SECURITIES PURCHASE AGREEMENT
EXHIBIT
10.1
This
Securities Purchase Agreement (this “Agreement”)
is
dated as of February 16, 2007, by and among ZIOPHARM Oncology, Inc, a Delaware
corporation (the “Company”),
and
each purchaser identified on the signature pages hereto (each, including its
successors and assigns, a “Purchaser”
and
collectively, the “Purchasers”).
RECITALS
A. The
Company and each Purchaser is executing and delivering this agreement in
reliance upon the exemption from securities registration afforded by Section
4(2) of the Securities Act of 1933, as amended (the “Securities
Act”),
and
Rule 506 of Regulation D (“Regulation
D”)
as
promulgated by the United States Securities and Exchange Commission under the
Securities Act.
B. The
Company desires to raise gross proceeds of up to $35,000,000 pursuant to the
issuance and sale of (i) shares
of the
Common Stock, par value $0.001 per share (the “Common
Stock”),
of
the Company (which shares of Common Stock and shall be collectively referred
to
herein as the “Shares”),
and
(ii) and warrants, in substantially the form attached hereto as Exhibit
A
(the
“Warrants”).
C. Each
Purchaser, severally and not jointly, wishes to purchase, and the Company wishes
to sell, upon the terms and conditions stated in this Agreement, (i) that
aggregate number of Shares set forth below such Purchaser’s name on the
signature page of this Agreement, and (ii) Warrants to acquire up to that number
of additional shares of Common Stock equal to 20.0% of the number of Shares
purchased by such Purchaser (rounded up to the nearest whole share) (the shares
of Common Stock issuable upon exercise of or otherwise pursuant to the Warrants,
collectively, the “Warrant
Shares”).
D. The
Shares, the Warrants and the Warrant Shares issued pursuant to this Agreement
are collectively referred to herein as the “Securities”.
E. The
Company has engaged Xxxxxxxxxxx & Co. Inc., Xxxxxxx Securities, Inc. and
Paramount BioCapital, Inc. as its placement agents (the “Placement
Agents”)
for
the offering of the Securities on a “best efforts” basis.
F. Contemporaneously
with the execution and delivery of this Agreement, the parties hereto are
executing and delivering a Registration Rights Agreement, in the form attached
hereto as Exhibit
B
(the
“Registration
Rights Agreement”),
pursuant to which, among other things, the Company will agree to provide certain
registration rights with respect to the Shares and the Warrant Shares under
the
Securities Act and applicable state securities laws.
NOW,
THEREFORE, IN CONSIDERATION of the mutual covenants contained in this Agreement,
and for other good and valuable consideration, the receipt and adequacy of
which
are hereby acknowledged, the Company and the Purchasers hereby agree as
follows:
ARTICLE
I.
DEFINITIONS
1.1 Definitions.
In
addition to the terms defined elsewhere in this Agreement, for all purposes
of
this Agreement, the following terms shall have the meanings indicated in this
Section 1.1:
“Action”
means
any action, suit, inquiry, notice of violation, proceeding (including any
partial proceeding such as a deposition) or investigation pending or, to the
Company’s Knowledge, threatened in writing against or affecting the Company or
any of their respective properties before or by any court, arbitrator,
governmental or administrative agency, regulatory authority (federal, state,
county, local or foreign), stock market, stock exchange or trading
facility.
“Affiliate”
means,
with respect to any Person, any other Person that, directly or indirectly
through one or more intermediaries, Controls, is controlled by or is under
common control with such Person, as such terms are used in and construed under
Rule 144. With respect to a Purchaser, any investment fund or managed account
that is managed on a discretionary basis by the same investment manager as
such
Purchaser will be deemed to be an Affiliate of such Purchaser.
“Agents’
Representative”
means
Paramount BioCapital, Inc., as representative of the Placement
Agents.
“Business
Day”
means
a
day, other than a Saturday or Sunday, on which banks in New York City are open
for the general transaction of business.
“Closing”
means
the closing of the purchase and sale of the Shares and the Warrants pursuant
to
this Agreement.
“Closing
Date”
means
the Trading Day when all of the Transaction Documents have been executed and
delivered by the applicable parties thereto, and all of the conditions set
forth
in Sections 2.1, 2.2, 5.1 and 5.2 hereof are satisfied, or such other date
as
the parties may agree.
“Commission”
means
the United States Securities and Exchange Commission.
“Common
Stock”
has
the
meaning set forth in the Recitals, and also includes any securities into which
the Common Stock may hereafter be reclassified or changed.
“Common
Stock Equivalents”
means
any securities of the Company which would entitle the holder thereof to acquire
at any time Common Stock, including, without limitation, any debt, preferred
stock, rights, options, warrants or other instrument that is at any time
convertible into or exchangeable for, or otherwise entitles the holder thereof
to receive, Common Stock or other securities that entitle the holder to receive,
directly or indirectly, Common Stock.
“Company
Counsel”
means
Xxxxxx Xxxxxxx Xxxxxx & Brand, LLP.
“Company
Deliverables”
has
the
meaning set forth in Section 2.2(a).
“Company’s
Knowledge”
means
with respect to any statement made to the knowledge of a party, that the
statement is based upon the actual knowledge of the officers of such party
having responsibility for the matter or matters that are the subject of the
statement.
“Control”
(including the terms “controlling”, “controlled by” or “under common control
with”) means the possession, direct or indirect, of the power to direct or cause
the direction of the management and policies of a Person, whether through the
ownership of voting securities, by contract or otherwise.
“Disclosure
Materials”
has
the
meaning set forth in Section 3.1(h).
“Effective
Date”
means
the date on which the initial Registration Statement required by Section 2(a)
of
the Registration Rights Agreement is first declared effective by the
Commission.
“Effectiveness
Deadline”
means
the date on which the initial Registration Statement is required to be declared
effective by the Commission under the terms of the Registration Rights
Agreement.
“Environmental
Laws”
has
the
meaning set forth in Section 3.1(l).
“Exchange
Act”
means
the Securities Exchange Act of 1934, as amended, or any successor statute,
and
the rules and regulations promulgated thereunder.
“GAAP”
means
U.S. generally accepted accounting principles, as applied by the
Company.
“Intellectual
Property”
has
the
meaning set forth in Section 3.1(r).
“Irrevocable
Transfer Agent Instructions”
means,
with respect to the Company, the Irrevocable Transfer Agent Instructions, in
the
form of Exhibit
E,
executed by the Company and delivered to and acknowledged in writing by the
Transfer Agent.
“Lien”
means
any lien, charge, claim, encumbrance, security interest, right of first refusal,
preemptive right or other restrictions of any kind.
“Losses”
has
the
meaning set forth in Section 4.9(a).
“Material
Adverse Effect”
means
any of (i) a material and adverse effect on the legality, validity or
enforceability of any Transaction Document, (ii) a material and adverse effect
on the results of operations, assets, prospects, business or financial condition
of the Company, or (iii) any material adverse impairment to the Company's
ability to perform in any material respect on a timely basis its obligations
under any Transaction Document.
“Material
Contract”
means
any contract of the Company that was filed as an exhibit to the SEC Reports
pursuant to Item 601(b)(4) or Item 601(b)(10) of Regulation S-K.
“Material
Permits”
has
the
meaning set forth in Section 3.1(p).
“New
York Courts”
means
the state and federal courts sitting in the City of New York, Borough of
Manhattan.
“Outside
Date”
means
five Trading Days following the date of this Agreement.
“Person”
means
an individual, corporation, partnership, limited liability company, trust,
business trust, association, joint stock company, joint venture, sole
proprietorship, unincorporated organization, governmental authority or any
other
form of entity not specifically listed herein.
“Principal
Trading Market”
means
the Trading Market on which the Common Stock is primarily listed on and quoted
for trading, which, as of the date of this Agreement and the Closing Date,
shall
be the NASDAQ Capital Market.
“Proceeding”
means
an action, claim, suit, investigation or proceeding (including, without
limitation, an investigation or partial proceeding, such as a deposition),
whether commenced or threatened.
“Purchase
Price”
means
the sum of (i) the closing bid price of the Company’s Common Stock, as listed on
the Principal Trading Market, on the date of this Agreement, plus (ii)
$0.025.
“Purchaser
Deliverables”
has
the
meaning set forth in Section 2.2(b).
“Registration
Rights Agreement”
has
the
meaning set forth in the Recitals.
“Registration
Statement”
means
a
registration statement meeting the requirements set forth in the Registration
Rights Agreement and covering the resale by the Purchasers of the Registrable
Securities (as defined in the Registration Rights Agreement).
“Required
Approvals”
has
the
meaning set forth in Section 3.1(e).
“Rule
144”
means
Rule 144 promulgated by the Commission pursuant to the Securities Act, as such
Rule may be amended from time to time, or any similar rule or regulation
hereafter adopted by the Commission having substantially the same effect as
such
Rule.
“SEC
Reports”
has
the meaning set forth in Section 3.1(h).
“Secretary’s
Certificate”
has
the
meaning set forth in Section 2.2(a)(vii).
“Securities
Act”
means
the Securities Act of 1933, as amended.
“Short
Sales”
include, without limitation, all “short sales” as defined in Rule 200
promulgated under Regulation SHO under the Exchange Act, whether or not against
the box, and all types of direct and indirect stock pledges, forward sale
contracts, options, puts, calls, short sales, swaps, “put equivalent positions”
(as defined in Rule 16a-1(h) under the Exchange Act) and similar arrangements
(including on a total return basis), and sales and other transactions through
non-US broker dealers or foreign regulated brokers.
“Subscription
Amount”
means
with respect to each Purchaser, the aggregate amount to be paid for the Shares
and the related Warrants purchased hereunder as indicated on such Purchaser’s
signature page to this Agreement next to the heading “Purchase Price
(Subscription Amount)”.
“Trading
Affiliate”
has
the
meaning set forth in Section 3.2(g).
“Trading
Day”
means
(i) a day on which the Common Stock is listed or quoted and traded on its
primary Trading Market (other than the OTC Bulletin Board), or (ii) if the
Common Stock is not listed on a Trading Market (other than the OTC Bulletin
Board), a day on which the Common Stock is traded in the over-the-counter
market, as reported by the OTC Bulletin Board, or (iii) if the Common Stock
is
not quoted on any Trading Market, a day on which the Common Stock is quoted
in
the over-the-counter market as reported by the National Quotation Bureau
Incorporated (or any similar organization or agency succeeding to its functions
of reporting prices); provided,
that in
the event that the Common Stock is not listed or quoted as set forth in (i),
(ii) and (iii) hereof, then Trading Day shall mean a Business Day.
“Trading
Market”
means
whichever of the New York Stock Exchange, the American Stock Exchange, the
NASDAQ Global Select Market, the NASDAQ Global Market, the NASDAQ Capital Market
or the OTC Bulletin Board on which the Common Stock is listed or quoted for
trading on the date in question.
“Transaction
Documents”
means
this Agreement, the schedules and exhibits attached hereto, the Warrants, the
Registration Rights Agreement, the Irrevocable Transfer Agent Instructions
and
any other documents or agreements executed in connection with the transactions
contemplated hereunder.
“Transfer
Agent”
means
American Stock Transfer and Trust Company or any successor transfer agent for
the Company.
“Warrants”
has
the
meaning set forth in the Preamble to this Agreement. The Placement Agents and/or
their designees are also receiving placement agent warrants as compensation
for
services rendered in connection with the transactions set forth herein, which
warrants shall also constitute “Warrants” for all purposes
hereunder.
ARTICLE
II.
PURCHASE
AND SALE
2.1 Closing.
(a)
Subject to the terms and conditions set forth in this Agreement, at the Closing,
the Company shall issue and sell to each Purchaser, and each Purchaser shall,
severally and not jointly, purchase from the Company, such number of Shares
of
Common Stock equal to the quotient resulting from dividing (i) the aggregate
purchase price for such Purchaser, as indicated below such Purchaser’s name on
the signature page of this Agreement (the “Subscription
Amount”)
by
(ii) the Purchase Price, rounded to the nearest whole Share. In addition, each
Purchaser shall receive a Warrant to purchase a number of Warrant Shares equal
to 20% of the number of Shares purchased by such Purchaser, as indicated below
such Purchaser’s name on the signature page of this Agreement. The Warrants
shall have an exercise price equal to 110% of the Purchase Price and shall
be
exercisable at any time prior to the fifth anniversary of the date of
issuance.
