SECURITIES PURCHASE AGREEMENT
Sirna
Therapeutics, Inc.
000
Xxxxx
Xxxxxx, Xxxxx 0000
Xxx
Xxxxxxxxx, XX 00000
Ladies
& Gentlemen:
The
undersigned, [
] (the “Investor”),
hereby confirms its agreement with you as follows:
1. This
Securities Purchase Agreement (the “Agreement”) is made as of July __, 2005
between Sirna Therapeutics, Inc., a Delaware corporation (the “Company”), and
the Investor.
2. The
Company has authorized the sale and issuance of up to 18,750,000 shares
(the “Shares”) of common stock of the Company, $.01 par value per share (the
“Common Stock”), and Warrants (the “Warrants”) to purchase up to 6,750,000
shares
of Common Stock at an exercise price of $1.92
per
share (the “Warrant Shares”) to certain investors in a private placement (the
“Offering”).
3. The
Company and the Investor agree that the Investor will purchase from the Company
and the Company will issue and sell to the Investor [__________] Shares
and a Warrant to purchase [__________]
Warrant
Shares, for a purchase price of $1.60
per
share, or an aggregate purchase price of $[____________],
pursuant to the Terms and Conditions for Purchase of Shares and Warrants
attached hereto as Annex I and incorporated herein by reference as
if fully
set forth herein (the “Terms and Conditions”). This Securities Purchase
Agreement, together with the Terms and Conditions which are incorporated
herein
by reference as if fully set forth herein, may hereinafter be referred to
as the
“Agreement.” Unless otherwise requested by the Investor, the Warrant and
certificates representing the Shares purchased by the Investor will be
registered in the Investor’s name and address as set forth below. The
Warrant shall have the rights, preferences, privileges and restrictions as
set
forth in the form of Warrant attached as Exhibit
B.
4. The
Investor represents that, except as set forth below, (a) it has had no position,
office or other material relationship within the past three years with the
Company or persons known to it to be affiliates of the Company, (b) neither
it,
nor any group of which it is a member or to which it is related, beneficially
owns (including the right to acquire or vote) any securities of the Company
and
(c) it has no direct or indirect affiliation or association with any NASD
member
as of the date hereof. Exceptions:
______________________________________________________________________________________________.
(If
no
exceptions, write “none.” If left blank, response will be deemed to be
“none.”)
5. Please
confirm that the foregoing correctly sets forth the agreement between us
by
signing in the space provided below for that purpose. By executing this
Agreement, the Investor acknowledges that the Company may use the information
in
paragraph 4 above and the name and address information below in preparation
of
the Registration Statement (as defined in Annex 1). This Agreement may be
executed in separate counterparts, each of which shall be deemed to be an
original and all of which taken together shall constitute one and the same
instrument.
|
AGREED
AND ACCEPTED:
Sirna
Therapeutics, Inc.
__________________________________
By:
Xxxxxx X. Xxxxx
Title:
President and Chief Executive Officer
|
Investor:
___________________________________
By: _______________________________________
Print Name:
_________________________________
Title:
______________________________________
Address:
___________________________________
Tax
ID No.: __________________________________
Contact
name: ________________________________
Telephone:
__________________________________
Name
in which shares should be registered (if different):
___________________________________________
|
ANNEX
I
TERMS
AND CONDITIONS FOR PURCHASE OF SHARES AND WARRANTS
1. Authorization
and Sale of the Shares and Warrants.
Subject
to these Terms and Conditions, the Company has authorized the sale of up
to
18,750,000 Shares
and Warrants to purchase up to 6,750,000 Warrant Shares. The Company reserves
the right to increase or decrease this number.
2. Agreement
to Sell and Purchase the Shares and Warrants; Subscription Date.
2.1 At
the
Closing (as defined in Section 3), the Company will sell to the Investor,
and the Investor will purchase from the Company, upon the terms and conditions
hereinafter set forth, the number of Shares and a Warrant to purchase the
number
of Warrant Shares, each as set forth in Section 3 of the Securities Purchase
Agreement to which these Terms and Conditions are attached at the purchase
price
set forth thereon.
2.2 The
Company may enter into the same form of Securities Purchase Agreement, including
these Terms and Conditions, with other investors (the “Other Investors”) and
expects to complete sales of Shares and Warrants to them. (The Investor and
the
Other Investors are hereinafter sometimes collectively referred to as the
“Investors,” and the Securities Purchase Agreement to which these Terms and
Conditions are attached and the Securities Purchase Agreements (including
attached Terms and Conditions) executed by the Other Investors are hereinafter
sometimes collectively referred to as the “Agreements.”) The Company may accept
executed Agreements from Investors for the purchase of Shares and Warrants
commencing upon the date on which the Company provides the Investors with
the
proposed purchase price per Share and concluding upon the date (the
“Subscription Date”) on which the Company has (i) executed Agreements with
Investors for the purchase of at least 8,900,000 Shares and Warrants to purchase
at least 2,670,000 Warrant Shares, and (ii) notified Xxxxxx Xxxxxx
Partners
LLC, in its capacity as placement agent for this transaction (the “Placement
Agent”), in writing that it is no longer accepting additional Agreements from
Investors for the purchase of Shares and Warrants. The Company may not enter
into any Agreements after the Subscription Date.
2.3 The
obligations of each Investor under any Agreement are several and not joint
with
the obligations of any Other Investor, and no Investor shall be responsible
in
any way for the performance of the obligations of any other Investor under
any
Agreement. Nothing contained herein, and no action taken by any Investor
hereto,
shall be deemed to constitute the Investors as a partnership, an association,
a
joint venture or any other kind of entity, or create a presumption that the
Investors are in any way acting in concert or as a group with respect to
such
obligations or the transactions contemplated hereby, provided that such
obligations or the transactions contemplated hereby may be modified, amended
or
waived in accordance with Section 9 below. Each Investor shall be entitled
to
independently protect and enforce its rights, including without limitation
the
rights arising out of this Agreement (provided, that such rights may be
modified, amended or waived in accordance with Section 9 below), and it shall
not be necessary for any Other Investor to be joined as an additional party
in
any proceeding for such purpose.
3. Delivery
of the Shares and Warrants at Closing.
The
completion of the purchase and sale of the Shares and Warrants (the “Closing”)
shall occur on July 6, 2005 (the “Closing Date”), at the offices of the
Company’s counsel; provided, however, that the Closing for the purposes of (i)
any sale of Shares and Warrants to Investors who are officers or directors
of
the Company, or their affiliates (collectively, the “Affiliate Investors”) and
(ii) any sale of Shares and Warrants to non-Affiliate Investors in excess
of
19.99% of the outstanding common stock on the trading day immediately preceding
the date set forth above (the “Excess Amount”) shall be subject to such
stockholder approval and shall be the date which is one business day following
such stockholder approval. The Affiliate Investors shall place the full purchase
price for the Shares and Warrants being purchased by them hereunder in escrow
(the “Escrow”) pursuant to the terms of the Escrow Agreement (defined below) at
the initial Closing. In addition, each non-Affiliate Investor shall place
a
portion of its purchase price for the Shares and Warrants being purchased
by it
hereunder into the Escrow, such pro rata portion being equal to the product
of
(A) the Excess Amount and (B) a fraction equal to (1) the number of Shares
purchased by such non-Affiliate Investor divided by (2) the total number
of
Shares being purchased by all non-Affiliate Investors. At the Closing, the
Company shall deliver to the Investor one or more stock certificates
representing the number of Shares and a Warrant to purchase the number of
Warrant Shares, each as set forth pursuant to Section 3 of the Securities
Purchase Agreement, each such certificate to be registered in the name of
the
Investor or, if so indicated on the signature page of the Securities Purchase
Agreement, in the name of a nominee designated by the Investor.
The
Company’s obligation to issue and deliver the Shares and Warrant to the Investor
shall be subject to the following conditions, any one or more of which may
be
waived by the Company: (a) receipt by U.S.
Bank
National Association
(the
“Escrow Agent”) under the Escrow Agreement dated as of July 1, 2005 by and
between the Company and the Escrow Agent (the “Escrow Agreement”) of a certified
or official bank check or wire transfer of funds in the full amount of the
purchase price for the Shares and Warrant being purchased hereunder as set
forth
in Section 3 of the Securities Purchase Agreement; (b) completion
of
the purchases and sales under the Agreements with the Other Investors, subject
to the provisos in the previous and following paragraphs with regard to the
Affiliate Investors; (c) receipt by the Company of a completed Investor
Questionnaire; (d) the accuracy of the representations and warranties made
by
the Investors and the fulfillment of those undertakings of the Investors
to be
fulfilled prior to the Closing; and (e) the filing of a Form 8-K with the
Securities and Exchange Commission (the “SEC”) disclosing the material terms of
the transactions contemplated hereby and any information provided by the
Company
or any person acting on its behalf that the Company believes constitutes
material and non-public information.
The
Investor’s obligation to purchase the Shares and Warrant shall be subject to the
following conditions, any one or more of which may be waived by the Investor:
(a) Investors shall have executed Agreements for the purchase of at least
8,900,000 Shares
and Warrants to purchase at least 2,670,000 Warrant Shares (the “Minimum
Purchase Amount”); (b) each of the Affiliate Investors shall have executed and
delivered to the Company voting agreements in the form attached as Exhibit
C
with
respect to the voting of the shares of common stock of the Company; (c) receipt
by the Escrow Agent of the Minimum Purchase Amount (including the Shares
and
Warrants to be purchased by the Affiliate Investors), provided that funds
(i)
provided for the purchase of the Excess Amount and (ii) provided by Affiliate
Investors shall be released to the Company from Escrow by the Escrow Agent
upon
receipt of a certificate of the Secretary of the Company that the required
stockholder approval has been obtained (it being understood that all other
funds
shall be released to the Company from Escrow at the Closing by the Escrow
Agent
upon its receipt of the Minimum Purchase Amount); (d) the representations
and
warranties of the Company set forth herein shall be true and correct as of
the
Closing Date in all material respects (except for representations and warranties
that speak as of a specific date, which representations and warranties shall
be
true and correct as of such date); and (e) the Investor shall have received
such
documents as such Investor shall reasonably have requested, including, a
standard opinion of the Company’s counsel as to the matters set forth in Section
4.2 and as to exemption from the registration requirements of the Securities
Act
of 1933, as amended (the “Securities Act”), of the sale of the Shares and
Warrants.
