SECURITIES PURCHASE AGREEMENT
EXECUTION
COPY
SECURITIES
PURCHASE AGREEMENT
(the
"Agreement"),
dated
as of March 16, 2007, by and among Cleveland BioLabs, Inc., a Delaware
corporation, with headquarters located at 00000 Xxxxx Xxx., Xxxxx 000,
Xxxxxxxxx, Xxxx 00000 (the "Company"),
and
the investors listed on the Schedule of Buyers attached hereto (individually,
a
"Buyer"
and
collectively, the "Buyers").
WHEREAS:
A. The
Company and each Buyer is executing and delivering this Agreement in reliance
upon the exemption from securities registration afforded by Section 4(2) of
the
Securities Act of 1933, as amended (the "1933
Act"),
and
Rule 506 of Regulation D ("Regulation D")
as
promulgated by the United States Securities and Exchange Commission (the
"SEC")
under
the 1933 Act.
B. The
Company has authorized a new series of convertible preferred stock of the
Company designated as Series
B
Convertible Preferred Stock,
the
terms of which are set forth in the certificate of designation for such series
of preferred stock (the "Certificate
of Designations")
in the
form attached hereto as Exhibit
A
(together with any share of convertible preferred stock issued in replacement
thereof in accordance with the terms thereof, the "Preferred
Shares"),
which
Preferred Shares shall be convertible into the Company's common stock, par
value
$0.005 per share (the "Common
Stock"),
in
accordance with the terms of the Certificate of Designations.
C. Each
Buyer (other than the Agent (as defined below) and the Non-Convertible Buyers
(as defined below)) (collectively, as identified on the Schedule of Buyers,
the
"Convertible
Buyers")
wishes
to purchase, and the Company wishes to sell, upon the terms and conditions
stated in this Agreement, (i) that aggregate number of Preferred Shares (the
"Investor
Convertible Preferred Shares")
set
forth opposite such Buyer's name in column (3) on the Schedule of Buyers (which
aggregate number for all Buyers shall be 2,376,000) (the shares of Common Stock
issuable upon conversion thereof, collectively, the "Investor
Convertible Conversion Shares")
and
(ii) Series B Warrants in substantially the form attached hereto as Exhibit
B-1
(the
"Investor
Convertible Warrants")
to
acquire up to that number of shares of Common Stock (the shares of Common Stock
issuable upon exercise thereof, collectively, the "Investor
Convertible Warrant Shares")
as set
forth opposite such Buyer's name in column (4) on the Schedule of Buyers, with
each two (2) Investor Convertible Preferred Shares and Investor Convertible
Warrant with respect to the right to acquire one (1) Investor Convertible
Warrant Share (each, a "Convertible
Unit")
constituting an "investment unit" for purposes of Section 1273(c)(2) of the
Internal Revenue Code, as amended (the "Code"),
as
described below.
D. Each
Buyer (other than the Agent (as defined below) and the Convertible Buyers)
(collectively, as identified on the Schedule of Buyers, the "Non-Convertible
Buyers")
wishes
to purchase, and the Company wishes to sell, upon the terms and conditions
stated in this Agreement, the
following securities, which are not convertible or exercisable into Common
Stock
until the Stockholder Approval Date (as defined below),
(i) that
aggregate number of Preferred Shares (the "Investor
Non-Convertible Preferred Shares",
and
together with the Investor Convertible Preferred Shares, the "Investor
Preferred Shares")
set
forth opposite such Buyer's name in column (5) on the Schedule of Buyers (which
aggregate number for all Buyers shall be 1,912,712) (the shares of Common Stock
issuable upon conversion thereof, collectively, the "Investor
Non-Convertible Conversion Shares",
and
together with the Investor Convertible Conversion Shares, the "Investor
Conversion Shares")
and
(ii) Series B Warrants in substantially the form attached hereto as Exhibit
B-1
(the
"Investor
Non-Convertible Warrants",
and
together with the Investor Convertible Warrants, the "Investor
Warrants")
to
acquire up to that number of shares of Common Stock (the shares of Common Stock
issuable upon exercise thereof, collectively, the "Investor
Non-Convertible Warrant Shares",
and
together with the Investor Convertible Warrant Shares, the "Investor
Warrant Shares")
as set
forth opposite such Buyer's name in column (6) on the Schedule of Buyers, with
each two (2) Investor Non-Convertible Preferred Shares and Investor
Non-Convertible Warrant with respect to the right to acquire one (1) Investor
Non-Convertible Warrant Share (each, a "Non-Convertible
Unit",
and
together with the Convertible Units, each a "Unit")
constituting an "investment unit" for purposes of Section 1273(c)(2) of the
Code, as described below.
E. Sunrise
Securities Corp. ("Sunrise"),
which
is a Buyer hereunder, has agreed to act as placement agent in connection with
the transactions contemplated by this Agreement and, subject to the closing
of
the transaction contemplated hereby, the Company agreed to issue to Sunrise
and/or its designees and certain other placement agents set forth on the
Schedule of Buyers (collectively, the "Agents")
the
following securities, which are not convertible or exercisable into Common
Stock
until the Stockholder Approval Date,
(i) that
aggregate number of Preferred Shares (the "Agent
Preferred Shares",
and
together with the Investor Non-Convertible Preferred Shares, the "Non-Convertible
Preferred Shares")
set
forth opposite such Agent's name in column (5) on the Schedule of Buyers (the
shares of Common Stock issuable upon conversion thereof, collectively, the
"Agent
Conversion Shares",
and
together with the Investor Conversion Shares, the "Conversion
Shares"),
(ii)
Series B Warrants in substantially the form attached hereto as Exhibit
B-1
(the
"Agent
Warrants")
to
acquire up to that number of shares of Common Stock (the shares of Common Stock
issuable upon exercise thereof, collectively, the "Agent
Warrant Shares")
as set
forth opposite such Agent's name in column (6) on the Schedule of Buyers and
(iii) Series C Warrants in substantially the form attached hereto as
Exhibit
B-2
(the
"Retainer
Warrants",
and
together with the Agent Warrants and the Investor Non-Convertible Warrants,
the
"Non-Convertible
Warrants"
and
together with the Investor Convertible Warrants, the "Warrants")
to
acquire up to that number of shares of Common Stock (the shares of Common Stock
issuable upon exercise thereof, collectively, the "Retainer
Warrant Shares",
and
together with the Agent Warrant Shares and the Investor Warrant Shares, the
"Warrant
Shares")
as set
forth opposite such Agent's name in column (7) on the Schedule of Buyers. For
the avoidance of doubt, the amount of securities set forth opposite each Agent's
name in the Schedule of Buyers (to the extent such Agent has elected to have
each of the foregoing commissions paid in such securities) represents (a) a
commission to be paid to each such Agent (and/or its designees) in such number
of units (comprised of two (2) Agent Preferred Shares and one (1) Agent Warrant
exercisable into one
(1)
Agent
Warrant Share) equal to the quotient of (i) 8% of the aggregate Purchase Price
of the Units placed by such Agent, divided by (ii) $12.88 and (b) an additional
commission to be paid to each such Agent (and/or its designees) as (x) in the
case of Sunrise, Retainer Warrants and (y) in the case of any Agent other than
Sunrise, additional Agent Warrants, in each case, exercisable into such number
of Warrant Shares equal to the quotient of (i) 8% of the aggregate Purchase
Price of the Units placed by such Agent, divided by (ii) $7.00.
-2-
F. Contemporaneously
with the execution and delivery of this Agreement, the parties hereto are
executing and delivering a Registration Rights Agreement, substantially in
the
form attached hereto as Exhibit
C
(the
"Registration
Rights Agreement"),
pursuant to which the Company has agreed to provide certain registration rights
with respect to the Registrable Securities (as defined in the Registration
Rights Agreement), under the 1933 Act and the rules and regulations promulgated
thereunder, and applicable state securities laws.
G. The
Preferred Shares, the Conversion Shares, the Warrants, the Warrant Shares and
the Units are collectively referred to herein as the "Securities".
NOW,
THEREFORE,
the
Company and each Buyer hereby agree as follows:
1. PURCHASE
AND SALE OF PREFERRED STOCK AND WARRANTS.
(a) Preferred
Shares and Warrants.
Subject
to the satisfaction (or waiver) of the conditions set forth in Sections 6 and
7
below, the Company shall issue and sell to each Buyer (other than the Agents),
and each Buyer (other than the Agents) severally, but not jointly, agrees to
purchase from the Company on the Closing Date (as defined below), (x) if such
Buyer is a Convertible Buyer, the number of Investor Convertible Preferred
Shares as is set forth opposite such Buyer's name in column (3) on the Schedule
of Buyers, along
with Investor Convertible Warrants to acquire that number of Investor
Convertible Warrant Shares as is set forth opposite such Buyer's name in column
(4) on the Schedule of Buyers, or (y) if such Buyer is a Non-Convertible Buyer,
the number of Investor Non-Convertible Preferred Shares as is set forth opposite
such Buyer's name in column (5) on the Schedule of Buyers, along
with Investor Non-Convertible Warrants to acquire that number of Investor
Non-Convertible Warrant Shares as is set forth opposite such Buyer's name in
column (6) on the Schedule of Buyers. Concurrently with the issuance of the
Investor Preferred Shares and the Investor Warrants, the Company shall issue
to
each Agents (and/or its designees), and such Agent (and/or its designees) agrees
to accept from the Company on the Closing Date (as defined below), collectively,
the number of Agent Preferred Shares as is set forth opposite such Agent's
name
in column (5) on the Schedule of Buyers, along
with Agent Warrants to acquire that number of Agent Warrant Shares as is set
forth opposite such Agent's name in column (6) on the Schedule of Buyers and
the
Retainer Warrants to acquire that number of Retainer Warrant Shares as is set
forth opposite such Agent's name in column (7) on the Schedule of
Buyers.
(b) Closing.
The
closing (the "Closing")
of the
acquisition of the Preferred Shares and the Warrants by the Buyers shall occur
at the offices of Xxxxxxx Xxxx & Xxxxx LLP, 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx
Xxxx 00000. The date and time of the Closing (the "Closing
Date")
shall
be 10:00 a.m., New York City time, on the date hereof after the notification
of
satisfaction (or waiver) of the conditions to the Closing set forth in Sections
6 and 7 below (or such other date and time as is mutually agreed to by the
Company and each Buyer).
-3-
(c) Purchase
Price.
The
aggregate purchase price for the Preferred Shares and the Warrants to be
purchased by each Buyer (the "Purchase
Price")
shall
be the amount set forth opposite such Buyer's name in column (8) on the Schedule
of Buyers. Each Buyer (other than the Agents) shall pay $14.00 for each Unit
to
be purchased by such Buyer at the Closing. The Buyers and the Company agree
that
each Unit constitutes an "investment unit" for purposes of Section 1273(c)(2)
of
the Code. The Buyers (other than the Agents) and the Company mutually agree
that
the allocation of the issue price of each such Unit between the Preferred Shares
and the Warrants in accordance with Section 1273(c)(2) of the Code and Treasury
Regulation Section 1.1273-2(h) shall be the Purchase Price in full allocated
to
the Preferred Shares and no portion of the Purchase Price allocated to the
Warrants, and neither the Buyers (other than the Agents) nor the Company shall
take any position inconsistent with such allocation in any tax return or in
any
judicial or administrative proceeding in respect of taxes. The Units shall
not
constitute securities separate from the Preferred Shares and Warrants and shall
not be represented by certificates or other instruments. The Agent Preferred
Shares, Agent Warrants and Agent Retainer Shares shall be issued to each Agent
(or its designees) in exchange for placement agent services rendered in
connection with the transactions contemplated hereby and without any additional
cash consideration to be paid to the Company.
(d) Form
of Payment.
On the
Closing Date, (A) each Buyer (other than the Agents) shall pay its portion
of
the Purchase Price to the Company for the Preferred Shares and the Warrants
to
be issued and sold to such Buyer at the Closing, by wire transfer of immediately
available funds in accordance with the Company's written wire instructions
and
(B) the Company shall deliver to (x) each Convertible Buyer, the Investor
Convertible Preferred Shares (in
such
denominations
as is
set forth opposite such Buyer's name in column (3) on the Schedule
of
Buyers),
along with the Investor
Convertible Warrants
(exercisable for the number of shares of Common Stock as is set forth opposite
such Buyer's name in column (4) on the Schedule of Buyers), (y) each
Non-Convertible Buyer, the Investor Non-Convertible Preferred Shares
(in
such
denominations
as is
set forth opposite such Buyer's name in column (5) on the Schedule
of
Buyers),
along with the Investor
Non-Convertible Warrants
(exercisable for the number of shares of Common Stock as is set forth opposite
such Buyer's name in column (6) on the Schedule of Buyers), and (z) each
Agent, the Agent Preferred Shares (in
such
denominations
as is
set forth opposite such Agent's name in column (5) on the Schedule
of
Buyers),
along with the Agent Warrants (exercisable for the number of shares of Common
Stock as is set forth opposite such Agent's name in column (6) on the Schedule
of Buyers) and the Retainer Warrants (exercisable for the number of shares
of
Common Stock as is set forth opposite such Agent's name in column (7) on the
Schedule of Buyers), each duly executed on behalf of the Company and registered
in the name of such Buyer or its designees.
2. BUYER'S
REPRESENTATIONS AND WARRANTIES.
Each
Buyer represents and warrants with respect to only itself that:
(a) Organization;
Authority; Legal Capacity.
(i) If
such
Buyer is a legal entity, such Buyer is an entity duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
organization with the requisite power and authority to enter into and to
consummate the transactions contemplated by the Transaction Documents (as
defined below) to which it is a party and otherwise to carry out its obligations
hereunder and thereunder.
-4-
(ii) If
such
Buyer is a natural person, such Buyer has the legal capacity and right to
execute, deliver, enter into, consummate and perform the transactions
contemplated by the Transaction Documents to which it is a party and otherwise
to carry out its obligations hereunder and thereunder.
(b) No
Public Sale or Distribution.
Such
Buyer is (i) acquiring the Preferred Shares and the Warrants, (ii) upon
conversion of the Preferred Shares will acquire the Conversion Shares, and
(iii) upon exercise of the Warrants will acquire the Warrant Shares, in
each case, for its own account and not with a view towards, or for resale in
connection with, the public sale or distribution thereof, except pursuant to
sales registered or exempted under the 1933 Act; provided,
however,
that by
making the foregoing representations, such Buyer does not agree to hold any
of
the Securities for any minimum or other specific term and reserves the right
to
dispose of the Securities at any time in accordance with or pursuant to a
registration statement or an exemption under the 1933 Act. Such Buyer is
acquiring the Securities hereunder in the ordinary course of its business.
Such
Buyer does not presently have any agreement or understanding, directly or
indirectly, with any Person to resell or distribute any of the
Securities.
(c) Accredited
Investor Status.
Such
Buyer is an "accredited investor" as that term is defined in Rule 501(a) of
Regulation D (or to the extent such Buyer is a resident of Canada, of that
term
as defined under applicable Canadian securities laws), and shall be an
"accredited" investor at the time of any conversion by such Buyer of any of
the
Preferred Shares or exercise by such Buyer of any of the Warrants. Such Buyer
has such knowledge and experience in financial and business matters that such
Buyer is capable of evaluating the merits and risks of its investment in the
Securities.
(d) Reliance
on Exemptions.
Such
Buyer understands that the Securities are being offered and sold to it in
reliance on specific exemptions from the registration requirements of United
States federal and state securities laws and that the Company is relying in
part
upon the truth and accuracy of, and such Buyer's compliance with, the
representations, warranties, agreements, acknowledgments and understandings
of
such Buyer set forth herein in order to determine the availability of such
exemptions and the eligibility of such Buyer to acquire the
Securities.
