COMMON STOCK PURCHASE AGREEMENT
Exhibit 10.1
COMMON STOCK PURCHASE
AGREEMENT (the “Agreement”), dated as of July 6, 2010 by and between
BIONOVO, INC. a Delaware
corporation (the “Company”), and ASPIRE CAPITAL FUND, LLC, an
Illinois limited liability company (the “Buyer”). Capitalized terms
used herein and not otherwise defined herein are defined in Section 10
hereof.
WHEREAS:
Subject to the terms and conditions set
forth in this Agreement, the Company wishes to sell to the Buyer, and the Buyer
wishes to buy from the Company, up to Fifteen Million Dollars ($15,000,000) of
the Company's common stock, par value $.0001 per share (the “Common
Stock”). The shares of Common Stock to be purchased hereunder are
referred to herein as the "Purchase Shares."
NOW THEREFORE, the Company and
the Buyer hereby agree as follows:
1.
PURCHASE OF COMMON STOCK.
Subject to the terms and conditions set
forth in this Agreement, the Company has the right to sell to the Buyer, and the
Buyer has the obligation to purchase from the Company, Purchase Shares as
follows:
(a) Commencement of Purchases of
Common Stock. After the Commencement Date (as defined below),
the purchase and sale of Purchase Shares hereunder shall occur from time to time
upon written notices by the Company to the Buyer on the terms and conditions as
set forth herein following the satisfaction of the conditions (the
“Commencement”) as set forth in Sections 6 and 7 below (the date of
satisfaction of such conditions, the "Commencement Date").
(b) The Company’s Right to
Require Purchases. On any given Business Day after the
Commencement Date, the Company shall have the right but not the obligation to
direct the Buyer by its delivery to the Buyer of a Purchase Notice from time to
time to buy up to 300,000 Purchase Shares per Business Day (each such purchase,
a “Purchase”) at the Purchase Price on the Purchase Date. The Company
may deliver multiple Purchase Notices to the Buyer from time to time so long as
the most recent Purchase has been completed.
(c) Payment for Purchase
Shares. The Buyer shall pay to the Company an amount equal to
the Purchase Amount with respect to such Purchase Shares as full payment for
such Purchase Shares via wire transfer of immediately available funds on the
same Business Day that the Buyer receives such Purchase Shares if they are
received by the Buyer before 1:00 p.m. eastern time or if received by the Buyer
after 1:00 p.m. eastern time, the next Business Day. All payments
made under this Agreement shall be made in lawful money of the United States of
America via wire transfer of immediately available funds to such account as the
Company may from time to time designate by written notice in accordance with the
provisions of this Agreement. Whenever any amount expressed to be due
by the terms of this Agreement is due on any day that is not a Business Day, the
same shall instead be due on the next succeeding day that is a Business
Day.
(d) Purchase Price
Floor. The Company and the Buyer shall not effect any sales
under this Agreement on any Purchase Date where the Closing Sale Price would be
less than the Floor Price. “Floor Price” means $0.25, which shall be
appropriately adjusted for any reorganization, recapitalization, non-cash
dividend, stock split or other similar transaction.
(e) Records of
Purchases. The Buyer and the Company shall each maintain
records showing the remaining Available Amount at any give time and the dates
and Purchase Amounts for each purchase or shall use such other method,
reasonably satisfactory to the Buyer and the Company.
(f)
Taxes. The
Company shall pay any and all transfer, stamp or similar taxes that may be
payable with respect to the issuance and delivery of any shares of Common Stock
to the Buyer made under this Agreement.
(g) Compliance with Principal
Market Rules. Notwithstanding anything in this Agreement to
the contrary, and in addition to the limitations set forth in Section 1(d),
unless and until such time as the shareholders of the Company approve the
transaction contemplated by this Agreement, no Purchases shall be made under
Section 1(b) of this Agreement unless the Purchase Price thereunder equals or
exceeds the Base Price. The “Base Price” is a price per share equal
to (x) the Signing Market Price plus (y) $0.026, which shall be appropriately
adjusted for any reorganization, recapitalization, non-cash dividend, stock
split, reverse stock split or other similar transaction. “Signing
Market Price” shall mean $0.370, the consolidated closing bid price of the
Common Stock on the Principal Market immediately preceding the date of this
Agreement. The Company hereby represents and warrants to the Buyer
that the book value per share of Common Stock as of the date hereof is less than
the Signing Market Price. The Company shall not be required or
permitted to issue any shares of Common Stock under this Agreement if such
issuance would breach the Company's obligations under the rules or regulations
of the Principal Market.
(h) Beneficial Ownership
Limitation. The Company shall not issue and the Buyer
shall not purchase any shares of Common Stock under this
Agreement which, when aggregated with all other shares of Common Stock then
owned beneficially (as calculated pursuant to Section 13(d) of the Exchange Act
and Rule 13d-3 promulgated thereunder) by the Buyer and its affiliates, would
result in the beneficial ownership by the Buyer and its affiliates of
more than 19.99% of the then issued and outstanding shares of Common
Stock.
2.
BUYER'S REPRESENTATIONS AND WARRANTIES.
The Buyer
represents and warrants to the Company that as of the date hereof and as of the
Commencement Date:
(a) Investment
Purpose. The Buyer is entering into this Agreement and
acquiring the Commitment Shares (as defined in Section 4(e) hereof) (the
Purchase Shares and the Commitment Shares are collectively referred to herein as
the "Securities"), for its own account for investment only and not with a view
towards, or for resale in connection with, the public sale or distribution
thereof; provided however, by making the representations herein, the Buyer does
not agree to hold any of the Securities for any minimum or other specific
term.
(b) Accredited Investor
Status. The Buyer is an "accredited investor" as that term is
defined in Rule 501(a)(3) of Regulation D.
(c) Reliance on
Exemptions. The 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 the
Buyer's compliance with, the representations, warranties, agreements,
acknowledgments and understandings of the Buyer set forth herein in order to
determine the availability of such exemptions and the eligibility of the Buyer
to acquire the Securities.
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(d) Information. The
Buyer has been furnished with all materials relating to the business, finances
and operations of the Company and materials relating to the offer and sale of
the Securities that have been reasonably requested by the Buyer, including,
without limitation, the SEC Documents (as defined in Section 3(f)
hereof). The Buyer understands that its investment in the Securities
involves a high degree of risk. The Buyer (i) is able to bear the
economic risk of an investment in the Securities including a total loss, (ii)
has such knowledge and experience in financial and business matters that it is
capable of evaluating the merits and risks of the proposed investment in the
Securities and (iii) has had an opportunity to ask questions of and receive
answers from the officers of the Company concerning the financial condition and
business of the Company and others matters related to an investment in the
Securities. Neither such inquiries nor any other due diligence
investigations conducted by the Buyer or its representatives shall modify, amend
or affect the Buyer's right to rely on the Company's representations and
warranties contained in Section 3 below. The Buyer has sought such
accounting, legal and tax advice as it has considered necessary to make an
informed investment decision with respect to its acquisition of the
Securities.
(e) No Governmental
Review. The Buyer understands that no United States federal or
state agency or any other government or governmental agency has passed on or
made any recommendation or endorsement of the Securities or the fairness or
suitability of the investment in the Securities nor have such authorities passed
upon or endorsed the merits of the offering of the Securities.
(f)
Transfer or
Sale. The Buyer understands that except as provided in the
Registration Rights Agreement (as defined in Section 4(a) hereof): (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 or (B) an exemption
exists permitting such Securities to be sold, assigned or transferred without
such registration; (ii) any sale of the Securities made in reliance on Rule 144
may be made only in accordance with the terms of Rule 144 and further, if Rule
144 is not applicable, any resale of the Securities under
circumstances in which the seller (or the person through whom the sale is made)
may be deemed to be an underwriter (as that term is defined in the 0000 Xxx) may
require compliance with some other exemption under the 1933 Act or the rules and
regulations of the SEC thereunder; and (iii) neither the Company nor any other
person is under any obligation to register the Securities under the 1933 Act or
any state securities laws or to comply with the terms and conditions of any
exemption thereunder.
(g) Validity;
Enforcement. This Agreement has been duly and validly
authorized, executed and delivered on behalf of the Buyer and is a valid and
binding agreement of the Buyer enforceable against the Buyer in accordance with
its terms, subject as to enforceability to general principles of equity and to
applicable bankruptcy, insolvency, reorganization, moratorium, liquidation and
other similar laws relating to, or affecting generally, the enforcement of
applicable creditors' rights and remedies.
(h) Residency. The
Buyer is a resident of the State of Illinois.
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(i)
No Prior Short
Selling. The Buyer represents and warrants to the Company that
at no time prior to the date of this Agreement has any of the Buyer, its agents,
representatives or affiliates engaged in or effected, in any manner whatsoever,
directly or indirectly, any (i) "short sale" (as such term is defined in Section
242.200 of Regulation SHO of the Securities Exchange Act of 1934, as amended
(the "1934 Act")) of the Common Stock or (ii) hedging transaction, which
establishes a net short position with respect to the Common Stock.
3.
REPRESENTATIONS AND WARRANTIES OF THE
COMPANY.
The
Company represents and warrants to the Buyer that as of the date hereof and as
of the Commencement Date:
(a) Organization and
Qualification. The Company is a corporation duly organized and
validly existing in good standing under the laws of the State of Delaware, and
has the requisite corporate power and authority to own its properties and to
carry on its business as now being conducted. As of the date hereof,
the Company does not have any Subsidiaries. The Company is duly
qualified as a foreign corporation 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 could not
reasonably be expected to have a Material Adverse Effect. As used in
this Agreement, "Material Adverse Effect" means any material adverse effect on
any of: (i) the business, properties, assets, operations, results of operations
or financial condition of the Company and its Subsidiaries, if any, taken as a
whole, or (ii) the authority or ability of the Company to perform its
obligations under the Transaction Documents (as defined in Section 3(b)
hereof).