(b) Each
Purchaser must complete and return a duly executed, unaltered copy of this
Agreement (including without limitation the completed Accredited Investor
Questionnaire and the Stock Certificate Questionnaire included as Exhibits
C-1
and C-2 hereto, respectively) to the Agents’ Representative. The Company and the
Agents’ Representative retain complete discretion to accept or reject any
subscription unless and until the Company executes a counterpart to this
Agreement that includes such Purchaser’s signature. Within five Business Days
after the execution and delivery of this Agreement by Purchaser and the Company,
each Purchaser shall deposit the amount of readily available funds equal to
such
Purchaser’s Subscription Amount in a segregated escrow account (the
“Escrow
Account”)
with
an escrow agent designated by the Agents’ Representative (the “Escrow
Agent”)
by
wire transfer of immediately available funds pursuant to the instructions
provided below:
(c) The
Closing shall be held at a date and time designated by the Company and the
Placement Agents prior to 11:59 p.m. Eastern Standard Time on the Outside Date.
The Closing shall occur at the offices of the Agents’ Representative, located at
000 Xxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, or at such other locations or
remotely by facsimile transmission or other electronic means as the parties
may
mutually agree. Upon satisfaction or waiver of all conditions to the Closing,
the Agents’ Representative and the Company shall instruct the Escrow Agent to
release the proceeds held in the Escrow Account to the Company, less fees and
expenses due to the Placement Agents. Interest, if any, that has accrued with
respect to the Subscription Amount while in escrow shall also be distributed
to
the Company at the Closing and the Purchaser will have no right to such
interest, even if there is no Closing.
(d) The
Company shall deliver, or cause to be delivered, a certificate or certificates,
registered in such name or names as the Purchasers may designate, representing
the Shares and Warrants purchased by the Purchaser hereunder as soon as
practical after the Closing, and in any event within five Business Days, to
the
Purchaser’s mailing address indicated on the Stock Certificate Questionnaire
included as Exhibit C-2 hereto.
2.2 Closing
Deliveries.
(a) On
or
prior to the Closing, the Company shall issue, deliver or cause to be delivered
to each Purchaser the following (the “Company
Deliverables”):
(i) this
Agreement, duly executed by the Company;
(ii) one
or
more stock certificates, free and clear of all restrictive and other legends
(except as provided in Section 4.1(b) hereof), evidencing the Shares subscribed
for by Purchaser hereunder, registered in the name of such Purchaser as set
forth on the Stock Certificate Questionnaire included as Exhibit C-2
hereto;
(iii) a
Warrant, executed by the Company and registered in the name of such Purchaser
as
set forth on the Stock Certificate Questionnaire included as Exhibit C-2 hereto,
pursuant to which such Purchaser shall have the right to acquire such number
of
Warrant Shares equal to 20.0% of the number of Shares issuable to such Purchaser
pursuant to Section 2.2(a)(ii), rounded up to the nearest whole share, on the
terms set forth therein;
(iv) a
legal
opinion of Company Counsel, in the form attached hereto as Exhibit
D,
executed by such counsel and addressed to the Purchasers and the Placement
Agents;
(v) the
Registration Rights Agreement, duly executed by the Company;
(vi) duly
executed Irrevocable Transfer Agent Instructions acknowledged in writing by
the
Transfer Agent;
(vii) a
certificate of the Secretary of the Company (the “Secretary’s
Certificate”),
dated
as of the Closing Date, (a) certifying the resolutions adopted by the Board
of
Directors of the Company approving the transactions contemplated by this
Agreement and the other Transaction Documents and the issuance of the
Securities, (b) certifying the current versions of the certificate of
incorporation, as amended and by-laws of the Company and (c) certifying as
to
the signatures and authority of persons signing the Transaction Documents and
related documents on behalf of the Company;
(viii) the
Compliance Certificate referred to in Section 5.1(h);
(ix) a
certificate evidencing the formation and good standing of the Company in the
State of Delaware issued by the Secretary of State (or comparable office),
as of
a date within 10 days of the Closing Date; and
(x) a
certified copy of the Certificate of Incorporation as certified by the Secretary
of State of the State of Delaware within ten (10) days of the Closing
Date.
(b) On
or
prior to the Closing, each Purchaser shall deliver or cause to be delivered
to
the Company the following (the “Purchaser
Deliverables”):
(i) this
Agreement, duly executed by such Purchaser;
(ii) its
Subscription Amount, in United States dollars and in immediately available
funds, in the amount set forth as the “Purchase Price” indicated below such
Purchaser’s name on the applicable signature page hereto by wire transfer to an
account designated in writing by the Company for such purpose, as set forth
on
Exhibit
F
attached
hereto;
(iii) the
Registration Rights Agreement, duly executed by such Purchaser;
(iv) a
fully
completed and duly executed Selling Stockholder Questionnaire in the form
attached as Annex
B
to the
Registration Rights Agreement; and
(v) a
fully
completed and duly executed Accredited Investor Questionnaire and Stock
Certificate Questionnaire in the forms attached hereto as Exhibits
C-1
and
C-2,
respectively.
ARTICLE
III.
REPRESENTATIONS
AND WARRANTIES
3.1 Representations
and Warranties of the Company.
The
Company hereby represents and warrants to the Purchasers and to the Placement
Agents that, except as set forth in the Schedules delivered
herewith:
(a) Subsidiaries.
With
the exception of ZIOPHARM Oncology Limited, a private limited company
incorporated in England and Wales, the Company has no direct or indirect
subsidiaries.
(b) Organization
and Qualification.
The
Company is an entity duly incorporated or otherwise organized, validly existing
and in good standing under the laws of the jurisdiction of its incorporation
or
organization (as applicable), with the requisite power and authority to own
or
lease and use its properties and assets and to carry on its business as
currently conducted. The Company is not in violation of any of the provisions
of
its certificate of incorporation, bylaws or other organizational or charter
documents. The Company is duly qualified to conduct business and is in good
standing as a foreign corporation or other entity in each jurisdiction in which
the nature of the business conducted or property owned by it makes such
qualification necessary, except where the failure to be so qualified or in
good
standing, as the case may be, could not have or reasonably be expected to have,
individually or in the aggregate, resulted in a Material Adverse Effect, and
no
Proceeding has been instituted in any such jurisdiction revoking, limiting
or
curtailing or seeking to revoke, limit or curtail such power and authority
or
qualification.
(c) Authorization;
Enforcement; Validity.
The
Company has the requisite corporate power and authority to enter into and to
consummate the transactions contemplated by each of the Transaction Documents
to
which it is a party and otherwise to carry out its obligations hereunder and
thereunder. The execution and delivery of each of the Transaction Documents
to
which it is a party by the Company and the consummation by it of the
transactions contemplated hereby and thereby (including, but not limited to,
the
sale and delivery of the Shares and the Warrants and the subsequent issuance
of
the Warrant Shares upon exercise of the Warrants) have been duly authorized
by
all necessary corporate action on the part of the Company, and no further
corporate action is required by the Company, its Board of Directors or its
shareholders in connection therewith other than in connection with the Required
Approvals. Each of the Transaction Documents to which it is a party has been
(or
upon delivery will have been) duly executed by the Company and is, or when
delivered in accordance with the terms hereof, will constitute the valid and
binding obligation of the Company enforceable against the Company in accordance
with its terms, except as such enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium, liquidation or similar
laws
relating to, or affecting generally the enforcement of, creditors’ rights and
remedies or by other equitable principles of general application. Except as
set
forth on Schedule
3.1(c)
hereto,
there are no shareholder agreements, voting agreements, or other similar
arrangements with respect to the Company’s capital stock to which the Company is
a party or, to the Company’s Knowledge, between or among any of the Company’s
shareholders.
(d) No
Conflicts.
The
execution, delivery and performance by the Company of the Transaction Documents
to which it is a party and the consummation by the Company of the transactions
contemplated hereby or thereby (including, without limitation, the issuance
of
the Shares and the reservation for issuance and issuance of the Warrant Shares)
do not and will not (i) conflict with or violate any provision of the Company’s
certificate of incorporation, bylaws or other organizational or charter
documents, (ii) conflict with, or constitute a default (or an event that with
notice or lapse of time or both would become a default) under, result in the
creation of any Lien upon any of the properties or assets of the Company or
give
to others any rights of termination, amendment, acceleration or cancellation
(with or without notice, lapse of time or both) of, any agreement, credit
facility, debt or other instrument (evidencing a Company debt or otherwise)
or
other understanding to which the Company is a party or by which any property
or
asset of the Company is bound or affected, or (iii) subject to the Required
Approvals, conflict with or result in a violation of any law, rule, regulation,
order, judgment, injunction, decree or other restriction of any court or
governmental authority to which the Company is subject (including federal and
state securities laws and regulations and the rules and regulations, assuming
the correctness of the representations and warranties made by the Purchasers
herein, of any self-regulatory organization to which the Company or its
securities are subject, including all applicable Trading Markets), or by which
any property or asset of the Company is bound or affected, except in the case
of
clauses (ii) and (iii), such as would not, individually or in the aggregate,
have or reasonably be expected to result in a Material Adverse
Effect.
(e) Filings,
Consents and Approvals.
The
Company is not required to obtain any consent, waiver, authorization or order
of, give any notice to, or make any filing or registration with, any court
or
other federal, state, local or other governmental authority or other Person
in
connection with the execution, delivery and performance by the Company of the
Transaction Documents (including the issuance of the Securities), other than
(i)
the filing with the Commission of one or more Registration Statements in
accordance with the requirements of the Registration Rights Agreement, (ii)
filings required by applicable state securities laws, (iii) the filing of a
Notice of Sale of Securities on Form D with the Commission under Regulation
D of
the Securities Act, (iv) the filing of any requisite notices and/or
application(s) to the Principal Trading Market for the issuance and sale of
the
Common Stock and the Warrants and the listing of the Common Stock for trading
or
quotation, as the case may be, thereon in the time and manner required thereby
(except as disclosed on Schedule 3.1(e)), (v) the filings required in accordance
with Section 4.8 of this Agreement and (vi) those that have been made or
obtained prior to the date of this Agreement (collectively, the “Required
Approvals”).
(f) Issuance
of the Securities.
The
Shares have been duly authorized and, when issued and paid for in accordance
with the terms of the Transaction Documents, will be duly and validly issued,
fully paid and nonassessable, free and clear of all Liens, other than
restrictions on transfer provided for in the Transaction Documents or imposed
by
applicable securities laws, and shall not be subject to preemptive or similar
rights of shareholders. The Warrants have been duly authorized and, when issued
and paid for in accordance with the terms of the Transaction Documents, will
be
duly and validly issued, free and clear of all Liens, other than restrictions
on
transfer provided for in the Transaction Documents or imposed by applicable
securities laws, and shall not be subject to preemptive or similar rights of
shareholders. The Warrant Shares issuable upon exercise of the Warrants have
been duly authorized and, when issued and paid for in accordance with the terms
of the Transaction Documents and the Warrants, will be duly and validly issued,
fully paid and nonassessable, free and clear of all Liens, other than
restrictions on transfer provided for in the Transaction Documents or imposed
by
applicable securities laws, and shall not be subject to preemptive or similar
rights of shareholders. Assuming the accuracy of the representations and
warranties of the Purchasers in this Agreement, the Shares and the Warrant
Shares will be issued in compliance with all applicable federal and state
securities laws. The Company shall, so long as any of the Warrants are
outstanding, take all action necessary to reserve and keep available out of
its
authorized and unissued capital stock, solely for the purpose of effecting
the
exercise of the Warrants, 100% of the number of shares of Common Stock issuable
upon exercise of the Warrants..
(g) Capitalization.
The
number of shares and type of all authorized, issued and outstanding capital
stock, options and other securities of the Company (whether or not presently
convertible into or exercisable or exchangeable for shares of capital stock
of
the Company) has been set forth in the SEC Reports and has changed since the
date of such SEC Reports only to reflect stock option and warrant exercises
that
do not, individually or in the aggregate, have a material affect on the issued
and outstanding capital stock, options and other securities. All of the
outstanding shares of capital stock of the Company are duly authorized, validly
issued, fully paid and non-assessable, have been issued in compliance in all
material respects with all applicable federal and state securities laws, and
none of such outstanding shares was issued in violation of any preemptive rights
or similar rights to subscribe for or purchase any capital stock of the Company.