(e) Information.
Such
Buyer and its advisors, if any, have been furnished with all materials relating
to the business, finances and operations of the Company and materials relating
to the offer and sale of the Securities which have been requested by such Buyer.
Such Buyer and its advisors, if any, have been afforded the opportunity to
ask
questions of the Company. Neither such inquiries nor any other due diligence
investigations conducted by such Buyer or its advisors, if any, or its
representatives shall modify, amend or affect such Buyer's right to rely on
the
Company's representations and warranties contained herein. Such Buyer
understands that its investment in the Securities involves a high degree of
risk. Such Buyer has sought such accounting, legal and tax advice as it has
considered necessary to make an informed investment decision with respect to
its
acquisition of the Securities.
(f) No
Governmental Review.
Such
Buyer understands that no United States federal or state agency or any other
government or governmental agency has passed on or made any recommendation
or
endorsement of the Securities or the fairness or suitability of the investment
in the Securities nor have such authorities passed upon or endorsed the merits
of the offering of the Securities.
-5-
(g) Transfer
or Resale.
Such
Buyer understands that except as provided in the Registration Rights Agreement
or in the Retainer Warrants: (i) the Securities have not been and are not being
registered under the 1933 Act or any state securities laws, and may not be
offered for sale, sold, assigned or transferred unless (A) subsequently
registered thereunder, (B) such Buyer shall have delivered to the Company an
opinion of counsel, in a generally acceptable form, to the effect that such
Securities to be sold, assigned or transferred are being sold, assigned or
transferred pursuant to Rule 144 or Rule 144A promulgated under the 1933 Act,
as
amended, (or a successor rule thereto) (collectively, "Rule
144")
or any
other exemption from such registration or may be sold, assigned or transferred
pursuant to Rule 144(k), or (C) such Buyer provides the Company with reasonable
assurance that such Securities either are being (or have been) sold, assigned
or
transferred pursuant to Rule 144 or can be sold, assigned or transferred
pursuant to Rule 144(k); (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 (as defined in Section 3(s)) through whom
the
sale is made) may be deemed to be an underwriter (as that term is defined in
the
0000 Xxx) may require compliance with some other exemption under the 1933 Act
or
the rules and regulations of the SEC thereunder; and (iii) neither the Company
nor any other Person is under any obligation to register the Securities under
the 1933 Act or any state securities laws or to comply with the terms and
conditions of any exemption thereunder. Notwithstanding the foregoing, the
Securities may be pledged in connection with a bona fide margin account or
other
loan or financing arrangement secured by the Securities and such pledge of
Securities shall not be deemed to be a transfer, sale or assignment of the
Securities hereunder, and no Buyer effecting a pledge of Securities shall be
required to provide the Company with any notice thereof or otherwise make any
delivery to the Company pursuant to this Section 2(g).
(h) Legends.
(i) Such
Buyer understands that the certificates or other instruments representing the
Preferred Shares and the Warrants and, until such time as the resale of the
applicable Conversion Shares and the Warrant Shares have been registered under
the 1933 Act as contemplated by the Registration Rights Agreement, the stock
certificates representing the Conversion Shares and the Warrant Shares, except
as set forth below, shall bear any legend as required by the "blue sky" laws
of
any state and a restrictive legend in substantially the following form (and
a
stop-transfer order may be placed against transfer of such stock
certificates):
[NEITHER
THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR
THE
SECURITIES INTO WHICH THESE SECURITIES ARE [CONVERTIBLE] [EXERCISABLE] HAVE
BEEN][THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN] REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES
LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED
(I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL,
IN A
GENERALLY ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT
AND
APPLICABLE STATE SECURITIES LAWS OR (II) UNLESS SOLD PURSUANT TO RULE 144 UNDER
SAID ACT. NOTWITHSTANDING
THE FOREGOING, THE SECURITIES MAY BE PLEDGED PURSUANT TO AN AVAILABLE EXEMPTION
FROM REGISTRATION UNDER THE 1933 ACT IN CONNECTION WITH A BONA FIDE MARGIN
ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE
SECURITIES.
-6-
The
legend set forth above shall be removed and the Company shall issue a
certificate without such legend to the holder of the Securities upon
which it is stamped or issue to such holder by electronic delivery at the
applicable balance account at DTC, if, unless otherwise required by state
securities laws, (i) such Securities are registered for resale under the 1933
Act, (ii) in connection with a sale, assignment or other transfer, such holder
provides the Company with an opinion of counsel, in a generally acceptable
form,
to the effect that such sale, assignment or transfer of the Securities is being
made under the applicable requirements of Rule 144 of the 1933 Act, or (iii)
such holder provides the Company with reasonable assurance that the Securities
can be sold, assigned or transferred pursuant to Rule 144(k). Such Buyer
acknowledges, covenants and agrees to sell the Securities represented by a
certificate(s) from which the legend has been removed only (x) pursuant to
a
registration statement effective under the 1933 Act and in accordance with
the
plan of distribution contained therein, (y) pursuant to a transaction exemption
from registration under the 1933 Act and any applicable state securities laws,
in which such Buyer's rights under the Registration Rights Agreement with
respect to such Securities are assigned to the Transferee in accordance with
the
terms of the Registration Rights Agreement, or (z) in a transaction pursuant
to
Rule 144 (including Rule 144(k)).
(ii) Such
Non-Convertible Buyer and Agent understands that until the Stockholder Approval
Date, the certificates or other instruments representing the Non-Convertible
Preferred Shares and Non-Convertible Warrants shall bear the following
legend:
THE
SECURITIES REPRESENTED BY THIS CERTIFICATE MAY NOT BE [CONVERTED][EXERCISED]
UNTIL THE STOCKHOLDER APPROVAL DATE (AS DEFINED IN THE SECURITIES PURCHASE
AGREEMENT, DATED MARCH 16, 2007, BY AND AMONG THE COMPANY AND THE BUYERS PARTY
THERETO).
The
legend set forth above shall be removed and the Company shall issue a
certificate without such legend to the holder of such Securities upon request
at
any time following the Stockholder Approval Date.
(i) Validity;
Enforcement.
This
Agreement and the Registration Rights Agreement have been duly and validly
authorized, executed and delivered on behalf of such Buyer and shall constitute
the legal, valid and binding obligations of such Buyer enforceable against
such
Buyer in accordance with their respective terms, except as such enforceability
may be limited by general principles of equity or to applicable bankruptcy,
insolvency, reorganization, moratorium, liquidation and other similar laws
relating to, or affecting generally, the enforcement of applicable creditors'
rights and remedies.
-7-
(j) No
Conflicts.
The
execution, delivery and performance by such Buyer of this Agreement and the
Registration Rights Agreement and the consummation by such Buyer of the
transactions contemplated hereby and thereby will not (i) result in a violation
of the organizational documents of such Buyer or (ii) conflict with, or
constitute a default (or an event which with notice or lapse of time or both
would become a default) under, or give to others any rights of termination,
amendment, acceleration or cancellation of, any agreement, indenture or
instrument to which such Buyer is a party, or (iii) result in a violation of
any
law, rule, regulation, order, judgment or decree (including federal and state
securities laws) applicable to such Buyer, except in the case of clauses (ii)
and (iii) above, for such conflicts, defaults, rights or violations which would
not, individually or in the aggregate, reasonably be expected to have a material
adverse effect on the transactions contemplated hereby or in the other
Transaction Documents or the authority or ability of such Buyer to perform
its
obligations under the Transaction Documents.
(k) Residency.
Such
Buyer is a resident of that jurisdiction set forth opposite such Buyer's name
in
column (2) on the Schedule of Buyers.
(l) Certain
Trading Activities.
Such
Buyer has not directly or indirectly, nor has any Person acting on behalf of
or
pursuant to any understanding with such Buyer, engaged in any purchase or sale
of Common Stock (including, without limitation, any Short Sales (as defined
below) involving the Company's securities) since the date that such Buyer first
became aware of the transactions contemplated hereby. For purposes of this
Section, "Short
Sales"
include, without limitation, all "short sales" as defined in Rule 200 of
Regulation SHO adopted under the 1934 Act (as defined in Section 3(f) below)
and
all types of direct and indirect stock pledges, forward sale contracts, options,
puts, calls, short sales, swaps and similar arrangements (including on a total
return basis), and sales and other transactions through non-US broker-dealers
or
foreign regulated brokers having the effect of hedging the securities of the
Company or the investment contemplated under this Agreement. Such Buyer
covenants that neither it, nor any person acting on its behalf or pursuant
to
any understanding with it, will engage in any transactions in the securities
of
the Company (including Short Sales) prior to the filing of the 8-K Filing (as
defined below).
3. REPRESENTATIONS
AND WARRANTIES OF THE COMPANY.
The
Company represents and warrants to each of the Buyers that:
(a) Organization
and Qualification.
Each of
the Company and its "Subsidiaries"
(which
for purposes of this Agreement means any joint venture or any entity in which
the Company, directly or indirectly, owns capital stock or holds an equity
or
similar interest, other than a publicly traded entity of which the Company
directly or indirectly owns less than 5% of the outstanding equity) are entities
duly organized and validly existing and in good standing under the laws of
the
jurisdiction in which they are formed, and have the requisite power and
authorization to own their properties and to carry on their business as now
being conducted. Each of the Company and its Subsidiaries is duly qualified
as a
foreign entity to do business and is in good standing in every jurisdiction
in
which its ownership of property or the nature of the business conducted by
it
makes such qualification necessary, except to the extent that the failure to
be
so qualified or be in good standing would not reasonably be expected to have
a
Material Adverse Effect. As used in this Agreement, "Material
Adverse Effect"
means
any material adverse effect on the business, properties, assets, operations,
results of operations, condition (financial or otherwise) or prospects of the
Company and its Subsidiaries taken as a whole, or on the transactions
contemplated hereby or in the other Transaction Documents, or on the authority
or ability of the Company to perform its obligations under the Transaction
Documents (as defined below). The Company has no Subsidiaries.
-8-
(b) Authorization;
Enforcement; Validity.
The
Company has the requisite power and authority to enter into and perform its
obligations under this Agreement, the Certificate of Designations, the Warrants,
the Registration Rights Agreement, the Irrevocable Transfer Agent Instructions
(as defined in Section 5(b)), and each of the other agreements entered into
by
the parties hereto in connection with the transactions contemplated by this
Agreement (collectively, the "Transaction
Documents")
and to
issue the Securities in accordance with the terms hereof and thereof. The
execution and delivery of the Transaction Documents by the Company and the
consummation by the Company of the transactions contemplated hereby and thereby,
including, without limitation, the issuance of the Preferred Shares, the
reservation for issuance and the issuance of the Conversion Shares issuable
upon
conversion of the Preferred Shares, the issuance of the Warrants and the
reservation for issuance and issuance of the Warrant Shares issuable upon
exercise of the Warrants, have been duly authorized by the Company's board
of
directors and (other than the Stockholder Approval and related filing (as set
forth in Section 4(m)), the 8-K Filing (as set forth in Section 4(i)), the
filing with the SEC of one or more registration statements in accordance with
the requirements of the Registration Rights Agreement and the Retainer Warrants
and any other filings as may be required by any state or foreign securities
agencies, the National Association of Securities Dealers, Inc. or the Principal
Market (as defined in Section 3(d)) or the Boston Stock Exchange, no further
filing, consent, or authorization is required by the Company, except as set
forth on Schedule
3(b),
its
board of directors or its stockholders with respect to the transactions
contemplated hereby. This Agreement and the other Transaction Documents of
even
date herewith have been duly executed and delivered by the Company, and
constitute the legal, valid and binding obligations of the Company, enforceable
against the Company in accordance with their respective terms, except as such
enforceability may be limited by general principles of equity, applicable
bankruptcy, insolvency, reorganization, moratorium, liquidation or similar
laws
relating to, or affecting generally, the enforcement of applicable creditors'
rights and remedies or as indemnification or contribution may be limited by
the
securities laws and public policy relating thereto and subject to Schedule
3(b).
The
Certificate of Designations in the form attached hereto as Exhibit
A
has been
filed with the Secretary of State of the State of Delaware and is in full force
and effect, enforceable against the Company in accordance with its terms and
has
not been amended.
(c) Issuance
of Securities.
The
issuance of the Preferred Shares and the Warrants are duly authorized and upon
issuance in accordance with the terms of the Transaction Documents shall be
free
from all taxes, liens and charges with respect to the issue thereof, and the
Preferred Shares shall be entitled to the rights and preferences set forth
in
the Certificate of Designations. As of the Closing, a number of shares of Common
Stock shall have been duly authorized and reserved for issuance which equals
at
least 130% of the sum of (i) the maximum number of shares of Common Stock then
issuable upon conversion of the Preferred Shares (assuming for purposes hereof,
that the Preferred Shares are convertible at the Conversion Price and without
taking into account any limitations on the conversion of the Preferred Shares
set forth in the Certificate of Designations) and (ii) the maximum number of
shares of Common Stock then issuable upon exercise of the Warrants (without
taking into account any limitations on the exercise of the Warrants set forth
in
the Warrants). Upon issuance or conversion in accordance with the Certificate
of
Designations or exercise in accordance with the Warrants, as the case may be,
the Conversion Shares and the Warrant Shares, respectively, will be validly
issued, fully paid and nonassessable and free from all preemptive or similar
rights, taxes, liens and charges with respect to the issue thereof, with the
holders being entitled to all rights accorded to a holder of Common Stock.
Subject to the accuracy of the representations and warranties of the Buyers
in
this Agreement, the offer and issuance by the Company of the Securities to
each
of the Buyers is exempt from registration under the 1933 Act.
-9-
(d) 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 issuance of the Preferred Shares,
the Warrants, and reservation for issuance of the Conversion Shares and the
Warrant Shares) will not (i) result in a violation of the Certificate of
Incorporation (as defined in Section 3(r)) of the Company or any certificate
of
incorporation, certificate of formation, any certificate of designations or
other constituent document of any of its Subsidiaries, any capital stock of
the
Company or Bylaws (as defined in Section 3(r)) or the Certificate of
Designations or Existing Certificates of Designations (as defined in Section
3(r)) of the Company or any of its Subsidiaries 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 (iii)
subject to Schedule
3(d),
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 NASDAQ
Capital
Market (the "Principal
Market"))
applicable to the Company or any of its Subsidiaries or by which any property
or
asset of the Company or any of its Subsidiaries is bound or affected, except
in
the case of clauses (ii) and (iii) above, for such conflicts, defaults, rights
or violations which would not, individually or in the aggregate, reasonably
be
expected to have a Material Adverse Effect..
(e) Consents.
The
Company is not required to obtain any consent, authorization or order of, or
make any filing or registration with, any court, governmental agency or any
regulatory or self-regulatory agency or any other Person in order for it to
execute, deliver or perform any of its obligations under or contemplated by
the
Transaction Documents, in each case in accordance with the terms hereof or
thereof, except for any such consent, authorization, order, filing or
registration contemplated hereby or by any of the other Transaction Documents.
Except as set forth on Schedule
3(e),
all
consents, authorizations, orders, filings and registrations which the Company
is
required to obtain on or prior to the Closing Date pursuant to the preceding
sentence shall have been obtained or effected on or prior to the Closing Date,
and the Company and its Subsidiaries are unaware of any facts or circumstances
which might prevent the Company from obtaining or effecting any of the
registration, application or filings pursuant to the preceding sentence.
-10-
(f) Acknowledgment
Regarding Buyer's Purchase of Securities.
