reasonable costs and expenses
including attorneys’ fees incurred in connection therewith,
in addition to all other amounts due hereunder.
(o) Amendment
and Waiver; Failure or Indulgence Not Waiver. No provision of this Agreement may be amended or
waived by the parties from and after the date that is one (1)
Business Day immediately preceding the filing of the Registration
Statement with the SEC. Subject to the immediately preceding
sentence, (i) no provision of this Agreement may be amended other
than by a written instrument signed by both parties hereto and (ii)
no provision of this Agreement may be waived other than in a
written instrument signed by the party against whom enforcement of
such waiver is sought. No failure or delay in the exercise of any
power, right or privilege hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of any such
power, right or privilege preclude other or further exercise
thereof or of any other right, power or
privilege.
** Signature Page Follows **
-29-
IN WITNESS WHEREOF, the Investor and the
Company have caused this Purchase Agreement to be duly executed as
of the date first written above.
THE COMPANY:
By:
/s/ Xxxxx
Xxxxxxxxxx
Name:
Xxxxx Xxxxxxxxxx
Title:
Chief Executive Officer
INVESTOR:
LINCOLN
PARK CAPITAL FUND, LLC
BY:
LINCOLN PARK CAPITAL, LLC
BY:
By:
/s/ Xxxxxxxx
Xxxx
Name:
Xxxxxxxx Xxxx
Title:
President
-30-
SCHEDULES
Schedule
4(c)
Capitalization
Schedule 4(x)
Brokerage or
Finder’s Fees
EXHIBITS
Exhibit
A
Form of Company
Counsel Opinion
Exhibit
B
Form of
Officer’s Certificate
Exhibit
C
Form of Resolutions
of Board of Directors of the Company
Exhibit
D
Form of
Secretary’s Certificate
Exhibit
E
Form of Letter to
Transfer Agent
-31-