(b) Authorization; Enforcement;
Validity. (i) The Company has the requisite corporate power
and authority to enter into and perform its obligations under this Agreement,
the Registration Rights Agreement and each of the other agreements entered into
by the parties on the Commencement Date and attached hereto as exhibits to this
Agreement (collectively, the "Transaction Documents"), and to issue the
Securities in accordance with the terms hereof and thereof, (ii) the execution
and delivery of the Transaction Documents by the Company and the consummation by
it of the transactions contemplated hereby and thereby, including without
limitation, the issuance of the Commitment Shares and the reservation for
issuance and the issuance of the Purchase Shares issuable under this Agreement,
have been duly authorized by the Company's Board of Directors and no further
consent or authorization is required by the Company, its Board of Directors or
its shareholders, except for approvals of the Company’s Board of Directors or a
committee thereof as may be required in connection with any issuance and sale of
Purchase Shares to the Buyer hereunder pursuant to a specific Purchase Notice
(which approvals shall be obtained prior to the delivery of any Purchase
Notice), (iii) this Agreement has been, and each other Transaction Document
shall be on the Commencement Date, duly executed and delivered by the Company
and (iv) this Agreement constitutes, and each other Transaction Document upon
its execution on behalf of the Company, shall constitute, the valid and binding
obligations of the Company enforceable against the Company in accordance with
their terms, except as such enforceability may be limited by general principles
of equity or applicable bankruptcy, insolvency, reorganization, moratorium,
liquidation or similar laws relating to, or affecting generally, the enforcement
of creditors' rights and remedies. The Board of Directors of the
Company has approved the resolutions (the “Signing Resolutions”) substantially
in the form as set forth as Exhibit C-1 attached
hereto to authorize this Agreement and the transactions contemplated
hereby. The Signing Resolutions are valid, in full force and effect
and have not been modified or supplemented in any respect other than by the
resolutions set forth in Exhibit C-2 attached
hereto regarding the registration statement referred to in Section 4
hereof. The Company has delivered to the Buyer a true and correct
copy of a unanimous written consent adopting the Signing Resolutions executed by
all of the members of the Board of Directors of the Company.
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(c) Capitalization. As
of the date hereof, the authorized capital stock of the Company consists of (i)
190,000,000 shares of Common Stock, of which as of the date hereof, 107,618,690
shares are issued and outstanding, no shares of Common Stock are held as
treasury shares, 9,496,788 shares are reserved for future issuance pursuant to
the Company's stock option plans of which only approximately 3,180,567 shares
remain available for future option grants and 42,020,093 shares are issuable and
reserved for issuance pursuant to securities (other than stock options issued
pursuant to the Company's stock option plans) exercisable or exchangeable for,
or convertible into, shares of Common Stock and (ii) 10,000,000 shares of
Preferred Stock, $0.0001 par value, of which as of the date hereof no shares are
issued and outstanding. All of such outstanding shares have
been, or upon issuance will be, validly issued and are fully paid and
nonassessable. Except as disclosed in Schedule 3(c), (i) no shares of
the Company's capital stock are 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 debt securities, (iii) there are no
outstanding options, warrants, scrip, rights to subscribe to, calls or
commitments of any character whatsoever relating to, or securities or rights
convertible into, any shares of capital stock of the Company or any of its
Subsidiaries, or contracts, commitments, understandings or arrangements by which
the Company or any of its Subsidiaries is or may become bound to issue
additional shares of capital stock of the Company or any of its Subsidiaries or
options, warrants, scrip, rights to subscribe to, calls or commitments of any
character whatsoever relating to, or securities or rights convertible into, any
shares of capital stock of the Company or any of its Subsidiaries, (iv) there
are no agreements or arrangements under which the Company or any of its
Subsidiaries is obligated to register the sale of any of their securities under
the 1933 Act (except the Registration Rights Agreement), (v) there are no
outstanding securities or instruments of the Company or any of its Subsidiaries
which contain any redemption or similar provisions, and there are no contracts,
commitments, understandings or arrangements by which the Company or any of its
Subsidiaries is or may become bound to redeem a security of the Company or any
of its Subsidiaries, (vi) there are no securities or instruments containing
anti-dilution or similar provisions that will be triggered by the issuance of
the Securities as described in this Agreement and (vii) the Company does not
have any stock appreciation rights or "phantom stock" plans or agreements or any
similar plan or agreement. The Company has furnished or made
available to the Buyer via the SEC’s Electronic Data Gathering and Retrieval
system (XXXXX) true and correct 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 By-laws, as amended and as in effect on
the date hereof (the "By-laws"), and copies of any documents containing the
material rights of the holders thereof in respect thereto.
(d) Issuance of
Securities. The Commitment Shares have been duly authorized
and, upon issuance in accordance with the terms hereof, the Commitment Shares
shall be (i) validly issued, fully paid and non-assessable and (ii) free from
all taxes, liens and charges with respect to the issue thereof. At least
20,000,000 shares of Common Stock have been duly authorized and reserved for
issuance upon purchase under this Agreement. Upon issuance and
payment therefor in accordance with the terms and conditions of this Agreement,
the Purchase Shares shall be validly issued, fully paid and nonassessable and
free from all taxes, liens and charges with respect to the issue thereof, with
the holders being entitled to all rights accorded to a holder of Common
Stock.
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(e) No
Conflicts. Except as disclosed in Schedule 3(e) or in the SEC
Documents, the execution, delivery and performance of the Transaction Documents
by the Company and the consummation by the Company of the transactions
contemplated hereby and thereby (including, without limitation, the reservation
for issuance and issuance of 20,000,000 Purchase Shares will not (i) result in a
violation of the Certificate of Incorporation, any Certificate of Designations,
Preferences and Rights of any outstanding series of preferred stock of the
Company or the By-laws or (ii) conflict with, or constitute a default (or an
event which with notice or lapse of time or both would become a default) under,
or give to others any rights of termination, amendment, acceleration or
cancellation of, any agreement, indenture or instrument to which the Company or
any of its Subsidiaries is a party, or result in a violation of any law, rule,
regulation, order, judgment or decree (including federal and state securities
laws and regulations and the rules and regulations of the Principal Market
applicable to the Company or any of its Subsidiaries) or by which any property
or asset of the Company or any of its Subsidiaries is bound or affected, except
in the case of conflicts, defaults, terminations, amendments, accelerations,
cancellations and violations under clause (ii), which could not reasonably be
expected to result in a Material Adverse Effect. Except as disclosed
in Schedule 3(e), neither the Company nor its Subsidiaries is in violation of
any term of or in default under its Certificate of Incorporation, any
Certificate of Designation, Preferences and Rights of any outstanding series of
preferred stock of the Company or By-laws or their organizational charter or
by-laws, respectively. Except as disclosed in Schedule 3(e), neither
the Company nor any of its Subsidiaries is in violation of any term of or is in
default under any material contract, agreement, mortgage, indebtedness,
indenture, instrument, judgment, decree or order or any statute, rule or
regulation applicable to the Company or its Subsidiaries, except for possible
conflicts, defaults, terminations or amendments which could not reasonably be
expected to have a Material Adverse Effect. The business of the
Company and its Subsidiaries is not being conducted, and shall not be conducted,
in violation of any law, ordinance, regulation of any governmental entity,
except for possible violations, the sanctions for which either individually or
in the aggregate could not reasonably be expected to have a Material Adverse
Effect. Except as specifically contemplated by this Agreement and as
required under the 1933 Act or applicable state securities laws, the 1934 Act or
the rules and regulations of the Principal Market, the Company is not required
to obtain any consent, authorization or order of, or make any filing or
registration with, any court or governmental agency or any regulatory or
self-regulatory agency in order for it to execute, deliver or perform any of its
obligations under or contemplated by the Transaction Documents in accordance
with the terms hereof or thereof. Except as disclosed in Schedule
3(e), all consents, authorizations, orders, filings and registrations which the
Company is required to obtain pursuant to the preceding sentence shall be
obtained or effected on or prior to the Commencement Date. Except as
listed in Schedule 3(e) or in the SEC Documents, since January 1, 2009 the
Company has not received nor delivered any notices or correspondence from or to
the Principal Market. The Principal Market has not commenced any
delisting proceedings against the Company.
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(f)
SEC Documents; Financial
Statements. Except as disclosed in Schedule 3(f), since January 1, 2009,
the Company has timely filed all reports, schedules, forms, statements and other
documents required to be filed by it with the SEC pursuant to the reporting
requirements of the 1934 Act (all of the foregoing filed prior to the date
hereof and all exhibits included therein and financial statements and schedules
thereto and documents incorporated by reference therein being hereinafter
referred to as the "SEC Documents"). As of their respective dates
(except as they have been correctly amended), 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 (except
as they may have been properly 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 light of the
circumstances under which they were made, not misleading. As of their
respective dates (except as they have been properly amended), the financial
statements of the Company included in the SEC Documents complied as to form in
all material respects with applicable accounting requirements and the published
rules and regulations of the SEC with respect thereto. Such financial
statements have been prepared in accordance with generally accepted accounting
principles, consistently applied, during the periods involved (except (i) as may
be otherwise indicated in such financial statements or the notes thereto or (ii)
in the case of unaudited interim statements, to the extent they may exclude
footnotes or may be condensed or summary statements) and fairly present in all
material respects the financial position of the Company as of the dates thereof
and the results of its operations and cash flows for the periods then ended
(subject, in the case of unaudited statements, to normal year-end audit
adjustments). Except as listed in Schedule 3(f), the Company has received no
notices or correspondence from the SEC since January 1, 2009. The SEC has not
commenced any enforcement proceedings against the Company.
(g) Absence of Certain
Changes. Except as disclosed in Schedule 3(g), since March 31,
2010, there has been no material adverse change in the business, properties,
operations, financial condition or results of operations of the Company or its
Subsidiaries. The Company has not taken any steps, and does not
currently expect to take any steps, to seek protection pursuant to any
Bankruptcy Law nor does the Company or any of its Subsidiaries have any
knowledge or reason to believe that its creditors intend to initiate involuntary
bankruptcy or
insolvency proceedings. The Company is financially solvent and is
generally able to pay its debts as they become due.
(h) Absence of
Litigation. There is no action, suit, proceeding, inquiry or
investigation before or by any court, public board, government agency,
self-regulatory organization or body pending or, to the knowledge of the
Company, threatened against or affecting the Company, the Common Stock or any of
the Company's officers or directors in their capacities as such, which could
reasonably be expected to have a Material Adverse Effect. A
description of each action, suit, proceeding, inquiry or investigation before or
by any court, public board, government agency, self-regulatory organization or
body which, as of the date of this Agreement, is pending or threatened in
writing against or affecting the Company, the Common Stock or any of the
Company's Subsidiaries or any of the Company's or the Company's Subsidiaries'
officers or directors in their capacities as such, is set forth in Schedule
3(h).
(i)
Acknowledgment Regarding
Buyer's Status. The Company acknowledges and agrees that the
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. The Company further acknowledges that the Buyer is not
acting as a financial advisor or fiduciary of the Company (or in any similar
capacity) with respect to the Transaction Documents and the transactions
contemplated hereby and thereby and any advice given by the 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 the Buyer's
purchase of the Securities. The Company further represents to the
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 and advisors.