The
Company acknowledges and agrees that each Buyer is acting solely in the capacity
of arm's length purchaser with respect to the Transaction Documents and the
transactions contemplated hereby and thereby and that, except as set forth
on
Schedule
3(f),
no
Buyer is (i) an officer or director of the Company, (ii) to the knowledge of
the
Company, an "affiliate" of the Company or any of its Subsidiaries (as defined
in
Rule 144) or (iii) to the knowledge of the Company, a "beneficial owner" of
more
than 10% of the shares of Common Stock (as defined for purposes of Rule 13d-3
of
the Securities Exchange Act of 1934, as amended (the "1934
Act")).
The
Company further acknowledges that no Buyer is acting as a financial advisor
or
fiduciary of the Company or any of its Subsidiaries (or in any similar capacity)
with respect to the Transaction Documents and the transactions contemplated
hereby and thereby, and any advice given by a Buyer or any of its
representatives or agents in connection with the Transaction Documents and
the
transactions contemplated hereby and thereby is merely incidental to such
Buyer's purchase of the Securities. The Company further represents to each
Buyer
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.
(g) No
General Solicitation; Restricting Third Parties; Placement Agent's
Fees.
Neither
the Company, nor any of its Subsidiaries or affiliates, nor, to the Company's
knowledge, any Person acting on its or their behalf, has engaged in any form
of
general solicitation or general advertising (within the meaning of Regulation
D)
in connection with the offer or sale of the Securities. To the extent the
Company has entered into any agreement with any third party (a "Restricting
Third Party")
that
would otherwise restrict or prevent the Company from consummating the
transactions contemplated hereby without breaching the provisions thereof,
the
Company has received a written release of such Restricting Third Party on or
prior to the date hereof. The Buyers shall not be responsible for the payment
of
any placement agent's fees, financial advisory fees, or brokers' commissions
(other than for persons engaged by any Buyer or its investment advisor) relating
to or arising out of the transactions contemplated hereby or any fees or other
amounts payable to any Restricting Third Party. The Company shall pay, and
hold
each Buyer harmless against, any liability, loss or expense (including, without
limitation, attorney's fees and out-of-pocket expenses) arising in connection
with any such claim. The Company acknowledges that it has engaged the Agents
as
placement agents in connection with the sale of the Securities. Other than
as
set forth on Schedule
3(g),
neither
the Company nor any of its Subsidiaries has engaged any placement agent or
other
agent other than the Agents in connection with the sale of the Securities.
(h) No
Integrated Offering.
None of
the Company, its Subsidiaries, any of their affiliates, and any Person acting
on
their behalf has, directly or indirectly, made any offers or sales of any
security or solicited any offers to buy any security, under circumstances that
would require registration of any of the Securities under the 1933 Act or cause
this offering of the Securities to be integrated with prior offerings by the
Company for purposes of the 1933 Act or any applicable stockholder approval
provisions, including, without limitation, under the rules and regulations
of
any exchange or automated quotation system on which any of the securities of
the
Company are listed or designated. None of the Company, its Subsidiaries, their
affiliates and any Person acting on their behalf will take any action or steps
referred to in the preceding sentence that would require registration of any
of
the Securities under the 1933 Act or cause the offering of the Securities to
be
integrated with other offerings.
-11-
(i) Dilutive
Effect.
The
Company understands and acknowledges that the number of Conversion Shares
issuable upon conversion of the Preferred Shares, and, the Warrant Shares
issuable upon exercise of the Warrants, will increase in certain circumstances.
The Company further acknowledges that its obligation to issue Conversion Shares
upon conversion of the Preferred Shares, all in accordance with this Agreement
and the Certificate of Designations and subject to the limitations set forth
therein, and its obligation to issue the Warrant Shares upon exercise of the
Warrants in accordance with this Agreement and the Warrants is, in each case,
absolute and unconditional regardless of the dilutive effect that such issuance
may have on the ownership interests of other stockholders of the Company and
subject to the limitations set forth therein.
(j) Application
of Takeover Protections; Rights Agreement.
The
Company and its board of directors have taken all necessary action, if any,
in
order to render inapplicable any control share acquisition, business
combination, poison pill (including any distribution under a rights agreement)
or other similar anti-takeover provision under the Certificate of Incorporation
or any certificates of designations or the laws of the jurisdiction of its
formation or incorporation which to the extent any such provision would limit,
prevent or otherwise restrict any of the transactions contemplated by this
Agreement, including, without limitation, the Company's issuance of the
Securities in accordance with the terms thereof and any Buyer's ownership of
the
Securities. The Company has not adopted a stockholder rights plan or similar
arrangement relating to accumulations of beneficial ownership of Common Stock
or
a change in control of the Company.
(k) SEC
Documents; Financial Statements.
During
the period beginning on the date of the effectiveness of the Company's
registration statement on Form SB-2 relating to its initial public offering
of
Common Stock through the date hereof, the Company has timely filed (which,
for
avoidance of doubt, include, any filing made within an extension of time
pursuant to rule 12b-25 under the 1934 Act (as defined below)), all reports,
schedules, forms, statements and other documents required to be filed by it
with
the SEC pursuant to the reporting requirements of the Securities Exchange Act
of
1934, as amended (the "1934
Act")
(all
of the foregoing filed prior to the date hereof, as amended from time to time,
and all exhibits included therein and financial statements, notes and schedules
thereto and documents incorporated by reference therein being hereinafter
referred to as the "SEC
Documents").
The
Company has delivered to the Buyers or their respective representatives true,
correct and complete copies of each of the SEC Documents not available on the
XXXXX system that have been requested by each Buyer. As of their respective
dates, the SEC Documents complied in all material respects with the requirements
of the 1934 Act and the rules and regulations of the SEC promulgated thereunder
applicable to the SEC Documents, and none of the SEC Documents, at the time
they
were filed with the SEC (or, if amended thereafter, as so amended), 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. As of their respective dates, the financial statements of the
Company included in the SEC Documents complied as to form in all material
respects with applicable accounting requirements and the published rules and
regulations of the SEC with respect thereto as in effect as of the time of
filing. Such financial statements were prepared in accordance with U.S.
generally accepted accounting principles ("GAAP"),
consistently applied, during the periods involved (except (i) as may be
otherwise indicated in such financial statements or the notes thereto, or (ii)
in the case of unaudited interim statements, to the extent they may exclude
footnotes or may be condensed or summary statements) and fairly present in
all
material respects the financial position of the Company as of the dates thereof
and the results of its operations and cash flows for the periods then ended
(subject, in the case of unaudited statements, to normal year-end audit
adjustments). No other information provided by or on behalf of the Company
to
the Buyers which is not included in the SEC Documents, including, without
limitation, information referred to in Section 2(e) of this Agreement, contains
any untrue statement of a material fact or omits to state any material fact
necessary in order to make the statements therein, in the light of the
circumstance under which they are or were made not misleading.
-12-
(l) Absence
of Certain Changes.
Except
as disclosed in Schedule
3(l),
since
September 30, 2006, there has been no material adverse change and no material
adverse development in the business, assets, properties, operations, condition
(financial or otherwise), results of operations or prospects of the Company
and
its Subsidiaries, taken as a whole. Except as disclosed in Schedule
3(l),
since
September 30, 2006, neither the Company nor any of its Subsidiaries has (i)
declared or paid any dividends, (ii) sold any assets, individually or in the
aggregate, in excess of $100,000 outside of the ordinary course of business
or
(iii) had capital expenditures, individually or in the aggregate, in excess
of
$250,000. Neither the Company nor any of its Subsidiaries has taken any steps
to
seek protection pursuant to any bankruptcy law nor does the Company have any
knowledge or reason to believe that its creditors intend to initiate involuntary
bankruptcy proceedings or any actual knowledge of any fact which would
reasonably lead a creditor to do so. The Company and its Subsidiaries,
individually and on a consolidated basis, are not as of the date hereof, and
after giving effect to the transactions contemplated hereby to occur at the
Closing will not, be Insolvent (as defined below). For purposes of this Section
3(l), "Insolvent"
means,
with respect to any Person (as defined in Section 3(s)) (i) the present fair
saleable value of such Person's assets is less than the amount required to
pay
such Person's total Indebtedness (as defined in Section 3(s)), (ii) such Person
is unable to pay its debts and liabilities, subordinated, contingent or
otherwise, as such debts and liabilities become absolute and matured, (iii)
such
Person intends to incur or believes that it will incur debts that would be
beyond its ability to pay as such debts mature or (iv) such Person has
unreasonably small capital with which to conduct the business in which it is
engaged as such business is now conducted and is proposed to be
conducted.
(m) No
Undisclosed Events, Liabilities, Developments or Circumstances.
Except
as set forth on Schedule 3(m), no event, liability, development or circumstance
has occurred or exists, or is contemplated to occur with respect to the Company,
its Subsidiaries or their respective business, properties, prospects, operations
or financial condition, that would be required to be disclosed by the Company
under applicable securities laws on a registration statement on Form S-1 filed
with the SEC relating to an issuance and sale by the Company of its Common
Stock
and which has not been publicly announced, except which would not, individually
or in the aggregate, reasonably be expected to have a Material Adverse
Effect.
-13-
(n) Conduct
of Business; Regulatory Permits.
Neither
the Company nor its Subsidiaries is in violation of any term of or in default
under its Certificate of Incorporation, the Certificate of Designations, the
Existing Certificate of Designations, any other certificate of designation,
preferences or rights of any other outstanding series of preferred stock of
the
Company or Bylaws or their organizational charter or certificate of
incorporation or bylaws, respectively. Neither the Company nor any of its
Subsidiaries is in violation of any judgment, decree or order or any statute,
ordinance, rule or regulation applicable to the Company or its Subsidiaries,
and
neither the Company nor any of its Subsidiaries will conduct its business in
violation of any of the foregoing, except in all cases for violations which
would not, individually or in the aggregate, reasonably be expected to have
a
Material Adverse Effect. Without limiting the generality of the foregoing,
the
Company is not in violation of any of the material rules, regulations or
requirements of the Principal Market and has no knowledge of any facts or
circumstances that would reasonably lead to delisting or suspension of the
Common Stock by the Principal Market in the foreseeable future. During the
period beginning on the date of effectiveness of the Company's Registration
Statement on Form SB-2 relating to its initial public offering of Common Stock
through the date hereof, (i) the Common Stock has been designated for quotation
on the Principal Market, (ii) trading in the Common Stock has not been suspended
by the SEC or the Principal Market and (iii) the Company has received no
communication, written or oral, from the SEC or the Principal Market regarding
the suspension or delisting of the Common Stock from the Principal Market.
The
Company and its Subsidiaries possess all certificates, authorizations and
permits issued by the appropriate regulatory authorities necessary to conduct
their respective businesses, except where the failure to possess such
certificates, authorizations or permits would not have, individually or in
the
aggregate, a Material Adverse Effect, and neither the Company nor any such
Subsidiary has received any notice of proceedings relating to the revocation
or
modification of any such certificate, authorization or permit, except where
such
revocation or modification would not have a Material Adverse
Effect..
(o) Foreign
Corrupt Practices.
Neither
the Company nor any of its Subsidiaries nor any director, officer, agent,
employee or other Person acting on behalf of the Company or any of its
Subsidiaries has, in the course of its actions for, or on behalf of, the Company
or any of its Subsidiaries (i) used any corporate funds for any unlawful
contribution, gift, entertainment or other unlawful expenses relating to
political activity; (ii) made any direct or indirect unlawful payment to any
foreign or domestic government official or employee from corporate funds; (iii)
violated or is in violation of any provision of the U.S. Foreign Corrupt
Practices Act of 1977, as amended; or (iv) made any unlawful bribe, rebate,
payoff, influence payment, kickback or other unlawful payment to any foreign
or
domestic government official or employee.
(p) Xxxxxxxx-Xxxxx
Act.
The
Company is in compliance with any and all applicable requirements of the
Xxxxxxxx-Xxxxx Act of 2002 that are effective as of the date hereof, and any
and
all applicable rules and regulations promulgated by the SEC thereunder that
are
effective as of the date hereof.
(q) Transactions
With Affiliates.
Except
as set forth on Schedule
3(q)
or in
the SEC Documents or in the Company's Registration Statement on Form SB-2 (File
No. 333-136904)(including, without limitation, the prospectus contained therein,
dated September 21, 2006, as supplemented prior to the date hereof)(the
"2006
Registration Statement"),
none
of the officers, directors or employees of the Company or any of its
Subsidiaries is presently a party to any transaction with the Company or any
of
its Subsidiaries (other than for ordinary course services as employees, officers
or directors), including any contract, agreement or other arrangement providing
for the furnishing of services to or by, providing for rental of real or
personal property to or from, or otherwise requiring payments to or from any
such officer, director or employee or, to the knowledge of the Company or any
of
its Subsidiaries, any corporation, partnership, trust or other entity in which
any such officer, director, or employee has a substantial interest or is an
officer, director, trustee or partner.
-14-
(r) Equity
Capitalization.
As of
March 13, 2007, the authorized capital stock of the Company consisted of (i)
40,000,000 shares of Common Stock, of which, 11,889,099 are issued and
outstanding and 1,333,209 shares are reserved for issuance pursuant to
securities (other than the Preferred Shares and the Warrants) exercisable or
exchangeable for, or convertible into, shares of Common Stock and (ii) (x)
10,000,000 shares of Preferred Stock (the "Existing
Preferred Stock",
and
the certificates of designations with respect to such Existing Preferred Stock,
the "Existing
Certificates of Designations"),
of
which none are outstanding. All of such outstanding shares have been, or upon
issuance will be, validly issued and are fully paid and nonassessable. Except
as
set forth on Schedule
3(r):
(i)
none of the Company's capital stock is subject to preemptive rights or any
other
similar rights or any liens or encumbrances suffered or permitted by the
Company; (ii) there are no outstanding options, warrants, scrip, rights to
subscribe to, calls or commitments of any character whatsoever relating to,
or
securities or rights convertible into, or exercisable or exchangeable for,
any
capital stock of the Company or any of its Subsidiaries, or contracts,
commitments, understandings or arrangements by which the Company or any of
its
Subsidiaries is or may become bound to issue additional capital stock of the
Company or any of its Subsidiaries or options, warrants, scrip, rights to
subscribe to, calls or commitments of any character whatsoever relating to,
or
securities or rights convertible into, or exercisable or exchangeable for,
any
capital stock of the Company or any of its Subsidiaries; (iii) there are no
outstanding debt securities, notes, credit agreements, credit facilities or
other agreements, documents or instruments evidencing Indebtedness (as defined
in Section 3(s)) of the Company or any of its Subsidiaries or by which the
Company or any of its Subsidiaries is bound; (iv) there are no financing
statements securing obligations in any material amounts, either singly or in
the
aggregate, filed in connection with the Company or any of its Subsidiaries;
(v)
there are no agreements or arrangements under which the Company or any of its
Subsidiaries is obligated to register the sale of any of their securities under
the 1933 Act (except pursuant to the Registration Rights Agreement); (vi) 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; (vii) there are no securities or instruments
containing anti-dilution or similar provisions that will be triggered by the
issuance of the Securities; (viii) the Company does not have any stock
appreciation rights or "phantom stock" plans or agreements or any similar plan
or agreement; and (ix) the Company and its Subsidiaries have no liabilities
or
obligations required to be disclosed in the SEC Documents but not so disclosed
in the SEC Documents, other than those incurred in the ordinary course of the
Company's or its Subsidiaries' respective businesses and which, individually
or
in the aggregate, do not or would not have a Material Adverse Effect. The
Company has furnished to the Buyers true, correct and complete copies of the
Company's Certificate of Incorporation, as amended and as in effect on the
date
hereof (the "Certificate
of Incorporation"),
and
the Company's Bylaws, as amended and as in effect on the date hereof (the
"Bylaws"),
and
the material terms of all securities convertible into, or exercisable or
exchangeable for, shares of Common Stock and the material rights of the holders
thereof in respect thereto.