4. Representations,
Warranties and Covenants of the Company.
The
Company hereby represents and warrants to, and covenants with, the Investor,
as
follows:
4.1 Organization.
The
Company and each of its Subsidiaries (as defined in Rule 405 under
the
Securities Act) is duly organized and validly existing in good standing under
the laws of the jurisdiction of its organization. Each of the Company and
its
Subsidiaries has full power and authority to own, operate and occupy its
properties and to conduct its business as presently conducted and as described
in the documents filed by the Company under the Securities Exchange Act of
1934,
as amended, and the rules and regulations promulgated thereunder (the “Exchange
Act”), since the end of its most recently completed fiscal year through the date
hereof, including, without limitation, its most recent report on Form 10-K
(the
“Exchange Act Documents”) and is registered or qualified to do business and in
good standing in each jurisdiction in which the nature of the business conducted
by it or the location of the properties owned or leased by it requires such
qualification and where the failure to be so qualified would have a material
adverse effect upon the financial condition, assets, liabilities, properties
or
operations of the Company and its Subsidiaries, considered as one enterprise
(a
“Material Adverse Effect”), and no proceeding has been instituted in any such
jurisdiction, revoking, limiting or curtailing, or seeking to revoke, limit
or
curtail, such power and authority or qualification.
4.2 Due
Authorization and Valid Issuance.
The
Company has all requisite power and authority to execute, deliver and perform
its obligations under the Agreements and the Warrants, and the Agreements
and
the Warrants have been duly authorized and validly executed and delivered
by the
Company and constitute legal, valid and binding agreements of the Company
enforceable against the Company in accordance with their terms, except as
rights
to indemnity and contribution may be limited by state or federal securities
laws
or the public policy underlying such laws, except as enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium
or
similar laws affecting creditors’ and contracting parties’ rights generally and
except as enforceability may be subject to general principles of equity
(regardless of whether such enforceability is considered in a proceeding
in
equity or at law). The Shares and the Warrant being purchased by the Investor
hereunder and the Warrant Shares issuable pursuant to the Warrant will, upon
issuance and payment therefor pursuant to the terms hereof and thereof, be
duly
authorized, validly issued, fully-paid and nonassessable.
4.3 Non-Contravention.
The
execution and delivery of the Agreements and the Warrants, the issuance and
sale
of the Shares and the Warrants under the Agreements and the Warrant Shares
under
the Warrant, the fulfillment of the terms of the Agreements and the Warrants
and
the consummation of the transactions contemplated thereby will not
(A) conflict with or constitute a violation of, or default (with the
passage of time or otherwise) under, (i) any bond, debenture, note
or other
evidence of indebtedness, lease, contract, indenture, mortgage, deed of trust,
loan agreement, joint venture or other agreement or instrument to which the
Company or any Subsidiary is a party or by which it or any of its Subsidiaries
or their respective properties are bound, (ii) the charter or by-laws
of
the Company or any Subsidiary, or (iii) any law, administrative regulation,
ordinance or order of any court or governmental agency, arbitration panel
or
authority applicable to the Company or any Subsidiary or their respective
properties, except in the case of clauses (i) and (iii) for any such
conflicts, violations or defaults which are not reasonably likely to have
a
Material Adverse Effect or (B) result in the creation or imposition
of any
lien, encumbrance, claim, security interest or restriction whatsoever upon
any
of the material properties or assets of the Company or any Subsidiary or
an
acceleration of indebtedness pursuant to any obligation, agreement or condition
contained in any bond, debenture, note or any other evidence of indebtedness
or
any material indenture, mortgage, deed of trust or any other agreement or
instrument to which the Company or any Subsidiary is a party or by which
any of
them is bound or to which any of the material property or assets of the Company
or any Subsidiary is subject except for any such creation or imposition which
is
not reasonably likely to have a Material Adverse Effect. No consent, approval,
authorization or other order of, or registration, qualification or filing
with,
any regulatory body, administrative agency, or other governmental body in
the
United States or any other person (including, without limitation, the
stockholders of the Company) is required for the execution and delivery of
the
Agreements and the Warrants and the valid issuance and sale of the Shares
and
Warrants to be sold pursuant to the Agreements, and the valid issuance of
the
Warrant Shares under the Warrant, other than such as have been made or obtained,
and except for stockholder approval under applicable Nasdaq requirements
as
contemplated pursuant to Section 7.9, post-closing securities filings or
notifications required to be made under federal or state securities
laws.
4.4 Capitalization.
The
capitalization of the Company as of June 30, 2005 is
as set
forth in the most recent applicable Exchange Act Documents, increased as
set
forth in the next sentence. The Company has not issued any capital stock
since
that date other than pursuant to (i) employee benefit plans disclosed in
the
Exchange Act Documents, or (ii) outstanding warrants, options or other
securities disclosed in the Exchange Act Documents. The Shares and Warrants
to
be sold pursuant to the Agreements, and the Warrant Shares to be issued pursuant
to the Warrant, have been duly authorized, and when issued and paid for in
accordance with the terms of the Agreements and the Warrants, as the case
may
be, will be duly and validly issued, fully paid and nonassessable. The
outstanding shares of capital stock of the Company have been duly and validly
issued and are fully paid and nonassessable, have been issued in compliance
with
all federal and state securities laws, and were not issued in violation of
any
preemptive rights or similar rights to subscribe for or purchase securities.
Except as set forth in or contemplated by the Exchange Act Documents, there
are
no outstanding rights (including, without limitation, preemptive rights),
warrants or options to acquire, or instruments convertible into or exchangeable
for, any unissued shares of capital stock or other equity interest in the
Company or any Subsidiary, or any contract, commitment, agreement, understanding
or arrangement of any kind to which the Company is a party or of which the
Company has knowledge and relating to the issuance or sale of any capital
stock
of the Company or any Subsidiary, any such convertible or exchangeable
securities or any such rights, warrants or options. Without limiting the
foregoing, no preemptive right, co-sale right, right of first refusal,
registration right, or other similar right exists with respect to the Shares,
the Warrants or the Warrant Shares or the issuance and sale thereof. Except
as
set forth in this Agreement, no further approval or authorization of any
stockholder, the Board of Directors of the Company or others is required
for the
issuance and sale of the Shares, the Warrants and the Warrant Shares, including
under Nasdaq rules. The Company owns the entire equity interest in each of
its
Subsidiaries, free and clear of any pledge, lien, security interest,
encumbrance, claim or equitable interest, other than as described in the
Exchange Act Documents. Except as disclosed in the Exchange Act Documents,
there
are no stockholders agreements, voting agreements or other similar agreements
with respect to the Common Stock to which the Company is a party or, to the
knowledge of the Company, between or among any of the Company’s
stockholders.
4.5 Legal
Proceedings.
There
is no material legal or governmental proceeding pending or, to the knowledge
of
the Company, threatened to which the Company or any Subsidiary is or may
be a
party or of which the business or property of the Company or any Subsidiary
is
subject that is not disclosed in the Exchange Act Documents.
4.6 No
Violations.
Neither
the Company nor any Subsidiary is in violation of its charter, bylaws, or
other
organizational document, or in violation of any law, administrative regulation,
ordinance or order of any court or governmental agency, arbitration panel
or
authority applicable to the Company or any Subsidiary, which violation,
individually or in the aggregate, would be reasonably likely to have a Material
Adverse Effect, or is in default (and there exists no condition which, with
the
passage of time or otherwise, would constitute a default) in the performance
of
any bond, debenture, note or any other evidence of indebtedness in any
indenture, mortgage, deed of trust or any other material agreement or instrument
to which the Company or any Subsidiary is a party or by which the Company
or any
Subsidiary is bound or by which the properties of the Company or any Subsidiary
are bound, which would be reasonably likely to have a Material Adverse
Effect.
4.7 Governmental
Permits, Etc.
With
the exception of the matters which are dealt with separately in
Sections 4.1, 4.12, 4.13 and 4.14, each of the Company and its Subsidiaries
has all necessary franchises, licenses, certificates and other authorizations
from any foreign, federal, state or local government or governmental agency,
department, or body that are currently necessary for the operation of the
business of the Company and its Subsidiaries as currently conducted and as
described in the Exchange Act Documents except where the failure to currently
possess could not reasonably be expected to have a Material Adverse
Effect.
4.8 Intellectual
Property.
Except
as described in the Company’s SEC filings: (i) the Company owns or and to the
Company’s knowledge has obtained (a) valid and enforceable licenses or other
rights for the material intellectual property used in its business, as it
is
currently conducted including, without limitation, in the field of RNA
interference (RNAi) involving small interfering nucleic acid (siNA, including
siRNA) molecules, and process development/cGMP manufacturing of RNA and siNA,
including siRNA, and (b) all licenses and other rights required to use or
exploit any of the foregoing, currently used in the conduct of the Company’s
business (collectively, the “Intellectual Property”); and (ii) (a) to the
Company’s knowledge there are no third parties who have any ownership rights to
any Intellectual Property or trademarks, trademark, trademark applications,
service marks, service xxxx applications, or trade secrets (“Other Property”)
that is owned by, or has been licensed to, the Company for the products
described in the SEC Filings that would preclude the Company from conducting
its
business as currently conducted and have a Material Adverse Effect, except
for
the ownership rights of the owners of the Intellectual Property or Other
Property licensed or optioned by the Company; (b) to the Company’s knowledge,
there are currently no sales of any products that would constitute an
infringement by third parties of any Intellectual Property owned, licensed
or
optioned by the Company, which infringement would have a Material Adverse
Effect; (c) there is no pending or, to the Company’s knowledge, threatened
action, suit, proceeding or claim by others challenging the rights of the
Company in or to any Intellectual Property or Other Property owned, licensed
or
optioned by the Company, other than claims which would not reasonably be
expected to have a Material Adverse Effect; (d) there is no pending or, to
the
Company’s knowledge, threatened action, suit, proceeding or claim by others
challenging the validity or scope of any Intellectual Property or Other Property
owned, licensed or optioned by the Company; and (e) there is no pending or,
to
the Company’s knowledge, threatened action, suit, proceeding or claim by others
that the Company infringes or otherwise violates any patent, trademark,
copyright, trade secret or other proprietary right of others, other than
non-material actions, suits, proceedings and claims.