Except as specified in the SEC Reports: (i) no shares of the Company's capital
stock are subject to preemptive rights or any other similar rights or any liens
or encumbrances suffered or permitted by the Company; (ii) there are no
outstanding options, warrants, scrip, rights to subscribe to, calls or
commitments of any character whatsoever relating to, or securities or rights
convertible into, or exercisable or exchangeable for, any shares of capital
stock of the Company, or contracts, commitments, understandings or arrangements
by which the Company is or may become bound to issue additional shares of
capital stock of the Company or options, warrants, scrip, rights to subscribe
to, calls or commitments of any character whatsoever relating to, or securities
or rights convertible into, or exercisable or exchangeable for, any shares
of
capital stock of the Company; (iii) there are no outstanding debt securities,
notes, credit agreements, credit facilities or other agreements, documents
or
instruments evidencing indebtedness of the Company or by which the Company
is or
may become bound; (iv) there are no financing statements securing obligations
in
any material amounts, either singly or in the aggregate, filed in connection
with the Company; (v) there are no agreements or arrangements under which the
Company is obligated to register the sale of any of their securities under
the
Securities Act (except the Registration Rights Agreement); (vi) there are no
outstanding securities or instruments of the Company or which contain any
redemption or similar provisions, and there are no contracts, commitments,
understandings or arrangements by which the Company is or may become bound
to
redeem a security of the Company; (vii) there are no securities or instruments
containing anti-dilution or similar provisions that will be triggered by the
issuance of the Securities; (viii) the Company does not have any stock
appreciation rights or “phantom stock” plans or agreements or any similar plan
or agreement; and (ix) the Company has no liabilities or obligations required
to
be disclosed in the SEC Reports (as defined herein) but not so disclosed in
the
SEC Reports, other than those incurred in the ordinary course of the Company's
businesses and which, individually or in the aggregate, do not or would not
have
a Material Adverse Effect.
(h) SEC
Reports.
The
Company has filed all reports, schedules, forms, statements and other documents
required to be filed by it under the Exchange Act, including pursuant to Section
13(a) or 15(d) thereof, for the two years preceding the date hereof (or such
shorter period as the Company was required by law or regulation to file such
material) (the foregoing materials, including the exhibits thereto and documents
incorporated by reference therein, being collectively referred to herein as
the
“SEC
Reports”
and
together with this Agreement and the Schedules to this Agreement (if any),
the
“Disclosure
Materials”),
on a
timely basis or has received a valid extension of such time of filing and has
filed any such SEC Reports prior to the expiration of any such extension. As
of
the date hereof, the Company is not aware of any event occurring on or prior
to
the Closing Date (other than the transactions contemplated by the Transaction
Documents) that requires the filing of a Form 8-K after the Closing. As of
their
respective dates, or to the extent corrected by a subsequent restatement, the
SEC Reports complied in all material respects with the requirements of the
Securities Act and the Exchange Act and the rules and regulations of the
Commission promulgated thereunder, and none of the SEC Reports, when filed,
contained any untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading.
(i) Financial
Statements. The
financial statements of the Company included in the SEC Reports comply in all
material respects with applicable accounting requirements and the rules and
regulations of the Commission with respect thereto as in effect at the time
of
filing (or to the extent corrected by a subsequent restatement). Such financial
statements have been prepared in accordance with GAAP applied on a consistent
basis during the periods involved, except as may be otherwise specified in
such
financial statements or the notes thereto and except that unaudited financial
statements may not contain all footnotes required by GAAP, and fairly present
in
all material respects the financial position of the Company of and for the
dates
thereof and the results of operations and cash flows for the periods then ended,
subject, in the case of unaudited statements, to normal, year-end audit
adjustments. All material agreements to which the Company is a party or to
which
the property or assets of the Company are subject are included as part of or
specifically identified in the SEC Reports.
(j) Tax
Matters The
Company (i) has accurately and timely prepared and filed all foreign, federal
and state income and all other tax returns, reports and declarations required
by
any jurisdiction to which it is subject, (ii) has paid all taxes and other
governmental assessments and charges that are material in amount, shown or
determined to be due on such returns, reports and declarations, except those
being contested in good faith, with respect to which adequate reserves have
been
set aside on the books of the Company and (iii) has set aside on its books
provisions reasonably adequate for the payment of all taxes for periods
subsequent to the periods to which such returns, reports or declarations apply,
except, in the case of clauses (i) and (ii) above, where the failure to so
pay
or file any such tax, assessment, charge or return would not result in a
Material Adverse Effect. There are no unpaid taxes in any material amount
claimed to be due by the Company by the taxing authority of any jurisdiction.
(k) Material
Changes.
Since
the date of the latest audited financial statements included within the SEC
Reports, (i) there have been no events, occurrences or developments that have
had or that could reasonably be expected to result, either individually or
in
the aggregate, in a Material Adverse Effect, (ii) the Company has not incurred
any liabilities (contingent or otherwise) other than (A) trade payables, accrued
expenses and other liabilities incurred in the ordinary course of business
consistent with past practice and (B) liabilities not required to be reflected
in the Company's financial statements pursuant to GAAP or required to be
disclosed in filings made with the Commission, (iii) the Company has not altered
its method of accounting or the manner in which it keeps its accounting books
and records, (iv) the Company has not declared or made any dividend or
distribution of cash or other property to its shareholders or purchased,
redeemed or made any agreements to purchase or redeem any shares of its capital
stock (other than in connection with repurchases of unvested stock issued to
employees of the Company) and (v) the Company has not issued any equity
securities to any officer, director or Affiliate, except Common Stock issued
in
the ordinary course as dividends on outstanding preferred stock or pursuant
to
existing Company stock option or stock purchase plans or executive and director
corporate arrangements disclosed in the SEC Reports and (vi) there has not
been
any material change or amendment to, or any waiver of any material right under,
any contract under which the Company or any of their assets is bound or subject.
Except for the issuance of the Securities contemplated by this Agreement or
as
set forth in Schedule
3.1(k)
hereto,
no event, liability or development has occurred or exists with respect to the
Company or its business, properties, operations or financial condition that
would be required to be disclosed by the Company under applicable securities
laws at the time this representation is made that has not been publicly
disclosed at least one Trading Day prior to the date that this representation
is
made.
(l) Environmental
Matters.
To the
Company’s Knowledge, the Company (i) is not in violation of any statute, rule,
regulation, decision or order of any governmental agency or body or any court,
domestic or foreign, relating to the use, disposal or release of hazardous
or
toxic substances or relating to the protection or restoration of the environment
or human exposure to hazardous or toxic substances (collectively, “Environmental
Laws”),
(ii)
does not own or operate any real property contaminated with any substance that
is in violation of any Environmental Laws, (iii) is not liable for any off-site
disposal or contamination pursuant to any Environmental Laws, and (iv) is not
subject to any claim relating to any Environmental Laws; which violation,
contamination, liability or claim has had or could reasonably be expected to
have a Material Adverse Effect, individually or in the aggregate; and there
is
no pending or, to the Company’s Knowledge, threatened investigation that might
lead to such a claim.
(m) Litigation.
There
is no Action which (i) adversely affects or challenges the legality, validity
or
enforceability of any of the Transaction Documents or the Securities or (ii)
except as specifically disclosed in the SEC Reports, would, if there were an
unfavorable decision, individually or in the aggregate, have or reasonably
be
expected to result in a Material Adverse Effect. The Company, nor, to the
Company’s Knowledge, any current director or officer thereof (in his or her
capacity thereof), is or has been during the five-year period prior to the
Closing Date the subject of any Action involving a claim of violation of or
liability under federal or state securities laws or a claim of breach of
fiduciary duty. There has not been and, to the Company’s Knowledge, there is not
pending or contemplated, any investigation by the Commission involving the
Company or, to the Company’s Knowledge, any current or former director or
officer of the Company (in his or her capacity as such). The Commission has
not
issued any stop order or other order suspending the effectiveness of any
registration statement filed by the Company under the Exchange Act or the
Securities Act.
(n) Employment
Matters.
No
material labor dispute exists or, to the knowledge of the Company, is imminent
with respect to any of the employees of the Company which could reasonably
be
expected to result in a Material Adverse Effect. None of the Company’s employees
is a member of a union that relates to such employee’s relationship with the
Company, and the Company is not a party to a collective bargaining agreement,
and the Company believes that their relationships with their employees are
good.
No executive officer, to the knowledge of the Company, is, or is now expected
to
be, in violation of any material term of any employment contract,
confidentiality, disclosure or proprietary information agreement or
non-competition agreement, or any other contract or agreement or any restrictive
covenant, and the continued employment of each such executive officer does
not
subject the Company to any liability with respect to any of the foregoing
matters. The Company is in compliance with all U.S. federal, state, local and
foreign laws and regulations relating to employment and employment practices,
terms and conditions of employment and wages and hours, except where the failure
to be in compliance could not, individually or in the aggregate, reasonably
be
expected to have a Material Adverse Effect.
(o) Compliance.
The
Company is not (i) in default under or in violation of (and no event has
occurred that has not been waived that, with notice or lapse of time or both,
would result in a default by the Company), nor has the Company received notice
of a claim that it is in default under or that it is in violation of, any
indenture, loan or credit agreement or any other agreement or instrument to
which it is a party or by which it or any of its properties is bound (whether
or
not such default or violation has been waived), (ii) in violation of any order
of any court, arbitrator or governmental body having jurisdiction over the
Company or its properties or assets, or (iii) in violation of, or in receipt
of
notice that it is in violation of, any statute, rule or regulation of any
governmental authority applicable to the Company, except in each case as could
not, individually or in the aggregate, have or reasonably be expected to result
in a Material Adverse Effect.
(p) Regulatory
Permits.
The
Company possesses all certificates, authorizations and permits issued by the
appropriate federal, state, local or foreign regulatory authorities necessary
to
conduct its business as described in the SEC Reports, except where the failure
to possess such permits, individually or in the aggregate, has not and could
not
reasonably be expected to result in a Material Adverse Effect (“Material
Permits”),
and
the Company has not received any notice of proceedings relating to the
revocation or modification of any such Material Permits.
(q) Title
to Assets.
Except
for property that is specifically the subject of, and covered by, other
representations and warranties as to ownership or title contained herein, the
Company has good and marketable title in fee simple to all real property owned
by it that is material to its business and good and marketable title in all
personal property owned by it that is material to its business, in each case
free and clear of all Liens, except for Liens as do not materially affect the
value of such property and do not materially interfere with the use made and
proposed to be made of such property by the Company and Liens for the payment
of
federal, state or other taxes, the payment of which is neither delinquent nor
subject to penalties. Any real property and facilities held under lease by
the
Company are held by it under valid, subsisting and enforceable leases of which
the Company is in material compliance.
(r) Patents
and Trademarks.
The
Company owns, possesses, licenses or has other rights to use all foreign and
domestic patents, patent applications, trade and service marks, trade and
service xxxx registrations, trade names, copyrights, licenses, inventions,
trade
secrets, technology, Internet domain names, know-how and other intellectual
property (collectively, the “Intellectual
Property”)
necessary for the conduct of its business as now conducted or as proposed to
be
conducted. Except as set forth in the SEC Reports and except where such
violations or infringements would not reasonably be expected to result, either
individually or in the aggregate, in a Material Adverse Effect, (a) there
are no rights of third parties to any such Intellectual Property; (b) to the
Company’s Knowledge, there is no infringement by third parties of any such
Intellectual Property; (c) there is no pending or, to the Company’s Knowledge,
threatened action, suit, proceeding or claim by others challenging the Company’s
rights in or to any such Intellectual Property, and the Company is unaware
of
any facts which would form a reasonable basis for any such claim; (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 such Intellectual
Property; 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 rights of others, and the Company is unaware of any other fact
which
would form a reasonable basis for any such claim.
(s) Insurance.
The
Company is insured by insurers of recognized financial responsibility against
such losses and risks and in such amounts as are prudent and customary in the
businesses and location in which the Company is engaged. The Company does not
have any knowledge that it will be unable to renew its existing insurance
coverage for the Company as and when such coverage expires or to obtain similar
coverage from similar insurers as may be necessary to continue its business
without a significant increase in cost.
(t) Transactions
With Affiliates and Employees.