-15-
(s) Indebtedness
and Other Contracts.
Except
as set forth on Schedule
3(s)
or set
forth in the SEC Documents or the 2006 Registration Statement, neither the
Company nor any of its Subsidiaries (i) has any outstanding Indebtedness (as
defined below), (ii) is in violation of any term of or in default under any
contract, agreement or instrument relating to any Indebtedness, except where
such violations and defaults would not result, individually or in the aggregate,
in a Material Adverse Effect, or (iii) is a party to any contract, agreement
or
instrument relating to any Indebtedness, the performance of which, in the
judgment of the Company's officers, has or is expected to have a Material
Adverse Effect. Schedule
3(s)
provides
a detailed description of the material terms of any such outstanding
Indebtedness. For purposes of this Agreement: (x) "Indebtedness"
of any
Person means, without duplication (A) all indebtedness for borrowed money,
(B)
all obligations issued, undertaken or assumed as the deferred purchase price
of
property or services (including, without limitation, "capital leases" in
accordance with generally accepted accounting principles) (other than trade
payables entered into in the ordinary course of business), (C) all reimbursement
or payment obligations with respect to letters of credit, surety bonds and
other
similar instruments, (D) all obligations evidenced by notes, bonds, debentures
or similar instruments, including obligations so evidenced incurred in
connection with the acquisition of property, assets or businesses, (E) all
indebtedness created or arising under any conditional sale or other title
retention agreement, or incurred as financing, in either case with respect
to
any property or assets acquired with the proceeds of such indebtedness (even
though the rights and remedies of the seller or bank under such agreement in
the
event of default are limited to repossession or sale of such property), (F)
all
monetary obligations under any leasing or similar arrangement which, in
connection with generally accepted accounting principles, consistently applied
for the periods covered thereby, is classified as a capital lease, (G) all
indebtedness referred to in clauses (A) through (F) above secured by (or for
which the holder of such Indebtedness has an existing right, contingent or
otherwise, to be secured by) any mortgage, lien, pledge, charge, security
interest or other encumbrance upon or in any property or assets (including
accounts and contract rights) owned by any Person, even though the Person which
owns such assets or property has not assumed or become liable for the payment
of
such indebtedness, and (H) all Contingent Obligations in respect of indebtedness
or obligations of others of the kinds referred to in clauses (A) through (G)
above; (y) "Contingent
Obligation"
means,
as to any Person, any direct or indirect liability, contingent or otherwise,
of
that Person with respect to any indebtedness, lease, dividend or other
obligation of another Person if the primary purpose or intent of the Person
incurring such liability, or the primary effect thereof, is to provide assurance
to the obligee of such liability that such liability will be paid or discharged,
or that any agreements relating thereto will be complied with, or that the
holders of such liability will be protected (in whole or in part) against loss
with respect thereto; and (z) "Person"
means
an individual, a limited liability company, a partnership, a joint venture,
a
corporation, a trust, an unincorporated organization and a government or any
department or agency thereof.
(t) Absence
of Litigation.
There
is no action, suit, proceeding, inquiry or investigation before or by the
Principal Market, any court, public board, government agency, self-regulatory
organization or body pending or, to the knowledge of the Company, threatened
against or affecting the Company or any of its Subsidiaries, the Common Stock
or
any of the Company's Subsidiaries or any of the Company's or its Subsidiaries'
officers or directors, whether of a civil or criminal nature or otherwise,
except which would not, individually or in the aggregate, reasonably be expected
to have a Material Adverse Effect.
-16-
(u) 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 would not have a Material
Adverse Effect.
(v) Employee
Relations.
i)
Neither
the Company nor any of its Subsidiaries is a party to any collective bargaining
agreement or employs any member of a union. No executive officer of the Company
or any of its Subsidiaries (as defined in Rule 501(f) of the 0000 Xxx) has
notified the Company or any such Subsidiary that such officer intends to leave
the Company or any such Subsidiary or otherwise terminate such officer's
employment with the Company or any such Subsidiary. No executive officer of
the
Company or any of its Subsidiaries is, or is now expected to be, in violation
of
any material term of any employment contract, confidentiality, disclosure or
proprietary information agreement, non-competition agreement, or any other
contract or agreement or any restrictive covenant, and the continued employment
of each such executive officer does not subject the Company or any of its
Subsidiaries to any liability with respect to any of the foregoing
matters.
(ii) The
Company and its Subsidiaries are in compliance with all federal, state, local
and foreign laws and regulations respecting labor, employment and employment
practices and benefits, terms and conditions of employment and wages and hours,
except where failure to be in compliance would not, either individually or
in
the aggregate, reasonably be expected to result in a Material Adverse
Effect.
(w) Title.
The
Company and its Subsidiaries do not own any real property. The Company and
its
Subsidiaries have good and marketable title to all personal property owned
by
them which is material to the business of the Company and its Subsidiaries,
taken as a whole, in each case free and clear of all liens, encumbrances and
defects except such as do not materially affect the value of such property
and
do not interfere with the use made and proposed to be made of such property
by
the Company and any of its Subsidiaries. Any real property and facilities held
under lease by the Company or any of its Subsidiaries that are material to
the
business of the Company and its Subsidiaries, taken as a whole, are held by
them
under valid, subsisting and enforceable leases with such exceptions as are
not
material to the Company and its Subsidiaries, taken as a whole, and do not
materially interfere with the use made and proposed to be made of such property
and buildings by the Company and its Subsidiaries.
(x) Intellectual
Property Rights.
The
Company and its Subsidiaries own or possess adequate rights or licenses to
use
all trademarks, trade names, service marks, service xxxx registrations, service
names, patents, patent rights, copyrights, inventions, licenses, approvals,
governmental authorizations, original works of authorship, trade secrets and
other intellectual property rights and all applications related thereto
("Intellectual
Property Rights")
necessary to conduct their respective businesses as now conducted. None of
the
Company's or its Subsidiaries' Intellectual Property Rights have expired,
terminated or been abandoned, or are expected to expire, terminate or be
abandoned, within three years from the date of this Agreement. The Company
does
not have any knowledge of any infringement by the Company or any of its
Subsidiaries of Intellectual Property Rights of others. There is no claim,
action or proceeding being made or brought, or to the knowledge of the Company,
being threatened, against the Company or any of its Subsidiaries regarding
its
Intellectual Property Rights. The Company is unaware of any facts or
circumstances which would reasonably be expected to give rise to any of the
foregoing infringements or claims, actions or proceedings. The Company and
its
Subsidiaries have taken reasonable security measures to protect the secrecy,
confidentiality and value of all of their Intellectual Property
Rights.
-17-
(y) Environmental
Laws.
The
Company and its Subsidiaries (i) are in compliance with any and all
Environmental Laws (as hereinafter defined), (ii) have received all permits,
licenses or other approvals required of them under applicable Environmental
Laws
to conduct their respective businesses and (iii) are in compliance with all
terms and conditions of any such permit, license or approval where, in each
of
the foregoing clauses (i), (ii) and (iii), the failure to so comply would be
reasonably expected to have, individually or in the aggregate, a Material
Adverse Effect. The term "Environmental
Laws"
means
all federal, state, local or foreign laws relating to pollution or protection
of
human health or the environment (including, without limitation, ambient air,
surface water, groundwater, land surface or subsurface strata), including,
without limitation, laws relating to emissions, discharges, releases or
threatened releases of chemicals, pollutants, contaminants, or toxic or
hazardous substances or wastes (collectively, "Hazardous
Materials") into
the
environment, or otherwise relating to the manufacture, processing, distribution,
use, treatment, storage, disposal, transport or handling of Hazardous Materials,
as well as all authorizations, codes, decrees, demands or demand letters,
injunctions, judgments, licenses, notices or notice letters, orders, permits,
plans or regulations issued, entered, promulgated or approved
thereunder.
(z) [Intentionally
Omitted]
(aa) Tax
Status.
The
Company and each of its Subsidiaries (i) has made or filed all material foreign,
federal and state income and all other material tax returns, reports and
declarations required by any jurisdiction to which it is subject, (ii) has
paid
all taxes and other governmental assessments and charges that are material
in
amount, shown or determined to be due on such returns, reports and declarations,
except those being contested in good faith and (iii) to the extent required
by
GAAP, 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.
(bb) Internal
Accounting and Disclosure Controls.
The
Company and each of its Subsidiaries maintain a system of internal accounting
controls sufficient to provide reasonable assurance that (i) transactions are
executed in accordance with management's general or specific authorizations,
(ii) transactions are recorded as necessary to permit preparation of financial
statements in conformity with generally accepted accounting principles and
to
maintain asset and liability accountability, (iii) access to assets or
incurrence of liabilities is permitted only in accordance with management's
general or specific authorization and (iv) the recorded accountability for
assets and liabilities is compared with the existing assets and liabilities
at
reasonable intervals and appropriate action is taken with respect to any
difference. The Company maintains disclosure controls and procedures (as such
term is defined in Rule 13a-14 under the 0000 Xxx) that are effective to
providing reasonably assurance that information required to be disclosed by
the
Company in the reports that it files or submits under the 1934 Act is recorded,
processed, summarized and reported, within the time periods specified in the
rules and forms of the SEC, including, without limitation, controls and
procedures designed to provide reasonable assurance that information required
to
be disclosed by the Company in the reports that it files or submits under the
1934 Act is accumulated and communicated to the Company's management, including
its principal executive officer or officers and its principal financial officer
or officers, as appropriate, to allow timely decisions regarding required
disclosure. During the twelve months prior to the date hereof the Company has
not received any notice or correspondence from its independent public
accountants to the effect that there is a "material weakness" in the internal
accounting controls of the Company.
-18-
(cc) Off
Balance Sheet Arrangements.
There
is no transaction, arrangement, or other relationship between the Company and
an
unconsolidated or other off balance sheet entity that is required to be
disclosed by the Company in its 1934 Act filings and is not so disclosed or
that
otherwise would be reasonably likely to have a Material Adverse
Effect.
(dd) Investment
Company Status.
The
Company is not, and upon consummation of the sale of the Securities will not
be,
an "investment company," a company controlled by an "investment company" or
an
"affiliated person" of, or "promoter" or "principal underwriter" for, an
"investment company" as such terms are defined in the Investment Company Act
of
1940, as amended.
(ee) Transfer
Taxes.
On the
Closing Date, all stock transfer or other taxes (other than income or similar
taxes) which are required to be paid in connection with the sale and transfer
to
each of the Buyers of the Preferred Shares and Warrants to be sold to such
Buyer
hereunder will be, or will have been, fully paid or provided for by the Company,
and all laws imposing such taxes will be or will have been complied
with.
(ff) Acknowledgement
Regarding Buyers' Trading Activity.
It is
understood and acknowledged by the Company (i) that none of the Buyers have
been
asked by the Company or its Subsidiaries to agree, nor has any Buyer agreed
with
the Company or its Subsidiaries, to desist from purchasing or selling, long
and/or short, securities of the Company, or "derivative" securities based on
securities issued by the Company or to hold the Securities for any specified
term after the filing of the 8-K Filing; (ii) that any Buyer, and counterparties
in "derivative" transactions to which any such Buyer is a party, directly or
indirectly, presently may have a "short" position in the Common Stock, and
(iii)
that each Buyer shall not be deemed to have any affiliation with or control
over
any arm's length counterparty in any "derivative" transaction as a result of
engaging in such transaction with such counterparty. The Company further
understands and acknowledges that one or more Buyers may engage in hedging
and/or trading activities at various times after the filing of the 8-K Filing
and during the period that the Securities are outstanding, including, without
limitation, during the periods that the value of the Conversion Shares and
the
Warrant Shares deliverable with respect to Securities are being determined
and
(b) such hedging and/or trading activities, if any, can reduce the value of
the
existing stockholders' equity interest in the Company both at and after the
time
the hedging and/or trading activities are being conducted. The Company
acknowledges that such aforementioned hedging and/or trading activities do
not
constitute a breach of this Agreement, the Certificate of Designations, the
Warrants or any of the documents executed in connection herewith.
-19-
(gg) Manipulation
of Price.
The
Company has not, and to its knowledge no one acting on its behalf has, (i)
taken, directly or indirectly, any action designed to cause or to result in
the
stabilization or manipulation of the price of any security of the Company to
facilitate the sale or resale of any of the Securities or (ii) other than the
Agents, sold, bid for, purchased, or paid any compensation for soliciting
purchases of, any of the Securities.
(hh) U.S.
Real Property Holding Corporation.
The
Company is not, has never been, and so long as any Preferred Shares or Warrants
remain outstanding, shall not become, a U.S. real property holding corporation
within the meaning of Section 897 of the Internal Revenue Code of 1986, as
amended, and the Company shall so certify upon Buyer's request.
(ii) Disclosure.
The
Company confirms that neither it nor any other Person acting on its behalf
has
provided any of the Buyers or their agents or counsel with any information
that
constitutes or would reasonably be expected to constitute material, nonpublic
information, except information relating to the transactions contemplated hereby
and such information as will be disclosed in the 8-K Filing. The Company
understands and confirms that each of the Buyers will rely on the foregoing
representations in effecting transactions in securities of the Company. All
disclosure provided to the Buyers regarding the Company and its Subsidiaries,
their business and the transactions contemplated hereby, including the Schedules
to this Agreement, furnished by or on behalf of the Company is does not contain
any untrue statement of a material fact or, considered in the aggregate, omit
to
state any material fact necessary in order to make the statements made therein,
in the light of the circumstances under which they were made, not misleading.
Each press release issued by the Company or its Subsidiaries during the twelve
(12) months preceding the date of this Agreement did not at the time of release
contain any untrue statement of a material fact or omit to state a material
fact
required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they are made, not
misleading. No event or circumstance has occurred or information exists with
respect to the Company or any of its Subsidiaries or either of their respective
businesses, properties, prospects, operations or financial conditions, which,
under applicable law, rule or regulation, required public disclosure in a filing
by the Company under the 1934 Act prior to the date of this Agreement, but
which
has not been so publicly disclosed.
4. COVENANTS.
(a) Reasonable
Best Efforts.
Each
party shall use its reasonable best efforts timely to satisfy each of the
covenants and conditions to be satisfied by it as provided in Sections 4, 6
and
7 of this Agreement.
-20-
(b) Form
D
and Blue Sky.
The
Company agrees to file a Form D with respect to the Securities as required
under
Regulation D and to provide a copy thereof to each Buyer promptly after such
filing. The Company shall, on or before the Closing Date, take such action,
at
the Company's sole expense, as the Company shall reasonably determine is
necessary in order to obtain an exemption for or to qualify the Securities
for
sale to the Buyers at the Closing pursuant to this Agreement under applicable
securities or "Blue Sky" laws of the states of the United States (or to obtain
an exemption from such qualification) and the applicable securities laws of
Canada, and shall provide evidence of any such action so taken to the Buyers
on
or prior to the Closing Date. At the Company's sole expense, the Company shall
make all filings and reports relating to the offer and sale of the Securities
required under applicable securities or "Blue Sky" laws of the states of the
United States and the applicable securities laws of Canada following the Closing
Date.
(c) Reporting
Status.
Until
the date on which the Buyers shall have sold all the Conversion Shares and
Warrant Shares, and none of the Preferred Shares or Warrants
is outstanding (the "Reporting
Period"),
the
Company shall timely file all reports required to be filed with the SEC pursuant
to the 1934 Act (other than Current Reports on Form 8-K that are required solely
pursuant to Items 1.01, 1.02, 2.03, 2.04, 2.05, 2.06 or 5.02(e) of Form 8-K),
and the Company shall not terminate its status as an issuer required to file
reports under the 1934 Act even if the 1934 Act or the rules and regulations
thereunder would no longer require or otherwise permit such termination, and
the
Company shall take all actions reasonably necessary to cause it to become
eligible to register the Conversion Shares and Warrant Shares for resale by
the
Buyers on Form S-3.