4.9 Financial
Statements.
(a) The
financial statements of the Company and the related notes contained in the
Exchange Act Documents present fairly, in accordance with generally accepted
accounting principles, the financial position of the Company and its
Subsidiaries as of the dates indicated, and the results of its operations
and
cash flows for the periods therein specified except that the unaudited interim
financial statements were or are subject to normal and recurring year-end
adjustments which will not be material in amount. Such financial statements
(including the related notes) have been prepared in accordance with generally
accepted accounting principles applied on a consistent basis throughout the
periods therein specified, except as may be disclosed in
the
notes to such financial statements, or in the case of unaudited statements,
as
may be permitted by the SEC on Form 10-Q under the Exchange Act and
except
as disclosed in the Exchange Act Documents. The other financial information
contained in the Exchange Act Documents has been prepared on a basis consistent
with the financial statements of the Company.
(b) Except
as
set forth in any Exchange Act Documents, there are no obligations of the
Company
to officers, directors, stockholders or employees of the Company other than
(i)
for payment of salary for services rendered and for bonus payments; (ii)
reimbursements for reasonable expenses incurred on behalf of the Company;
(iii)
for other standard employee benefits made generally available to all employees
(including stock option agreements outstanding under any stock option plan
approved by the Board of Directors of the Company); and (iv) obligations
listed
in the Company’s financial statements. Except as described above or in any
Exchange Act Filings, none of the officers, directors or, to the best of
the
Company’s knowledge, key employees or stockholders of the Company or any members
of their immediate families, are indebted to the Company, individually or
in the
aggregate, in excess of $60,000 or have any direct or indirect ownership
interest in any firm or corporation with which the Company is affiliated
or with
which Company has a business relationship, or any firm or corporation which
competes with the Company, other than passive investments in publicly traded
companies (representing less than one percent (1%) of such company) which
may
compete with the Company. Except as described above, no officer, director
or
stockholder, or any member of their immediate families, is, directly or
indirectly, interested in any material contract with the Company and no
agreements, understandings or proposed transactions are contemplated between
the
Company and any such person. Except as set forth in any Exchange Act Documents,
the Company is not a guarantor or indemnitor of any indebtedness of any other
person, firm or corporation.
4.10 No
Material Adverse Change.
Except
as disclosed in the Exchange Act Documents, since March 31, 2005, there has
not
been (i) any event which has had, or would be reasonably expected
to have,
a Material Adverse Effect; (ii) any obligation, direct or contingent, that
is
material to the Company and its Subsidiaries considered as one enterprise,
incurred by the Company, except obligations incurred in the ordinary course
of
business, (iii) any dividend or distribution of any kind declared,
paid or
made on the capital stock of the Company or any of its Subsidiaries, or
(iv) any loss or damage (whether or not insured) to the physical property
of the Company or any of its Subsidiaries which has been sustained which
has a
Material Adverse Effect.
4.11 Disclosure.
The representations
and warranties of the Company contained in this Section 4 as of the
date
hereof and as of the Closing Date, do not contain any untrue statement of
a
material fact or omit to state a material fact required to be stated therein
or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading. Except with respect to the material
terms
and conditions of the transaction contemplated by the Agreements and the
Warrants, which shall be publicly disclosed by the Company pursuant to Section
16 hereof, the Company confirms that any information provided by it or any
person acting on its behalf that the Company believes constitutes material,
non-public information will be publicly disclosed pursuant to a press release
and Form 8-K issued within one (1) business day of the Subscription Date
(as
defined in Section 2.2 above). The Company understands and confirms that
Investor will rely on the foregoing representations in effecting transactions
in
securities of the Company.
4.12 NASDAQ
Compliance.
The
Company’s Common Stock is registered pursuant to Section 12(g) of the
Exchange Act and is listed on The Nasdaq Stock Market, Inc. National Market
(the
“Nasdaq National Market”), and the Company has taken no action designed to, or
likely to have the effect of, terminating the registration of the Common
Stock
under the Exchange Act or de-listing the Common Stock from the Nasdaq National
Market, nor has the Company received any notification that the SEC or the
National Association of Securities Dealers, Inc. (“NASD”) is contemplating
terminating such registration or listing. The Company is in compliance with
all
applicable Nasdaq maintenance requirements and corporate governance requirements
for continuing listing on Nasdaq National Market. The issuance by the Company
of
the Shares, the Warrants, and the Warrant Shares shall not have the effect
of
terminating the registration of the Common Stock under the Exchange Act or
delisting the Common Stock from the Nasdaq National Market.
4.13 Reporting
Status.
The
Company is eligible to use Form S-3 to register the Shares and Warrant Shares
to
be offered for the account of the Investors. The following documents complied
in
all material respects with the SEC’s requirements as of their respective filing
dates, and the information contained therein as of the date thereof did not
contain an untrue statement of a material fact or omit to state a material
fact
required to be stated therein or necessary to make the statements therein
in
light of the circumstances under which they were made not
misleading:
(a) the
Annual Report on Form 10-K for the fiscal year ended December 31, 2004, filed
by
the Company with the SEC on March 31, 2005, as amended pursuant to the Form
10-K/A filed by the Company with the SEC on May 2, 2005; and
(b) all
other
documents, if any, filed by the Company with the SEC during
the one-year period preceding the date of this Agreement pursuant to the
reporting requirements of the Exchange Act.
4.14 Listing.
The
Company shall comply with all requirements of the NASD and SEC with respect
to
the issuance of the Shares, the Warrant and the Warrant Shares and the listing
of the Shares and the Warrant Shares on the Nasdaq National Market.
4.15 No
Manipulation of Stock.
The
Company has not taken and will not, in violation of applicable law, take,
any
action designed to or that might reasonably be expected to cause or result
in
stabilization or manipulation of the price of the Common Stock to facilitate
the
sale or resale of the Shares or the Warrant Shares.
4.16 Company
not an “Investment Company”.
The
Company has been advised of the rules and requirements under the Investment
Company Act of 1940, as amended (the “Investment Company Act”). To the best
knowledge of the Company, the Company is not, and immediately after receipt
of
payment for the Shares and Warrants will not be, an “investment company” or an
entity “controlled” by an “investment company” within the meaning of the
Investment Company Act and shall conduct its business in a manner so that
it
will not become subject to the Investment Company Act.
4.17 Accountants.
To the
Company’s knowledge Ernst & Young LLP, who the Company expects will consent
to the incorporation by reference of its report dated February 14, 2005 with
respect to the consolidated financial statements of the Company included
in the
Company's Annual Report on Form 10-K for the year ended December 31, 2004
into
the Registration Statement (as defined below) and the prospectus which forms
a
part thereof, are independent accountants as required by the Securities Act
and
the rules and regulations promulgated thereunder.
4.18 Contracts.
The
contracts described in the Exchange Act Documents that are material to the
Company are in full force and effect on the date hereof, and neither the
Company
nor, to the Company's knowledge, any other party to such contracts is in
breach
of or default under any of such contracts which would have a Material Adverse
Effect. The Company has filed with the SEC all contracts and agreements required
to be filed by the Exchange Act.
4.19 Taxes.
The
Company has filed all necessary federal, state and foreign income and franchise
tax returns when due (or obtained appropriate extensions for filing) and
has
paid or accrued all taxes shown as due thereon, and the Company has no knowledge
of a tax deficiency which has been or might be asserted or threatened against
it
which would have a Material Adverse Effect.
4.20 Transfer
Taxes.
On the
Closing Date, all stock transfer or other taxes (other than income taxes)
which
are required to be paid in connection with the sale and transfer of the Shares
and the Warrant to be sold to the Investor hereunder will be, or will have
been,
fully paid or provided for by they Company and all laws imposing such taxes
will
be or will have been fully complied with. Upon the issuance of the Warrants
Shares pursuant to the Warrant all stock transfer or other taxes (other than
income taxes) which are required to be paid in connection therewith will
be, or
will have been, fully paid or provided for by the Company and all laws imposing
such taxes will be or will have been fully complied with.
4.21 Private
Offering.
Assuming the correctness of the representations and warranties of the Investors
set forth in Section 5 hereof, the offer and sale of Shares and the
Warrants hereunder is and, upon exercise of the Warrants, the issuance of
the
Warrant Shares will be, exempt from registration under the Securities Act.
The
Company has not in the past nor will it hereafter take any action independent
of
the placement agent to sell, offer for sale or solicit offers to buy any
securities of the Company which would bring the offer, issuance or sale of
the
Shares and the Warrants as contemplated by this Agreement, or the issuance
of
the Warrant Shares pursuant to the Warrant, within the provisions of Section
5
of the Securities Act, unless such offer, issuance or sale was or shall be
within the exemptions of Section 4 of the Securities Act. Neither
the Company nor any person acting on behalf of the Company has offered or
sold
any of the Shares or the Warrants by any form of general solicitation or
general
advertising. The Company has offered the Shares and the Warrants for sale
only
to the Investors and certain other “accredited investors” within the meaning of
Rule 501 under the Securities Act.
4.22 Disclosure
Controls and Procedures.
The
Company is in material compliance with all provisions of the Xxxxxxxx-Xxxxx
Act
of 2002 which are applicable to it as of the Closing Date. The Company maintains
a system of internal control over financial reporting (as such term is defined
in the Exchange Act ) regarding the reliability of financial reporting and
preparation of financial statements for external purposes in accordance with
GAAP and includes policies and procedures that (i) pertain to maintenance
of
records that in reasonable detail accurately and fairly reflect the transactions
and dispositions of the assets of the issuer; (ii) provide reasonable assurance
that transactions are recorded as necessary to permit preparation of financial
statements in accordance with GAAP, and that receipts and expenditures of
the
issuer are being made only in accordance with authorizations of management
and
directors of the issuer; and (iii) provide reasonable assurance regarding
prevention or timely detection of unauthorized acquisition, use, or disposition
of the issuer’s assets that could have a material adverse effect on the
financial statements. The Company’s certifying officers are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in
Exchange Act) for the Company and they have, to the extent applicable,
(a) designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under their supervision,
to
ensure that material information relating to the Company, including its
Subsidiaries, is made known to the certifying officers by others within those
entities, particularly during the periods in which the Exchange Act Documents
have been prepared; (b) evaluated the effectiveness of the Company’s
disclosure controls and procedures and presented in the applicable Exchange
Act
Documents their conclusions about the effectiveness of the disclosure controls
and procedures, as of the end of the periods covered by such Exchange Act
Documents based on such evaluation; and (c) to the extent applicable,
since
the last evaluation date referred to in (b) above, there have been
no
material changes in the Company’s internal control over financial reporting (as
such term is defined in the Exchange Act) and no significant deficiencies
or
material weaknesses in internal controls over financial reporting have been
identified since the last evaluation date or, to the Company’s knowledge, in
other factors that could significantly affect the Company’s internal control
over financial reporting.