Except
as set forth in the SEC Reports or reported on a Form 4, 3 or 5 filed with
the
Commission, in either case at least ten days prior to the date hereof, none
of
the officers, directors or employees of the Company is presently a party to
any
transaction with the Company (other than for ordinary course services as
employees, officers or directors), including any contract, agreement or other
arrangement providing for the furnishing of services to or by, providing for
rental of real or personal property to or from, or otherwise requiring payments
to or from any such officer, director or employee or, to the knowledge of the
Company, any corporation, partnership, trust or other entity in which any such
officer, director, or employee has a substantial interest or is an officer,
director, trustee or partner.
(u) Internal
Accounting Controls.
The
Company maintains a system of internal accounting controls sufficient to provide
reasonable assurance that (i) transactions are executed in accordance with
management's general or specific authorizations, (ii) transactions are recorded
as necessary to permit preparation of financial statements in conformity with
GAAP and to maintain asset accountability, (iii) access to assets is permitted
only in accordance with management's general or specific authorization, and
(iv)
the recorded accountability for assets is compared with the existing assets
at
reasonable intervals and appropriate action is taken with respect to any
differences.
(v) Xxxxxxxx-Xxxxx;
Disclosure Controls.
The
Company is in compliance in all material respects with all of the provisions
of
the Xxxxxxxx-Xxxxx Act of 2002 which are applicable to it as of the Closing
Date. The Company maintains disclosure controls and procedures (as such term
is
defined in Rule 13a-15(e) under the Exchange Act) that are effective in ensuring
that information required to be disclosed by the Company in the reports that
it
files or submits under the Exchange Act is recorded, processed, summarized
and
reported, within the time periods specified in the rules and forms of the
Commission, including, without limitation, controls and procedures designed
in
to ensure that information required to be disclosed by the Company in the
reports that it files or submits under the Exchange Act is accumulated and
communicated to the Company's management, including its principal executive
officer or officers and its principal financial officer or officers, as
appropriate, to allow timely decisions regarding required disclosure.
(w) Certain
Fees.
No
person
or entity will have, as a result of the transactions contemplated by this
Agreement, any valid right, interest or claim against or upon the Company or
a
Purchaser for any commission, fee or other compensation pursuant to any
agreement, arrangement or understanding entered into by or on behalf of the
Company, other than the Placement Agents with respect to the offer and sale
of
the Securities. Such Placement Agent fees and expenses are set forth on
Schedule
3.1(w)
hereto
and are being paid by the Company. The Company shall pay, and hold each
Purchaser harmless against, any liability, loss or expense (including, without
limitation, attorneys’ fees and out-of-pocket expenses) arising in connection
with any such right, interest or claim.
(x) Private
Placement.
Assuming
the accuracy of the Purchasers’ representations and warranties set forth in
Section 3.2 of this Agreement, no registration under the Securities Act is
required for the offer and sale of the Securities by the Company to the
Purchasers under the Transaction Documents. Other than each of the Purchasers,
no Person has any right to cause the Company to effect the registration under
the Securities Act of any securities of the Company other than those securities
which are currently registered on an effective registration statement on file
with the Commission.
(y) No
Directed Selling Efforts or General Solicitation.
Neither
the Company, nor any of its Affiliates, nor any Person acting on its or their
behalf has conducted any “general solicitation” or “general advertising” (as
those terms are used in Regulation D) in connection with the offer or sale
of
any of the Securities.
(z) No
Integrated Offering.
Assuming the accuracy of the Purchasers’ representations and warranties set
forth in Section 3.2, neither the Company, its Affiliates, nor any Person acting
on its or their behalf has, directly or indirectly, at any time within the
past
six months, made any offers or sales of any Company security or solicited any
offers to buy any security under circumstances that would (i) eliminate the
availability of the exemption from registration under Regulation D under the
Securities Act in connection with the offer and sale by the Company of the
Securities as contemplated hereby or (ii) cause the offering of the Securities
pursuant to the Transaction Documents to be integrated with prior offerings
by
the Company for purposes of any applicable law, regulation or shareholder
approval provisions, including, without limitation, under the rules and
regulations of any Trading Market on which any of the securities of the Company
are listed or designated.
(aa) Listing
and Maintenance Requirements.
The
Company’s Common Stock is registered pursuant to Section 12(b) of the Exchange
Act, and the Company has taken no action designed to terminate the registration
of the Common Stock under the Exchange Act nor has the Company received any
notification that the Commission is contemplating terminating such registration.
Except as specified in the SEC Reports, the Company has not, in the two years
preceding the date hereof, received written notice from any Trading Market
on
which the Common Stock is or has been listed or quoted to the effect that the
Company is not in compliance with the listing or maintenance requirements of
such Trading Market. The Company is, and has no reason to believe that it will
not in the foreseeable future continue to be, in compliance in all material
respects with the listing and maintenance requirements for continued trading
of
the Common Stock on the Principal Trading Market.
(bb) Investment
Company The
Company is not required to be registered as, and is not an Affiliate of, and
immediately following the Closing will not be required to register as, an
“investment company” within the meaning of the Investment Company Act of 1940,
as amended.
(cc) Questionable
Payments. The
Company, nor, to the Company’s Knowledge, any directors, officers, employees,
agents or other Persons acting on behalf of the Company has, in the course
of
its actions for, or on behalf of, the Company: (a) directly or indirectly,
used
any corporate funds for unlawful contributions, gifts, entertainment or other
unlawful expenses relating to foreign or domestic political activity; (b) made
any direct or indirect unlawful payments to any foreign or domestic governmental
officials or employees or to any foreign or domestic political parties or
campaigns from corporate funds; (c) violated in any material respect any
provision of the Foreign Corrupt Practices Act of 1977, as amended, or (d)
made
any other unlawful bribe, rebate, payoff, influence payment, kickback or other
unlawful payment to any foreign or domestic government official or
employee.
(dd) Application
of Takeover Protections; Rights Agreements.
The
Company and its board of directors have taken all necessary action, if any,
in
order to render inapplicable any control share acquisition, business
combination, poison pill (including any distribution under a rights agreement)
or other similar anti-takeover provision under the Company's charter documents
or the laws of its state of incorporation that is or could reasonably be
expected to become applicable to any of the Purchasers as a result of the
Purchasers and the Company fulfilling their obligations or exercising their
rights under the Transaction Documents, including, without limitation, the
Company's issuance of the Securities and the Purchasers' ownership of the
Securities. The Company has not adopted a stockholder rights plan or similar
arrangement relating to accumulations of beneficial ownership of Common Stock
or
a change in control of the Company.
(ee) Disclosure.
The
Company confirms that neither it nor any of its officers or directors nor any
other Person acting on its or their behalf has provided, and it has not
authorized the Placement Agents to provide, any Purchaser with any information
that it believes constitutes or could reasonably be expected to constitute
material, non-public information except insofar as the existence, provisions
and
terms of the Transaction Documents and the proposed transactions hereunder
may
constitute such information, all of which will be disclosed by the Company
in
the Press Release as contemplated by Section 4.8 hereof. The Company understands
and confirms that the Purchasers will rely on the foregoing representations
in
effecting transactions in securities of the Company. All disclosure provided
to
the Purchasers regarding the Company, its business and the transactions
contemplated hereby furnished by the Company or authorized by the Company and
furnished by the Placement Agents on behalf of the Company (including the
Company’s representations and warranties set forth in this Agreement) are true
and correct in all material respects and do not contain any untrue statement
of
a material fact or omit to state any material fact necessary in order to make
the statements made therein, in light of the circumstances under which they
were
made, not misleading. No event or circumstance has occurred or information
exists with respect to the Company or or its business, properties, operations
or
financial conditions, which, under applicable law, rule or regulation, requires
public disclosure or announcement by the Company but which has not been so
publicly announced or disclosed, except for the announcement of this Agreement
and related transactions.
(ff) Off
Balance Sheet Arrangements.
There
is no transaction, arrangement, or other relationship between the Company and
an
unconsolidated or other off balance sheet entity that is required to be
disclosed by the Company in its Exchange Act filings and is not so disclosed
or
that otherwise would be reasonably likely to have a Material Adverse
Effect.
(gg) Consultation
with Auditors.
The
Company has consulted its independent auditors concerning the accounting
treatment of the transactions contemplated by the Transaction Documents and
in
connection therewith has furnished such auditors complete copies of the
Transaction Documents. The Company intends to account for the gross proceeds
raised from the financing which is the subject of this Agreement as equity
in
its financial statements.
(hh) No
Additional Agreements. The
Company does not have any agreement or understanding with any Purchaser with
respect to the transactions contemplated by the Transaction Documents other
than
as specified in the Transaction Documents.
(ii) Use
of
Form S-3. The
Company meets the registration and transaction requirements for use of Form
S-3
for the registration of the Shares and the Warrant Shares for resale by the
Purchasers.
3.2 Representations
and Warranties of the Purchasers.
Each
Purchaser hereby, for itself and for no other Purchaser, represents and warrants
as of the date hereof and as of the Closing Date to the Company and the
Placement Agents as follows:
(a) Organization;
Authority.
Such
Purchaser is an entity duly organized, validly existing and in good standing
under the laws of the jurisdiction of its organization with the requisite
corporate or partnership power and authority to enter into and to consummate
the
transactions contemplated by the applicable Transaction Documents and otherwise
to carry out its obligations hereunder and thereunder. The execution, delivery
and performance by such Purchaser of the transactions contemplated by this
Agreement have been duly authorized by all necessary corporate or, if such
Purchaser is not a corporation, such partnership, limited liability company
or
other applicable like action, on the part of such Purchaser. Each of this
Agreement, the Warrant and the Registration Rights Agreement has been duly
executed by such Purchaser, and when delivered by such Purchaser in accordance
with terms hereof, will constitute the valid and legally binding obligation
of
such Purchaser, enforceable against it in accordance with its terms, except
as
such enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation or similar laws relating to, or
affecting generally the enforcement of, creditors’ rights and remedies or by
other equitable principles of general application.
(b) Investment
Intent.
Such
Purchaser understands that the Securities are “restricted securities” and have
not been registered under the Securities Act or any applicable state securities
law and is acquiring the Securities and, upon exercise of the Warrants, will
acquire the Warrant Shares issuable upon exercise thereof as principal for
its
own account and not with a view to, or for distributing or reselling such
Securities or any part thereof in violation of the Securities Act or any
applicable state securities laws, provided,
however,
that by
making the representations herein, such Purchaser does not agree to hold any
of
the Securities for any minimum period of time and reserves the right, subject
to
the provisions of this Agreement and the Registration Rights Agreement, at
all
times to sell or otherwise dispose of all or any part of such Securities or
Warrant Shares pursuant to an effective registration statement under the
Securities Act or under an exemption from such registration and in compliance
with applicable federal and state securities laws. Such Purchaser is acquiring
the Securities hereunder in the ordinary course of its business. Such Purchaser
does not presently have any agreement, plan or understanding, directly or
indirectly, with any Person to distribute or effect any distribution of any
of
the Securities (or any securities which are derivatives thereof) to or through
any person or entity. Such Purchaser is not a registered broker-dealer under
Section 15 of the Exchange Act or an entity engaged in a business that would
require it to be so registered as a broker-dealer.
(c) Purchaser
Status.
At the
time such Purchaser was offered the Securities, it was, and at the date hereof
it is, and on each date on which it exercises the Warrants it will be, an
“accredited investor” as defined in Rule 501(a) under the Securities Act.
(d) General
Solicitation. Such
Purchaser is not purchasing the Securities as a result of any advertisement,
article, notice or other communication regarding the Securities published in
any
newspaper, magazine or similar media or broadcast over television or radio
or
presented at any seminar or any other general advertisement.
(e) Experience
of Such Purchaser.
Such
Purchaser, either alone or together with its representatives, has such
knowledge, sophistication and experience in business and financial matters
so as
to be capable of evaluating the merits and risks of the prospective investment
in the Securities, and has so evaluated the merits and risks of such investment.
Such Purchaser is able to bear the economic risk of an investment in the
Securities and, at the present time, is able to afford a complete loss of such
investment.
(f) Access
to Information.
Such
Purchaser acknowledges that it has had the opportunity to review the Disclosure
Materials and has been afforded (i) the opportunity to ask such questions as
it
has deemed necessary of, and to receive answers from, representatives of the
Company concerning the terms and conditions of the offering of the Securities
and the merits and risks of investing in the Securities; (ii) access to
information about the Company and its financial condition, results of
operations, business, properties, management and prospects sufficient to enable
it to evaluate its investment; and (iii) the opportunity to obtain such
additional information that the Company possesses or can acquire without
unreasonable effort or expense that is necessary to make an informed investment
decision with respect to the investment. Neither such inquiries nor any other
investigation conducted by or on behalf of such Purchaser or its representatives
or counsel shall modify, amend or affect such Purchaser's right to rely on
the
truth, accuracy and completeness of the Disclosure Materials and the Company's
representations and warranties contained in the Transaction
Documents.