(d) Use
of
Proceeds.
The
Company shall use the proceeds from the sale of the Securities for working
capital purposes, but not for (A) repayment of any outstanding Indebtedness
of
the Company or any of its Subsidiaries or (B) redemption or repurchase of any
of
its or its Subsidiaries' equity securities.
(e) Financial
Information.
The
Company agrees to send the following to each Investor (as defined in the
Registration Rights Agreement) during the Reporting Period (i) unless the
following are filed with the SEC through XXXXX and are available to the public
through the XXXXX system, within one (1) Business Day after the filing thereof
with the SEC, a copy of its Annual Reports and Quarterly Reports on Form 10-K,
10-KSB, 10-Q or 10-QSB, any interim reports or any consolidated balance sheets,
income statements, stockholders' equity statements and/or cash flow statements
for any period other than annual, any Current Reports on Form 8-K and any
registration statements (other than on Form S-8) or amendments filed pursuant
to
the 1933 Act, (ii) unless available through Bloomberg Financial Markets, on
the
same day as the release thereof, facsimile copies of all press releases issued
by the Company or any of its Subsidiaries, and (iii) copies of any notices
and
other information made available or given to the stockholders of the Company
generally, contemporaneously with the making available or giving thereof to
the
stockholders. As used herein "Business
Day"
means
any day other than a Saturday, Sunday or other day on which commercial banks
in
The City of New York are authorized or required by law to remain
closed.
(f) Listing.
The
Company shall promptly secure the listing of all of the Registrable Securities
(as defined in the Registration Rights Agreement) upon each national securities
exchange and automated quotation system, if any, upon which the Common Stock
is
then listed (subject to official notice of issuance) and shall maintain such
listing of all Registrable Securities from time to time issuable under the
terms
of the Transaction Documents. The Company shall maintain the Common Stocks'
authorization for quotation on the Principal Market or another Eligible Market
(as defined in the Certificate of Designations). Neither the Company nor any
of
its Subsidiaries shall take any action that would be reasonably expected to
result in the delisting or suspension of the Common Stock on the Principal
Market (or such other Eligible Market). The Company shall pay all fees and
expenses in connection with satisfying its obligations under this Section
4(f).
-21-
(g) Fees.
(i) The
Company shall be responsible for the payment of any placement agent's fees
or
commissions, financial advisory fees, or broker's commissions (other than for
Persons engaged by any Buyer) relating to or arising out of the transactions
contemplated hereby, including, without limitation, the reasonable fees and
expenses of Xxxxxxx Xxxx & Xxxxx LLP, counsel to Sunrise, not to exceed
$95,000, and any fees or commissions payable to the Agents. The Company shall
pay, and hold each Buyer harmless against, any liability, loss or expense
(including, without limitation, reasonable attorney's fees and out-of-pocket
expenses) arising in connection with any claim
relating
to any such payment.
(ii) So
long
as any Warrants remain outstanding, Sunrise is hereby appointed by the Company
as exclusive management agent regarding all exercises of the Warrants (which
for
purposes of this Section 4(g) shall not include the Retainer Warrants) and/or
any of the Company's exchanges, swaps, purchases and/or any other related
agreements with respect to such Warrants (individually a "Warrant
Transaction",
and
collectively, "Warrant
Transactions").
In
connection with the consummation of each Warrant Transaction (the date of
consummation, the "Warrant
Transaction Closing Date"),
the
Company shall pay to Sunrise warrant management fees ("Warrant
Management Fees")
as
follows: (1) with respect to each Warrant Transaction in the form of a cash
exercise of one or more of the Warrants, then the Company shall pay to Sunrise
a
cash fee equal to three and one half percent (3.5%) of the Aggregate Exercise
Price (as defined in the applicable Warrant) received by the Company in such
Warrant Transaction and (2) with respect to each Warrant Transaction in which
the Company purchases one or more Warrants from the holders of such Warrants
for
cash (such payment, the "Company
Warrant Redemption Payment"),
the
Company shall pay Sunrise a cash fee equal to three and one half percent (3.5%)
of the Company Warrant Redemption Payment in each such Warrant Transaction
and
(3) with respect to the exercise by Warrant holders of one or more Warrants
pursuant to a Cashless Exercise (as defined in the Warrants) or if the Company
exchanges or swaps (or any other related agreements) (each, an "Exchange")
one or
more of the Warrants into other securities of the Company (e.g. including,
but
not limited to shares of Common Stock of the Company) (collectively, the
"Exchange
Securities"),
the
Company shall pay Sunrise a fee payable (x) if pursuant to a Cashless Exercise,
in Common Stock or (y) if pursuant to an Exchange, in Exchange Securities,
equal
to three and one half percent (3.5%) of the total number of shares of Common
Stock or Exchange Securities, as applicable, issuable pursuant to the Warrants
surrendered or cancelled or exchanged in such Warrant Transaction (without
regard to any limitations on exercise set forth therein) and such Common Stock
and Exchange Securities (and any Common Stock issuable upon exercise or
conversion of such Exchange Securities, if any) to be issued to Sunrise shall
be
deemed to be "Restricted Securities" for purposes of Section 8 of the Retainer
Warrants. On the third Business Day after the end of the calendar month in
which
such Warrant Transaction occurs, the Company shall deliver to Sunrise (x) the
applicable Warrant Management Fees for such calendar month and (y) a certificate
executed by an executive officer of the Company certifying the following as
true
and accurate as of such date: (I) the calculation of such Warrant Management
Fee
and (II) a description in reasonable detail of each such Warrant
Transaction that occurred in such calendar month.
-22-
(h) Pledge
of Securities.
The
Company acknowledges and agrees that the Securities may be pledged by an
Investor (as defined in the Registration Rights Agreement) in connection with
a
bona fide margin agreement or other loan or financing arrangement that is
secured by the Securities. The pledge of Securities shall not be deemed to
be a
transfer, sale or assignment of the Securities hereunder, and no Investor
effecting a pledge of Securities shall be required to provide the Company with
any notice thereof or otherwise make any delivery to the Company pursuant to
this Agreement or any other Transaction Document. The Company hereby agrees
to
execute and deliver such documentation as a pledgee of the Securities may
reasonably request in connection with a pledge of the Securities to such pledgee
by an Investor.
(i) Disclosure
of Transactions and Other Material Information.
On or
before 8:30 a.m., New York City time, on the first Business Day following the
date of this Agreement, the Company shall issue a press release and file a
Current Report on Form 8-K describing the terms of the transactions contemplated
by the Transaction Documents in the form required by the 1934 Act and attaching
the material Transaction Documents (including, without limitation, this
Agreement (and all schedules to this Agreement), the form of Certificate of
Designations, the form of Warrant, and the form of the Registration Rights
Agreement) as exhibits to such filing (including all attachments, the
"8-K
Filing").
From
and after the filing of the 8-K Filing with the SEC, no Buyer shall be in
possession of any material, nonpublic information received from the Company,
any
of its Subsidiaries or any of its respective officers, directors, employees
or
agents. The Company shall not, and shall cause each of its Subsidiaries and
its
and each of their respective officers, directors, employees and agents, not
to,
provide any Buyer with any material, nonpublic information regarding the Company
or any of its Subsidiaries from and after the filing of the 8-K Filing with
the
SEC without the express written consent of such Buyer or as may be required
under the terms of the Transaction Documents. If a Buyer has received any such
material, nonpublic information regarding the Company or any of its
Subsidiaries, it may provide the Company with written notice thereof. The
Company shall, within five (5) Trading Days (as defined in the Certificate
of
Designations) of receipt of such notice, make public disclosure of such
material, nonpublic information. Subject to the foregoing, neither the Company,
its Subsidiaries nor any Buyer shall issue any press releases or any other
public statements with respect to the transactions contemplated hereby;
provided,
however,
that
the Company shall be entitled, without the prior approval of any Buyer, to
make
any press release or other public disclosure with respect to such transactions
(i) in substantial conformity with the 8-K Filing and contemporaneously
therewith and (ii) as is required by applicable law and regulations (provided
that in the case of clause (i) each Buyer shall be consulted by the Company
in
connection with any such press release or other public disclosure prior to
its
release). Without the prior written consent of any applicable Buyer, neither
the
Company nor any of its Subsidiaries or affiliates shall disclose the name of
such Buyer in any filing, announcement, release or otherwise, unless such
disclosure is required by law, regulation or the Principal Market.
-23-
(j) Additional
Registration Statements.
Without
the prior written consent of the holders of a majority of the Registrable
Securities, until the earlier to occur of (i) such date whereafter all
Registrable Securities shall be registered in a registration statement under
the
1933 Act that has been declared effective by the SEC and (ii) date that is
180
calendar days after the Initial Effective Date (as defined in the Registration
Rights Agreement), the Company shall not file a registration statement under
the
1933 Act relating to securities that are not the Securities; provided, however,
that nothing herein shall be deemed to prohibit the Company from amending the
2006 Registration Statement (or supplementing the prospectus contained therein),
provided that neither the amendment nor the prospectus supplement increases
the
aggregate number of shares of Common Stock registered pursuant to such 2006
Registration Statement.
(k) Additional
Preferred Shares; Variable Securities; Dilutive Issuances.
(i) So
long
as any Buyer beneficially owns any Securities, the Company will not, without
the
prior written consent of Buyers holding a majority of the Preferred Shares,
issue any shares of Series B Preferred Stock (other than to the Buyers as
contemplated hereby) and the Company shall not issue any other securities that
would cause a breach or default under the Certificate of Designations or the
Warrants. For so long as any Preferred Shares or Warrants remain outstanding,
the Company shall not, in any manner, issue or sell any rights, warrants or
options to subscribe for or purchase Common Stock or directly or indirectly
convertible into or exchangeable or exercisable for Common Stock at a
conversion, exchange or exercise price which varies or may vary after issuance
with the market price of the Common Stock, including by way of one or more
reset(s) to any fixed price unless the conversion, exchange or exercise price
of
any such security cannot be less than the then applicable Conversion Price
(as
defined in the Certificate of Designations) with respect to the Common Stock
into which any Preferred Shares are convertible or the then applicable Exercise
Price (as defined in the Warrants) with respect to the Common Stock into which
any Warrant is exercisable. For so long as any Preferred Shares or Warrants
remain outstanding, the Company shall not, in any manner, enter into or affect
any Dilutive Issuance (as such term is defined in the Certificate Designation
and the Warrants) if the effect of such Dilutive Issuance is to cause the
Company to be required to issue upon conversion of any Preferred Shares or
exercise of any Warrant any shares of Common Stock in excess of that number
of
shares of Common Stock which the Company may issue upon conversion of the
Preferred Shares and exercise of the Warrants without breaching the Company's
obligations under the rules or regulations of the Principal Market (without
giving effect to (x) the Exchange Cap provisions set forth in the Certificate
of
Designations and the Warrants or (y) the floor price provisions specified in
Section 2(a)(vi) of the Warrants).
(ii) Until
the
Stockholder Approval Date, the Company will not, directly or indirectly, issue
or sell any of its Common Stock or Options (as defined in the Warrants) or
Convertible Securities (as defined in the Warrants) (other than Common Stock
issuable upon conversion, exercise or exchange of any Options or Convertible
Securities which are outstanding on the day immediately preceding the Closing
Date, provided that such issuance of Common Stock upon exercise of such Options
or Convertible Securities is made pursuant to the terms of such Options or
Convertible Securities in effect on the date immediately preceding the Closing
Date and such Options or Convertible Securities are not amended, modified or
changed on or after the Closing Date), including without limitation any debt,
preferred stock or other instrument or security that is, at any time during
its
life and under any circumstances, convertible into or exchangeable or
exercisable for shares of Common Stock, if the effect of such issuance or sale
would result in the shares of Common Stock subject to the Voting Agreements
(as
defined below) to fail to sufficient in and of themselves to obtain the
Stockholder Approval (as defined below).
-24-
(l) Corporate
Existence.
So long
as any Buyer beneficially owns any Securities, the Company shall maintain its
corporate existence and not sell all or substantially all of the Company's
assets and not be party to any Fundamental Transaction (as defined in the
Certificate of Designations) unless the Company is in compliance with the
applicable provisions governing Fundamental Transactions set forth in the
Certificate of Designations and the Warrants.
(m) Reservation
of Shares.
The
Company shall take all action necessary to at all times have authorized, and
reserved for the purpose of issuance, no less than 130% of the sum of
(i) the maximum number of shares of Common Stock then issuable upon
conversion of the Preferred Shares (assuming for purposes hereof, that the
Preferred Shares are convertible at the Conversion Price and without taking
into
account any limitations on the conversion of the Preferred Shares set forth
in
the Certificate of Designations) and (ii) the maximum number of shares of Common
Stock then issuable upon exercise of the Warrants (without taking into account
any limitations on the exercise of the Warrants set forth in the
Warrants).
(n) Conduct
of Business.
The
business of the Company and its Subsidiaries shall not be conducted in violation
of any law, ordinance or regulation of any governmental entity, except where
such violations would not result, either individually or in the aggregate,
in a
Material Adverse Effect.
(o) Stockholder
Approval.
The
Company shall provide each stockholder entitled to vote at a special or annual
meeting of stockholders of the Company (the "Stockholder
Meeting"),
which
initially shall be promptly called and held not later than June 20, 2007 (the
"Stockholder
Meeting Deadline"),
a
proxy statement, substantially in the form which has been previously reviewed
by
the Buyers and Xxxxxxx Xxxx & Xxxxx LLP at the expense of the Company,
soliciting each such stockholder's affirmative vote at the Stockholder Meeting
for approval of resolutions (the "Resolutions")
providing for the Company's issuance of all of the Securities as described
in
the Transaction Documents in accordance with applicable law and the rules and
regulations of the Principal Market (such affirmative approval being referred
to
herein as the "Stockholder
Approval"
and the
date such approval is obtained, the "Stockholder
Approval Date"),
and
the Company shall use its reasonable best efforts to solicit its stockholders'
approval of the Resolutions and to cause the Board of Directors of the Company
to recommend to the stockholders that they approve the Resolutions. The Company
shall be obligated to seek to obtain the Stockholder Approval by the Stockholder
Meeting Deadline. If, despite the Company's reasonable best efforts the
Stockholder Approval is not obtained on or prior to the Stockholder Meeting
Deadline, the Company shall cause an additional Stockholder Meeting to be held
each three month period thereafter until such Stockholder Approval is
obtained.
-25-
5. REGISTER;
TRANSFER AGENT INSTRUCTIONS.
(a) Register.
The
Company shall maintain at its principal executive offices (or such other office
or agency of the Company as it may designate by notice to each holder of
Securities), a register for the Preferred Shares and the Warrants in which
the
Company shall record the name and address of the Person in whose name the
Preferred Shares and the
Warrants have been issued (including the name and address of each transferee),
the number of Preferred Shares held by such Person, the number of Conversion
Shares issuable upon conversion of the Preferred Shares and the number of
Warrant Shares issuable upon exercise of the Warrants held by such Person.
The
Company shall keep the register open and available at all times during business
hours for inspection of any Buyer or its legal representatives.
(b) Transfer
Agent Instructions.
The
Company shall issue irrevocable instructions to its transfer agent, and any
subsequent transfer agent, to issue certificates or credit shares to the
applicable balance accounts at The Depository Trust Company ("DTC"),
registered in the name of each Buyer or its respective nominee(s), for the
Conversion Shares and the Warrant Shares in
such
amounts as specified from time to time by each Buyer to the Company upon
conversion of the Preferred Shares or exercise of the Warrants in the form
of
Exhibit
D
attached
hereto (the "Irrevocable
Transfer Agent Instructions").