4.23 Transactions
With Affiliates.
Except
as disclosed in the Exchange Act Documents, none of the officers or directors
of
the Company is presently a party to any transaction with the Company or any
Subsidiary (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
or
director or, to the knowledge of the Company, any entity in which any officer
or
director has a substantial interest or is an officer, director, trustee or
partner.
4.24 No
Registration Rights.
Other
than the registration rights granted to the Investors in Section 7 of this
Agreement and except as set forth in this Section 4.24, no person has the
right,
which right has not been waived, to require the Company or any Subsidiary
to
register any securities for sale under the Securities Act by reason of the
filing of the Registration Statement with the SEC or the issuance and sale
of
the Shares, the Warrant or the Warrant Shares. The following persons have
the
right to require the Company to register securities for sale under the
Securities Act, and have exercised such rights with respect to the filing
of the
Registration Statement: (a) Sprout Capital IX, L.P., with respect to 1,160,462
shares of the Company's common stock; (b) Sprout IX Plan Investors, L.P.,
with
respect to 53,589 shares of the Company's common stock; (c) Sprout Entrepreneurs
Fund, L.P., with respect to 4,571 shares of the Company's common stock; (d)
DLJ
Capital Corporation, with respect to 2,543 shares of the Company's common
stock;
(e) Xxxxx Xxxxxx, Ph.D., with respect to 31,311 shares of the Company's common
stock; (f) Venrock Associates III, L.P. with respect to 1,813,814 shares
of the
Company's common stock; (g) Venrock Associates, with respect to 408,108 shares
of the Company's common stock; (h) Venrock Entrepreneurs Fund III, L.P.,
with
respect to 45,345 shares of the Company's common stock; (i) Oxford Bioscience
Partners IV L.P., with respect to 1,701,661 shares of the Company's common
stock; (j) mRNA Fund II L.P. with respect to 17,073 shares of the Company's
common stock; (k) Granite Global Ventures (Q.P.) L.P., with respect to 431,453
shares of the Company's common stock; (l) Granite Global Ventures L.P., with
respect to 7,373 shares of the Company's common stock; and (m) Abingworth
Management, Ltd., with respect to 459,714 shares of the Company's common
stock
(clauses (a)-(m), collectively, the “Existing Registrable Shares”).
4.25 Dilution.
The
Company acknowledges that the issuance of the Shares and the Warrant will
result
in dilution of the outstanding shares of Common Stock, which dilution may
be
substantial under certain market conditions. The Company further acknowledges
that its obligations under this Agreement and the Warrant, including without
limitation its obligation to issue the Warrant, are, except as expressly
set
forth in this Agreement, unconditional and absolute and not subject to any
right
of set off, counterclaim, delay, or reduction, regardless of the effect of
any
such dilution or any claim the Company may have against any Investor and
regardless of the dilutive effect that such issuance may have on the ownership
of the other stockholders of the Company.
5. Representations,
Warranties and Covenants of the Investor.
5.1 The
Investor represents and warrants to, and covenants with, the Company that:
(i) (A) the Investor is an “accredited investor” as defined in Regulation D
under the Securities Act and the Investor is also knowledgeable, sophisticated
and experienced in making, and is qualified to make decisions with respect
to
investments in shares presenting an investment decision like that involved
in
the purchase of the Shares and the Warrant, including investments in securities
issued by the Company and investments in comparable companies, and has
requested, received, reviewed and considered all information it deemed relevant
in making an informed decision to purchase the Shares and the Warrant and
(B)
the Company has made available to the Investor, prior to the date hereof,
the
opportunity to ask questions of and receive complete and correct answers
from
representatives of the Company concerning the terms and conditions of the
Shares
and the Warrant and to obtain any additional information relating to the
financial condition and business of the Company and the Investor has such
knowledge and experience in financial and business matters that the Investor
is
capable of evaluating the merits and risks of the investment in the Shares
and
the Warrant; (ii) the Investor is acquiring the number of Shares and
the
Warrant to purchase the number of Warrant Shares, each as set forth in Section
3
of the Securities Purchase Agreement in the ordinary course of its business
and
for its own account and with no present intention of distributing any of
such
Shares, Warrant or Warrant Shares or any arrangement or understanding with
any
other persons regarding the distribution of such Shares, Warrant or Warrant
Shares (other than pursuant to the Registration Statement or in compliance
with
applicable laws); (iii) the Investor will not, directly or indirectly,
offer, sell, pledge, transfer or otherwise dispose of (or solicit any offers
to
buy, purchase or otherwise acquire or take a pledge of) any of the Shares
and
the Warrant except in compliance with the Securities Act, applicable state
securities laws and the respective rules and regulations promulgated thereunder;
(iv) the Investor has answered all questions on the Investor Questionnaire
for use in preparation of the Registration Statement and the answers thereto
are
true, correct and complete as of the date hereof and will be true, correct
and
complete as of the Closing Date and the Filing Date; (v) the Investor
will
notify the Company of any change in any of such information until such time
as
the Investor has sold all of its Shares and Warrant Shares or until the Company
is no longer required to keep the Registration Statement effective; and (vi)
the
Investor has, in connection with its decision to purchase the number of Shares
and the Warrant to purchase the number of Warrant Shares, each as set forth
in
Section 3 of the Securities Purchase Agreement, relied only upon the Exchange
Act Documents and the representations and warranties of the Company contained
herein. The Investor understands that its acquisition of the Shares and the
Warrant has not been registered under the Securities Act or registered or
qualified under any state securities law in reliance on specific exemptions
therefrom, which exemptions may depend upon, among other things, the bona
fide
nature of the Investor’s investment intent as expressed herein. Subject to
compliance with the Securities Act, applicable securities laws and the
respective rules and regulations promulgated thereunder, nothing contained
herein shall be deemed a representation or warranty by such Investor to hold
the
Shares, Warrant or Warrant Shares for any period of time. The Investor has
completed or caused to be completed and delivered to the Company the Investor
Questionnaire, which questionnaire is true, correct and complete in all material
respects.
5.2 The
Investor acknowledges, represents and agrees that no action has been or will
be
taken in any jurisdiction outside the United States by the Company that would
permit an offering of the Shares, Warrant or Warrant Shares, or possession
or
distribution of offering materials in connection with the issue of the Shares,
Warrant or Warrant Shares, in any jurisdiction outside the United States
where
legal action by the Company for that purpose is required. Each Investor outside
the United States will comply with all applicable laws and regulations in
each
foreign jurisdiction in which it purchases, offers, sells or delivers the
Shares, Warrant or Warrant Shares or has in its possession or distributes
any
offering material, in all cases at its own expense.
5.3 The
Investor hereby covenants with the Company not to make any sale of the Shares,
Warrant or Warrant Shares without complying with the provisions of this
Agreement and without causing the prospectus delivery requirement under the
Securities Act to be satisfied (whether by delivery of the Prospectus or
pursuant to and in compliance with an exemption from such requirement), and
the
Investor acknowledges that the Warrant and certificates evidencing the Shares
will be imprinted with a legend that prohibits their transfer except in
accordance therewith. The Investor acknowledges that there may occasionally
be
times when the Company determines that it must suspend the use of the Prospectus
forming a part of the Registration Statement, as set forth in Section
7.2(c).
5.4 The
Investor further represents and warrants to, and covenants with, the Company
that (i) the Investor has full right, power, authority and capacity
to
enter into this Agreement and to consummate the transactions contemplated
hereby
and has taken all necessary action to authorize the execution, delivery and
performance of this Agreement, and (ii) this Agreement constitutes
a valid
and binding obligation of the Investor enforceable against the Investor in
accordance with its terms, except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting
creditors’ and contracting parties’ rights generally and except as
enforceability may be subject to general principles of equity (regardless
of
whether such enforceability is considered in a proceeding in equity or at
law)
and except as the indemnification agreements of the Investors herein may
be
legally unenforceable.
5.5 Neither
the Investor nor any person acting on its behalf or at its direction has
engaged
in any purchase or sale of Common Stock (including without limitation any
short
sale), pledge, transfer, establish an open “put equivalent position” within the
meaning of Rule 16a-1(h) under the Exchange Act) during the 5 trading
days
immediately preceding the date of this Agreement. Investor will not use any
of
the restricted Shares acquired pursuant to this Agreement, or the Warrant
Shares
acquired pursuant to the Warrant, to cover any short position in the Common
Stock of the Company if doing so would be in violation of applicable securities
laws and otherwise will comply with federal securities laws in the holding
and
sale of the Shares, Warrant and Warrant Shares.
5.6 The
Investor understands that nothing in the Exchange Act Documents, this Agreement,
the Warrant or any other materials presented to the Investor in connection
with
the purchase and sale of the Shares and the Warrant constitutes legal, tax
or
investment advice. The Investor has consulted such legal, tax and investment
advisors as it, in its sole discretion, has deemed necessary or appropriate
in
connection with its purchase of Shares and the Warrant.
5.7 The
Company acknowledges and agrees that Investor does not make or has not made
any
representations or warranties with respect to the transactions contemplated
hereby other than those specifically set forth in Sections 4 and 5 of this
Agreement, Sections 5 and 16(a) of Annex 1 of this Agreement, or in the Investor
Questionnaire.