(g) Certain
Trading Activities.
Other
than with respect to the transactions contemplated herein, since the earlier
to
occur of (1) the time that such Purchaser was first contacted by the Company,
the Placement Agents or any other Person regarding the transactions contemplated
hereby and (2) the tenth (10th)
day
prior to the date of this Agreement, neither the Purchaser nor any Affiliate
of
such Purchaser which (x) had knowledge of the transactions contemplated hereby,
(y) has or shares discretion relating to such Purchaser’s investments or trading
or information concerning such Purchaser’s investments, including in respect of
the Securities, and (z) is subject to such Purchaser’s review or input
concerning such Affiliate’s investments or trading (collectively, “Trading
Affiliates”)
has
directly or indirectly, nor has any Person acting on behalf of or pursuant
to
any understanding with such Purchaser or Trading Affiliate, effected or agreed
to effect any transactions in the securities of the Company (including, without
limitation, any Short Sales involving the Company’s securities). Notwithstanding
the foregoing, in the case of a Purchaser and/or Trading Affiliate that is,
individually or collectively, a multi-managed investment vehicle whereby
separate portfolio managers manage separate portions of such Purchaser's or
Trading Affiliate’s assets and the portfolio managers have no direct knowledge
of the investment decisions made by the portfolio managers managing other
portions of such Purchaser's or Trading Affiliate’s assets, the representation
set forth above shall apply only with respect to the portion of assets managed
by the portfolio manager that have knowledge about the financing transaction
contemplated by this Agreement. Other than to other Persons party to this
Agreement, such Purchaser has maintained the confidentiality of all disclosures
made to it in connection with this transaction (including the existence and
terms of this transaction). Notwithstanding the foregoing, no Purchaser makes
any representation, warranty or covenant hereby that it will not engage in
Short
Sales in the securities of the Company after the time that the transactions
contemplated by this Agreement are first publicly announced as described in
Section 4.8.
(h) Brokers
and Finders.
No
Person will have, as a result of the transactions contemplated by this
Agreement, any valid right, interest or claim against or upon the Company or
any
Purchaser for any commission, fee or other compensation pursuant to any
agreement, arrangement or understanding entered into by or on behalf of the
Purchaser.
(i) Limited
Ownership.
The
purchase by such Purchaser of the Securities issuable to it at the Closing
will
not result in such Purchaser (individually or together with other Person with
whom such Purchaser has identified, or will have identified, itself as part
of a
“group” in a public filing made with the Commission involving the Company’s
securities) acquiring, or obtaining the right to acquire, in excess of 19.99%
of
the outstanding shares of Common Stock or the voting power of the Company on
a
post transaction basis that assumes that the Closing shall have occurred. Such
Purchaser does not presently intend to, alone or together with others, make
a
public filing with the Commission to disclose that it has (or that it together
with such other Persons have) acquired, or obtained the right to acquire, as
a
result of the Closing (when added to any other securities of the Company that
it
or they then own or have the right to acquire), in excess of 19.99% of the
outstanding shares of Common Stock or the voting power of the Company on a
post
transaction basis that assumes that the Closing shall have occurred.
(j) Independent
Investment Decision.
Such
Purchaser has independently evaluated the merits of its decision to purchase
Securities pursuant to the Transaction Documents, and such Purchaser confirms
that it has not relied on the advice of any other Purchaser’s business and/or
legal counsel in making such decision. Such Purchaser understands that nothing
in this Agreement or any other materials presented by or on behalf of the
Company to the Purchaser in connection with the purchase of the Securities
constitutes legal, tax or investment advice. Such Purchaser 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 the Securities.
Such
Purchaser understands that the Placement Agents have acted solely as the agent
of the Company in this placement of the Securities and such Purchaser has not
relied on the business or legal advice of the Placement Agents or any of their
agents, counsel or Affiliates in making its investment decision hereunder,
and
confirms that none of such Persons has made any representations or warranties
to
such Purchaser in connection with the transactions contemplated by the
Transaction Documents.
(k) Reliance
on Exemptions.
Such
Purchaser understands that the Securities being offered and sold to it in
reliance on specific exemptions from the registration requirements of United
States federal and state securities laws and that the Company is relying in
part
upon the truth and accuracy of, and such Purchaser’s compliance with, the
representations, warranties, agreements, acknowledgements and understandings
of
such Purchaser set forth herein in order to determine the availability of such
exemptions and the eligibility of such Purchaser to acquire the
Securities.
(l) No
Governmental Review.
Such
Purchaser understands that no United States federal or state agency or any
other
government or governmental agency has passed on or made any recommendation
or
endorsement of the Securities or the fairness or suitability of the investment
in the Securities nor have such authorities passed upon or endorsed the merits
of the offering of the Securities.
The
Company acknowledges and agrees that no Purchaser has made or makes any
representations or warranties with respect to the transactions contemplated
hereby other than those specifically set forth in this Section 3.2.
ARTICLE
IV.
OTHER
AGREEMENTS OF THE PARTIES
4.1 (a) Compliance
with Laws.
Notwithstanding any other provision of this Article IV, each Purchaser covenants
that the securities may be disposed of only pursuant to an effective
registration statement under, and in compliance with the requirements of, the
Securities Act, or pursuant to an available exemption from, or in a transaction
not subject to, the registration requirements of the Securities Act, and in
compliance with any applicable state and federal securities laws. In connection
with any transfer of the Securities other than (i) pursuant to an effective
registration statement, (ii) to the Company, (iii) to an Affiliate of a
Purchaser, (iv) pursuant to Rule 144 (provided
that the
Purchaser provides the Company with reasonable assurances (in the form of seller
and broker representation letters) that the securities may be sold pursuant
to
such rule) or Rule 144A, (v) pursuant to Rule 144(k) following the applicable
holding period or (vi) in connection with a bona fide pledge as contemplated
in
Section 4.1(b), except as otherwise provided herein, the Company may require
the
transferor thereof to provide to the Company an opinion of counsel selected
by
the transferor and reasonably acceptable to the Company, the form and substance
of which opinion shall be reasonably satisfactory to the Company, to the effect
that such transfer does not require registration of such transferred Securities
under the Securities Act. As a condition of transfer, any such transferee shall
agree in writing to be bound by the terms of this Agreement and shall have
the
rights of a Purchaser under this Agreement and the Registration Rights
Agreement.
(b) Legends.
Certificates evidencing the Securities shall bear any legend as required by
the
“blue sky” laws of any state and a restrictive legend in substantially the
following form, until such time as they are not required under Section
4.1(c):
[NEITHER
THESE SECURITIES NOR THE SECURITIES ISSUABLE UPON EXERCISE OF THESE SECURITIES
HAVE BEEN REGISTERED] [THESE SECURITIES HAVE NOT BEEN REGISTERED] WITH THE
SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE
IN
RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD
EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES
ACT
OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT
TO,
THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH
APPLICABLE STATE SECURITIES LAWS OR BLUE SKY LAWS AS EVIDENCED BY A LEGAL
OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE COMPANY.
The
Company acknowledges and agrees that a Purchaser may from time to time pledge,
and/or grant a security interest in, some or all of the legended Securities
in
connection with applicable securities laws, pursuant to a bona fide margin
agreement in compliance with a bona fide margin loan. Such a pledge would not
be
subject to approval or consent of the Company and no legal opinion of legal
counsel to the pledgee, secured party or pledgor shall be required in connection
with the pledge, but such legal opinion shall be required in connection with
a
subsequent transfer or foreclosure following default by the Purchaser's
transferee of the pledge. No notice shall be required of such pledge, but
Purchaser’s transferee shall promptly notify the Company of any such subsequent
transfer or foreclosure. Each Purchaser acknowledges that the Company shall
not
be responsible for any pledges relating to, or the grant of any security
interest in, any of the Securities or for any agreement, understanding or
arrangement between any Purchaser and its pledgee or secured party. At the
appropriate Purchaser’s expense, the Company will execute and deliver such
reasonable documentation as a pledgee or secured party of Shares may reasonably
request in connection with a pledge or transfer of the Shares, including the
preparation and filing of any required prospectus supplement under Rule
423(b)(3) of the Securities Act or other applicable provision of the Securities
Act to appropriately amend the list of Selling Stockholders thereunder. Each
Purchaser acknowledges and agrees that, except as otherwise provided in Section
4.1(c), any Shares subject to a pledge or security interest as contemplated
by
this Section 4.1(b) shall continue to bear the legend set forth in this Section
4.1(b) and be subject to the restrictions on transfer set forth in Section
4.1(a).
(c) Removal
of Legends.
The
legend set forth in Section 4.1(b) above shall be removed and the Company shall
issue a certificate without such legend to the holder of the Securities upon
which it is stamped or issue to such holder by electronic delivery at the
applicable balance account at The Depository Trust Company (“DTC”),
if
(i) such Securities are registered for resale under the Securities Act, (ii)
such Securities are sold or transferred pursuant to Rule 144 (assuming the
transferor is not an Affiliate of the Company) or Rule 144A, or (iii) such
Securities are eligible for sale under Rule 144(k). The Company shall cause
its
counsel to issue the legal opinion referred to in the Irrevocable Transfer
Agent
Instructions to the Company’s transfer agent on the Effective Date. Any fees
(with respect to the Transfer Agent, counsel to the Company or otherwise)
associated with the issuance of such opinion or the removal of such legend
shall
be borne by the Company. If any portion of the Warrant is exercised at a time
when there is an effective registration statement to cover the resale of the
Warrant Shares, or if such Warrant Shares may be sold under Rule 144(k), then
such Warrant Shares shall be issued free of all legends. Following the Effective
Date, or at such earlier time as a legend is no longer required for certain
Securities, the Company will no later than three (3) Trading Days following
the
delivery by a Purchaser to the Company or the Transfer Agent (with notice to
the
Company) of (i) a legended certificate representing such Shares or Warrant
Shares (endorsed or with stock powers attached, signatures guaranteed, and
otherwise in form necessary to affect the reissuance and/or transfer) or (ii)
an
Exercise Notice in the manner stated in the Warrants to effect the exercise
of
such Warrant in accordance with its terms and an opinion of counsel to the
extent required by Section 4.1(a), deliver or cause to be delivered to such
Purchaser a certificate representing such Securities that is free from all
restrictive and other legends. The Company may not make any notation on its
records or give instructions to the Transfer Agent that enlarge the restrictions
on transfer set forth in this Section.
(d) Irrevocable
Transfer Agent Instructions.
The
Company shall issue irrevocable instructions to its transfer agent, and any
subsequent transfer agent, to issue certificates or credit shares to the
applicable balance accounts at DTC, registered in the name of each Purchaser
or
its respective nominee(s), for the Shares and the Warrant Shares in such amounts
as specified from time to time by each Purchaser to the Company in the form
of
Exhibit
E
attached
hereto (the “Irrevocable
Transfer Agent Instructions”).
The
Company warrants that no instruction other than the Irrevocable Transfer Agent
Instructions referred to in this Section 4(d) will be given by the Company
to
its transfer agent in connection with this Agreement, and that the Securities
shall otherwise be freely transferable on the books and records of the Company
as and to the extent provided in this Agreement and the other Transaction
Documents.
(e) Acknowledgement.
Each
Purchaser hereunder acknowledges its primary responsibilities under the
Securities Act and accordingly will not sell the Shares, the Warrant Shares
or
any interest therein without complying with the requirements of the Securities
Act. While the above-referenced registration statement remains effective, each
Purchaser hereunder may sell the shares in accordance with the plan of
distribution contained in the registration statement and if it does so it will
comply therewith and with the related prospectus delivery requirements unless
an
exemption therefrom is available. Each Purchaser, severally and not jointly
with
the other Purchasers, agrees that if it is notified by the Company at any time
after the date any legend is removed pursuant to Section
4.1(c)
hereof
that the registration statement registering the resale of the Shares or the
Warrant Shares is not effective or that the prospectus included in such
registration statement no longer complies with the requirements of Section
10 of
the Securities Act, the Purchaser will refrain from selling such Shares and
Warrant Shares until such time as the Purchaser is notified by the Company
that
such registration statement is effective or such prospectus is compliant with
Section 10 of the Exchange Act, unless such Purchaser is able to, and does,
sell
such Shares or Warrant Shares pursuant to an available exemption from the
registration requirements of Section 5 of the Securities Act. Each Purchaser,
severally and not jointly with the other Purchasers, agrees to indemnify the
Company for any damages or losses resulting to the Company from the Purchaser’s
breach of its covenants set forth in the preceding sentence.