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(j) Intellectual Property
Rights. To the knowledge of the Company, the Company owns or
possesses adequate rights or licenses to use all material trademarks, trade
names, service marks, service xxxx registrations, service names, patents, patent
rights, copyrights, inventions, licenses, approvals, governmental
authorizations, trade secrets and rights necessary to conduct their respective
businesses as now conducted. Except as set forth on Schedule 3(k), to
the knowledge of the Company, none of the Company's material trademarks, trade
names, service marks, service xxxx registrations, service names, patents, patent
rights, copyrights, inventions, licenses, approvals, government authorizations,
trade secrets or other intellectual property rights have expired or terminated,
or, by the terms and conditions thereof, could expire or terminate within two
years from the date of this Agreement. The Company does not have any
knowledge of any infringement by the Company of any material trademark, trade
name rights, patents, patent rights, copyrights, inventions, licenses, service
names, service marks, service xxxx registrations, trade secret or other similar
rights of others, or of any such development of similar or identical trade
secrets or technical information by others and, except as set forth on Schedule
3(k), there is no claim, action or proceeding being made or brought against, or
to the Company's knowledge, being threatened against, the Company regarding
trademark, trade name, patents, patent rights, invention, copyright, license,
service names, service marks, service xxxx registrations, trade secret or other
infringement, which could reasonably be expected to have a Material Adverse
Effect.
(k) Environmental
Laws. To the knowledge of the Company, the Company (i) is in
compliance with any and all applicable foreign, federal, state and local laws
and regulations relating to the protection of human health and safety, the
environment or hazardous or toxic substances or wastes, pollutants or
contaminants (“Environmental Laws”), (ii) has received all permits, licenses or
other approvals required of it under applicable Environmental Laws to conduct
its business and (iii) is in compliance with all terms and conditions of any
such permit, license or approval, except where, in each of the three foregoing
clauses, the failure to so comply could not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect.
(l)
Title. The
Company has good and marketable title in fee simple to all real property and
good and marketable title to all personal property owned by it which is material
to the business of the Company, in each case free and clear of all liens,
encumbrances and defects except such as are described in Schedule 3(m), the SEC
Documents or 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. To the knowledge of the Company, any real property and
facilities held under lease by the Company are held by it under valid,
subsisting and enforceable leases with such exceptions as are not material and
do not interfere with the use made and proposed to be made of such property and
buildings by the Company.
(m) Insurance. The
Company is 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 is
engaged. The Company has not been refused any insurance coverage
sought or applied for and the Company has no reason to believe that it will not
be able to renew its existing insurance coverage as and when such coverage
expires or to obtain similar coverage from similar insurers as may be necessary
to continue its business at a cost that would not materially and adversely
affect the condition, financial or otherwise, or the earnings, business or
operations of the Company.
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(n) Regulatory
Permits. To the knowledge of the Company, the Company
possesses all material certificates, authorizations and permits issued by the
appropriate federal, state or foreign regulatory authorities necessary to
conduct their respective businesses, and the Company has not received any notice
of proceedings relating to the revocation or modification of any such
certificate, authorization or permit.
(o) Tax
Status. The Company has made or filed all federal and state
income and all other material tax returns, reports and declarations required by
any jurisdiction to which it is subject (unless and only to the extent that the
Company has set aside on its books provisions reasonably adequate for the
payment of all unpaid and unreported taxes) and has paid all taxes and other
governmental assessments and charges that are material in amount, shown or
determined to be due on such returns, reports and declarations, except those
being contested in good faith and has set aside on its books provision
reasonably adequate for the payment of all taxes for periods subsequent to the
periods to which such returns, reports or declarations apply. There
are no unpaid taxes in any material amount claimed to be due by the taxing
authority of any jurisdiction, and the officers of the Company know of no basis
for any such claim.
(p) Transactions With
Affiliates. Except as set forth on Schedule 3(q) and other
than the grant or exercise of stock options disclosed on Schedule 3(c), none of
the officers, directors, or employees of the Company is presently a party to any
transaction with the Company (other than for services as employees, officers and
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 officer,
director or such employee or, to the knowledge of the Company, any corporation,
partnership, trust or other entity in which any officer, director, or any such
employee has an interest or is an officer, director, trustee or
partner.
(q) Application of Takeover
Protections. The Company and its board of directors have taken
or will take prior to the Commencement Date all necessary action, if any, in
order to render inapplicable any control share acquisition, business
combination, poison pill (including any distribution under a rights agreement)
or other similar anti-takeover provision under the Certificate of Incorporation
or the laws of the state of its incorporation which is or could become
applicable to the Buyer as a result of the transactions contemplated by this
Agreement, including, without limitation, the Company's issuance of the
Securities and the Buyer's ownership of the Securities.
4.
COVENANTS.
(a) Filing of Form 8-K and
Registration Statement. The Company agrees that it shall,
within the time required under the 1934 Act file a Report on Form 8-K disclosing
this Agreement and the transaction contemplated hereby. The Company
shall also file within twenty (20) Business Days from the date hereof a new
registration statement covering the sale of the
Commitment Shares and 20,000,000 Purchase Shares in accordance with
the terms of the Registration Rights Agreement between the Company and the
Buyer, dated as of the date hereof (“Registration Rights
Agreement”).
(b) Blue Sky. The Company
shall take such action, if any, as is reasonably necessary in order to obtain an
exemption for or to qualify (i) the initial sale of the Commitment Shares and
any Purchase Shares to the Buyer under this Agreement and (ii) any subsequent
sale of the Commitment Shares and any Purchase Shares by the Buyer, in each
case, under applicable securities or "Blue Sky" laws of the states of the United
States in such states as is reasonably requested by the Buyer from time to time,
and shall provide evidence of any such action so taken to the
Buyer.
-9-
(c) Listing. The
Company shall promptly secure the listing of at least 20,000,000 Purchase Shares
and all of the Commitment Shares upon each national securities exchange and
automated quotation system, if any, upon which shares of Common Stock are then
listed (subject to official notice of issuance) and shall maintain, so long as
any other shares of Common Stock shall be so listed, such listing of all such
securities from time to time issuable under the terms of the Transaction
Documents. The Company shall maintain the Common Stock's
authorization for quotation on the Principal Market. Neither the
Company nor any of its Subsidiaries shall take any action that would be
reasonably expected to result in the delisting or suspension of the Common Stock
on the Principal Market. The Company shall promptly, and in no event
later than 48 hours, provide to the Buyer copies of any notices it receives from
the Principal Market regarding the continued eligibility of the Common Stock for
listing on such automated quotation system or securities
exchange. The Company shall pay all fees and expenses in connection
with satisfying its obligations under this Section.
(d) Limitation on Short Sales
and Hedging Transactions. The Buyer agrees that beginning on
the date of this Agreement and ending on the date of termination of this
Agreement as provided in Section 11(k), the Buyer and its agents,
representatives and affiliates shall not in any manner whatsoever enter into or
effect, directly or indirectly, any (i) "short sale" (as such term is defined in
Section 242.200 of Regulation SHO of the 0000 Xxx) of the Common Stock or (ii)
hedging transaction, which establishes a net short position with respect to the
Common Stock.
(e) Issuance of Commitment
Shares. Immediately upon the execution of this Agreement, the
Company shall issue to the Buyer as consideration for the Buyer entering into
this Agreement 1,395,349 shares of Common Stock (the "Commitment
Shares"). The Commitment Shares shall be issued in
certificated form and (subject to Section 5 hereof) shall bear the
following restrictive legend:
THE
SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE
SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE OFFERED FOR SALE,
SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
APPLICABLE STATE SECURITIES LAWS, UNLESS SOLD PURSUANT TO: (1) RULE 144 UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, OR (2) AN OPINION OF HOLDER’S COUNSEL,
IN A CUSTOMARY FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR
APPLICABLE STATE SECURITIES LAWS.
(f) Due
Diligence. The Buyer shall have the right, from time to time
as the Buyer may reasonably deem appropriate, to perform reasonable due
diligence on the Company during normal business hours. The Company
and its officers and employees shall provide information and reasonably
cooperate with the Buyer in connection with any reasonable request by the Buyer
related to the Buyer's due diligence of the Company, including, but not limited
to, any such request made by the Buyer in connection with (i) the filing of the
registration statement described in Section 4(a) hereof and (ii) the
Commencement. Each party hereto agrees not to disclose any
Confidential Information of the other party to any third party and shall not use
the Confidential Information for any purpose other than in connection with, or
in furtherance of, the transactions contemplated hereby. Each party
hereto acknowledges that the Confidential Information shall remain the property
of the disclosing party and agrees that it shall take all reasonable measures to
protect the secrecy of any Confidential Information disclosed by the other
party.
-10-
5.
TRANSFER AGENT INSTRUCTIONS.
Immediately
upon the execution of this Agreement, the Company shall deliver to the Transfer
Agent a letter in the form as set forth as Exhibit E attached
hereto with respect to the issuance of the Commitment Shares. On the Commencement
Date, the Company shall cause any restrictive legend on the Commitment Shares to
be removed. All of the Purchase Shares to be issued under this
Agreement shall be issued without any restrictive legend unless the Buyer
expressly consents otherwise. The Company shall issue irrevocable
instructions to the Transfer Agent, and any subsequent transfer agent, to issue
Purchase Shares in the name of the Buyer for the Purchase Shares (the
"Irrevocable Transfer Agent Instructions"). The Company warrants to
the Buyer that no instruction other than the Irrevocable Transfer Agent
Instructions referred to in this Section 5, will be given by the Company to the
Transfer Agent with respect to the Purchase Shares and that the Commitment
Shares, and the Purchase Shares shall otherwise be freely transferable on the
books and records of the Company as and to the extent provided in this Agreement
and the Registration Rights Agreement and permitted under the 1933 Act and
applicable state securities laws.
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6.
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CONDITIONS
TO THE COMPANY'S RIGHT TO COMMENCE SALES OF SHARES OF COMMON STOCK UNDER
THIS AGREEMENT.
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The right
of the Company hereunder to commence sales of the Purchase Shares is subject to
the satisfaction of each of the following conditions on or before the
Commencement Date (the date that the Company may begin sales):
(a) The
Buyer shall have executed each of the Transaction Documents and delivered the
same to the Company;
(b) A
registration statement covering the sale of the Commitment Shares and Purchase Shares
shall have been declared effective under the 1933 Act by the SEC and no stop
order with respect to the registration statement shall be pending or threatened
by the SEC.
(c) The
representations and warranties of the Buyer shall be true and correct in all
material respects as of the date when made and as of the Commencement Date as
though made at that time (except for representations and warranties that speak
as of a specific date, which shall be true and correct in all material respects
as of such specific date), and the 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 the
Buyer at or prior to the Commencement Date.
-11-
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7.
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CONDITIONS
TO THE BUYER'S OBLIGATION TO MAKE PURCHASES OF SHARES OF COMMON
STOCK.