5.8 The
Purchaser acknowledges the following disclosure, which is set forth herein
as
required pursuant to Section 25102(a) of the California Corporate Securities
Law
of 1968 (provided that, subject to the accuracy of the Purchasers’
representations and warranties to the Company, the Company represents that
the
sale of the Shares is so exempt):
“THE
SALE OF THE SECURITIES THAT ARE THE SUBJECT OF THIS AGREEMENT HAS NOT BEEN
QUALIFIED WITH THE COMMISSIONER OF CORPORATIONS OF THE STATE OF CALIFORNIA
AND
THE ISSUANCE OF THE SECURITIES OR THE PAYMENT OR RECEIPT OF ANY PART OF THE
CONSIDERATION THEREFOR PRIOR TO THE QUALIFICATION IS UNLAWFUL, UNLESS THE
SALE
OF SECURITIES IS EXEMPT FROM THE QUALIFICATION BY SECTION 25100, 25102, OR
25105
OF THE CALIFORNIA CORPORATIONS CODE. THE RIGHTS OF ALL PARTIES TO THIS AGREEMENT
ARE EXPRESSLY CONDITIONED UPON THE QUALIFICATION BEING OBTAINED, UNLESS THE
SALE
IS SO EXEMPT.”
6. Survival
of Representations, Warranties and Agreements.
Notwithstanding any investigation made by any party to this Agreement, all
covenants, agreements, representations and warranties made by the Company
and
the Investor herein shall survive the execution of this Agreement, the delivery
to the Investor of the Shares and the Warrant being purchased and the payment
therefor until the expiration date of the Company’s obligation to keep the
Registration Statement effective pursuant to Section 7.1(c).
7. Registration
of the Shares and Warrant Shares; Compliance with the Securities
Act.
7.1 Registration
Procedures and Other Matters.
The
Company shall:
(a) subject
to receipt of necessary information from the Investor after prompt request
from
the Company to the Investor to provide such information, prepare and file
with
the SEC, within 15 business days after the Closing Date (the “Filing Date”), a
registration statement on Form S-3 (the “Registration Statement”) to enable the
resale of the Shares and the Warrant shares by the Investors from time to
time
through the automated quotation system of the Nasdaq National Market or in
privately-negotiated transactions;
(b) subject
to receipt of necessary information from the Investor after prompt request
from
the Company to the Investors to provide such information, use its reasonable
commercial efforts to cause the Registration Statement to become effective
on or
prior to the 70th
calendar
day after the Closing Date (the “Required Effective Date”). However, so long as
the Company filed the Registration Statement by the Filing Date, if the
Registration Statement receives Commission review, then the Required Effective
Date will be the one hundred tenth (110th) calendar day after the Closing
Date;
(c) use
its
reasonable commercial efforts to prepare and file with the SEC such amendments
and supplements to the Registration Statement and the Prospectus used in
connection therewith as may be necessary to keep the Registration Statement
current, effective and free from any material misstatement or omission to
state
a material fact for a period not exceeding, with respect to each Investor’s
Shares and Warrant Shares, the earlier of (i) the fifth anniversary
of the
Closing Date, (ii) the date on which the Investor may sell all Shares
and
Warrant Shares then held by the Investor without restriction by the volume
limitations of Rule 144(e) of the Securities Act, or (iii) such
time
as all Shares, and Warrant Shares issuable pursuant to the Warrant, purchased
by
such Investor in this Offering have been sold pursuant to a registration
statement;
(d) furnish
to the Investor with respect to the Shares and Warrant Shares registered
under
the Registration Statement such number of copies of the Registration Statement,
Prospectuses and Preliminary Prospectuses in conformity with the requirements
of
the Securities Act and such other documents as the Investor may reasonably
request, in order to facilitate the public sale or other disposition of all
or
any of the Shares and Warrant Shares by the Investor; provided, however,
that
the obligation of the Company to deliver copies of Prospectuses or Preliminary
Prospectuses to the Investor shall be subject to the receipt by the Company
of
reasonable assurances from the Investor that the Investor will comply with
the
applicable provisions of the Securities Act and of such other securities
or blue
sky laws as may be applicable in connection with any use of such Prospectuses
or
Preliminary Prospectuses;
(e) file
documents required of the Company for normal blue sky clearance in states
specified in writing by the Investor and use its reasonable commercial efforts
to maintain such blue sky qualifications during the period the Company is
required to maintain the effectiveness of the Registration Statement pursuant
to
Section 7.1(c); provided, however, that the Company shall not be required
to qualify to do business or consent to service of process in any jurisdiction
in which it is not now so qualified or has not so consented;
(f) bear
all
expenses in connection with the procedures in paragraph (a) through (e) of
this
Section 7.1 (other than underwriting discounts or commissions, brokers’
fees and similar selling expenses, and any other fees or expenses incurred
by
the Investor, including attorney fees of the Investor) and the registration
of
the Shares and Warrant Shares pursuant to the Registration Statement;
(g) advise
the Investor, promptly after it shall receive notice or obtain knowledge
of the
issuance of any stop order by the SEC delaying or suspending the effectiveness
of the Registration Statement or of the initiation or threat of any proceeding
for that purpose; and it will promptly use its reasonable commercial efforts
to
prevent the issuance of any stop order or to obtain its withdrawal at the
earliest possible moment if such stop order should be issued; and
(h) provide
a
“Plan of Distribution” section of the Registration Statement in the form
attached hereto as Exhibit
A.
Notwithstanding
anything to the contrary herein, except for the Existing Registrable Shares
the
Registration Statement shall cover only the Shares and Warrant Shares. In
no
event at any time before the expiration of ninety (90) days after the
effectiveness of the Registration Statement with respect to the Shares and
Warrant Shares shall the Company publicly announce or file any other
registration statement, other than registrations on Form S-8, without
the
prior written consent of a majority in interest of the Investors.
The
Company understands that the Investor disclaims being an underwriter, but
if the
SEC deems the Investor to be an underwriter the Company shall not be relieved
of
any obligations it has hereunder; provided,
however
that if
the Company receives notification from the SEC that the Investor is deemed
an
underwriter, then the period by which the Company is obligated to submit
an
acceleration request to the SEC shall be extended to the earlier of (i) the
90th day after such SEC notification, or (ii) 120 days after the initial
filing of the Registration Statement with the SEC.
7.2 Transfer
of Shares and Warrant Shares After Registration; Suspension.
(a) The
Investor agrees that it will not effect any disposition of the Shares or
Warrant
Shares or its right to purchase the Shares or Warrant Shares that would
constitute a sale within the meaning of the Securities Act except as
contemplated in the Registration Statement referred to in Section 7.1
and
as described below or as otherwise permitted by law, and that it will promptly
notify the Company of any changes in the information set forth in the
Registration Statement regarding the Investor or its plan of
distribution.
(b) Except
in
the event that paragraph (c) below applies, the Company shall (i) if
deemed
necessary by the Company, prepare and file from time to time with the SEC
a
post-effective amendment to the Registration Statement or a supplement to
the
related Prospectus or a supplement or amendment to any document incorporated
therein by reference or file any other required document so that such
Registration Statement will not contain an untrue statement of a material
fact
or omit to state a material fact required to be stated therein or necessary
to
make the statements therein not misleading, and so that, as thereafter delivered
to purchasers of the Shares or Warrant Shares being sold thereunder, such
Prospectus will not contain an untrue statement of a material fact or omit
to
state a material fact required to be stated therein or necessary to make
the
statements therein, in light of the circumstances under which they were made,
not misleading; (ii) provide the Investor copies of any documents
filed
pursuant to Section 7.2(b)(i) as the Investor may reasonably request;
and
(iii) inform each Investor that the Company has complied with its
obligations in Section 7.2(b)(i) (or that, if the Company has filed
a
post-effective amendment to the Registration Statement which has not yet
been
declared effective, the Company will notify the Investor to that effect,
will
use its reasonable commercial efforts to secure the effectiveness of such
post-effective amendment as promptly as possible and will promptly notify
the
Investor pursuant to Section 7.2(b)(i) hereof when the amendment
has
become effective).
(c) Subject
to paragraph (d) below, in the event (i) of any request by the SEC
or any
other federal or state governmental authority during the period of effectiveness
of the Registration Statement for amendments or supplements to a Registration
Statement or related Prospectus or for additional information; (ii) of
the
issuance by the SEC or any other federal or state governmental authority
of any
stop order suspending the effectiveness of a Registration Statement or the
initiation of any proceedings for that purpose; (iii) of the receipt
by the
Company of any notification with respect to the suspension of the qualification
or exemption from qualification of any of the Shares or Warrant Shares for
sale
in any jurisdiction or the initiation or threatening of any proceeding for
such
purpose; or (iv) of any event or circumstance which, upon the advice of its
counsel, necessitates the making of any changes in the Registration Statement
or
Prospectus, or any document incorporated or deemed to be incorporated therein
by
reference, so that, in the case of the Registration Statement, it will not
contain any untrue statement of a material fact or any omission to state
a
material fact required to be stated therein or necessary to make the statements
therein not misleading, and that in the case of the Prospectus, it will not
contain any untrue statement of a material fact or any omission to state
a
material fact required to be stated therein or necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading; then the Company shall deliver a certificate in writing to the
Investor (the “Suspension Notice”) to the effect of the foregoing and, upon
receipt of such Suspension Notice, the Investor will refrain from selling
any
Shares or Warrant Shares pursuant to the Registration Statement (a “Suspension”)
until the Investor’s receipt of copies of a supplemented or amended Prospectus
prepared and filed by the Company, or until it is advised in writing by the
Company that the current Prospectus may be used, and has received copies
of any
additional or supplemental filings that are incorporated or deemed incorporated
by reference in any such Prospectus. The Suspension Notice shall not contain
any
information that constitutes or would reasonably be expected to constitute
material, non-public information. In the event of any Suspension, the Company
will use its reasonable commercial efforts to cause the use of the Prospectus
so
suspended to be resumed as soon as reasonably practicable within 20 business
days after the delivery of a Suspension Notice to the Investor. In addition
to
and without limiting any other remedies (including, without limitation, at
law
or at equity) available to the Investor, the Investor shall be entitled to
specific performance in the event that the Company fails to comply with the
provisions of this Section 7.2(c).
(d) Notwithstanding
the foregoing paragraphs of this Section 7.2, the Investor shall not
be
prohibited from selling Shares and Warrant Shares under the Registration
Statement as a result of Suspensions on more than two occasions of not more
than
30 days each in any twelve month period, unless, in the good faith judgment
of
the Company’s Board of Directors, upon the written opinion of counsel of the
Company, the sale of Shares and Warrant Shares under the Registration Statement
in reliance on this paragraph 7.2(d) would be reasonably likely to cause
a
violation of the Securities Act or the Exchange Act and result in liability
to
the Company.