4.2 Reservation
of Common Stock.
The
Company shall take all action necessary to at all times have authorized, and
reserved for the purpose of issuance from and after the Closing Date, no less
than 100% of the number of shares of Common Stock issuable upon exercise of
the
Warrants issued at the Closing (without taking into account any limitations
on
exercise of the Warrants set forth in the Warrants).
4.3 Furnishing
of Information.
In
order to enable the Purchasers to sell the Securities under Rule 144 of the
Securities Act, for a period of two years from the Closing, the Company shall
use its commercially reasonable efforts to timely file (or obtain extensions
in
respect thereof and file within the applicable grace period) all reports
required to be filed by the Company after the date hereof pursuant to the
Exchange Act. During such two year period, if the Company is not required to
file reports pursuant to such laws, it will prepare and furnish to the
Purchasers and make publicly available in accordance with Rule 144(c) such
information as is required for the Purchasers to sell the Shares and Warrant
Shares under Rule 144. The Company further covenants that it will take such
further action as any holder of Securities may reasonably request, all to the
extent required from time to time to enable such Person to sell the Shares
and
Warrant Shares without registration under the Securities Act within the
limitation of the exemptions provided by Rule 144.
4.4 Reporting
Status.
During
the two year period from and after the Closing, the Company shall not terminate
its status as an issuer required to file reports under the Exchange Act even
if
the Exchange Act or the rules and regulations thereunder would otherwise permit
such termination.
4.5 Form
D
and Blue Sky.
The
Company agrees to file a Form D with respect to the Securities as required
under
Regulation D and to provide a copy thereof to each Purchaser promptly after
such
filing. The Company, on or before the Closing Date, shall take such action
as
the Company shall reasonably determine is necessary in order to obtain an
exemption for or to qualify the Securities for sale to the Purchasers at the
Closing pursuant to this Agreement under applicable securities or “Blue Sky”
laws of the states of the United States (or to obtain an exemption from such
qualification), and shall provide evidence of any such action so taken to the
Purchasers on or prior to the Closing Date. The Company shall make all filings
and reports relating to the offer and sale of the Securities required under
applicable securities or “Blue Sky” laws of the states of the United States
following the Closing Date.
4.6 No
Integration.
The
Company shall not, and shall use its best efforts to ensure that no Affiliate
of
the Company shall, sell, offer for sale or solicit offers to buy or otherwise
negotiate in respect of any security (as defined in Section 2 of the Securities
Act) that will be integrated with the offer or sale of the Securities in a
manner that would require the registration under the Securities Act of the
sale
of the Securities to the Purchasers, or that will be integrated with the offer
or sale of the Securities for purposes of the rules and regulations of any
Trading Market such that it would require shareholder approval prior to the
closing of such other transaction unless shareholder approval is obtained before
the closing of such subsequent transaction.
4.7 Intentionally
Omitted.
4.8 Securities
Laws Disclosure; Publicity.
By 9:00
a.m. (New York City time) on the Trading Day immediately following the execution
of this Agreement, the Company shall issue a press release (the “Press
Release”)
reasonably acceptable to the Placement Agents disclosing all material terms
of
the transactions contemplated hereby. On or before 9:00 a.m. (New York City
time) on the Trading Day following the Closing Date, the Company will file
a
Current Report on Form 8-K with the Commission describing the terms of the
Transaction Documents (and including as exhibits to such Current Report on
Form
8-K the material Transaction Documents (including, without limitation, this
Agreement including the schedule and exhibit thereto, the form of Warrant and
the Registration Rights Agreement)). Notwithstanding the foregoing, the Company
shall not publicly disclose the name of any Purchaser or an Affiliate of any
Purchaser, or include the name of any Purchaser or an Affiliate of any Purchaser
in any press release or filing with the Commission (other than the Registration
Statement) or any regulatory agency or Trading Market, without the prior written
consent of such Purchaser, except to the extent such disclosure is required
by
law, request of the Staff of the Commission or Trading Market regulations.
From
and after the issuance of the Press Release, no Purchaser shall be in possession
of any material, non-public information received from the Company or any of
its
officers, directors, employees or agents, that is not disclosed in the Press
Release. The Company shall not, and shall cause each of its officers, directors,
employees and agents, not to, provide any Purchaser with any material,
non-public information regarding the Company from and after the filing of the
Press Release without the express written consent of such Purchaser. If a
Purchaser has received from the Company, or any of its officers, directors,
employees or agents, any such material, non-public information regarding the
Company, it shall provide the Company with written notice thereof. The Company
shall within five (5) Trading Days of receipt of such notice, make public
disclosure of such material, non-public information. Each Purchaser, severally
and not jointly with the other Purchasers, covenants that until such time as
the
transactions contemplated by this Agreement are publicly disclosed by the
Company as described in Section 4.8, such Purchaser will maintain the
confidentiality of all disclosures made to it in connection with this
transaction (including the existence and terms of this transaction).
4.9 Intentionally
Omitted.
4.10 Listing
of Securities.
Promptly following the date hereof, the Company shall take all necessary action
to cause the Shares, the Warrant Shares and the shares of Common Stock issuable
upon exercise of the Placement Agents’ Warrants to be listed upon the Principal
Trading Market, if any, upon which shares of Common Stock are then listed
(subject to official notice of issuance) and shall maintain, so long as any
other shares of Common Stock shall be so listed, such listing. Further, if
the
Company applies to have its Common Stock or other securities listed on any
other
Trading Market, it shall include in such application the Shares and the Warrant
Shares (including the shares of Common Stock issuable upon exercise of the
warrants issued to the Placement Agents) and will take such other action as
is
necessary to cause the Shares, and the Warrant Shares (including the shares
of
Common Stock issuable upon exercise of the warrants issued to the Placement
Agents) to be listed on such other Trading Market as promptly as practicable.
4.11 Use
of
Proceeds.
The
Company intends to use the net proceeds from the sale of the Securities
hereunder for working capital and general corporate purposes.
4.12 Short
Sales and Confidentiality After The Date Hereof.
Such
Purchaser shall not, and shall cause its Trading Affiliates not to, engage,
directly or indirectly, in any transactions in the securities of the Company
(including, without limitation, any Short Sales) during the period from the
date
hereof until such time as (i) the transactions contemplated by this Agreement
are first publicly announced as described in Section 4.8 or (ii) this Agreement
is terminated in full pursuant to Section 6.18. Notwithstanding the foregoing,
in the case of a Purchaser that is a multi-managed investment vehicle whereby
separate portfolio managers manage separate portions of such Purchaser's assets
and the portfolio managers have no direct knowledge of the investment decisions
made by the portfolio managers managing other portions of such Purchaser's
assets, the representation set forth above shall apply only with respect to
the
portion of assets managed by the portfolio manager that have knowledge about
the
financing transaction contemplated by this Agreement. Each
Purchaser understands
and acknowledges, severally and not jointly with any other Purchaser, that
the
Commission currently takes the position that covering a short position
established prior to effectiveness of a resale registration statement with
shares included in such registration statement would be a violation of Section
5
of the Securities Act, as set forth in Item 65, Section 5 under Section A,
of
the Manual of Publicly Available Telephone Interpretations, dated July 1997,
compiled by the Office of Chief Counsel, Division of Corporation Finance.
ARTICLE
V.
CONDITIONS
PRECEDENT TO CLOSING
5.1 Conditions
Precedent to the Obligations of the Purchasers to Purchase
Securities.
The
obligation of each Purchaser to acquire Securities at the Closing is subject
to
the fulfillment to such Purchaser’s satisfaction, on or prior to the Closing
Date, of each of the following conditions, any of which may be waived by such
Purchaser (as to itself only):
(a) Representations
and Warranties.
The
representations and warranties of the Company contained herein shall be true
and
correct in all material respects as of the date when made and as of the Closing
Date, as though made on and as of such date except for representations and
warranties that speak as of a specific date;
(b) Performance.
The
Company shall have performed, satisfied and complied in all material respects
with all covenants, agreements and conditions required by the Transaction
Documents to be performed, satisfied or complied with by it at or prior to
the
Closing;
(c) No
Injunction.
No
statute, rule, regulation, executive order, decree, ruling or injunction shall
have been enacted, entered, promulgated or endorsed by any court or governmental
authority of competent jurisdiction that prohibits the consummation of any
of
the transactions contemplated by the Transaction Documents;
(d) Consents.
The
Company shall have obtained in a timely fashion any and all consents, permits,
approvals, registrations and waivers necessary or appropriate for consummation
of the purchase and sale of the Securities, all of which shall be and remain
so
long as necessary in full force and effect;
(e) Adverse
Changes.
Since
the date of execution of this Agreement, no event or series of events shall
have
occurred that has resulted or reasonably could result in a Material Adverse
Effect;
(f) No
Suspensions of Trading in Common Stock; Listing.
The
Common Stock (i) shall be designated for quotation or listed on the Principal
Market and (ii) shall not have been suspended, as of the Closing Date, by the
Commission or the Principal Market from trading on the Principal Market nor
shall suspension by the Commission or the Principal Market have been threatened,
as of the Closing Date, either (A) in writing by the Commission or the Principal
Market or (B) by falling below the minimum listing maintenance requirements
of
the Principal Market;
(g) Company
Deliverables.
The
Company shall have delivered the Company Deliverables in accordance with Section
2.2(a);
(h) Compliance
Certificate.
The
Company shall have delivered to each Purchaser a certificate, dated as of the
Closing Date and signed by its Chief Executive Officer or its Chief Financial
Officer, dated as of the Closing Date, certifying to the fulfillment of the
conditions specified in Sections 5.1(a), (b), (c), (d) and (f); and
(i) Termination. This
Agreement shall not have been terminated as to such Purchaser in accordance
with
Section 6.18 herein.
5.2 Conditions
Precedent to the Obligations of the Company to sell Securities.
The
Company's obligation to sell and issue the Securities at the Closing is subject
to the fulfillment to the satisfaction of the Company on or prior to the Closing
Date of the following conditions, any of which may be waived by the
Company:
(a) Representations
and Warranties.
The
representations and warranties made by the Purchasers in Section
3.2
hereof
shall be true and correct in all material respects as of the date when made,
and
as of the Closing Date as though made on and as of such date (except for
representations and warranties that speak as of a specific date);
(b) Performance.
The
Purchasers shall have performed, satisfied and complied in all material respects
with all covenants, agreements and conditions required by the Transaction
Documents to be performed, satisfied or complied with by the Purchasers at
or
prior to the Closing Date;
(c) No
Injunction.
No
statute, rule, regulation, executive order, decree, ruling or injunction shall
have been enacted, entered, promulgated or endorsed by any court or governmental
authority of competent jurisdiction that prohibits the consummation of any
of
the transactions contemplated by the Transaction Documents;
(d) Consents.
The
Company shall have obtained in a timely fashion any and all consents, permits,
approvals, registrations and waivers necessary or appropriate for consummation
of the purchase and sale of the Securities, all of which shall be and remain
so
long as necessary in full force and effect;
(e) Purchasers
Deliverables.
Each
Purchaser shall have delivered its Purchaser Deliverables in accordance with
Section 2.2(b); and
(f) Termination. This
Agreement shall not have been terminated as to such Purchaser in accordance
with
Section 6.18 herein.
ARTICLE
VI.
MISCELLANEOUS
6.1 Fees
and Expenses.
The
Company shall provide the Placement Agents with an aggregate non-accountable
expense allowance of $50,000, which is intended to reimburse the Placement
Agents for fees and expenses incurred by them in connection with the
transactions contemplated by this Agreement. The Company and the Purchasers
shall each pay the fees and expenses of their respective advisers, counsel,
accountants and other experts, if any, and all other expenses incurred by such
party in connection with the negotiation, preparation, execution, delivery
and
performance of this Agreement. The Company shall pay all Transfer Agents’ fees,
stamp taxes and other taxes and duties levied in connection with the sale and
issuance of the Securities to the Purchasers. Each party acknowledges that
Xxxxxxxxxx Xxxxxxx PC has rendered legal advice to certain of the Placement
Agents and not to such party in connection with the transactions contemplated
hereby, and that such party has relied for such matters on the advice of its
own
respective counsel.