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The
obligation of the Buyer to buy Purchase Shares under this Agreement is subject
to the satisfaction of each of the following conditions on or before the
Commencement Date (the date that the Company may begin sales) and once such
conditions have been initially satisfied, there shall not be any ongoing
obligation to satisfy such conditions after the Commencement has
occurred:
(a) The
Company shall have executed each of the Transaction Documents and delivered the
same to the Buyer;
(b) The
Company shall have issued to the Buyer the Commitment Shares and shall have
removed the restrictive transfer legend from the certificate representing the
Commitment Shares;
(c) The
Common Stock shall be authorized for quotation on the Principal Market, trading
in the Common Stock shall not have been within the last 365 days suspended by
the SEC or the Principal Market and at least 20,000,000 Purchase Shares and all
of the Commitment Shares shall be approved for listing upon the Principal
Market;
(d) The
Buyer shall have received the opinions of the Company's legal counsel dated as
of the Commencement Date in form and substance substantially similar to Exhibit
A attached hereto;
(e) The
representations and warranties of the Company shall be true and correct in all
material respects (except to the extent that any of such representations and
warranties is already qualified as to materiality in Section 3 above, in which
case, such representations and warranties shall be true and correct without
further qualification) as of the date when made and as of the Commencement Date
as though made at that time (except for representations and warranties that
speak as of a specific date, which shall be true and correct in all material
respects 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 Commencement
Date. The Buyer shall have received a certificate, executed by the
CEO, President or CFO of the Company, dated as of the Commencement Date, to the
foregoing effect in the form attached hereto as Exhibit
B;
(f) The
Board of Directors of the Company shall have adopted resolutions in the form
attached hereto as Exhibit
C which shall be in full force and effect without any amendment or
supplement thereto as of the Commencement Date;
(g) As
of the Commencement Date, the Company shall have reserved out of its authorized
and unissued Common Stock, solely for the purpose of effecting purchases of
Purchase Shares hereunder, at least 20,000,000 shares of Common
Stock;
(h) The
Irrevocable Transfer Agent Instructions, in form acceptable to the Buyer shall
have been delivered to and acknowledged in writing by the Company and the
Company's Transfer Agent;
-12-
(i)
The Company shall have delivered
to the Buyer a certificate evidencing the incorporation and good standing of the
Company in the State of Delaware issued by the Secretary of State of the State
of Delaware as of a date within ten (10) Business Days of the Commencement
Date;
(j)
The Company
shall have delivered to the Buyer a certified copy of the Certificate of
Incorporation as certified by the Secretary of State of the State of Delaware
within ten (10) Business Days of the Commencement Date;
(k) The
Company shall have delivered to the Buyer a secretary's certificate executed by
the Secretary of the Company, dated as of the Commencement Date, in the form
attached hereto as Exhibit
D;
(l) A
registration statement covering the sale of all of the Commitment Shares and
Purchase Shares shall have been declared effective under the 1933 Act by the SEC
and no stop order with respect to the registration statement shall be pending or
threatened by the SEC. The Company shall have prepared and delivered
to the Buyer a final and complete form of prospectus dated and current as of the
Commencement Date, to be used by the Buyer in connection with any sales of any
Commitment Shares or any Purchase Shares, and to be filed by the Company with
the SEC one Business Day after the Commencement Date. The Company shall have
made all filings under all applicable federal and state securities laws
necessary to consummate the issuance of the Commitment Shares and the Purchase
Shares pursuant to this Agreement in compliance with such laws;
(m) No
Event of Default has occurred, or any event which, after notice and/or lapse of
time, would become an Event of Default has occurred;
(n) On
or prior to the Commencement Date, the Company shall take all necessary action,
if any, and such actions as reasonably requested by the Buyer, in order to
render inapplicable any control share acquisition, business combination,
shareholder rights plan or poison pill (including any distribution under a
rights agreement) or other similar anti-takeover provision under the Certificate
of Incorporation or the laws of the state of its incorporation which is or could
become applicable to the Buyer as a result of the transactions contemplated by
this Agreement, including, without limitation, the Company's issuance of the
Securities and the Buyer's ownership of the Securities; and
(o) The
Company shall have provided the Buyer with the information reasonably requested
by the Buyer in connection with its due diligence requests made prior to, or in
connection with, the Commencement, in accordance with the terms of Section 4(f)
hereof.
-13-
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8.
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INDEMNIFICATION.
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In
consideration of the Buyer's execution and delivery of the Transaction Documents
and acquiring the Securities hereunder and in addition to all of the Company's
other obligations under the Transaction Documents, the Company shall defend,
protect, indemnify and hold harmless the Buyer and all of its affiliates,
shareholders, officers, directors, employees and direct or indirect investors
and any of the foregoing person's agents or other representatives (including,
without limitation, those retained in connection with the transactions
contemplated by this Agreement) (collectively, the "Indemnitees") from and
against any and all actions, causes of action, suits, claims, losses, costs,
penalties, fees, liabilities and damages, and expenses in connection therewith
(irrespective of whether any such Indemnitee is a party to the action for which
indemnification hereunder is sought), and including reasonable attorneys' fees
and disbursements (the "Indemnified Liabilities"), incurred by any Indemnitee as
a result of, or arising out of, or relating to (a) any misrepresentation or
breach of any representation or warranty made by the Company in the Transaction
Documents or any other certificate, instrument or document contemplated hereby
or thereby, (b) any breach of any covenant, agreement or obligation of the
Company contained in the Transaction Documents or any other certificate,
instrument or document contemplated hereby or thereby, or (c) any cause of
action, suit or claim brought or made against such Indemnitee and arising out of
or resulting from the execution, delivery, performance or enforcement of the
Transaction Documents or any other certificate, instrument
or document contemplated hereby or thereby, other than (i) with
respect to Indemnified Liabilities which directly and primarily result from (A)
a material breach of any of the Buyer’s representations, warranties, covenants
or agreements contained in this Agreement or the Registration Rights Agreement
or (B) the fraud or gross negligence or willful misconduct of the Indemnitee, or
(ii) claims for indemnification within the scope of Section 6 of the
Registration Rights Agreement. 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.
9.
EVENTS OF DEFAULT.
An "Event
of Default" shall be deemed to have occurred at any time as any of the following
events occurs:
(a) while
any registration statement is required to be maintained effective pursuant to
the terms of the Registration Rights Agreement, the effectiveness of such
registration statement lapses for any reason (including, without limitation, the
issuance of a stop order) or is unavailable to the Buyer for sale of all of the
Registrable Securities (as defined in the Registration Rights Agreement) in
accordance with the terms of the Registration Rights Agreement, and such lapse
or unavailability continues for a period of twenty (20) consecutive Business
Days or for more than an aggregate of sixty (60) Business Days in any 365-day
period;
(b) the
suspension from trading or failure of the Common Stock to be listed on the
Principal Market for a period of ten (10) consecutive Business
Days;
-14-
(c) the
delisting of the Common Stock from the Principal Market, provided, however, that
the Common Stock is not immediately thereafter trading on the New York Stock
Exchange, the Nasdaq Global Market, the Nasdaq Global Select Market, the NYSE
Amex Equities or the OTC Bulletin Board;
(d) the
failure for any reason by the Transfer Agent to issue Purchase Shares to the
Buyer within five (5) Business Days after the applicable Purchase Date which the
Buyer is entitled to receive;
(e) the
Company breaches any representation, warranty, covenant or other term or
condition under any Transaction Document if such breach could have a Material
Adverse Effect and except, in the case of a breach of a covenant which is
reasonably curable, only if such breach continues for a period of at least five
(5) Business Days;
(f)
if any Person
commences a proceeding against the Company pursuant to or within the meaning of
any Bankruptcy Law;
(g) if
the Company pursuant to or within the meaning of any Bankruptcy Law; (A)
commences a voluntary case, (B) consents to the entry of an order for relief
against it in an involuntary case, (C) consents to the appointment of a
Custodian of it or for all or substantially all of its property, (D) makes a
general assignment for the benefit of its creditors, (E) becomes insolvent, or
(F) is generally unable to pay its debts as the same become due; or
(h) a
court of competent jurisdiction enters an order or decree under any Bankruptcy
Law that (A) is for relief against the Company in an involuntary case, (B)
appoints a Custodian of the Company or for all or substantially all of its
property, or (C) orders the liquidation of the Company or any
Subsidiary.
In
addition to any other rights and remedies under applicable law and this
Agreement, including the Buyer termination rights under Section 11(k) hereof, so
long as an Event of Default has occurred and is continuing, or if any event
which, after notice and/or lapse of time, would become an Event of Default, has
occurred and is continuing, or so long as the Closing Sale Price is below the
Floor Price, the Buyer shall not be obligated or permitted to purchase any
shares of Common Stock under this Agreement. If pursuant to or within
the meaning of any Bankruptcy Law, the Company commences a voluntary case or any
Person commences a proceeding against the Company, a Custodian is appointed for
the Company or for all or substantially all of its property, or the Company
makes a general assignment for the benefit of its creditors, (any of which would
be an Event of Default as described in Sections 9(f), 9(g) and 9(h) hereof) this Agreement
shall automatically terminate without further action or notice by any Person
without any liability or payment to the Company. No such termination
of this Agreement under Section 11(k)(i) shall affect the Company's or the
Buyer's obligations under this Agreement with respect to pending purchases and
the Company and the Buyer shall complete their respective obligations with
respect to any pending purchases under this Agreement.
10.
CERTAIN DEFINED TERMS.
For
purposes of this Agreement, the following terms shall have the following
meanings:
-15-
(a) “1933
Act” means the Securities Act of 1933, as amended.
(b) “Available
Amount” means initially Fifteen Million Dollars ($15,000,000) in the aggregate
which amount shall be reduced by the Purchase Amount each time the Buyer
purchases shares of Common Stock pursuant to Section 1 hereof.
(c) “Bankruptcy
Law” means Title 11, U.S. Code, or any similar federal or state law for the
relief of debtors.
(d) “Business
Day” means any day on which the Principal Market is open for trading including
any day on which the Principal Market is open for trading for a period of time
less than the customary time.
(e) “Closing
Sale Price” means, the last closing trade price for the Common Stock on the
Principal Market as reported by the Principal Market.
(f) “Confidential
Information” means any information disclosed by either party to the other party,
either directly or indirectly, in writing, orally or by inspection of tangible
objects (including, without limitation, documents, prototypes, samples, plant
and equipment), which is designated as "Confidential," "Proprietary" or some
similar designation. Information communicated orally shall be considered
Confidential Information if such information is confirmed in writing as being
Confidential Information within ten (10) Business Days after the initial
disclosure. Confidential Information may also include information disclosed to a
disclosing party by third parties. Confidential Information shall not, however,
include any information which (i) was publicly known and made generally
available in the public domain prior to the time of disclosure by the disclosing
party; (ii) becomes publicly known and made generally available after disclosure
by the disclosing party to the receiving party through no action or inaction of
the receiving party; (iii) is already in the possession of the receiving party
at the time of disclosure by the disclosing party as shown by the receiving
party’s files and records immediately prior to the time of disclosure; (iv) is
obtained by the receiving party from a third party without a breach of such
third party’s obligations of confidentiality; (v) is independently developed by
the receiving party without use of or reference to the disclosing party’s
Confidential Information, as shown by documents and other competent evidence in
the receiving party’s possession; or (vi) is required by law to be disclosed by
the receiving party, provided that the receiving party gives the disclosing
party prompt written notice of such requirement prior to such disclosure and
assistance in obtaining an order protecting the information from public
disclosure.