(e) Provided
that a Suspension is not then in effect, the Investor may sell Shares and
Warrant Shares under the Registration Statement, provided that it arranges
for
delivery of a current Prospectus to the transferee of such Shares or Warrant
Shares. Upon receipt of a request therefor, the Company has agreed to provide
an
adequate number of current Prospectuses to the Investor and to supply copies
to
any other parties requiring such Prospectuses.
7.3 Indemnification.
For the
purpose of this Section 7.3:
(i) the
term
“Selling Stockholder” means the Investor and any affiliate or advisor of such
Investor;
(ii) the
term
“Registration Statement” shall include the Prospectus in the form first filed
with the SEC pursuant to Rule 424(b) of the Securities Act or filed
as part
of the Registration Statement at the time of effectiveness if no
Rule 424(b) filing is required, and any exhibit, supplement or amendment
included in or relating to the Registration Statement referred to in
Section 7.1; and
(iii) the
term
“Untrue Statement” means any untrue statement or alleged untrue statement, or
any omission or alleged omission to state in the Registration Statement a
material fact required to be stated therein or necessary to make the statements
therein not misleading.
(a) The
Company agrees to indemnify and hold harmless each Selling Stockholder from
and
against any losses, claims, damages, liabilities, or expenses to which such
Selling Stockholder may become subject (under the Securities Act or otherwise)
insofar as such losses, claims, damages, liabilities or expenses (or actions
or
proceedings in respect thereof) arise out of, or are based upon (i) any
breach of the representations or warranties of the Company contained herein
or
failure to comply with the covenants and agreements of the Company contained
herein, (ii) any Untrue Statement, or (iii) any failure by
the Company
to fulfill any undertaking included in the Registration Statement as amended
or
supplemented from time to time, and the Company will reimburse such Selling
Stockholder for any reasonable legal or other expenses reasonably incurred
in
investigating, defending or preparing to defend any such action, proceeding
or
claim, or preparing to defend any such action, proceeding or claim, provided,
however,
that
the Company shall not be liable in any such case to the extent that such
loss,
claim, damage or liability arises out of, or is based upon, an Untrue Statement
made in reliance upon and in conformity with written information furnished
to
the Company by or on behalf of such Selling Stockholder specifically for
use in
preparation of the Registration Statement, as amended or supplemented from
time
to time (including, without limitation, information set forth in the Investor
Questionnaire), or the inaccuracy of any representations made by such Selling
Stockholder herein, or the failure of such Selling Stockholder to comply
with
its covenants and agreements contained in Section 7.2 hereof respecting sale
of
the Shares or Warrant Shares or any statement or omission in any Prospectus
that
is corrected in any subsequent Prospectus that was delivered to the Selling
Stockholder prior to the pertinent sale or sales by the Selling Stockholder
and
that would have been avoided if the Selling Stockholder delivered the corrected
Prospectus. The Company shall reimburse each Selling Stockholder for the
indemnifiable amounts provided for herein on demand as such expenses are
incurred.
(b) The
Investor agrees to indemnify and hold harmless the Company (and each person,
if
any, who controls the Company within the meaning of Section 15 of
the
Securities Act, each officer of the Company who signs the Registration Statement
and each director of the Company) from and against any losses, claims, damages
or liabilities to which the Company (or any such officer, director or
controlling person) may become subject (under the Securities Act or otherwise),
insofar as such losses, claims, damages or liabilities (or actions or
proceedings in respect thereof) arise out of, or are based upon, (i) any
failure of the Investor to comply with the covenants and agreements contained
in
Section 7.2 hereof respecting sale of the Shares and Warrant Shares,
or
(ii) any Untrue Statement if such Untrue Statement was made in reliance
upon and in conformity with written information furnished by or on behalf
of the
Investor specifically for use in preparation of the Registration Statement,
as
amended or supplemented from time to time (including, without limitation,
information set forth in the Investor Questionnaire), and the Investor will
reimburse the Company (or such officer, director or controlling person),
as the
case may be, for any legal or other expenses reasonably incurred in
investigating, defending or preparing to defend any such action, proceeding
or
claim. The Investor shall reimburse the Company or such officer, director
or
controlling person, as the case may be, for the indemnifiable amounts provided
for herein on demand as such expenses are incurred. Notwithstanding the
foregoing, the Investor’s aggregate obligation to indemnify the Company and such
officers, directors and controlling persons shall be limited to the net amount
received by the Investor from the sale of the Shares or Warrant Shares, as
the
case may be.
(c) Promptly
after receipt by any indemnified person of a notice of a claim or the beginning
of any action in respect of which indemnity is to be sought against an
indemnifying person pursuant to this Section 7.3, such indemnified
person
shall notify the indemnifying person in writing of such claim or of the
commencement of such action, but the omission to so notify the indemnifying
person will not relieve it from any liability which it may have to any
indemnified person under this Section 7.3 (except to the extent that
such
omission materially and adversely affects the indemnifying person’s ability to
defend such action) or from any liability otherwise than under this
Section 7.3. Subject to the provisions hereinafter stated, in case
any such
action shall be brought against an indemnified person, the indemnifying person
shall be entitled to participate therein, and, to the extent that it shall
elect
by written notice delivered to the indemnified person promptly after receiving
the aforesaid notice from such indemnified person, shall be entitled to assume
the defense thereof, with counsel reasonably satisfactory to such indemnified
person. After notice from the indemnifying person to such indemnified person
of
its election to assume the defense thereof, such indemnifying person shall
not
be liable to such indemnified person for any legal expenses subsequently
incurred by such indemnified person in connection with the defense thereof,
provided,
however,
that if
there exists or shall exist a conflict of interest that would make it
inappropriate, in the opinion of counsel to the indemnified person, for the
same
counsel to represent both the indemnified person and such indemnifying person
or
any affiliate or associate thereof, the indemnified person shall be entitled
to
retain its own counsel at the expense of such indemnifying person; provided,
however, that no indemnifying person shall be responsible for the fees and
expenses of more than one separate counsel (together with appropriate local
counsel) for all indemnified parties. In no event shall any indemnifying
person
be liable in respect of any amounts paid in settlement of any action unless
the
indemnifying person shall have approved the terms of such settlement;
provided
that
such consent shall not be unreasonably withheld or delayed. No indemnifying
person shall, without the prior written consent of the indemnified person,
effect any settlement of any pending or threatened proceeding in respect
of
which any indemnified person is or could have been a party and indemnification
could have been sought hereunder by such indemnified person, unless such
settlement includes an unconditional release of such indemnified person from
all
liability on claims that are the subject matter of such proceeding.
(d) If
the
indemnification provided for in this Section 7.3 is unavailable to
or
insufficient to hold harmless an indemnified person under subsection (a)
or (b)
above in respect of any losses, claims, damages or liabilities (or actions
or
proceedings in respect thereof) referred to therein, then each indemnifying
person shall contribute to the amount paid or payable by such indemnified
person
as a result of such losses, claims, damages or liabilities (or actions in
respect thereof) in such proportion as is appropriate to reflect the relative
fault of the Company on the one hand and the Investor, as well as any other
Selling Shareholders under such Registration Statement on the other in
connection with the statements or omissions or other matters which resulted
in
such losses, claims, damages or liabilities (or actions in respect thereof),
as
well as any other relevant equitable considerations. The relative fault shall
be
determined by reference to, among other things, in the case of an Untrue
Statement, whether the Untrue Statement relates to information supplied by
the
Company on the one hand or an Investor or other Selling Shareholder on the
other
and the parties’ relative intent, knowledge, access to information and
opportunity to correct or prevent such Untrue Statement. The Company and
the
Investor agree that it would not be just and equitable if contribution pursuant
to this subsection (d) were determined by pro rata allocation (even if the
Investor and other Selling Shareholders were treated as one entity for such
purpose) or by any other method of allocation which does not take into account
the equitable considerations referred to above in this subsection (d). The
amount paid or payable by an indemnified person as a result of the losses,
claims, damages or liabilities (or actions in respect thereof) referred to
above
in this subsection (d) shall be deemed to include any legal or other expenses
reasonably incurred by such indemnified person in connection with investigating
or defending any such action or claim. Notwithstanding the provisions of
this
subsection (d), the Investor shall not be required to contribute any amount
in
excess of the amount by which the net amount received by the Investor from
the
sale of the Shares or Warrant Shares, as the case may be to which such loss
relates exceeds the amount of any damages which such Investor has otherwise
been
required to pay by reason of such Untrue Statement. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f)
of the
Securities Act) shall be entitled to contribution from any person who was
not
guilty of such fraudulent misrepresentation. The Investor’s obligations in this
subsection to contribute shall be in proportion to its sale of Shares and
Warrant Shares to which such loss relates and shall not be joint with any
other
Selling Shareholders.
(e) The
parties to this Agreement hereby acknowledge that they are sophisticated
business persons who were represented by counsel during the negotiations
regarding the provisions hereof including, without limitation, the provisions
of
this Section 7.3, and are fully informed regarding said provisions.
They
further acknowledge that the provisions of this Section 7.3 fairly
allocate
the risks in light of the ability of the parties to investigate the Company
and
its business in order to assure that adequate disclosure is made in the
Registration Statement as required by the Securities Act and the Exchange
Act.
The parties are advised that federal or state public policy as interpreted
by
the courts in certain jurisdictions may be contrary to certain of the provisions
of this Section 7.3, and the parties hereto hereby expressly waive
and
relinquish any right or ability to assert such public policy as a defense
to a
claim under this Section 7.3 and further agree not to attempt to assert
any
such defense.
7.4 Termination
of Conditions and Obligations.
The
conditions precedent imposed by Section 5 or this Section 7
upon the
transferability of the Shares and Warrant Shares shall cease and terminate
as to
any particular number of the Shares or Warrant Shares, as the case may be,
when
such Shares or Warrant Shares shall have been effectively registered under
the
Securities Act and sold or otherwise disposed of in accordance with the intended
method of disposition set forth in the Registration Statement covering such
Shares and Warrant Shares or at such time as an opinion of counsel reasonably
satisfactory to the Company shall have been rendered to the effect that such
conditions are not necessary in order to comply with the Securities
Act.
7.5 Information
Available.