6.2 Entire
Agreement.
The
Transaction Documents, together with the Exhibits and Schedules thereto, contain
the entire understanding of the parties with respect to the subject matter
hereof and supersede all prior agreements, understandings, discussions and
representations, oral or written, with respect to such matters, which the
parties acknowledge have been merged into such documents, exhibits and
schedules. At or after the Closing, and without further consideration, the
Company and the Purchasers will execute and deliver to the other such further
documents as may be reasonably requested in order to give practical effect
to
the intention of the parties under the Transaction Documents.
6.3 Notices.
Any and
all notices or other communications or deliveries required or permitted to
be
provided hereunder shall be in writing and shall be deemed given and effective
on the earliest of (a) the date of transmission, if such notice or communication
is delivered via facsimile (provided the sender receives a machine-generated
confirmation of successful transmission) at the facsimile number specified
in
this Section prior to 5:00 p.m. (New York City time) on a Trading Day, (b)
the
next Trading Day after the date of transmission, if such notice or communication
is delivered via facsimile at the facsimile number specified in this Section
on
a day that is not a Trading Day or later than 5:00 p.m. (New York City time)
on
any Trading Day, (c) the Trading Day following the date of mailing, if sent
by
U.S. nationally recognized overnight courier service with next day delivery
specified, or (d) upon actual receipt by the party to whom such notice is
required to be given. The address for such notices and communications shall
be
as follows:
If
to the
Company:
ZIOPHARM
Oncology, Inc.
1180
Avenue of the Xxxxxxxx
00xx
Xxxxx
Xxx
Xxxx,
Xxx Xxxx 00000
Telephone
No.: (000) 000-0000
Facsimile
No.: (000) 000-0000
Attention:
Xxxxxxxx Xxxxx. M.D., Ph.D.
With
a
copy to: Xxxxxx
Xxxxxxx Xxxxxx & Brand, LLP
3300
Xxxxx Fargo Center
00
Xxxxx
Xxxxxxx Xxxxxx
Xxxxxxxxxxx,
XX 00000
Telephone
No.: (612) 000- 0000
Facsimile
No.: (000) 000-0000
Attention:
Xxxx Xxxxxxx
If
to a
Purchaser:
To
the
address set forth under such Purchaser’s name on the signature page
hereof;
or
such
other address as may be designated in writing hereafter, in the same manner,
by
such Person.
6.4 Amendments;
Waivers; No Additional Consideration.
No
provision of this Agreement may be waived or amended except in a written
instrument signed, in the case of an amendment, by the Company and each of
the
Purchasers or, in the case of a waiver, by the party against whom enforcement
of
any such waiver is sought. No waiver of any default with respect to any
provision, condition or requirement of this Agreement shall be deemed to be
a
continuing waiver in the future or a waiver of any subsequent default or a
waiver of any other provision, condition or requirement hereof, nor shall any
delay or omission of either party to exercise any right hereunder in any manner
impair the exercise of any such right. No consideration shall be offered or
paid
to any Purchaser to amend or consent to a waiver or modification of any
provision of any Transaction Document unless the same consideration is also
offered to all Purchasers who then hold Securities.
6.5 Construction.
The
headings herein are for convenience only, do not constitute a part of this
Agreement and shall not be deemed to limit or affect any of the provisions
hereof. The language used in this Agreement will be deemed to be the language
chosen by the parties to express their mutual intent, and no rules of strict
construction will be applied against any party. This Agreement shall be
construed as if drafted jointly by the parties, and no presumption or burden
of
proof shall arise favoring or disfavoring any party by virtue of the authorship
of any provisions of this Agreement or any of the Transaction
Documents.
6.6 Successors
and Assigns.
The
provisions of this Agreement shall inure to the benefit of and be binding upon
the parties and their successors and permitted assigns. This Agreement, or
any
rights or obligations hereunder, may not be assigned by the Company without
the
prior written consent of the Purchasers. Any Purchaser may assign its rights
hereunder in whole or in part to any Person to whom such Purchaser assigns
or
transfers any Securities in compliance with this Agreement and applicable law,
provided
such
transferee shall agree in writing to be bound, with respect to the transferred
Securities, by the terms and conditions of this Agreement that apply to the
“Purchasers”.
6.7 No
Third-Party Beneficiaries.
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, except the Placement Agents
are intended third party beneficiaries of Article III hereof and each Placement
Agent may enforce the provisions of such Sections directly against the parties
with obligations thereunder.
6.8 Governing
Law.
All
questions concerning the construction, validity, enforcement and interpretation
of this Agreement shall be governed by and construed and enforced in accordance
with the internal laws of the State of New York, without regard to the
principles of conflicts of law thereof. Each party agrees that all Proceedings
concerning the interpretations, enforcement and defense of the transactions
contemplated by this Agreement and any other Transaction Documents (whether
brought against a party hereto or its respective Affiliates, employees or
agents) shall be commenced exclusively in the New York Courts. Each party hereto
hereby irrevocably submits to the exclusive jurisdiction of the New York Courts
for the adjudication of any dispute hereunder or in connection herewith or
with
any transaction contemplated hereby or discussed herein (including with respect
to the enforcement of any of the Transaction Documents), and hereby irrevocably
waives, and agrees not to assert in any Proceeding, any claim that it is not
personally subject to the jurisdiction of any such New York Court, or that
such
Proceeding has been commenced in an improper or inconvenient forum. Each party
hereto hereby irrevocably waives personal service of process and consents to
process being served in any such Proceeding by mailing a copy thereof via
registered or certified mail or overnight delivery (with evidence of delivery)
to such party at the address in effect for notices to it under this Agreement
and agrees that such service shall constitute good and sufficient service of
process and notice thereof. Nothing contained herein shall be deemed to limit
in
any way any right to serve process in any manner permitted by law. EACH
PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING
ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED
HEREBY.
If
either party shall commence a Proceeding to endorse any provisions of a
Transaction Document, then the prevailing party in such Proceeding shall be
reimbursed by the other party for its reasonable attorney’s fees and other costs
and expenses uncured with the investigation preparation and prosecution of
such
Proceeding.
6.9
Survival.
Subject
to applicable statute of limitations, the representations, warranties,
agreements and covenants contained herein shall survive the Closing and the
delivery of the Securities.
6.10 Execution.
This
Agreement may be executed in two or more counterparts, all of which when taken
together shall be considered one and the same agreement and shall become
effective when counterparts have been signed by each party and delivered to
the
other party, it being understood that both parties need not sign the same
counterpart. In the event that any signature is delivered by facsimile
transmission, or by e-mail delivery of a “.pdf” format data file, such signature
shall create a valid and binding obligation of the party executing (or on whose
behalf such signature is executed) with the same force and effect as if such
facsimile signature page were an original thereof.
6.11 Severability.
If any
provision of this Agreement is held to be invalid or unenforceable in any
respect, the validity and enforceability of the remaining terms and provisions
of this Agreement shall not in any way be affected or impaired thereby and
the
parties will attempt to agree upon a valid and enforceable provision that is
a
reasonable substitute therefor, and upon so agreeing, shall incorporate such
substitute provision in this Agreement.
6.12 Rescission
and Withdrawal Right.
Notwithstanding anything to the contrary contained in (and without limiting
any
similar provisions of) the Transaction Documents, whenever any Purchaser
exercises a right, election, demand or option under a Transaction Document
and
the Company does not timely perform its related obligations within the periods
therein provided, then such Purchaser may rescind or withdraw, in its sole
discretion from time to time upon written notice to the Company, any relevant
notice, demand or election in whole or in part without prejudice to its future
actions and rights.
6.13 Replacement
of Securities.
If any
certificate or instrument evidencing any Securities is mutilated, lost, stolen
or destroyed, the Company shall issue or cause to be issued in exchange and
substitution for and upon cancellation thereof, or in lieu of and substitution
therefor, a new certificate or instrument, but only upon receipt of evidence
reasonably satisfactory to the Company and the Transfer Agent of such loss,
theft or destruction and the execution by the holder thereof of a customary
lost
certificate affidavit of that fact and an agreement to indemnify and hold
harmless the Company and the Transfer Agent for any losses in connection
therewith or, if required by the Transfer Agent, a bond in such form and amount
as is reasonably required by the Transfer Agent. The applicants for a new
certificate or instrument under such circumstances shall also pay any reasonable
third-party costs associated with the issuance of such replacement Securities.
If a replacement certificate or instrument evidencing any Securities is
requested due to a mutilation thereof, the Company may require delivery of
such
mutilated certificate or instrument as a condition precedent to any issuance
of
a replacement.
6.14 Intentionally
Omitted.
6.15 Intentionally
Omitted.
6.16 Adjustments
in Share Numbers and Prices.
In the
event of any stock split, subdivision, dividend or distribution payable in
shares of Common Stock (or other securities or rights convertible into, or
entitling the holder thereof to receive directly or indirectly shares of Common
Stock), combination or other similar recapitalization or event occurring after
the date hereof, each reference in any Transaction Document to a number of
shares or a price per share shall be deemed to be amended to appropriately
account for such event.
6.17 Independent
Nature of Purchasers' Obligations and Rights.
The
obligations of each Purchaser under any Transaction Document are several and
not
joint with the obligations of any other Purchaser, and no Purchaser shall be
responsible in any way for the performance of the obligations of any other
Purchaser under any Transaction Document. The decision of each Purchaser to
purchase Securities pursuant to the Transaction Documents has been made by
such
Purchaser independently of any other Purchaser and independently of any
information, materials, statements or opinions as to the business, affairs,
operations, assets, properties, liabilities, results of operations, condition
(financial or otherwise) or prospects of the Company which may have been made
or
given by any other Purchaser or by any agent or employee of any other Purchaser,
and no Purchaser and any of its agents or employees shall have any liability
to
any other Purchaser (or any other Person) relating to or arising from any such
information, materials, statement or opinions. Nothing contained herein or
in
any Transaction Document, and no action taken by any Purchaser pursuant thereto,
shall be deemed to constitute the Purchasers as a partnership, an association,
a
joint venture or any other kind of entity, or create a presumption that the
Purchasers are in any way acting in concert or as a group with respect to such
obligations or the transactions contemplated by the Transaction Documents.
Each
Purchaser acknowledges that no other Purchaser has acted as agent for such
Purchaser in connection with making its investment hereunder and that no
Purchaser will be acting as agent of such Purchaser in connection with
monitoring its investment in the Securities or enforcing its rights under the
Transaction Documents. Each Purchaser shall be entitled to independently protect
and enforce its rights, including without limitation the rights arising out
of
this Agreement or out of the other Transaction Documents, and it shall not
be
necessary for any other Purchaser to be joined as an additional party in any
proceeding for such purpose. The Company acknowledges that each of the
Purchasers has been provided with the same Transaction Documents for the purpose
of closing a transaction with multiple Purchasers and not because it was
required or requested to do so by any Purchaser. The Company’s obligations to
each Purchaser under this Agreement are identical to its obligations to each
other Purchaser other than such differences resulting solely from the number
of
Securities purchased by such Purchaser, but regardless of whether such
obligations are memorialized herein or in another agreement between the Company
and a Purchaser.
6.18 Termination.
This
Agreement may be terminated and the sale and purchase of the Shares and the
Warrants abandoned at any time prior to the Closing by either the Company or
any
Purchaser (with respect to itself only) upon written notice to the other, if
the
Closing has not been consummated on or prior to 5:00 p.m. (New York City time)
on the Outside Date; provided,
however,
that
the right to terminate this Agreement under this Section
6.18
shall
not be available to any Person whose failure to comply with its obligations
under this Agreement has been the cause of or resulted in the failure of the
Closing to occur on or before such time. Nothing in this Section
6.18
shall be
deemed to release any party from any liability for any breach by such party
of
the terms and provisions of this Agreement or the other Transaction Documents
or
to impair the right of any party to compel specific performance by any other
party of its obligations under this Agreement or the other Transaction
Documents. In the event of a termination pursuant to this Section, the Company
shall promptly notify all non-terminating Purchasers. Upon a termination in
accordance with this Section, the Company and the terminating Purchaser(s)
shall
not have any further obligation or liability (including arising from such
termination) to the other, and no Purchaser will have any liability to any
other
Purchaser under the Transaction Documents as a result therefrom.