(g) “Custodian”
means any receiver, trustee, assignee, liquidator or similar official under any
Bankruptcy Law.
(h) “Maturity
Date” means the date that is 480 Business Days (24 Monthly Periods) from the
Commencement Date.
(i)
“Monthly Period”
means each successive 20 Business Day period commencing with the Commencement
Date.
-16-
(j)
“Person” means an
individual or entity including any limited liability company, a partnership, a
joint venture, a corporation, a trust, an unincorporated organization and a
government or any department or agency thereof.
(k) “Principal
Market” means the Nasdaq Capital Market; provided however, that in
the event the Company’s Common Stock is ever listed or traded on the Nasdaq
Global Market, the Nasdaq Global Select Market, the OTC Bulletin Board, the New
York Stock Exchange or the NYSE Amex Equities, than the “Principal Market” shall
mean such other market or exchange on which the Company’s Common Stock is then
listed or traded.
(l)
“Purchase
Amount” means, with respect to any particular purchase made hereunder, the
portion of the Available Amount to be purchased by the Buyer pursuant to Section
1 hereof as set forth in a valid Purchase Notice which the Company delivers to
the Buyer.
(m) “Purchase
Date” means with respect to any Purchase made hereunder, the Business Day of
receipt by the Buyer of a valid Purchase Notice that the Buyer is to buy
Purchase Shares pursuant to Section 1 hereof.
(n) “Purchase
Notice” shall mean an irrevocable written notice from the Company to the Buyer
directing the Buyer to buy Purchase Shares as specified by the Company therein
at the applicable Purchase Price on the Purchase Date.
(o)
“Purchase Price” means the lower of the (A) the lowest Sale Price of the Common
Stock on the Purchase Date and (B) the arithmetic average of the three (3)
lowest Closing Sale Prices for the Common Stock during the twelve (12)
consecutive Business Days ending on the Business Day immediately preceding such
Purchase Date (to be appropriately adjusted for any reorganization,
recapitalization, non-cash dividend, stock split or other similar
transaction).
(p) “Sale
Price” means, any trade price for the shares of Common Stock on the Principal
Market as reported by the Principal Market.
(q) “SEC”
means the United States Securities and Exchange Commission.
(r) “Transfer
Agent” means the transfer agent of the Company as set forth in Section 11(f)
hereof or such other person who is then serving as the transfer agent for the
Company in respect of the Common Stock.
-17-
11.
MISCELLANEOUS.
(a) Governing Law; Jurisdiction;
Jury Trial. The corporate laws of the State of Delaware shall
govern all issues concerning the relative rights of the Company and its
shareholders. All other questions concerning the construction, validity,
enforcement and interpretation of this Agreement and the other Transaction
Documents shall be governed by the internal laws of the State of Illinois,
without giving effect to any choice of law or conflict of law provision or rule
(whether of the State of Illinois or any other jurisdictions) that would cause
the application of the laws of any jurisdictions other than the State of
Illinois. Each party hereby irrevocably submits to the exclusive
jurisdiction of the state and federal courts sitting in the City of Chicago, for
the adjudication of any dispute hereunder or under the other Transaction
Documents or in connection herewith or therewith, or with any transaction
contemplated hereby or discussed herein, and hereby irrevocably waives, and
agrees not to assert in any suit, action or proceeding, any claim that it is not
personally subject to the jurisdiction of any such court, that such suit, action
or proceeding is brought in an inconvenient forum or that the venue of such
suit, action or proceeding is improper. Each party hereby irrevocably
waives personal service of process and consents to process being served in any
such suit, action or proceeding by mailing a copy thereof to such party at the
address for such notices to it under this Agreement and agrees that such service
shall constitute good and sufficient service of process and notice
thereof. Nothing contained herein shall be deemed to limit in any way
any right to serve process in any manner permitted by law. EACH PARTY HEREBY IRREVOCABLY WAIVES
ANY RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE
ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION HEREWITH OR ARISING OUT
OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.
(b) Counterparts. This
Agreement may be executed in two or more identical counterparts, all of which
shall be considered one and the same agreement and shall become effective when
counterparts have been signed by each party and delivered to the other party;
provided that a facsimile signature shall be considered due execution and shall
be binding upon the signatory thereto with the same force and effect as if the
signature were an original, not a facsimile signature.
(c) Headings. The
headings of this Agreement are for convenience of reference and shall not form
part of, or affect the interpretation of, this Agreement.
(d) Severability. If
any provision of this Agreement shall be invalid or unenforceable in any
jurisdiction, such invalidity or unenforceability shall not affect the validity
or enforceability of the remainder of this Agreement in that jurisdiction or the
validity or enforceability of any provision of this Agreement in any other
jurisdiction.
(e) Entire
Agreement. With the exception of the Mutual Nondisclosure
Agreement between the parties dated as of June 29, 2010, this Agreement
supersedes all other prior oral or written agreements between the Buyer, 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 contain the entire understanding of the
parties with respect to the matters covered herein and therein and, except as
specifically set forth herein or therein, neither the Company nor the Buyer
makes any representation, warranty, covenant or undertaking with respect to such
matters. The Company acknowledges and agrees that is has not relied
on, in any manner whatsoever, any representations or statements, written or
oral, other than as expressly set forth in this Agreement.
(f) Notices. Any
notices, consents or other communications required or permitted to be given
under the terms of this Agreement must be in writing and will be deemed to have
been delivered: (i) upon receipt when delivered personally; (ii) upon receipt
when sent by facsimile (provided confirmation of transmission is mechanically or
electronically generated and kept on file by the sending party); or (iii) one
Business Day after deposit with a nationally recognized overnight delivery
service, in each case properly addressed to the party to receive the same. The
addresses and facsimile numbers for such communications shall
be:
-18-
If to the
Company:
Bionovo,
Inc.
0000
Xxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxxx,
XX 00000
Phone:
000-000-0000
Fax:
000-000-0000
Attention: Chief
Financial Officer
With a
copy to:
Xxxxxxxxx
Traurig, LLP
000 Xxxx
Xxxxxx
Xxx Xxxx,
XX 00000
Telephone:
000-000-0000
Facsimile:
212-801-6400
Attention:
Xxxxxx X. Xxxxx, Esq.
If to the
Buyer:
Aspire
Capital Fund, LLC
000 Xxxxx
Xxxxxx Xxxxx, Xxxxx 0000
Xxxxxxx,
XX 00000
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Telephone:
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000-000-0000
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Facsimile:
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000-000-0000
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Attention:
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Xxxxxx
X. Xxxxxx
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With a copy to:
O’Melveny
& Xxxxx LLP
0000 Xxx
Xxxxxx, XX
Xxxxxxxxxx,
XX 00000
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Telephone:
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000-000-0000
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Facsimile:
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000-000-0000
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Attention:
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Xxxxxx
Xxxx, Esq.
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If to the
Transfer Agent:
Colonial
Stock Transfer
00
Xxxxxxxx Xxxxx
Xxxx Xxxx
Xxxx, XX 00000
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Telephone:
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801-355-5740Facsimile:
801-355-6505
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Attention:
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Xxxxx
Xxxxxx
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or at
such other address and/or facsimile number and/or to the attention of such other
person as the recipient party has specified by written notice given to each
other party one (1) Business Day prior to the effectiveness of such
change. Written confirmation of receipt (A) given by the recipient of
such notice, consent or other communication, (B) mechanically or electronically
generated by the sender's facsimile machine containing the time, date, and
recipient facsimile number or (C) provided by a nationally recognized overnight
delivery service, shall be rebuttable evidence of personal service, receipt by
facsimile or receipt from a nationally recognized overnight delivery service in
accordance with clause (i), (ii) or (iii) above, respectively.
-19-
(g) Successors and
Assigns. This Agreement shall be binding upon and inure to the
benefit of the parties and their respective successors and
assigns. The Company shall not assign this Agreement or any rights or
obligations hereunder without the prior written consent of the Buyer, including
by merger or consolidation. The Buyer may not assign its rights or
obligations under this Agreement.
(h) No Third Party
Beneficiaries. This Agreement is intended for the benefit of
the parties hereto and their respective permitted successors and assigns, and is
not for the benefit of, nor may any provision hereof be enforced by, any other
person.
(i)
Publicity. The
Buyer shall have the right to approve before issuance any press release, SEC
filing or any other public disclosure made by or on behalf of the Company
whatsoever with respect to, in any manner, the Buyer, its purchases hereunder or
any aspect of this Agreement or the transactions contemplated hereby; provided,
however, that the Company shall be entitled, without the prior approval of the
Buyer, to make any press release or other public disclosure (including any
filings with the SEC) with respect to such transactions as is required by
applicable law and regulations so long as the Company and its counsel consult
with the Buyer in connection with any such press release or other public
disclosure prior to its release. The Company agrees and acknowledges
that its failure to fully comply with this provision constitutes a material
adverse effect on its ability to perform its obligations under this
Agreement.
(j)
Further
Assurances. Each party shall do and perform, or cause to be
done and performed, all such further acts and things, and shall execute and
deliver all such other agreements, certificates, instruments and documents, as
the other party may reasonably request in order to carry out the intent and
accomplish the purposes of this Agreement and the consummation of the
transactions contemplated hereby.
(k) Termination. This
Agreement may be terminated only as follows:
(i) By
the Buyer any time an Event of Default exists without any liability whatsoever
of any party to any other party under this Agreement. However, if pursuant to or
within the meaning of any Bankruptcy Law, the Company commences a voluntary case
or any Person commences a proceeding against the Company, a Custodian is
appointed for the Company or for all or substantially all of its property, or
the Company makes a general assignment for the benefit of its creditors, (any of
which would be an Event of Default as described in Sections 9(f), 9(g) and 9(h)
hereof) this Agreement shall automatically terminate without any liability or
payment to the Company (and the Buyer shall in such case have no obligation to
pay to the Company the Termination Fee) and without further action or notice by
any Person. No such termination of this Agreement under this Section 11(k)(i)
shall affect the Company's or the Buyer's obligations under this Agreement with
respect to pending purchases and the Company and the Buyer shall complete their
respective obligations with respect to any pending purchases under this
Agreement.