So long
as the Registration Statement is effective covering the resale of Shares
and
Warrant Shares owned by the Investor, upon the reasonable request of the
Investor, the Company will furnish to the Investor:
(a) as
soon
as practicable after it is available, one copy of (i) its Annual Report
to
Stockholders (which Annual Report shall contain financial statements audited
in
accordance with generally accepted accounting principles by a national firm
of
certified public accountants), (ii) its Annual Report on Form 10-K
and
(iii) its Quarterly Reports on Form 10-Q (the foregoing, in
each case,
excluding exhibits);
(b) all
exhibits excluded by the parenthetical to subparagraph (a) of this
Section 7.5 as filed with the SEC and all other information that is
made
available to shareholders; and
(c) an
adequate number of copies of the Prospectuses to supply to any other party
requiring such Prospectuses; and upon the reasonable request of the Investor,
the President or the Principal Financial Officer of the Company (or an
appropriate designee thereof) will meet with the Investor or a representative
thereof at the Company’s headquarters to discuss all information relevant for
disclosure in the Registration Statement covering the Shares and Warrant
Shares
and will otherwise cooperate with any Investor conducting an investigation
for
the purpose of reducing or eliminating such Investor’s exposure to liability
under the Securities Act, including the reasonable production of information
at
the Company’s headquarters; provided, that the Company shall not be required to
disclose any confidential information to or meet at its headquarters with
any
Investor until and unless the Investor shall have entered into a confidentiality
agreement in form and substance reasonably satisfactory to the Company with
the
Company with respect thereto.
The
Investor acknowledges that the Company makes available on its website at
xxx.xxxxx.xxx a facility through which such Investor may subscribe to
automatically receive electronic copies of the Company’s future SEC filings and
press releases by email.
7.6 Legend;
Restrictions on Transfer.
The
Warrant and certificate or certificates for the Shares (and any securities
issued in respect of or exchange for the Shares or Warrant) shall be subject
to
a legend or legends restricting transfer under the Securities Act and referring
to restrictions on transfer herein, such legend to be substantially as
follows:
THE
SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT
OF 1933 (THE “ACT”) AND MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED, OR
HYPOTHECATED UNLESS AND UNTIL REGISTERED UNDER THE ACT OR, IN THE OPINION
OF
COUNSEL, IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER OF THESE SECURITIES,
SUCH OFFER, SALE OR TRANSFER OR HYPOTHECATION IS IN COMPLIANCE
THEREWITH.
The
Company and the Investor acknowledge and agree that the Investor may, as
permitted by law, from time to time pledge pursuant to a bona fide margin
agreement or grant a security interest in some or all of the Shares, Warrant
and
Warrant Shares and, if required under the terms of such arrangement, Investor
may, as permitted by law, transfer pledged or secured Shares, Warrant and
Warrant Shares to the pledgees or secured parties. So long as Investor is
not an
affiliate of the Company, such a pledge or transfer would not be subject
to
approval or consent of the Company, provided that, upon the request of the
Company, a legal opinion of legal counsel to the pledgee, secured party or
pledgor shall be obtained. At the Investor’s expense, so long as the Shares and
Warrant are subject to the legend required by this Section 7.6, the Company
will
use its reasonable commercial efforts to execute and deliver such reasonable
documentation as a pledgee or secured party of Shares and Warrant may reasonably
request in connection with a pledge or transfer of the Shares and Warrant
including such amendments or supplements to the Registration Statement and
Prospectus as may be reasonably required. The foregoing does not affect
Investor’s obligations pursuant to Section 7.2(a).
The
Investor expressly agrees that any sale by the Investor of Shares and Warrant
Shares pursuant to the Registration Statement shall be sold in a manner
described under the caption “Plan of Distribution” in such Registration
Statement and the Investor will deliver a copy of the Prospectus contained
in
the Registration Statement to the purchaser or purchasers, directly or through
the Investor's broker, in connection with such sale, in each case in compliance
with the requirements of the Securities Act and Exchange Act applicable to
such
sale. The Investor further agrees that the Shares and Warrant Shares will
only
be sold while the Registration Statement is effective, unless another exemption
from registration is available. On the basis of, and subject to, compliance
by
the Investor with the foregoing covenants, upon effectiveness of the
Registration Statement, the Company shall as soon as practicable (but not
later
than five business days after surrender of the legended certificates to the
Company and notice of such surrender has been provided pursuant to Section
8(b)
below) cause certificates evidencing the Shares and Warrant Shares previously
issued to be replaced with certificates which do not bear the restrictive
legends specified above in this Section 7.6, and all Shares and Warrant Shares
subsequently issued shall not bear the restrictive legend specified above
in
this Section 7.6. The Investor acknowledges that the removal of the restrictive
legends from certificates representing Shares and Warrant Shares as provided
in
this Section 7.6 is predicated upon the Company’s reliance on the Investor’s
compliance with its covenants in this Section 7.6.
7.7 Liquidated
Damages.
The
Company and Investor agree that Investor will suffer damages if the Company
fails to fulfill its obligations pursuant to Section 7.1 and 7.2 hereof and
that
it would not be possible to ascertain the extent of such damages with precision.
Accordingly, the Company hereby agrees to pay liquidated damages (“Liquidated
Damages”) to Investor under the following circumstances: (a) if the Registration
Statement is not filed by the Company on or prior to 15 business days after
the
Closing Date (such an event, a “Filing Default”); (b) if the Registration
Statement is not declared effective by the SEC on or prior to 70 calendar
days
or, subject to the filing of the Registration Statement by the Filing Date,
in
the event that the
Registration Statement receives SEC review, 110 clendar days after the Closing
Date
(such an
event, an “Effectiveness Default”); or (c) if the Registration Statement (after
its effectiveness date) ceases to be effective and available to Investor
for any
continuous period that exceeds 30 calendar days or for one or more period
that
exceeds in the aggregate 60 calendar days in any 12-month period (such an
event,
a “Suspension Default” and together with a Filing Default and an Effectiveness
Default, a “Registration Default”). In the event of a Registration Default, the
Company shall as Liquidated Damages pay to Investor, for each 30 calendar
day
period of a Registration Default, an amount in cash equal to 1% of the aggregate
purchase price paid by Investor pursuant to this Agreement up to a maximum
of
10% of the aggregate purchase price of the Shares and Warrants, provided
that
Liquidation Damages in respect of a Suspension Default shall not be payable
in
relation to any Shares or Warrant Shares not owned by the Investor at the
time
of the Suspension Default. The Company shall pay the Liquidated Damages as
follows: (i) in connection with a Filing Default, on the 16th business day
after
the Closing Date, and each 30th calendar day thereafter until the Registration
Statement is filed with the SEC; (ii) in connection with an Effectiveness
Default, on the 70th calendar day (or, in the event that the
Registration Statement receives SEC review, the 110th calendar day)
after
the Closing Date and each 30th calendar day thereafter until the Registration
Statement is declared effective by the SEC; or (iii) in connection with a
Suspension Default, on either (x) the 31st
consecutive day of any Suspension or (y) the 61st
calendar
day (in the aggregate) of any Suspensions in any 12-month period, and each
30th
calendar
day thereafter until the Suspension is terminated in accordance with Section
7.2. Notwithstanding the foregoing, all periods shall be tolled during delays
directly caused by the action or inaction of any Investor, and the Company
shall
have no liability to any Investor in respect of any such delay. The Liquidated
Damages payable herein shall apply on a pro rata basis for any portion of
a
30-day period of a Registration Default.
7.8 Right
of First Offer.
(a) Right
of First Offer.
The
Company shall not issue, sell or exchange, agree or obligate itself to issue,
sell or exchange, or reserve or set aside for issuance, sale or exchange,
in a
transaction not involving a public offering, any (i) shares of Common
Stock, (ii) any other equity security of the Company, including without
limitation, preferred shares, (iii) any debt security of the Company
which
by its terms is convertible into or exchangeable for any equity security
of the
Company, (iv) any security of the Company that is a combination of
debt and
equity, or (v) any option, warrant or other right to subscribe for,
purchase or otherwise acquire any such equity security or any such debt security
of the Company, unless in each case the Company shall have first offered
to sell
such securities (the “Offered Securities”) to the Investor as follows: The
Investor shall have the right to purchase that portion of the Offered Securities
as the number of shares of Common Stock then held (including shares then
issuable upon the exercise or conversion of outstanding securities) by the
Investor bears to the total number of shares of issued and outstanding Common
Stock of the Company (“Pro Rata Portion”), at a price and on such other terms as
shall have been specified by the Company in writing delivered to the Investor
(the “Offer”), which Offer by its terms shall remain open and irrevocable for a
period of seven (7) days from receipt of the Offer.
(b) Notice
of Acceptance.
Notice
of the Investor’s intention to accept, in whole or in part, any Offer made shall
be evidenced by a writing signed by the Investor and delivered to the Company
prior to the end of the 7-day period of such Offer, setting forth such of
the
Investor’s Pro Rata Portion as the Investor elects to purchase (the “Notice of
Acceptance”).
(c) Conditions
to Acceptances and Purchase.
(i) Permitted
Sales of Refused Securities.
In the
event that Notices of Acceptance are not given by the Investors in respect
of
all the Offered Securities, the Company shall have one hundred eighty (180)
days
from the expiration of the period set forth above to close the sale of all
or
any part of such Offered Securities as to which a Notice of Acceptance has
not
been given by the Investors (the “Refused Securities”), upon terms and
conditions, including, without limitation, unit price and interest rates,
which
are no more favorable, in the aggregate, to such other person or persons
or less
favorable to the Company than those set forth in the Offer.
(ii) Reduction
in Amount of Offered Securities.
In the
event the Company shall propose to sell less than all the Refused Securities
(any such sale to be in the manner and on the terms specified above), then
the
Investor may, at its sole option and in its sole discretion, reduce the number
of, or other units of the Offered Securities specified in its Notice of
Acceptance to an amount which shall be not less than the amount of the Offered
Securities which the Investor elected to purchase pursuant to (b) above
multiplied by a fraction, (i) the numerator of which shall be the
amount of
Offered Securities which the Company actually proposes to sell, and
(ii) the denominator of which shall be the amount of all Offered Securities
the Company proposed to sell in its writing delivered pursuant to Section
7.8(a)
above. In the event that the Investor so elects to reduce the number or amount
of Offered Securities specified in its Notice of Acceptance, the Company
may not
sell or otherwise dispose of more than the reduced amount of the Offered
Securities until such securities have again been offered to the Investor
in
accordance with (a) above.