The
Company warrants that no instruction other than the Irrevocable Transfer Agent
Instructions referred to in this Section 5(b), and stop transfer instructions
to
give effect to Section 2(f) hereof, will be given by the Company to its transfer
agent with respect to the Securities, and that the Securities shall otherwise
be
freely transferable on the books and records of the Company, as applicable,
and
to the extent provided in this Agreement and the other Transaction Documents.
If
a Buyer effects a sale, assignment or transfer of the shares of Common Stock
in
accordance with Section 2(f), the Company shall permit the transfer and shall
promptly instruct its transfer agent to issue one or more certificates or credit
shares to the applicable balance accounts at DTC in such name and in such
denominations as specified by such Buyer to effect such sale, transfer or
assignment. In the event that such sale, assignment or transfer involves
Conversion Shares and Warrant Shares sold, assigned or transferred pursuant
to
an effective registration statement or pursuant to Rule 144, the transfer agent
shall issue such Securities to the Buyer, assignee or transferee, as the case
may be, without any restrictive legend. The Company acknowledges that a breach
by it of its obligations hereunder will cause irreparable harm to a Buyer.
Accordingly, the Company acknowledges that the remedy at law for a breach of
its
obligations under this Section 5(b) will be inadequate and agrees, in the event
of a breach or threatened breach by the Company of the provisions of this
Section 5(b), that a Buyer shall be entitled, in addition to all other available
remedies, to an order and/or injunction restraining any breach and requiring
immediate issuance and transfer, without the necessity of showing economic
loss
and without any bond or other security being required.
6. CONDITIONS
TO THE COMPANY'S OBLIGATION TO SELL.
The
obligation of the Company hereunder to issue and sell the Preferred
Shares and
the
related Warrants to each Buyer at the Closing is subject to the satisfaction,
at
or before the Closing Date, of each of the following conditions, provided that
these conditions are for the Company's sole benefit and may be waived by the
Company at any time in its sole discretion by providing each Buyer with prior
written notice thereof:
-26-
(a) Such
Buyer shall have executed each of the Transaction Documents to which it is
a
party and delivered the same to the Company.
(b) Such
Buyer and each other Buyer shall have delivered to the Company the Purchase
Price for the Preferred Shares and the related Warrants being
purchased by such Buyer at the Closing by wire transfer of immediately available
funds pursuant to the wire instructions provided by the Company.
(c) The
representations and warranties of such Buyer shall be true and correct in all
material respects (except for those representations and warranties that are
qualified by materiality, which shall be true and correct in all respects)
as of
the date when made and as of the Closing Date as though made at that time
(except for representations and warranties that speak as of a specific date,
which shall be true and correct as of such specific date), and such Buyer shall
have performed, satisfied and complied in all material respects with the
covenants, agreements and conditions required by this Agreement to be performed,
satisfied or complied with by such Buyer at or prior to the Closing
Date.
7. CONDITIONS
TO EACH BUYER'S OBLIGATION TO PURCHASE.
The
obligation of each Buyer hereunder to purchase the Preferred Shares and
the
related Warrants at the Closing is subject to the satisfaction, at or before
the
Closing Date, of each of the following conditions, provided that these
conditions are for each Buyer's sole benefit and may be waived by such Buyer
at
any time in its sole discretion by providing the Company with prior written
notice thereof:
(a) The
Company shall have duly executed and delivered to such Buyer (A) each of
the Transaction Documents and (B) the Preferred Shares (in such numbers as
is
set forth across from such Buyer's name in column (3) of the Schedule of
Buyers) and
the
related Warrants (in such numbers as is set forth across from such Buyer's
name
in column (4) of the Schedule of Buyers) being purchased by such Buyer at the
Closing pursuant to this Agreement.
(b) Such
Buyer shall have received the opinion of Xxxxxx Xxxxxx Xxxxxxxx LLP, the
Company's outside counsel, dated as of the Closing Date, in substantially the
form of Exhibit
E
attached
hereto.
(c) The
Company shall have delivered to such Buyer a copy of the Irrevocable Transfer
Agent Instructions, in the form of Exhibit
D
attached
hereto, which instructions shall have been delivered to and acknowledged in
writing by the Company's transfer agent.
(d) The
Company shall have delivered to such Buyer a certificate evidencing the
formation and good standing of the Company and each of its Subsidiaries in
each
such entity's jurisdiction of formation issued by the Secretary of State (or
equivalent) of such jurisdiction of formation as of a date within ten (10)
days
of the Closing Date.
(e) The
Company shall have delivered to such Buyer a certificate evidencing the
Company's qualification as a foreign corporation and good standing issued by
the
Secretary of State (or comparable office) of each jurisdiction in which the
Company conducts business and is required to so qualify, as of a date within
10
days of the Closing Date.
-27-
(f) The
Company shall have delivered to such Buyer a certified copy of the Certificate
of Incorporation as certified by the Secretary of State of the State of Delaware
within ten (10) days of the Closing Date.
(g) The
Company shall have delivered to such Buyer a certificate, executed by the
Secretary of the Company and dated as of the Closing Date, as to (i) the
resolutions consistent with Section 3(b) as adopted by the Company's board
of
directors in a form reasonably acceptable to such Buyer, (ii) the Certificate
of
Incorporation and (iii) the Bylaws, each as in effect at the Closing, in the
form attached hereto as Exhibit
F.
(h) The
representations and warranties of the Company shall be true and correct in
all
material respects (except for those representations and warranties that are
qualified by materiality or Material Adverse Effect, which shall be true and
correct in all respects) as of the date when made and as of the Closing Date
as
though made at that time (except for representations and warranties that speak
as of a specific date, which shall be true and correct as of such specific
date)
and the Company shall have performed, satisfied and complied in all material
respects with the covenants, agreements and conditions required by the
Transaction Documents to be performed, satisfied or complied with by the Company
at or prior to the Closing Date. Such Buyer shall have received a certificate,
executed by the Chief Executive Officer of the Company, dated as of the Closing
Date, to the foregoing effect and as to such other matters as may be reasonably
requested by such Buyer in the form attached hereto as Exhibit
G.
(i) The
Company shall have delivered to such Buyer a letter from the Company's transfer
agent certifying the number of shares of Common Stock outstanding as of a date
within five days of the Closing Date.
(j) The
Common Stock (I) shall be designated for quotation or listed on the Principal
Market and (II) shall not have been suspended, as of the Closing Date, by the
SEC or the Principal Market from trading on the Principal Market nor shall
suspension by the SEC or the Principal Market have been threatened, as of the
Closing Date, either (A) in writing by the SEC or the Principal Market or (B)
by
falling below the minimum maintenance requirements of the Principal
Market.
(k) The
Company shall have obtained all governmental, regulatory or third party consents
and approvals, if any, necessary for the sale of the Securities to the
Buyers.
(l) The
Certificate of Designations in the form attached hereto as Exhibit
A
shall
have been filed with the Secretary of State of the State of Delaware and shall
be in full force and effect, enforceable against the Company in accordance
with
its terms and shall not have been amended.
(m) The
Company shall have delivered to such Buyer duly executed Voting Agreements,
in
the form attached hereto as Exhibit
H
(the
"Voting
Agreements"),
executed by stockholders of the Company holding at least 51% of the voting
capital stock of the Company as of the Closing Date.
(n) The
Company shall have delivered to Sunrise the duly executed Indemnity Agreement,
in the form attached hereto as Exhibit
I
(the
"Indemnity
Agreement").
-28-
8. TERMINATION.
In
the
event that the Closing shall not have occurred with respect to a Buyer on or
before five (5) Business Days from the date hereof due to the Company's or
such
Buyer's failure to satisfy the conditions set forth in Sections 6 and 7 above
(and the nonbreaching party's failure to waive such unsatisfied condition(s)),
the nonbreaching party shall have the option to terminate this Agreement with
respect to such breaching party at the close of business on such date without
liability of any party to any other party.
9. MISCELLANEOUS.
(a) Governing
Law; Jurisdiction; Jury Trial.
All
questions concerning the construction, validity, enforcement and interpretation
of this Agreement shall be governed by the internal laws of the State of New
York, without giving effect to any choice of law or conflict of law provision
or
rule (whether of the State of New York or any other jurisdictions) that would
cause the application of the laws of any jurisdictions other than the State
of
New York. Each party hereby irrevocably submits to the exclusive jurisdiction
of
the state and federal courts sitting in The City of New York, Borough of
Manhattan, for the adjudication of any dispute hereunder or in connection
herewith or with any transaction contemplated hereby or discussed herein, and
hereby irrevocably waives, and agrees not to assert in any suit, action or
proceeding, any claim that it is not personally subject to the jurisdiction
of
any such court, that such suit, action or proceeding is brought in an
inconvenient forum or that the venue of such suit, action or proceeding is
improper. Each party hereby irrevocably waives personal service of process
and
consents to process being served in any such suit, action or proceeding by
mailing a copy thereof to such party at the address for such notices to it
under
this Agreement and agrees that such service shall constitute good and sufficient
service of process and notice thereof. Nothing contained herein shall be deemed
to limit in any way any right to serve process in any manner permitted by law.
EACH
PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO
REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN
CONNECTION WITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED
HEREBY.
(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 signature transmitted by facsimile or other electronic
transmission 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.
(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.
-29-
(e) Entire
Agreement; Amendments.
This
Agreement and the other Transaction Documents supersede all other prior oral
or
written agreements between the Buyers, the Company, their Affiliates and Persons
acting on their behalf with respect to the matters discussed herein, and this
Agreement, the other Transaction Documents and the instruments referenced herein
and therein contain the entire understanding of the parties with respect to
the
matters covered herein and therein and, except as specifically set forth herein
or therein, neither the Company nor any Buyer makes any representation,
warranty, covenant or undertaking with respect to such matters. No provision
of
this Agreement may be amended other than by an instrument in writing signed
by
the Company and the holders of at least a majority of the Preferred Shares
issued and issuable hereunder, and any amendment to this Agreement made in
conformity with the provisions of this Section 9(e) shall be binding on all
Buyers and holders of Securities, as applicable. No provision hereof may be
waived other than by an instrument in writing signed by the party against whom
enforcement is sought. No such amendment shall be effective to the extent that
it applies to less than all of the holders of the Preferred Shares then
outstanding. No consideration shall be offered or paid to any Person to amend
or
consent to a waiver or modification of any provision of any of the Transaction
Documents unless the same consideration also is offered to all of the parties
to
the Transaction Documents, holders of Preferred Shares or holders of the
Warrants, as the case may be. The Company has not, directly or indirectly,
made
any agreements with any Buyers relating to the terms or conditions of the
transactions contemplated by the Transaction Documents except as set forth
in
the Transaction Documents. Without limiting the foregoing, the Company confirms
that, except as set forth in this Agreement, no Buyer has made any commitment
or
promise or has any other obligation to provide any financing to the Company
or
otherwise.
(f) Notices.
Any
notices, consents, waivers or other communications required or permitted to
be
given under the terms of this Agreement must be in writing and will be deemed
to
have been delivered: (i) upon receipt, when delivered personally; (ii) upon
receipt, when sent by facsimile (provided confirmation of transmission is
mechanically or electronically generated and kept on file by the sending party);
or (iii) one Business Day after deposit with an overnight courier service,
in
each case properly addressed to the party to receive the same. The addresses
and
facsimile numbers for such communications shall be:
If
to the
Company:
Cleveland
BioLabs, Inc.
00000
Xxxxx Xxx., Xxxxx 000
Xxxxxxxxx,
Xxxx 00000
Telephone:
(000)
000-0000
Facsimile: (000)
000-0000
Attention:
Xxxxxxx
Xxxxxxxx
With
a
copy (for informational purposes only) to:
Xxxxxx
Xxxxxx Xxxxxxxx LLP
000
Xxxx
Xxxxxx Xxxxxx
Xxxxxxx,
Xxxxxxxx 00000
Telephone:
(000)
000-0000
Facsimile: (000)
000-0000
Attention:
Ram
Xxxxxxxxxxx
-30-
If
to the
Transfer Agent:
Continental
Stock Transfer & Trust Company
00
Xxxxxxx Xxxxx, 0xx Xxxxx
Xxx
Xxxx,
Xxx Xxxx 00000
Telephone:
(000)
000-0000
Facsimile: (000)
000-0000
Attention:
Xxxxxxx
X. Xxxxxx
If
to a
Buyer, to its address and facsimile number set forth on Schedule
I
attached
hereto, with copies to such Buyer's representatives as set forth on the Schedule
of Buyers,
with
a
copy (for informational purposes only) to:
Xxxxxxx Xxxx & Xxxxx LLP
000
Xxxxx Xxxxxx
Xxx
Xxxx, Xxx Xxxx 00000
Telephone: (000)
000-0000
Facsimile: (000)
000-0000
Attention: Xxxxxxx
X. Xxxxx, Esq.
or
to
such other address and/or facsimile number and/or to the attention of such
other
Person as the recipient party has specified by written notice given to each
other party five (5) days prior to the effectiveness of such change. Written
confirmation of receipt (A) given by the recipient of such notice, consent,
waiver or other communication, (B) mechanically or electronically generated
by
the sender's facsimile machine containing the time, date, recipient facsimile
number and an image of the first page of such transmission or (C) provided
by an
overnight courier service shall be rebuttable evidence of personal service,
receipt by facsimile or receipt from an overnight courier service in accordance
with clause (i), (ii) or (iii) above, respectively.
(g) Successors
and Assigns.
This
Agreement shall be binding upon and inure to the benefit of the parties and
their respective successors and assigns, including any purchasers of the
Preferred Shares or the Warrants. The Company shall not assign this Agreement
or
any rights or obligations hereunder without the prior written consent of the
holders of at least a majority of the aggregate number of Registrable Securities
issued and issuable hereunder, including by way of a Fundamental Transaction
(unless the Company is in compliance with the applicable provisions governing
Fundamental Transactions set forth in the Certificate of Designations and the
Warrants). No Buyer shall assign this Agreement or any rights or obligations
hereunder without the prior written consent of the Company; provided,
however,
that
after the Closing, a Buyer may assign some or all of its rights hereunder in
connection with transfer of any of its Preferred Shares or Warrants without
the
consent of the Company, in which event such assignee shall be deemed to be
a
Buyer hereunder with respect to such assigned rights; provided,
further,
that
notwithstanding the forgoing, any of the Agents may assign some or all of its
rights hereunder in connection with transfer of any of its Preferred Shares
or
Warrants to any broker-dealer (or any affiliates, officers and/or employees
thereof) and/or any related third party approved by the Company and/or any
of
such Agent's affiliates, officers and/or employees.
-31-
(h) No
Third Party Beneficiaries.
This
Agreement is intended for the benefit of the parties hereto and their respective
permitted successors and assigns, and is not for the benefit of, nor may any
provision hereof be enforced by, any other Person.
(i) Survival.
Unless
this Agreement is terminated under Section 8, the representations and warranties
of the Company and the Buyers contained in Sections 2 and 3 and the agreements
and covenants set forth in Sections 4, 5 and 9 shall survive the Closing and
the
delivery and exercise of Securities, as applicable. Each Buyer shall be
responsible only for its own representations, warranties, agreements and
covenants hereunder.
(j) Further
Assurances.
Each
party shall do and perform, or cause to be done and performed, all such further
acts and things, and shall execute and deliver all such other agreements,
certificates, instruments and documents, as any other party may reasonably
request in order to carry out the intent and accomplish the purposes of this
Agreement and the consummation of the transactions contemplated
hereby.
(k) Indemnification.