(ii) In
the event that the Commencement shall not have occurred, the Company shall have
the option to terminate this Agreement for any reason or for no reason without
any liability whatsoever of any party to any other party under this
Agreement.
-20-
(iii) In
the event that the Commencement shall not have occurred on or before October 1,
2010, due to the failure to satisfy any of the conditions set forth in Sections
6 and 7 above with respect to the Commencement, any party shall have the option
to terminate this Agreement at the close of business on such date or thereafter
without liability of any party to any other party; provided, however, that the
right to terminate this Agreement under this Section 11(k)(iii) shall not be
available to any party if such failure to satisfy any of the conditions set
forth in Sections 6 and 7 is the result of a breach of this Agreement by such
party or the failure of any representation or warranty of such party included in
this Agreement to be true and correct.
(iv) At
any time after the Commencement Date, the Company shall have the option to
terminate this Agreement for any reason or for no reason by delivering notice (a
“Company Termination Notice”) to the Buyer electing to terminate this Agreement
without any liability whatsoever of any party to any other party under this
Agreement. The Company Termination Notice shall not be effective
until one (1) Business Day after it has been received by the Buyer.
(v) This
Agreement shall automatically terminate on the date that the Company sells and
the Buyer purchases the full Available Amount as provided herein, without any
action or notice on the part of any party and without any liability whatsoever
of any party to any other party under this Agreement.
(vi) If
by the Maturity Date for any reason or for no reason the full Available Amount
under this Agreement has not been purchased as provided for in Section 1 of this
Agreement, this Agreement shall automatically terminate on the Maturity Date,
without any action or notice on the part of any party and without any liability
whatsoever of any party to any other party under this Agreement (other than the
obligation of the Buyer to pay to the Company the Termination Fee).
Upon any
termination of this Agreement pursuant to Sections 11(k)(i) in the case of an
Event of Default as described in Section 9(e) hereof) or 11(k)(vi), the Buyer
shall be required to immediately pay to the Company a termination fee (the
“Termination Fee”), equal to the number of Commitment Shares multiplied by $0.43
multiplied by Unfunded Amount Percentage (as defined below). The
Termination Fee may, at the election of the Buyer, be paid in cash or in shares
of Common Stock valued at $0.43 per share. “Unfunded Amount Percentage” means
the percentage of the Aggregate Amount that the Company did not receive from the
Buyer during the term of this Agreement.
Except as
set forth in Sections 11(k)(i) (in respect of an Event of Default under Sections
9(f), 9(g) and 9(h)) and 11(k)(vi), any termination of this Agreement pursuant
to this Section 11(k) shall be effected by written notice from the Company to
the Buyer, or the Buyer to the Company, as the case may be, setting forth the
basis for the termination hereof. The representations and warranties of the
Company and the Buyer contained in Sections 2, 3 and 5 hereof, the
indemnification provisions set forth in Section 8 hereof and the agreements and
covenants set forth in Section 11, shall survive the
Commencement and any termination of this Agreement. No termination of
this Agreement shall affect the Company's or the Buyer's rights or obligations
(i) under the Registration Rights Agreement which shall survive any such
termination or (ii) under this Agreement with respect to pending purchases and
the Company and the Buyer shall complete their respective obligations with
respect to any pending purchases under this Agreement.
-21-
(l)
No Financial Advisor,
Placement Agent, Broker or Finder. The Company represents and
warrants to the Buyer that it has not engaged any financial advisor, placement
agent, broker or finder in connection with the transactions contemplated
hereby. The Buyer represents and warrants to the Company that it has
not engaged any financial advisor, placement agent, broker or finder in
connection with the transactions contemplated hereby. The Company
shall be responsible for the payment of any fees or commissions, if any, of any
financial advisor, placement agent, broker or finder engaged by the Company
relating to or arising out of the transactions contemplated
hereby. The Company shall pay, and hold the Buyer harmless against,
any liability, loss or expense (including, without limitation, attorneys' fees
and out of pocket expenses) arising in connection with any claim by any
financial advisor, placement agent, broker or finder engaged by the Company
relating to or arising out of the transactions contemplated hereby.
(m) 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.
(n) Remedies, Other Obligations,
Breaches and Injunctive Relief. The parties’ remedies provided
in this Agreement shall be cumulative and in addition to all other remedies
available to the parties under this Agreement, at law or in equity (including a
decree of specific performance and/or other injunctive relief), no remedy of any
party contained herein shall be deemed a waiver of compliance with the
provisions giving rise to such remedy and nothing herein shall limit any party’s
right to pursue actual damages for any failure by the other party to comply with
the terms of this Agreement. Each party hereto acknowledges that a
breach by it of its obligations hereunder will cause irreparable harm to the
other party and that the remedy at law for any such breach may be
inadequate. Each party therefore agrees that, in the event of any
such breach or threatened breach, such party shall be entitled, in addition to
all other available remedies, to an injunction restraining any breach, without
the necessity of showing economic loss and without any bond or other security
being required.
(0) [Intentionally
Omitted.]
(p) Failure or Indulgence Not
Waiver. No failure or delay in the exercise of any power,
right or privilege hereunder shall operate as a waiver thereof, nor shall any
single or partial exercise of any such power, right or privilege preclude other
or further exercise thereof or of any other right, power or
privilege.
* * * * *
-22-
IN WITNESS WHEREOF, the Buyer
and the Company have caused this Common Stock Purchase Agreement to be duly
executed as of the date first written above.
|
THE COMPANY:
|
||
|
BIONOVO,
INC.
|
||
|
By:
|
/s/ Xxxxxx X. Xxxxxxxxxx
|
|
|
Name:
Xxxxxx X. Xxxxxxxxxx
|
||
|
Title:
Chief Financial Officer
|
||
|
BUYER:
|
||
|
ASPIRE
CAPITAL FUND, LLC
|
||
|
BY:
ASPIRE CAPITAL PARTNERS, LLC
|
||
|
BY:
SGM HOLDINGS CORP.
|
||
|
By:
|
/s/ Xxxxxx X. Xxxxxx
|
|
|
Name:
Xxxxxx X. Xxxxxx
|
||
|
Title:
President
|
||
-23-
SCHEDULES
|
Schedule
3(c)
|
Capitalization
|
|
Schedule
3(e)
|
Conflicts
|
|
Schedule
3(f)
|
1934
Act Filings
|
|
Schedule
3(g)
|
Material
Changes
|
|
Schedule
3(h)
|
Litigation
|
|
Schedule
3(k)
|
Intellectual
Property
|
|
Schedule
3(m)
|
Liens
|
|
Schedule
3(q)
|
Certain
Transactions
|
EXHIBITS
|
Exhibit
A
|
Form
of Company Counsel Opinion
|
|
Exhibit
B
|
Form
of Officer’s Certificate
|
|
Exhibit
C
|
Form
of Resolutions of Board of Directors of the
Company
|
|
Exhibit
D
|
Form
of Secretary’s Certificate
|
|
Exhibit
E
|
Form
of Letter to Transfer Agent
|
DISCLOSURE
SCHEDULES
Schedule
3(c) - Capitalization
Schedule
3(e) - No Conflicts
Schedule
3(f) - 1934 Act Filings
Schedule
3(g) - Absence of Certain Changes
Schedule
3(h) - Litigation
Schedule
3(k) - Intellectual Property Rights
Schedule
3(m) - Title
Schedule
3(q) - Transactions with Affiliates
EXHIBIT
A
FORM
OF COMPANY COUNSEL OPINION
Capitalized terms used herein but not
defined herein, have the meaning set forth in the Common Stock Purchase
Agreement. Based on the foregoing, and subject to the assumptions and
qualifications set forth herein, we are of the opinion that:
1. The
Company is a corporation existing and in good standing under the laws of the
State of Delaware. The Company is qualified to do business as a
foreign corporation and is in good standing in the State of
California.
2. The
Company has the requisite corporate power to execute, deliver and perform its
obligations under, each Transaction Document to which it is a
party. To our knowledge, the Company has the requisite corporate
power to conduct its business as it is now conducted and to own and use the
properties owned and used by it.
3. The
execution and delivery by the Company of the Transaction Documents to which it
is a party, the performance by the Company of its obligations thereunder and the
consummation by the Company of the transactions contemplated therein have been
duly authorized by all necessary corporate action on the part of the
Company. The Transaction Documents to which the Company is a party
have been duly executed and delivered by the Company and (assuming the due
authorization, execution and delivery thereof by the Investor to the extent it
is a party thereto) constitute the valid and binding obligations of the Company,
enforceable against the Company in accordance with their terms, except as may be
limited by applicable bankruptcy, insolvency, liquidation, fraudulent
conveyance, reorganization, moratorium or similar laws relating to or affecting
creditors’ rights and remedies generally, or by general principles of equity,
including principles of materiality, commercial reasonableness, good faith,
conscionability and fair dealing (regardless of whether enforcement is sought in
a proceeding at law or in equity), and except that the enforceability of any
provision of the Transaction Documents releasing, exculpating or exempting a
party from, or requiring indemnification of a party for, liability for its own
action or inaction may be limited by applicable federal and state
laws.
4. The
execution and delivery by the Company of the Transaction Documents to which it
is a party, and the consummation by the Company of the transactions contemplated
thereby, including the offering, sale and issuance of the Commitment Shares and
the Purchase Shares in accordance with the terms and conditions of the Common
Stock Purchase Agreement, do not: (i) conflict with the Certificate of
Incorporation or the Bylaws of the Company, (ii) violate or result in a breach
of or a default under any material agreement, note, lease, mortgage, deed or
other material instrument to which the Company is a party or by which the
Company is bound that is an exhibit to the SEC Documents (collectively, the
“Material Agreements”), (iii) violate the General Corporation Law of the
State of Delaware or any U.S. federal or New York state statute, law, rule or
regulation applicable to the Company and which in our experience is generally
applicable to transactions in the nature of those contemplated by the
Transaction Documents, (iv) require any consent, approval or authorization of,
or any registration, declaration or filing with, any U.S. federal or New York
state governmental body or regulatory agency, except (a) as contemplated by the
Transaction Documents or (b) for such of the foregoing as have been obtained or
made, or (v) violate any court or administrative order, writ, injunction or
decree which names the Company and is specifically directed to it or its
property and of which we have knowledge (which is based solely on a review of
our litigation docket and a certificate of the Company dated today and delivered
to you), except, in the case described in clause (ii) above, for such
violations, breaches or defaults as would not, individually or in the aggregate,
have a Material Adverse Effect.