(iii)
Closing.
Upon
the closing, which shall include full payment to the Company, of the sale
to
such other person or persons of all or less than all the Refused Securities,
the
Investor shall purchase from the Company, and the Company shall sell to the
Investor, the number of Offered Securities specified in the Notice of
Acceptance, as reduced pursuant to Section 7.8(b) above if the Investor has
so
elected, upon the terms and conditions specified in the Offer. The purchase
by
the Investor of any Offered Securities is subject in all cases to the
preparation, execution and delivery by the Company and the Investor of a
purchase agreement relating to such Offered Securities reasonably satisfactory
in form and substance to the Company and the Investor and their respective
counsel.
(d) Further
Sale.
In each
case, any Offered Securities not purchased by the Investor or other person
or
persons in accordance with Section 7.8(c)(iii) above may not be sold or
otherwise disposed of until they are again offered to the Investor under
the
procedures specified in Section 7.8(c)(i)-(iii) above.
(e) Exceptions.
The
rights of the Investor under this Section 7.8 shall not apply to: (i) Common
Stock issued as a stock dividend to holders of Common Stock or upon any
subdivision or combination of shares of Common Stock; (ii) any capital stock
or
derivative thereof granted to an employee, director or consultant under a
Company stock or stock option plan or as compensation for services; (iii)
any
securities issued as consideration for the acquisition of another entity
by the
Company by merger or share exchange (whereby the Company owns no less than
51%
of the voting power of the surviving entity) or as the purchase price of
substantially all of such entity’s stock or assets; (iv) any securities issued
in connection with a license, strategic partnership, joint venture or other
similar agreement, provided that the purpose of such arrangement is not
primarily the raising of capital; (v) any securities issued to a financial
institution or lender in connection with a bank loan, credit, lease, or other
debt transaction with such financial institution or lender; (vi) securities
issuable upon the exercise or conversion of securities outstanding on the
Closing Date, or (vii) any securities the issuance of which is approved by
a
majority of the Investors.
(f) Termination
of Right.
The
Right of First Refusal set forth in this Section 7.8 shall survive for a
period
of one year following the Closing Date.
7.9 Stockholder
Meeting.
The
Company covenants and agrees to hold a stockholder meeting to approve (i)
the
participation of any Affiliate Investors and (ii) the sale of the Excess
Amount
as soon as practicable but in no event later than sixty (60) days following
the
Closing Date (subject to any delays caused by the receipt of SEC comments
on the
Company's proxy statement for such stockholder meeting). Each Affiliate Investor
who beneficially owns or controls the voting of shares of the Company's common
stock, including each such officer, director or affiliate, hereby covenants
and
agrees to vote all such shares of common stock in favor of approval of the
transactions contemplated by this Agreement pursuant to the form of voting
agreement attached hereto as Exhibit
C.
The
Company covenants and agrees that (i) it will not amend or terminate any
such
proxies and (ii) it shall vote all shares of common stock over which holds
a
proxy in favor of approval of the transactions contemplated by this Agreement.
Each signatory to this Agreement hereby acknowledges and agrees that all
covenants made in this Section 7.9 are made for the benefit of all Investors
not
parties to this Agreement, in each case as a third-party
beneficiary.
8. Notices.
All
notices, requests, consents and other communications hereunder shall be in
writing, shall be mailed (A) if within the United States by first-class
registered or certified airmail, or nationally recognized overnight express
courier, postage prepaid, or by facsimile or electronic mail, or (B) if
delivered from outside the United States, by International Federal Express
(or
other recognized international express courier) or facsimile, and shall be
deemed given (i) if delivered by first-class registered or certified
mail,
three business days after so mailed, (ii) if delivered by nationally
recognized overnight carrier, one business day after so mailed, (iii) if
delivered by International Federal Express (or other recognized international
express courier), two business days after so mailed, or (iv) if delivered
by facsimile or electronic mail, upon electronic confirmation of receipt
and
shall be delivered as addressed as follows:
| (a) |
if
to the Company, to:
|
Sirna
Therapeutics, Inc.
000
Xxxxx
Xxxxxx
Xxxxx
0000
Xxx
Xxxxxxxxx, XX 00000
Phone:
(000) 000-0000
Fax:
(000) 000-0000
Attn:
Xxxxxx Xxxxxxxx
Email:
XxxxxxxxX@xxxxx.xxx
| (b) |
with
a copy to:
|
O’Melveny
& Xxxxx LLP
0000
Xxxx
Xxxx Xxxx
Xxxxx
Xxxx, XX 00000
Phone: (000)
000-0000
Fax:
(000) 000-0000
Attn:
Xxx
Xxxxxx and Xxxxxx Xxxx
Email:
XXxxxxx@xxx.xxx, XXxxx@xxx.xxx
| (c) |
if
to the Investor, at its address on the signature page hereto, or
at such
other address or addresses as may have been furnished to the Company
in
writing (subject to the provisions of Section 19 of this
Agreement).
|
9. Changes.
This
Agreement may be modified, amended or waived only pursuant to a written
instrument signed by the Company and (a) Investors holding a majority of
the
Shares issued and sold in the Offering, provided
that
such
modification, amendment or waiver is made with respect to all Agreements
and
does not adversely affect the Investor without adversely affecting all Investors
in a similar manner; or (b) the Investor.
10. Headings.
The
headings of the various sections of this Agreement have been inserted for
convenience of reference only and shall not be deemed to be part of this
Agreement.
11. Severability.
In case
any provision contained in this Agreement should be invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of
the
remaining provisions contained herein shall not in any way be affected or
impaired thereby.
12. Governing
Law.
This
Agreement shall be governed by, and construed in accordance with, the internal
laws of the State of New York, without giving effect to the principles of
conflicts of law.
13. Counterparts.
This
Agreement may be executed in two or more counterparts, each of which shall
constitute an original, but all of which, when taken together, shall constitute
but one instrument, and shall become effective when one or more counterparts
have been signed by each party hereto and delivered to the other
parties.
14. Entire
Agreement.
This
Agreement and the Warrant constitute the entire agreement between the parties
hereto and supersedes any prior understandings or agreements concerning the
purchase and sale of the Shares and the Warrant and the resale registration
of
the Shares and Warrant Shares.
15. Rule
144.
The
Company covenants that it will use its reasonable commercial efforts to timely
file the reports required to be filed by it under the Securities Act and
the
Exchange Act and the rules and regulations adopted by the SEC thereunder
(or, if
the Company is not required to file such reports, it will, upon the request
of
any Investor holding Shares purchased hereunder, or Warrant Shares purchase
under any Warrant, made after the first anniversary of the Closing Date,
make
publicly available such information as necessary to permit sales pursuant
to
Rule 144 under the Securities Act), and it will take such further action
as any
such Investor may reasonably request, all to the extent required from time
to
time to enable such Investor to sell such Shares and Warrant Shares without
registration under the Securities Act within the limitation of the exemptions
provided by (a) Rule 144 under the Securities Act, as such Rule may be amended
from time to time, or (b) any similar rule or regulation hereafter adopted
by
the SEC. Upon the request of the Investor, the Company will deliver to such
holder a written statement as to whether it has complied with such information
and requirements.
16. Confidential
Information.
(a) The
Investor represents to the Company that, at all times during the Company’s
offering of the Shares and Warrants, the Investor has maintained in confidence
all non-public information regarding the Company received by the Investor
from
the Company or its agents, and covenants that it will continue to maintain
in
confidence such information until such information (a) becomes generally
publicly available other than through a violation of this provision by the
Investor or its agents or (b) is required to be disclosed in legal
proceedings (such as by deposition, interrogatory, request for documents,
subpoena, civil investigation demand, filing with any governmental authority
or
similar process), provided, however, that before making any use or disclosure
in
reliance on this subparagraph (b) the Investor shall give the Company prior
written notice specifying the circumstances giving rise thereto and will
furnish
only that portion of the non-public information which is legally required
and
will allow the Company to exercise its reasonable commercial efforts to obtain
reliable assurance that confidential treatment will be accorded any non-public
information so furnished.
(b) Within
one (1) business day after the Subscription Date (as defined in Section 2.2),
the Company shall issue a press release and Form 8-K disclosing any information
provided by the Company or any person acting on its behalf that the Company
believes constitutes material and non-public information. The Company shall,
at
the time of the Closing, file with the SEC a Form 8-K disclosing the material
terms of the transactions contemplated hereby (including at least the number
of
Shares and Warrants sold and proceeds therefrom). The Company shall not publicly
disclose the name of Investor or any beneficial owner of Shares or Warrants
held
by Investor, or include the name of Investor or such beneficial owner in
any
filing with the SEC or any state and federal regulatory agency or the Nasdaq
(other than the filing of the Agreements with the SEC pursuant to the Exchange
Act), without the prior written consent of Investor, except to the extent
such
disclosure is required by law, regulation or Nasdaq regulations.
17. No
Third-Party Beneficiaries.
Other
than as set forth in Section 7.9 above, this Agreement is intended for the
benefit of the parties hereto and their respective successors and permitted
assigns and is not for the benefit of, nor may any provision hereof be enforced
by, any other person.
18. Knowledge.
The
term “knowledge” in this Agreement shall mean the knowledge of the directors and
officers of the Company.
19. Delivery
of Documents, Information or Notices to Investors.
Notwithstanding anything in this Agreement to the contrary, (a) the Company
may
deliver any documents, information or notices required to be delivered to
an
Investor under this Agreement by email, in any recognized electronic format,
including Portable Document Format (PDF) or Microsoft Word document format,
and
(b) with respect to any documents, exhibits, filings, furnishings or other
submissions (other than any Registration Statement, Prospectus, or Preliminary
Prospectus pursuant to Section 7 of this Agreement) publicly available on
the
SEC’s XXXXX system (each, an “XXXXX Filing”), such XXXXX Filing shall be deemed
furnished by the Company to such Investor, in each case as of the date first
publicly available on the XXXXX system.
20. No
Strict Construction.
The
language used in this Agreement is 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.
21. Broker’s
Fee.
The
Investor acknowledges that the Company intends to pay fees to the Placement
Agent and the co-advisors in respect of the sale of the Shares to the Investor.
The Investor and the Company hereby agree that the Investor shall not be
responsible for such fees.