In
consideration of each Buyer's execution and delivery of the Transaction
Documents and acquiring the Securities thereunder and in addition to all of
the
Company's other obligations under the Transaction Documents, the Company shall
defend, protect, indemnify and hold harmless each Buyer and each other holder
of
the Securities and all of their stockholders, partners, members, officers,
directors, employees and direct or indirect investors and any of the foregoing
Persons' agents or other representatives (including, without limitation, those
retained in connection with the transactions contemplated by this Agreement)
(collectively, the "Indemnitees"),
as
incurred, 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, (b) any breach of any covenant, agreement
or obligation of the Company contained in the Transaction Documents or (c)
any
cause of action, suit or claim brought or made against such Indemnitee by a
third party (including for these purposes a derivative action brought on behalf
of the Company) and arising out of or resulting from (i) the execution,
delivery, performance or enforcement of the Transaction Documents or any other
certificate, instrument or document contemplated hereby or thereby, (ii) any
transaction financed or to be financed in whole or in part, directly or
indirectly, with the proceeds of the issuance of the Securities, (iii) any
disclosure made by such Buyer pursuant to Section 4(i), or (iv) the status
of
such Buyer or holder of the Securities as an investor in the Company pursuant
to
the transactions contemplated by the Transaction Documents. 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. Except as otherwise set forth herein, the mechanics and procedures with
respect to the rights and obligations under this Section 9(k) shall be the
same
as those set forth in Section 6 of the Registration Rights
Agreement.
-32-
(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.
The
Company, each Buyer and each holder of the Securities shall have all rights
and
remedies set forth in the Transaction Documents and all rights and remedies
which such holders have been granted at any time under any other agreement
or
contract and all of the rights which such holders have under any law. Any Person
having any rights under any provision of this Agreement shall be entitled to
enforce such rights specifically (without posting a bond or other security),
to
recover damages by reason of any breach of any provision of this Agreement
and
to exercise all other rights granted by law. Furthermore, each party hereto
recognizes that in the event that it fails to perform, observe, or discharge
any
or all of its obligations under the Transaction Documents, any remedy at law
may
prove to be inadequate relief to the other parties hereto. Each party hereto
therefore agrees that the other parties hereto shall be entitled to seek
temporary and permanent injunctive relief in any such case without the necessity
of proving actual damages and without posting a bond or other
security.
(n) Rescission
and
Withdrawal Right.
Notwithstanding anything to the contrary contained in (and without limiting
any
similar provisions of) the Transaction Documents, whenever any Buyer exercises
a
right, election, demand or option under a Transaction Document and the Company
does not timely perform its related obligations within the periods therein
provided, then such Buyer may rescind or withdraw, in its sole discretion from
time to time upon written notice to the Company, any relevant notice, demand
or
election in whole or in part without prejudice to its future actions and
rights.
(o) Payment
Set Aside.
To the
extent that the Company makes a payment or payments to the Buyers hereunder
or
pursuant to any of the other Transaction Documents or the Buyers enforce or
exercise their rights hereunder or thereunder, and such payment or payments
or
the proceeds of such enforcement or exercise or any part thereof are
subsequently invalidated, declared to be fraudulent or preferential, set aside,
recovered from, disgorged by or are required to be refunded, repaid or otherwise
restored to the Company, a trustee, receiver or any other Person under any
law
(including, without limitation, any bankruptcy law, foreign, state or federal
law, common law or equitable cause of action), then to the extent of any such
restoration the obligation or part thereof originally intended to be satisfied
shall be revived and continued in full force and effect as if such payment
had
not been made or such enforcement or setoff had not occurred.
(p) Independent
Nature of Buyers' Obligations and Rights.
The
obligations of each Buyer under any Transaction Document are several and not
joint with the obligations of any other Buyer, and no Buyer shall be responsible
in any way for the performance of the obligations of any other Buyer under
any
Transaction Document. Nothing contained herein or in any other Transaction
Document, and no action taken by any Buyer pursuant hereto or thereto, shall
be
deemed to constitute the Buyers as a partnership, an association, a joint
venture or any other kind of entity, or create a presumption that the Buyers
are
in any way acting in concert or as a group with respect to such obligations
or
the transactions contemplated by the Transaction Documents and the Company
acknowledges that the Buyers are not acting in concert or as a group, and the
Company will not assert any such claim, with respect to such obligations or
the
transactions contemplated by the Transaction Documents. Each Buyer confirms
that
it has independently participated in the negotiation of the transaction
contemplated hereby with the advice of its own counsel and advisors. Each Buyer
shall be entitled to independently protect and enforce its rights, including,
without limitation, the rights arising out of this Agreement or out of any
other
Transaction Documents, and it shall not be necessary for any other Buyer to
be
joined as an additional party in any proceeding for such purpose.
[Signature
Page Follows]
-33-
IN
WITNESS WHEREOF,
each
Buyer and the Company have caused their respective signature page to this
Securities Purchase Agreement to be duly executed as of the date first written
above.
|
COMPANY:
CLEVELAND
BIOLABS, INC.
|
||
| |
|
|
| By: | /s/ Xxxxxxx Xxxxxxxx | |
|
Name: Xxxxxxx Xxxxxxxx |
||
|
Title:
Chief Executive Officer &
President
|
||
IN
WITNESS WHEREOF,
each
Buyer and the Company have caused their respective signature page to this
Securities Purchase Agreement to be duly executed as of the date first written
above.
|
BUYERS:
SUNRISE
SECURITIES CORP.
|
||
| |
|
|
| By: | /s/ Xxxxxx Xxxxxx | |
|
Name: Xxxxxx Xxxxxx |
||
|
Title:
|
||
[Signature
pages of other Buyers intentionally omitted]
SCHEDULE
OF BUYERS
|
(1)
|
(2)
|
(3)
|
(4)
|
(5)
|
(6)
|
(7)
|
(8)
|
(9)
|
|
|
Buyer
|
Residence
|
Type
of
Buyer
:
Convertible
Buyer
(CB)
Non-
Convertible
Buyer
(NCB)
Agent
(A)
|
Aggregate
Number
of Investor Convertible Preferred
Shares
|
Aggregate
Number
of
Investor
Convertible
Series
B
Warrants
|
Aggregate
Number
of
Investor
Non-Convertible
Preferred
Shares
and
Agent
Preferred
Shares
|
Aggregate
Number
of
Investor
Non-Convertible
Series
B
Warrants
and
Agent
Series
B
Warrants
|
Aggregate
Number
of Non-
Convertible
Retainer
Series
C
Warrants
|
Purchase
Price
|
Legal
Representative's
Address
and Facsimile
Number
|
|
Sunrise
Securities Corp.
|
A
|
—
|
—
|
52,174
|
26,087
|
48,000
|
N/A
|
Xxxxxxx
Xxxx & Xxxxx LLP
000
Xxxxx Xxxxxx
Xxx
Xxxx, Xxx Xxxx 00000
Attention:
Xxxxxxx Xxxxx, Esq.
Facsimile:
(000) 000-0000
Telephone:
(000) 000-0000
|
|
|
1625421
Ontario
Inc
|
Ontario
|
CB
|
6,700
|
3,350
|
—
|
—
|
—
|
$46,900
|
N/A
|
|
Xxxxxx
X. Xxxxxxx
|
CB
|
2,000
|
1,000
|
—
|
—
|
—
|
$14,000
|
N/A
|
|
|
Xxxxxx
X. Xxxx
|
CB
|
20,000
|
10,000
|
—
|
—
|
—
|
$140,000
|
N/A
|
|
|
North
Pole Capital
Master
Fund
|
Canada
|
CB
|
55,000
|
27,500
|
—
|
—
|
—
|
$385,000
|
N/A
|
|
CAMHZN
Master LDC
|
Cayman
Islands
|
CB
|
35,714
|
17,857
|
—
|
—
|
—
|
$249,998
|
N/A
|
|
CAMOFI
Master LDC
|
Cayman
Islands
|
CB
|
3,302
|
1,651
|
—
|
—
|
—
|
$23,114
|
N/A
|
|
Xxxxxx
X. Xxxxxx
|
New
York
|
CB
|
46,000
|
23,000
|
—
|
—
|
—
|
$322,000
|
N/A
|
|
(1)
|
(2)
|
(3)
|
(4)
|
(5)
|
(6)
|
(7)
|
(8)
|
(9)
|
|
|
Buyer
|
Residence
|
Type
of
Buyer
:
Convertible
Buyer
(CB)
Non-
Convertible
Buyer
(NCB)
Agent
(A)
|
Aggregate
Number
of Investor Convertible Preferred
Shares
|
Aggregate
Number
of
Investor
Convertible
Series
B
Warrants
|
Aggregate
Number
of
Investor
Non-Convertible
Preferred
Shares
and
Agent
Preferred
Shares
|
Aggregate
Number
of
Investor
Non-Convertible
Series
B
Warrants
and
Agent
Series
B
Warrants
|
Aggregate
Number
of Non-
Convertible
Retainer
Series
C
Warrants
|
Purchase
Price
|
Legal
Representative's
Address
and Facsimile
Number
|
|
EGATNIV,
LLC
|
New
York
|
CB
|
8,002
|
4,001
|
—
|
—
|
—
|
$56,014
|
N/A
|
|
Xxxx
Xxxxxx
|
Ontario
|
CB
|
1,428
|
714
|
—
|
—
|
—
|
$9,996
|
N/X
|
|
X
Xxxxxx Co LP
|
New
York
|
CB
|
42,000
|
21,000
|
—
|
—
|
—
|
$294,000
|
N/A
|
|
Xxxxxx
Bay Fund L.P.
|
Delaware
|
CB
|
31,500
|
15,750
|
—
|
—
|
—
|
$220,500
|
N/A
|
|
Xxxxxx
Bay Overseas
Fund
Ltd
|
Cayman
Islands
|
CB
|
38,500
|
19,250
|
—
|
—
|
—
|
$269,500
|
N/A
|
|
Iroquois
Master
Fund
Ltd.
|
Cayman
Islands
|
CB
|
250,000
|
125,000
|
—
|
—
|
—
|
$1,750,000
|
N/A
|
|
J.S.A.
Investments,
LLC
|
Nevis
|
CB
|
20,000
|
10,000
|
—
|
—
|
—
|
$140,000
|
N/A
|
|
Jesselson
Grandchildren
12/18/80
Trust
|
New
York
|
CB
|
100,000
|
50,000
|
—
|
—
|
—
|
$700,000
|
N/A
|
|
JMG
Capital Partners, LP
|
California
|
CB
|
280,000
|
140,000
|
—
|
—
|
—
|
$1,960,000
|
N/A
|
|
Xxxxxx
Ventures
Corporation
|
Florida
|
CB
|
35,000
|
17,500
|
—
|
—
|
—
|
$245,000
|
N/A
|
|
Perceptive
Life
Sciences
Master
Fund,
Ltd
|
New
York
|
CB
|
285,000
|
142,500
|
—
|
—
|
—
|
$1,995,000
|
N/A
|
|
(1)
|
(2)
|
(3)
|
(4)
|
(5)
|
(6)
|
(7)
|
(8)
|
(9)
|
|
|
Buyer
|
Residence
|
Type
of
Buyer
:
Convertible
Buyer
(CB)
Non-
Convertible
Buyer
(NCB)
Agent
(A)
|
Aggregate
Number
of Investor Convertible Preferred
Shares
|
Aggregate
Number
of
Investor
Convertible
Series
B
Warrants
|
Aggregate
Number
of
Investor
Non-Convertible
Preferred
Shares
and
Agent
Preferred
Shares
|
Aggregate
Number
of
Investor
Non-Convertible
Series
B
Warrants
and
Agent
Series
B
Warrants
|
Aggregate
Number
of Non-
Convertible
Retainer
Series
C
Warrants
|
Purchase
Price
|
Legal
Representative's
Address
and Facsimile
Number
|
|
Xxxxx
X. Xx
|
New
York
|
CB
|
14,284
|
7,142
|
—
|
—
|
—
|
$99,988
|
N/A
|
|
Portside
Growth and Opportunity Fund
|
Cayman
Islands
|
CB
|
71,000
|
35,500
|
—
|
—
|
—
|
$497,000
|
N/A
|
|
Xxx
Xxxxxxxxx
|
Israel
|
CB
|
30,000
|
15,000
|
—
|
—
|
—
|
$210,000
|
N/A
|
|
Xxxx
Low
|
California
|
CB
|
100,000
|
50,000
|
—
|
—
|
—
|
$700,000
|
N/A
|
|
Xxx
Fendic
|
Ontario
|
CB
|
53,570
|
26,785
|
—
|
—
|
—
|
$374,990
|
N/A
|
|
SDS
Capital Group SPC, Ltd
|
Connecticut
|
CB
|
30,000
|
15,000
|
—
|
—
|
—
|
$210,000
|
N/A
|
|
SF
Capital Partners Ltd.
|
British
Virgin Islands
|
CB
|
354,000
|
177,000
|
—
|
—
|
—
|
$2,478,000
|
N/A
|
|
Starwood
Group, L.P.
|
New
York
|
CB
|
71,000
|
35,500
|
—
|
—
|
—
|
$497,000
|
N/A
|
|
TCMP3
Partners
|
New
Jersey
|
CB
|
122,000
|
61,000
|
—
|
—
|
—
|
$854,000
|
N/A
|
|
UBS
X'Xxxxxx LLC
fbo
X'Xxxxxx Pipes Corporate Strategies Master Limited
|
Cayman
Islands
|
CB
|
100,000
|
50,000
|
—
|
—
|
—
|
$700,000
|
N/A
|
|
Xxx
Xxxxx
|
New
York
|
CB
|
30,000
|
15,000
|
—
|
—
|
—
|
$210,000
|
N/A
|
|
(1)
|
(2)
|
(3)
|
(4)
|
(5)
|
(6)
|
(7)
|
(8)
|
(9)
|
|
|
Buyer
|
Residence
|
Type
of
Buyer
:
Convertible
Buyer
(CB)
Non-
Convertible
Buyer
(NCB)
Agent
(A)
|
Aggregate
Number
of Investor Convertible Preferred
Shares
|
Aggregate
Number
of
Investor
Convertible
Series
B
Warrants
|
Aggregate
Number
of
Investor
Non-Convertible
Preferred
Shares
and
Agent
Preferred
Shares
|
Aggregate
Number
of
Investor
Non-Convertible
Series
B
Warrants
and
Agent
Series
B
Warrants
|
Aggregate
Number
of Non-
Convertible
Retainer
Series
C
Warrants
|
Purchase
Price
|
Legal
Representative's
Address
and Facsimile
Number
|
|
Xerion
Partners II
Master
Fund Limited
|
Bermuda
|
CB
|
140,000
|
70,000
|
—
|
—
|
—
|
$980,000
|
N/A
|
|
Xxxx
Xxxxxxx
|
Ohio
|
NCB
|
—
|
—
|
4,000
|
2,000
|
—
|
$28,000
|
N/A
|
|
Basic
Investors, Inc.
|
New
York
|
NCB
|
—
|
—
|
8,000
|
4,000
|
—
|
$56,000
|
N/A
|
|
Xxxxx
Xxxxxx
|
New
York
|
NCB
|
—
|
—
|
4,000
|
2,000
|
—
|
$28,000
|
N/A
|
|
Xxxxx
X. & Xxxxxx X.
Xxxxxxx
Joint Revoc.