5. The
issuance of the Purchase Shares and Commitment Shares pursuant to the terms and
conditions of the Transaction Documents has been duly authorized and the
Commitment Shares are validly issued, fully paid and non-assessable, to our
knowledge, free of all preemptive or other similar rights under the Company’s
Certificate of Incorporation or Bylaws as currently in effect, the General
Corporation Law of the State of Delaware, or any Material Agreement. When issued
and paid for in accordance with the Common Stock Purchase Agreement, the
Purchase Shares shall be validly issued, fully paid and non-assessable, to our
knowledge, free of all preemptive or other similar rights under the Company’s
Certificate of Incorporation or Bylaws as currently in effect, the General
Corporation Law of the State of Delaware, or any Material Agreement. To our
knowledge, the execution and delivery of the Registration Rights Agreement do
not, and the performance by the Company of its obligations thereunder shall not,
give rise to any rights under any Material Agreement of any other person for the
registration under the 1933 Act of any shares of Common Stock or other
securities of the Company which have not been waived.
6. To
our knowledge, except as disclosed on Schedule 3(h) in the Purchase Agreement,
there is no action, suit, proceeding or investigation pending (in which service
of process has been received by an employee or agent of the Company or an agent
for service of process) before any court, public board or body, any governmental
agency, any stock exchange or market, or self-regulatory organization, or which
has been threatened in writing, against the Company or any of its officers or
directors which (i) questions the validity of any of the Transaction Documents
or the transactions contemplated thereby or any action taken or to be taken
pursuant thereto or (ii) is required to be disclosed in any SEC Document and has
not been so disclosed. We call your attention to the fact that, in connection
with the delivery of this opinion, we have not ordered or reviewed judgment,
lien or any other searches of public or private records of the Company or its
properties.
In addition, we have participated in
the preparation of the Registration Statement (SEC File #________) covering the
resale of the Purchase Shares and the Commitment Shares, including the form of
prospectus contained therein, and in conferences with officers of the Company
during which the Registration Statement and related matters were discussed and
reviewed and, although we are not passing upon and do not assume any
responsibility for the accuracy, completeness or fairness of the statements
contained in (i) the Registration Statement or any amendment thereto, (ii) the
form of prospectus contained therein or any amendment or supplement thereto, or
(iii) the documents incorporated by reference in the Registration Statement,
solely on the basis of the information that was developed in the course of the
performance of the services referred to above, considered in the light of our
understanding of the applicable law, nothing came to our attention that caused
us to believe that the Registration Statement (other than the financial
statements and schedules and the other financial and statistical data, or
exhibits, included or incorporated by reference therein or omitted therefrom, as
to which we express no belief), at the time it became effective, contained any
untrue statement of a material fact or omitted to state any material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
EXHIBIT
B
FORM
OF OFFICER’S CERTIFICATE
This
Officer’s Certificate (“Certificate”) is being
delivered pursuant to Section 7(e) of that certain Common Stock Purchase
Agreement dated as of _________, 2010 (the “Common Stock Purchase
Agreement”), by and between BIONOVO, INC., a Delaware
corporation (the “Company”), and ASPIRE CAPITAL FUND, LLC (the
“Buyer”). Terms used
herein and not otherwise defined shall have the meanings ascribed to them in the
Common Stock Purchase Agreement.
The
undersigned, Xxxxx Xxxxx, Chief Executive Officer of the Company, hereby
certifies as follows:
1. I
am the Chief Executive Officer of the Company and make the statements contained
in this Certificate;
2. The
representations and warranties of the Company set forth in Section 3 of the
Common Stock Purchase Agreement are true and correct in all material respects
(except to the extent that any of such representations and warranties is already
qualified as to materiality in Section 3 of the Common Stock Purchase Agreement,
in which case, such representations and warranties are true and correct without
further qualification) as of the date when made and as of the Commencement Date
as though made at that time (except for representations and warranties that
speak as of a specific date, which shall be true and correct in all material
respects as of such specific date); and
3. The
Company has performed, satisfied and complied in all material respects with
covenants, agreements and conditions required by the Transaction Documents to be
performed, satisfied or complied with by the Company at or prior to the
Commencement Date.
[signature page
follows]
IN WITNESS WHEREOF, I have
hereunder signed my name on this ___ day of _____ 2010.
|
Name: Xxxxx
Xxxxx
|
|
|
Title:
Chief Executive Officer
|
The undersigned as Secretary of the
Company hereby certifies that Xxxxx Xxxxx is the duly elected, appointed,
qualified and acting Chief Executive Officer of the Company and that the
signature appearing above is his genuine signature.
EXHIBIT
C-1
FORM
OF COMPANY RESOLUTIONS
FOR
SIGNING PURCHASE AGREEMENT
UNANIMOUS
WRITTEN CONSENT OF THE
BOARD
OF DIRECTORS OF
BIONOVO,
INC.
The
undersigned, being all of the directors of Bionovo, Inc., a Delaware corporation
(the “Corporation”),
pursuant to Section 2.8 of the Corporation’s bylaws, do hereby consent to and
adopt the following resolutions as the action of the Board of Directors for and
on behalf of the Corporation and hereby direct that this Consent be filed with
the minutes of the proceedings of the Board of Directors:
WHEREAS, there has been presented to
the Board of Directors of the Corporation a draft of the Common Stock Purchase
Agreement (the “Purchase
Agreement”) by and between the Corporation and Aspire Capital Fund, LLC
(“Aspire”), providing
for, among other things, the purchase by Aspire of up to Fifteen Million Dollars
($15,000,000) of the Corporation’s common stock, par value $.0001 (the “Common Stock”);
and
WHEREAS, after careful consideration of
the Purchase Agreement, the documents incident thereto and other factors deemed
relevant by the Board of Directors, the Board of Directors has determined that
it is advisable and in the best interests of the Corporation to engage in the
transactions contemplated by the Purchase Agreement, including, but not limited
to, the issuance of 1,395,349 shares of Common Stock to Aspire as a commitment
fee (the “Commitment
Shares”) and the sale of shares of Common Stock to Aspire up to the
available amount under the Purchase Agreement (the "Purchase
Shares").
Transaction
Documents
NOW,
THEREFORE, BE IT RESOLVED, that the transactions described in the Purchase
Agreement are hereby approved and each of the Chief Executive Officer, the
President and the Chief Financial Officer of the Company (the “Authorized Officers”) are
severally authorized to execute and deliver the Purchase Agreement, and any
other agreements or documents contemplated thereby including, without
limitation, a registration rights agreement (the “Registration Rights
Agreement”) providing for the registration of the shares of the Common
Stock issuable in respect of the Purchase Agreement on behalf of the
Corporation, with such amendments, changes, additions and deletions as the
Authorized Officers may deem to be appropriate and approve on behalf of, the
Corporation, such approval to be conclusively evidenced by the signature of an
Authorized Officer thereon; and
FURTHER
RESOLVED, that the terms and provisions of the Registration Rights Agreement by
and between the Corporation and Aspire are hereby approved and the Authorized
Officers are authorized to execute and deliver the Registration Rights Agreement
(pursuant to the terms of the Purchase Agreement), with such amendments,
changes, additions and deletions as the Authorized Officer may deem appropriate
and approve on behalf of, the Corporation, such approval to be conclusively
evidenced by the signature of an Authorized Officer thereon;
and
FURTHER
RESOLVED, that the terms and provisions of the Form of Transfer Agent
Instructions (the “Instructions”) are hereby
approved and the Authorized Officers are authorized to execute and deliver the
Instructions (pursuant to the terms of the Purchase Agreement), with such
amendments, changes, additions and deletions as the Authorized Officers may deem
appropriate and approve on behalf of, the Corporation, such approval to be
conclusively evidenced by the signature of an Authorized Officer thereon;
and
Issuance of Common
Stock
FURTHER
RESOLVED, that the Corporation is hereby authorized to issue 1,395,349 shares of
Common Stock to Aspire as Commitment Shares and
that upon issuance of the Commitment Shares pursuant to the Purchase Agreement,
the Commitment Shares shall be duly authorized, validly issued, fully paid and
nonassessable with no personal liability attaching to the ownership thereof;
and
FURTHER
RESOLVED, that the Corporation is hereby authorized to issue shares of Common
Stock upon the purchase of Purchase Shares up to the available amount under the
Purchase Agreement in accordance with the terms of the Purchase Agreement and
that, upon issuance of the Purchase Shares pursuant to the Purchase Agreement,
the Purchase Shares will be duly authorized, validly issued, fully paid and
nonassessable; and
FURTHER
RESOLVED, that the Corporation shall initially reserve [__________] shares of
Common Stock for issuance as Purchase Shares under the Purchase
Agreement.
General
Authority
FURTHER
RESOLVED, that, without limiting the foregoing, the Authorized Officers are, and
each of them hereby is, authorized and directed to proceed on behalf of the
Corporation and to take all such steps as deemed necessary or appropriate, with
the advice and assistance of counsel, to cause the Corporation to consummate the
agreements referred to herein and to perform its obligations under such
agreements; and
FURTHER RESOLVED, that the Authorized
Officers be, and each of them hereby is, authorized, empowered and directed on
behalf of and in the name of the Corporation, to take or cause to be taken all
such further actions and to execute and deliver or cause to be executed and
delivered all such further agreements, amendments, documents, certificates,
reports, schedules, applications, notices, letters and undertakings and to incur
and pay all such fees and expenses as in their judgment shall be necessary,
proper or desirable to carry into effect the purpose and intent of any and all
of the foregoing resolutions, and that all actions heretofore taken by any
officer or director of the Corporation in connection with the transactions
contemplated by the agreements described herein are hereby approved, ratified
and confirmed in all respects.
[signature page
follows]
IN WITNESS WHEREOF, the Board of
Directors has executed and delivered this Consent effective as of ________,
2010.
|
Xxxxx
Xxxxx
|
|
|
Xxxx
Xxxxxxxxxxx
|
|
|
Xxxxx
Xxxxxxx
|
|
|
Xxxx
X. Xxxxxx
|
|
|
Xxxxxx
X. Xxxxxx
|
Being
all of the directors of the Corporation
EXHIBIT
C-2
FORM
OF COMPANY RESOLUTIONS APPROVING REGISTRATION STATEMENT
UNANIMOUS
WRITTEN CONSENT OF THE
BOARD
OF DIRECTORS OF
BIONOVO,
INC.
The
undersigned, being all of the directors of Bionovo, Inc., a Delaware corporation
(the “Corporation”),
pursuant to Section 2.8 of the Corporation’s bylaws, do hereby consent to and
adopt the following resolutions as the action of the Board of Directors for and
on behalf of the Corporation and hereby direct that this Consent be filed with
the minutes of the proceedings of the Board of Directors:
WHEREAS, there has been presented to
the Board of Directors of the Corporation a Common Stock Purchase Agreement (the
“Purchase Agreement”) by
and between the Corporation and Aspire Capital Fund, LLC (“Aspire”), providing for the
purchase by Aspire of up to Fifteen Million Dollars ($15,000,000) of the
Corporation’s common stock, par value $.0001 (the “Common Stock”);
and
WHEREAS, after careful consideration of
the Purchase Agreement, the documents incident thereto and other factors deemed
relevant by the Board of Directors, the Board of Directors has approved the
Purchase Agreement and the transactions contemplated thereby and the Company has
executed and delivered the Purchase Agreement to Aspire; and
WHEREAS,
in connection with the transactions contemplated pursuant to the Purchase
Agreement, the Company has agreed to file a registration statement with the
Securities and Exchange Commission (the “Commission”) registering the
Commitment Shares (as defined in the Purchase Agreement) and the Purchase Shares
(as herein defined in the Purchase Agreement) and to list the Commitment Shares
and Purchase Shares on the Nasdaq Capital Market;
WHEREAS,
the management of the Corporation has prepared an initial draft of a
Registration Statement on Form S-1 (the “Registration Statement”) in
order to register the sale of the Purchase Shares and the Commitment Shares
(collectively, the “Shares”); and
WHEREAS,
the Board of Directors has determined to approve the Registration Statement and
to authorize the appropriate officers of the Corporation to take all such
actions as they may deem appropriate to effect the offering.
NOW,
THEREFORE, BE IT RESOLVED, that the officers and directors of the Corporation
be, and each of them hereby is, authorized and directed, with the assistance of
counsel and accountants for the Corporation, to prepare, execute and file with
the Commission the Registration Statement, which Registration Statement shall be
filed substantially in the form presented to the Board of Directors, with such
changes therein as the Chief Executive Officer, the President or the Chief
Financial Officer of the Corporation (the “Authorized Officers”) shall
deem desirable and in the best interest of the Corporation and its shareholders
(such officer’s execution thereof including such changes shall be deemed to
evidence conclusively such determination); and
FURTHER
RESOLVED, that the Authorized Officers of the Corporation be, and each of them
hereby is, authorized and directed, with the assistance of counsel and
accountants for the Corporation, to prepare, execute and file with the
Commission all amendments, including post-effective amendments, and supplements
to the Registration Statement, and all certificates, exhibits, schedules,
documents and other instruments relating to the Registration Statement, as such
Authorized Officers shall deem necessary or appropriate (such officer’s
execution and filing thereof shall be deemed to evidence conclusively such
determination); and
FURTHER
RESOLVED, that the execution of the Registration Statement and of any amendments
and supplements thereto by the officers and directors of the Corporation be, and
the same hereby is, specifically authorized either personally or by the
Authorized Officers as such officer’s or director’s true and lawful
attorneys-in-fact and agents; and
FURTHER
RESOLVED, that the Authorized Officers are hereby designated as “Agent for
Service” of the Corporation in connection with the Registration Statement and
the filing thereof with the Commission, and the Authorized Officers hereby are
authorized to receive communications and notices from the Commission with
respect to the Registration Statement; and
FURTHER
RESOLVED, that the Authorized Officers of the Corporation be, and each of them
hereby is, authorized and directed to pay all fees, costs and expenses that may
be incurred by the Corporation in connection with the Registration Statement;
and
FURTHER
RESOLVED, that it is desirable and in the best interest of the Corporation that
the Shares be qualified or registered for sale in various states; that the
Authorized Officers of the Corporation be, and each of them hereby is,
authorized to determine the states in which appropriate action shall be taken to
qualify or register for sale all or such part of the Shares as they may deem
advisable; that said Authorized Officers be, and each of them hereby is,
authorized to perform on behalf of the Corporation any and all such acts as they
may deem necessary or advisable in order to comply with the applicable laws of
any such states, and in connection therewith to execute and file all requisite
papers and documents, including, but not limited to, applications, reports,
surety bonds, irrevocable consents, appointments of attorneys for service of
process and resolutions; and the execution by such officers of any such paper or
document or the doing by them of any act in connection with the foregoing
matters shall conclusively establish their authority therefor from the
Corporation and the approval and ratification by the Corporation of the papers
and documents so executed and the actions so taken; and
FURTHER
RESOLVED, that if, in any state where the securities to be registered or
qualified for sale to the public, or where the Corporation is to be registered
in connection with the public offering of the Shares, a prescribed form of
resolution or resolutions is required to be adopted by the Board of Directors,
each such resolution shall be deemed to have been and hereby is adopted, and the
Secretary of the Corporation is hereby authorized to certify the adoption of all
such resolutions as though such resolutions were now presented to and adopted by
the Board of Directors; and
FURTHER
RESOLVED, that the Authorized Officers of the Corporation with the assistance of
counsel be, and each of them hereby is, authorized and directed to take all
necessary steps and do all other things necessary and appropriate to effect the
listing of the Shares on the Nasdaq Capital Market.
General
Authority
FURTHER
RESOLVED, that, without limiting the foregoing, the Authorized Officers are, and
each of them hereby is, authorized and directed to proceed on behalf of the
Corporation and to take all such steps as are deemed necessary or appropriate,
with the advice and assistance of counsel, to cause the Corporation to take all
such action referred to herein and to perform its obligations incident to the
registration, listing and sale of the Shares; and
FURTHER RESOLVED, that the Authorized
Officers be, and each of them hereby is, authorized, empowered and directed on
behalf of and in the name of the Corporation, to take or cause to be taken all
such further actions and to execute and deliver or cause to be executed and
delivered all such further agreements, amendments, documents, certificates,
reports, schedules, applications, notices, letters and undertakings and to incur
and pay all such fees and expenses as in their judgment shall be necessary,
proper or desirable to carry into effect the purpose and intent of any and all
of the foregoing resolutions, and that all actions heretofore taken by any
officer or director of the Corporation in connection with the transactions
contemplated by the agreements described herein are hereby approved, ratified
and confirmed in all respects.
[signature page
follows]
IN
WITNESS WHEREOF, the Board of Directors has executed and delivered this Consent
effective as of ___________, 2010.
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Xxxxx
Xxxxx
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Xxxx
Xxxxxxxxxxx
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Xxxxx
Xxxxxxx
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Xxxx
X. Xxxxxx
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Xxxxxx
X. Xxxxxx
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Being
all of the directors of the Corporation
EXHIBIT
D
FORM
OF SECRETARY’S CERTIFICATE
This Secretary’s Certificate (“Certificate”) is being
delivered pursuant to Section 7(k) of that certain Common Stock Purchase
Agreement dated as of ________, 2010 (the “Common Stock Purchase
Agreement”), by and between BIONOVO, INC., a Delaware
corporation (the “Company”) and ASPIRE CAPITAL FUND, LLC (the
“Buyer”), pursuant to
which the Company may sell to the Buyer up to Fifteen Million Dollars
($15,000,000) of the Company’s Common Stock, par value $.0001 per share (the
“Common
Stock”). Terms used herein and not otherwise defined shall
have the meanings ascribed to them in the Common Stock Purchase
Agreement.
The undersigned, Xxxx Xxxxxxxxxxx,
Secretary of the Company, hereby certifies as follows:
1. I
am the Secretary of the Company and make the statements contained in this
Certificate.
2. Attached
hereto as Exhibit
A and Exhibit
B are true, correct and complete copies of the Company’s bylaws (“Bylaws”) and Certificate of
Incorporation (“Articles”), in each case, as
amended through the date hereof, and no action has been taken by the Company,
its directors, officers or shareholders, in contemplation of the filing of any
further amendment relating to or affecting the Bylaws or Articles.
3. Attached
hereto as Exhibit
C are true, correct and complete copies of the written consent duly
adopted by the Board of Directors of the Company on ___________,
2010. Such written consent has not been amended, modified or
rescinded and remains in full force and effect and such written consent is the
only written consent adopted by the Company’s Board of Directors, or any
committee thereof, or the shareholders of the Company relating to or affecting
(i) the entering into and performance of the Common Stock Purchase Agreement, or
the issuance, offering and sale of the Purchase Shares and the Commitment Shares
and (ii) and the performance of the Company of its obligation under the
Transaction Documents as contemplated therein.
4. As
of the date hereof, the authorized, issued and reserved capital stock of the
Company is as set forth on Exhibit D
hereto.
[signature page
follows]
IN WITNESS WHEREOF, I have
hereunder signed my name on this ___ day of ________ 2010.
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Name: Xxxx
Xxxxxxxxxxx
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Title:
Secretary
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The undersigned as Chief Executive
Officer of the Company hereby certifies that Xxxx Xxxxxxxxxxx is the duly
elected, appointed, qualified and acting Secretary of the Company, and that the
signature appearing above is her genuine signature.
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Xxxxx
Xxxxx, Chief Executive Officer
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EXHIBIT
E
FORM
OF LETTER TO THE TRANSFER AGENT FOR THE ISSUANCE OF THE COMMITMENTS SHARES AT
SIGNING
OF THE PURCHASE AGREEMENT
[COMPANY
LETTERHEAD]
_________,
2010
Colonial
Stock Transfer
00
Xxxxxxxx Xxxxx, Xxxxx 000
Xxxx Xxxx
Xxxx, Xxxx 00000
Attention:
____________
Re:
Issuance of Commitment Shares to Aspire Capital Fund, LLC
Dear
________,
On behalf
of Bionovo, Inc., (the “Company”), you are hereby
instructed to issue as soon
as possible, a share certificate representing 1,395,349 shares of the
Company’s common stock, par value $0.0001 per share (the “Commitment Shares”) in the
name of Aspire Capital Fund, LLC (“Aspire”) pursuant to that
certain Common Stock Purchase Agreement, dated as of ___________, 2010, by and
between the Company and Aspire. The share certificate should be dated
__________, 2010. Attached hereto as Exhibit
A, I have included a true and correct copy of a unanimous written consent
executed by all of the members of the Board of Directors of the Company adopting
resolutions approving the issuance of the Commitment Shares. The Commitment
Shares should be issued bearing the following restrictive legend:
THE
SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE
SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE OFFERED FOR SALE,
SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
APPLICABLE STATE SECURITIES LAWS, UNLESS SOLD PURSUANT TO: (1) RULE 144 UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, OR (2) AN OPINION OF HOLDER’S COUNSEL,
IN A CUSTOMARY FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR
APPLICABLE STATE SECURITIES LAWS.
The share
certificate should be sent as soon
as possible via overnight mail to the following address:
Aspire
Capital Fund, LLC
000 Xxxxx
Xxxxxx Xxxxx, Xxxxx 0000
Xxxxxxx,
XX 00000
Attention:
Xxxxxx Xxxxxx
Thank you
very much for your help. Please call me at (000) 000-0000 if you have
any questions or need anything further.
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BIONOVO,
INC.
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By:
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Name: Xxxxx
Xxxxx
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Title:
Chief Executive Officer
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