Trust
|
Wisconsin
|
NCB
|
—
|
—
|
4,000
|
2,000
|
—
|
$28,000
|
N/A
|
|
CAMOFI
Master
LDC
|
Cayman
Islands
|
NCB
|
—
|
—
|
142,856
|
71,428
|
—
|
$999,992
|
N/A
|
|
Capital
Ventures
International
|
New
York
|
NCB
|
—
|
—
|
142,858
|
71,429
|
—
|
$1,000,006
|
N/A
|
|
Xxxxx
Xxxxxxxxxxx
|
New
York
|
NCB
|
—
|
—
|
4,000
|
2,000
|
—
|
$28,000
|
N/A
|
|
Xx
Xxxxx Holdings
Limited
|
U.K.
|
NCB
|
—
|
—
|
3,000
|
1,500
|
—
|
$21,000
|
N/A
|
|
Xxxxx
Xxxxxxxx
|
New
York
|
NCB
|
—
|
—
|
2,000
|
1,000
|
—
|
$14,000
|
N/A
|
|
Xxxxxxx
Xxxx
|
New
York
|
NCB
|
—
|
—
|
8,000
|
4,000
|
—
|
$56,000
|
N/A
|
|
Enable
Growth
Partners,
L.P.
|
California
|
NCB
|
—
|
—
|
425,000
|
212,500
|
—
|
$2,975,000
|
N/A
|
|
(1)
|
(2)
|
(3)
|
(4)
|
(5)
|
(6)
|
(7)
|
(8)
|
(9)
|
|
|
Buyer
|
Residence
|
Type
of
Buyer
:
Convertible
Buyer
(CB)
Non-
Convertible
Buyer
(NCB)
Agent
(A)
|
Aggregate
Number
of Investor Convertible Preferred
Shares
|
Aggregate
Number
of
Investor
Convertible
Series
B
Warrants
|
Aggregate
Number
of
Investor
Non-Convertible
Preferred
Shares
and
Agent
Preferred
Shares
|
Aggregate
Number
of
Investor
Non-Convertible
Series
B
Warrants
and
Agent
Series
B
Warrants
|
Aggregate
Number
of Non-
Convertible
Retainer
Series
C
Warrants
|
Purchase
Price
|
Legal
Representative's
Address
and Facsimile
Number
|
|
Enable
Opportunity
Partners,
L.P.
|
California
|
NCB
|
—
|
—
|
50,000
|
25,000
|
—
|
$350,000
|
N/A
|
|
Xxxx
Xxxxxxx
|
New
York
|
NCB
|
—
|
—
|
5,000
|
2,500
|
—
|
$35,000
|
N/A
|
|
Xxxx
Xxxxxx
|
Florida
|
NCB
|
—
|
—
|
6,000
|
3,000
|
—
|
$42,000
|
N/A
|
|
Xxxxx
Xxx
|
New
York
|
NCB
|
—
|
—
|
2,000
|
1,000
|
—
|
$14,000
|
N/A
|
|
Xxxx
Xxxxxxx
|
New
York
|
NCB
|
—
|
—
|
8,000
|
4,000
|
—
|
$56,000
|
N/A
|
|
Gemini
Master
Fund,
Ltd
|
California
|
NCB
|
—
|
—
|
35,714
|
17,857
|
—
|
$250,000
|
N/A
|
|
Xxx
Xxxxxxx
|
New
York
|
NCB
|
—
|
—
|
4,000
|
2,000
|
—
|
$28,000
|
N/A
|
|
Xxxxx
& Xxxxx Xxxxxx
|
New
York
|
NCB
|
—
|
—
|
4,000
|
2,000
|
—
|
$28,000
|
N/A
|
|
Xxxxxx
Xxxxx
|
Illinois
|
NCB
|
—
|
—
|
4,000
|
2,000
|
—
|
$28,000
|
N/A
|
|
JGB
Capital Offshore,
Ltd
|
Cayman
Islands
|
NCB
|
—
|
—
|
8,928
|
4,464
|
—
|
$62,500
|
N/A
|
|
JGB
Capital, LP
|
Delaware
|
NCB
|
—
|
—
|
26,786
|
13,393
|
—
|
$187,500
|
N/A
|
|
Xxxxxxxx
Xxxx
|
New
York
|
NCB
|
—
|
—
|
24,000
|
12,000
|
—
|
$168,000
|
N/A
|
|
(1)
|
(2)
|
(3)
|
(4)
|
(5)
|
(6)
|
(7)
|
(8)
|
(9)
|
|
|
Buyer
|
Residence
|
Type
of
Buyer
:
Convertible
Buyer
(CB)
Non-
Convertible
Buyer
(NCB)
Agent
(A)
|
Aggregate
Number
of Investor Convertible Preferred
Shares
|
Aggregate
Number
of
Investor
Convertible
Series
B
Warrants
|
Aggregate
Number
of
Investor
Non-Convertible
Preferred
Shares
and
Agent
Preferred
Shares
|
Aggregate
Number
of
Investor
Non-Convertible
Series
B
Warrants
and
Agent
Series
B
Warrants
|
Aggregate
Number
of Non-
Convertible
Retainer
Series
C
Warrants
|
Purchase
Price
|
Legal
Representative's
Address
and Facsimile
Number
|
|
Xxxxx
Xxxxx
|
New
York
|
NCB
|
—
|
—
|
10,000
|
5,000
|
—
|
$70,000
|
N/A
|
|
Xxxx
Xxxxx
|
Florida
|
NCB
|
—
|
—
|
2,000
|
1,000
|
—
|
$14,000
|
N/A
|
|
Xxxxxxx
X. Xxxxx
|
New
York
|
NCB
|
—
|
—
|
4,000
|
2,000
|
—
|
$28,000
|
N/A
|
|
Xxxxxxxx
Xxxxxx
|
New
York
|
NCB
|
—
|
—
|
2,000
|
1,000
|
—
|
$14,000
|
N/A
|
|
Xxxxxxx
and Xxxxx
Xxxxx
|
New
York
|
NCB
|
—
|
—
|
4,000
|
2,000
|
—
|
$28,000
|
N/A
|
|
Xxxxxx
Halequa
|
New
York
|
NCB
|
—
|
—
|
4,000
|
2,000
|
—
|
$28,000
|
N/A
|
|
Perceptive
Life
Sciences
Master
Fund,
Ltd
|
New
York
|
NCB
|
—
|
—
|
107,142
|
53,571
|
—
|
$749,994
|
|
|
Xxxxx
Xxxxxx
|
New
York
|
NCB
|
—
|
—
|
5,000
|
2,500
|
—
|
$35,000
|
N/A
|
|
Xxxxxx
Diversified
Strategy
Master Fund,
LLC,
Ena
|
California
|
NCB
|
—
|
—
|
25,000
|
12,500
|
—
|
$175,000
|
N/A
|
|
PR
Diamonds Inc.
|
New
York
|
NCB
|
—
|
—
|
4,000
|
2,000
|
—
|
$28,000
|
N/A
|
|
Xxxxxxx
Xxxxxx
|
Texas
|
NCB
|
—
|
—
|
4,000
|
2,000
|
—
|
$28,000
|
N/A
|
|
(1)
|
(2)
|
(3)
|
(4)
|
(5)
|
(6)
|
(7)
|
(8)
|
(9)
|
|
|
Buyer
|
Residence
|
Type
of
Buyer
:
Convertible
Buyer
(CB)
Non-
Convertible
Buyer
(NCB)
Agent
(A)
|
Aggregate
Number
of Investor Convertible Preferred
Shares
|
Aggregate
Number
of
Investor
Convertible
Series
B
Warrants
|
Aggregate
Number
of
Investor
Non-Convertible
Preferred
Shares
and
Agent
Preferred
Shares
|
Aggregate
Number
of
Investor
Non-Convertible
Series
B
Warrants
and
Agent
Series
B
Warrants
|
Aggregate
Number
of Non-
Convertible
Retainer
Series
C
Warrants
|
Purchase
Price
|
Legal
Representative's
Address
and Facsimile
Number
|
|
Xxxxxxx
Xxxxxxxxxx
|
New
York
|
NCB
|
—
|
—
|
4,000
|
2,000
|
—
|
$28,000
|
N/A
|
|
Xxxxxx
Xxxxx
|
New
York
|
NCB
|
—
|
—
|
2,000
|
1,000
|
—
|
$14,000
|
N/A
|
|
Xxxxxx
Xxxxx
|
New
York
|
NCB
|
—
|
—
|
4,000
|
2,000
|
—
|
$28,000
|
N/A
|
|
Xxxxxx
X. Xxxxx
|
New
York
|
NCB
|
—
|
—
|
71,428
|
35,714
|
—
|
$499,996
|
N/A
|
|
Rock
Associates
|
New
York
|
NCB
|
—
|
—
|
7,000
|
3,500
|
—
|
$49,000
|
N/A
|
|
Xxxxxxxx
Xxxxxx
|
New
Jersey
|
NCB
|
—
|
—
|
4,000
|
2,000
|
—
|
$28,000
|
N/A
|
|
Xxxxx
Xxxxx
|
Ontario
|
NCB
|
—
|
—
|
3,000
|
1,500
|
—
|
$21,000
|
N/A
|
|
Xxxxxx
Xxxxxxx
|
New
York
|
NCB
|
—
|
—
|
2,000
|
1,000
|
—
|
$14,000
|
N/A
|
|
Xxxxxx
X. Xxxxxxx
|
New
York
|
NCB
|
—
|
—
|
16,000
|
8,000
|
—
|
$112,000
|
N/A
|
|
Sunrise
Equity
Partners,
L.P.
|
Delaware
|
NCB
|
—
|
—
|
600,000
|
300,000
|
—
|
$4,200,000
|
N/A
|
|
TCMP3
Partners, LP
|
New
Jersey
|
NCB
|
—
|
—
|
80,000
|
40,000
|
—
|
$560,000
|
N/A
|
|
Xxxxxx
Xxxxxxxx
|
New
York
|
NCB
|
—
|
—
|
2,000
|
1,000
|
—
|
$14,000
|
N/A
|
|
(1)
|
(2)
|
(3)
|
(4)
|
(5)
|
(6)
|
(7)
|
(8)
|
(9)
|
|
|
Buyer
|
Residence
|
Type
of
Buyer
:
Convertible
Buyer
(CB)
Non-
Convertible
Buyer
(NCB)
Agent
(A)
|
Aggregate
Number
of Investor Convertible Preferred
Shares
|
Aggregate
Number
of
Investor
Convertible
Series
B
Warrants
|
Aggregate
Number
of
Investor
Non-Convertible
Preferred
Shares
and
Agent
Preferred
Shares
|
Aggregate
Number
of
Investor
Non-Convertible
Series
B
Warrants
and
Agent
Series
B
Warrants
|
Aggregate
Number
of Non-
Convertible
Retainer
Series
C
Warrants
|
Purchase
Price
|
Legal
Representative's
Address
and Facsimile
Number
|
|
Xxxxxxx
Xxxxxxx
|
Texas
|
NCB
|
—
|
—
|
20,000
|
10,000
|
—
|
$140,000
|
N/A
|
|
Xxxxx
Xxxxxxxxxx
|
New
York
|
A
|
—
|
—
|
72,771
|
36,385
|
60,034
|
N/A
|
N/A
|
|
Basic
Investors,
Inc.
|
New
York
|
A1
|
—
|
—
|
—
|
12,480
|
—
|
N/A
|
N/A
|
|
Xxxxx
Xxxxxxxxxx
|
New
Jersey
|
A
|
—
|
—
|
8,086
|
4,043
|
6,670
|
N/A
|
N/A
|
|
Xxxx
Xxxxxxx
|
New
York
|
A
|
—
|
—
|
228
|
114
|
224
|
N/A
|
N/A
|
|
Financial
West
Group
|
California
|
A2
|
—
|
—
|
—
|
1,590
|
—
|
N/A
|
N/A
|
|
Xxxxxxx
Xxxxxxxx
|
New
Jersey
|
A
|
—
|
—
|
3,293
|
1,647
|
3,232
|
N/A
|
N/A
|
|
Jewish
Communal
Fund—Bone
Marrow
Testing
Fund #3761
|
New
York
|
A
|
—
|
—
|
8,000
|
4,000
|
—
|
N/A
|
N/A
|
|
Xxxx
XxXxxx
|
New
York
|
A
|
—
|
—
|
—
|
—
|
1,000
|
N/A
|
N/A
|
1
In
addition, Basic Investors, Inc. will receive a placement agent fee, payable
in
cash in lieu of Units, equal to eight percent (8%) of the aggregate amount
placed by it.
2
In
addition, Reedland Capital Partners, an Institutional Division of Financial
West
Group, will receive a placement agent fee, payable in cash in lieu of
Units,
equal to eight percent (8%) of the aggregate amount placed by
it.
|
(1)
|
(2)
|
(3)
|
(4)
|
(5)
|
(6)
|
(7)
|
(8)
|
(9)
|
|
|
Buyer
|
Residence
|
Type
of
Buyer
:
Convertible
Buyer
(CB)
Non-
Convertible
Buyer
(NCB)
Agent
(A)
|
Aggregate
Number
of Investor Convertible Preferred
Shares
|
Aggregate
Number
of
Investor
Convertible
Series
B
Warrants
|
Aggregate
Number
of
Investor
Non-Convertible
Preferred
Shares
and
Agent
Preferred
Shares
|
Aggregate
Number
of
Investor
Non-Convertible
Series
B
Warrants
and
Agent
Series
B
Warrants
|
Aggregate
Number
of Non-
Convertible
Retainer
Series
C
Warrants
|
Purchase
Price
|
Legal
Representative's
Address
and Facsimile
Number
|
|
Xxxxxx
Xxxxxx
|
New
York
|
A
|
—
|
—
|
—
|
—
|
2,000
|
N/A
|
N/A
|
|
Xxxxxx
Low
|
New
York
|
A
|
—
|
—
|
116,883
|
58,441
|
113,759
|
N/A
|
N/A
|
|
Xxxx
Xxxxxxxx
|
New
York
|
A
|
—
|
—
|
13,766
|
6,883
|
13,509
|
N/A
|
N/A
|
|
Xxxxx
Xxxxxx
|
New
York
|
A
|
—
|
—
|
163
|
82
|
160
|
N/A
|
N/A
|
|
Xxxxxx
Xxxxx
|
New
York
|
A
|
—
|
—
|
130
|
65
|
128
|
N/A
|
N/A
|
|
Xxxxxx
Xxxxxxxx
|
California
|
A3
|
—
|
—
|
—
|
49,563
|
—
|
N/A
|
N/A
|
|
Xxx
Xxxxxx
|
New
York
|
A
|
—
|
—
|
14,804
|
7,402
|
14,528
|
N/A
|
N/A
|
|
Xxxxx
Xxxxx
|
Ontario
|
A
|
—
|
—
|
—
|
—
|
3,830
|
N/A
|
N/A
|
|
Xxxxxx
Xxxxxxx
|
California
|
A4
|
—
|
—
|
—
|
12,390
|
—
|
N/A
|
N/A
|
|
TOTAL
|
—
|
2,376,000
|
1,188,000
|
2,203,010
|
1,177,528
|
267,074
|
$30,020,988
|
—
|
4 In addition, Reedland Capital Partners, an Institutional Division of Financial West Group, will receive a placement agent fee, payable in cash in lieu of Units, equal to eight percent (8%) of the aggregate amount placed by it.
EXHIBITS
| Exhibit A |
Form
of Certificate of Designations
|
| Exhibit B-1 |
Form
of Series B Investor Warrant and Series B Agent
Warrant
|
| Exhibit B-2 |
Form
of Series C Retainer Warrant
|
| Exhibit C |
Form
of Registration Rights Agreement
|
| Exhibit D |
Form
of Irrevocable Transfer Agent
Instructions
|
| Exhibit E |
Form
of Outside Company Counsel Opinion
|
| Exhibit F |
Form
of Secretary's Certificate
|
| Exhibit G |
Form
of Officer's Certificate
|
| Exhibit H |
Form
of Voting Agreement
|
| Exhibit I |
Form
of Indemnity Agreement
|