IN
WITNESS WHEREOF, the parties hereto have caused this Securities Purchase
Agreement to be duly executed by their respective authorized signatories as
of
the date first indicated above.
|
ZIOPHARM
ONCOLOGY, INC.
|
||
| |
|
|
| By: | ||
|
Name:
Title:
|
||
[REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK]
[SIGNATURE
PAGES FOR PURCHASERS FOLLOW]
|
NAME
OF PURCHASER: ____________________________
|
||
| |
|
|
| By: | ||
|
Name:
Title:
|
||
Purchase
Price (Subscription Amount): $ ____________________
Number
of
Shares to be acquired: __________________________
Underlying
Shares subject to Warrant: ______________________
(20.0%
of
the number of Shares to be acquired)
Tax
ID
No.: ___________________________________________
Address
for Notice:
____________________________________________________
____________________________________________________
____________________________________________________
Telephone
No.: ________________________________________
Facsimile
No.: ________________________________________
Attention:
___________________________________________
Delivery
Instructions:
(if
different than above)
c/o:
________________________________________
Street:
______________________________________
______________________________________
City/State/Zip:________________________________
Attention:
___________________________________
Telephone
No.: _______________________________
EXHIBITS:
A:
Form
of
Warrant
B:
Form
of
Registration Rights Agreement
C-1:
Accredited
Investor Questionnaire
C-2: Stock
Certificate Questionnaire
D:
Form
of
Opinion of Company Counsel
E:
Irrevocable
Transfer
Agent Instructions
F: Wire
Instructions
SCHEDULES:
3.1(c)
Authorization; Enforcement
3.1(e)
Filings, Consents and Approvals
3.1(w)
Certain Fees
EXHIBIT
A
Form
of
Warrant
EXHIBIT
B
Form
of
Registration Rights Agreement
Instruction
Sheet for Exhibits C
(to
be
read in conjunction with the entire Securities Purchase Agreement and
Registration Rights Agreement)
A.
Complete
the following items in the Securities Purchase Agreement and/or Registration
Rights Agreement:
1.
Provide
the information regarding the Purchaser requested on the signature page.
The
Securities
Purchase Agreement must be executed by an individual authorized to bind
the
Purchaser.
2.
Exhibit
C-1
-
Accredited Investor Questionnaire:
Provide
the information requested by the
Accredited Investor Questionnaire
3.
Exhibit
C-2
- Stock
Certificate Questionnaire
Provide
the information requested by the
Stock
Certificate Questionnaire
4.
Annex
B
to the
Registration Rights Agreement—Selling
Securityholder Notice and Questionnaire
Provide
the information requested by the Selling Securityholder Notice and
Questionnaire
5.
Return
the signed Securities Purchase Agreement and Registration Rights Agreement to:
Xxxxx
Xxxxxxxxxx
Paramount
BioCapital, Inc.
000
Xxxxxxx Xxxxxx
00xx
Xxxxx
Xxx
Xxxx,
XX 00000
Tel:
(000) 000-0000
Fax:
(000) 000-0000
Email:
xxxxxxxxxxx@xxxxxxxxxxxx.xxx
|
B.
|
Instructions
regarding the transfer of funds for the purchase of Securities is
set
forth on Exhibit
F
to
the Securities Purchase Agreement.
|
EXHIBIT
C-1
ACCREDITED
INVESTOR QUESTIONNAIRE
(ALL
INFORMATION WILL BE TREATED CONFIDENTIALLY)
To: ZIOPHARM
Oncology, Inc.
This
Investor Questionnaire (“Questionnaire”)
must
be completed by each potential investor in connection with the offer and sale
of
the shares of the common stock, par value $0.001 per share, and shares of common
stock that may be issued upon exercise of certain warrants (collectively, the
“Securities”),
of
ZIOPHARM Oncology, Inc., a Delaware corporation (the “Corporation”).
The
Securities are being offered and sold by the Corporation without registration
under the Securities Act of 1933, as amended (the “Act”),
and
the securities laws of certain states, in reliance on the exemptions contained
in Section 4(2) of the Act and on Regulation D promulgated thereunder and
in reliance on similar exemptions under applicable state laws. The Corporation
must determine that a potential investor meets certain suitability requirements
before offering or selling Securities to such investor. The purpose of this
Questionnaire is to assure the Corporation that each investor will meet the
applicable suitability requirements. The information supplied by you will be
used in determining whether you meet such criteria, and reliance upon the
private offering exemptions from registration is based in part on the
information herein supplied.
This
Questionnaire does not constitute an offer to sell or a solicitation of an
offer
to buy any security. Your answers will be kept strictly confidential. However,
by signing this Questionnaire, you will be authorizing the Corporation to
provide a completed copy of this Questionnaire to such parties as the
Corporation deems appropriate in order to ensure that the offer and sale of
the
Securities will not result in a violation of the Act or the securities laws
of
any state and that you otherwise satisfy the suitability standards applicable
to
purchasers of the Securities. All potential investors must answer all applicable
questions and complete, date and sign this Questionnaire. Please print or type
your responses and attach additional sheets of paper if necessary to complete
your answers to any item.
PART
A. BACKGROUND
INFORMATION
Name
of
Beneficial Owner of the Securities:
Business
Address:
(Number
and Street)
|
(City)
|
(State)
|
(Zip
Code)
|
Telephone
Number: (___)
If
a corporation, partnership, limited liability company, trust or other
entity:
Type
of
entity:
State
of
formation:______________________ Approximate
Date of formation: ____________________
Set
forth
in the space provided below the (i) state(s), if any, in the United States
in which you maintained your principal office during the past two years and
the
dates during which you maintained your office in each state, and
(ii) state(s), if any, in which you pay income taxes:
Were
you
formed for the purpose of investing in the securities being
offered?
Yes
____ No
____
If
an individual:
Residence
Address:
(Number
and Street)
|
(City)
|
(State)
|
(Zip
Code)
|
Telephone
Number: (___)
Age:
__________ Citizenship:
____________ Where
registered to vote: _______________
Set
forth
in the space provided below the state(s), if any, in the United States in which
you maintained your residence during the past two years and the dates during
which you resided in each state:
Are
you a
director or executive officer of the Corporation?
Yes
____ No
____
PART
B. ACCREDITED
INVESTOR QUESTIONNAIRE
In
order
for the Company to offer and sell the Securities in conformance with state
and
federal securities laws, the following information must be obtained regarding
your investor status. Please initial
each category applicable
to you as a Purchaser of Securities of the Company.
| __ (1) |
A
bank as defined in Section 3(a)(2) of the Securities Act, or any
savings
and loan association
or other institution as defined in Section 3(a)(5)(A) of the Securities
Act whether
acting in its individual or fiduciary capacity;
|
| __ (2) |
A
broker or dealer registered pursuant to Section 15 of the Securities
Exchange Act of
1934;
|
|
__
(3)
|
An
insurance company as defined in Section 2(13) of the Securities Act;
|
|
__
(4)
|
An
investment company registered under the Investment Company Act of
1940 or
a business development company as defined in Section 2(a)(48) of
that Act;
|
|
__
(5)
|
A
Small Business Investment Company licensed by the U.S. Small Business
Administration under Section 301(c) or (d) of the Small Business
Investment Act of 1958;
|
|
__
(6)
|
A
plan established and maintained by a state, its political subdivisions,
or
any agency or instrumentality of a state or its political subdivisions,
for the benefit of its employees, if such plan has total assets in
excess
of $5,000,000;
|
|
__
(7)
|
An
employee benefit plan within the meaning of the Employee Retirement
Income
Security Act of 1974, if the investment decision is made by a plan
fiduciary, as defined in Section 3(21) of such act, which is either
a
bank, savings and loan association, insurance company, or registered
investment adviser, or if the employee benefit plan has total assets
in
excess of $5,000,000 or, if a self-directed plan, with investment
decisions made solely by persons that are accredited investors;
|
|
__
(8)
|
A
private business development company as defined in Section 202(a)(22)
of
the Investment Advisers Act of
1940;
|
|
__
(9)
|
An
organization described in Section 501(c)(3) of the Internal Revenue
Code,
a corporation, Massachusetts or similar business trust, or partnership,
not formed for the specific purpose of acquiring the Securities,
with
total assets in excess of $5,000,000;
|
| __ (10) |
A
trust, with total assets in excess of $5,000,000, not formed for
the
specific purpose of acquiring the Securities, whose purchase is directed
by a sophisticated person who has such knowledge and experience in
financial and business matters that such person is capable of evaluating
the merits and risks of investing in the
Company;
|
| __(11) |
A
natural person whose individual net worth, or joint net worth with
that
person’s spouse,
at the time of his purchase exceeds
$1,000,000;
|
| __(12) |
A
natural person who had an individual income in excess of $200,000
in each
of the two
most recent years, or joint income with that person’s spouse in excess
of $300,000,
in each of those years, and has a reasonable expectation of reaching
the same
income level in the current year;
|
|
__(13)
|
An
executive officer or director of the
Company
|
| __(14) |
An
entity in which all of the equity owners qualify under any of the
above
subparagraphs. If the undersigned belongs to this investor category
only,
list the equity owners of the undersigned, and the investor category
which
each such equity owner satisfies:
|
(Continue
on a separate piece of paper, if necessary.)
A. FOR
EXECUTION BY AN INDIVIDUAL:
|
|
|
By
|
|
|
Date |
Print Name: |
|
B. FOR
EXECUTION BY AN ENTITY:
|
Entity
Name:
|
|
||
|
|
|
By
|
|
|
Date |
Print
Name:
|
|
|
| Title: |
|
C. ADDITIONAL
SIGNATURES (if required by partnership, corporation or trust
document):
|
Entity
Name:
|
|
||
|
|
|
By
|
|
|
Date |
Print
Name:
|
|
|
| Title: |
|
||
|
Entity
Name:
|
|
||
|
|
|
By
|
|
|
Date |
Print
Name:
|
|
|
| Title: |
|
EXHIBIT
C-2
Stock
Certificate Questionnaire
Pursuant
to Section 2.2(b) of the Agreement, please provide us with the following
information:
|
1.
|
The
exact name that the Securities are to be registered in (this is the
name
that will appear on the stock certificate(s)). You may use a nominee
name
if appropriate:
|
|
|
2.
|
The
relationship between the Purchaser of the Securities and the Registered
Holder listed in response to Item 1 above:
|
|
|
3.
|
The
mailing address, telephone and telecopy number of the Registered
Holder
listed in response to Item 1 above:
|
|
|
4.
|
The
Tax Identification Number (or, if an individual, the Social Security
Number) of the Registered Holder listed in response to Item 1
above:
|
EXHIBIT
D
Form
of
Opinion of Company Counsel
Form
of
Irrevocable Transfer Agent Instructions
As
of
February __, 2007
American
Stock Transfer and Trust Company
0000
00
Xxxxxx
Xxxxxxxx
Xxx Xxxx 00000
Attn:
_________________
Ladies
and Gentlemen:
Reference
is made to that certain Securities Purchase Agreement, dated as of February
__,
2007 (the “Agreement”),
by
and among ZIOPHARM Oncology, Inc. a Delaware corporation (the “Company”),
and
the purchasers named on the signature pages thereto (collectively, the
“Holders”),
pursuant to which the Company is issuing to the Holders shares (the
“Shares”)
of
Common Stock of the Company, par value $0.001 per share (the “Common
Stock”),
and
warrants (the “Warrants”),
which
are exercisable into shares of Common Stock.
This
letter shall serve as our irrevocable authorization and direction to you
(provided that you are the transfer agent of the Company at such time and the
conditions set forth in this letter are satisfied):
(i) to
issue
shares of Common Stock upon transfer or resale of the Shares; and
(ii) to
issue
shares of Common Stock upon the exercise of the Warrants (the “Warrant
Shares”)
to or
upon the order of a Holder from time to time upon delivery to you of a properly
completed and duly executed Exercise Notice, in the form attached hereto as
Annex I,
which
has been acknowledged by the Company as indicated by the signature of a duly
authorized officer of the Company thereon together with indication of receipt
of
the exercise price therefor.
You
acknowledge and agree that so long as you have previously received
(a) written confirmation from the Company’s legal counsel that either
(1) a registration statement covering resales of the Shares and the Warrant
Shares has been declared effective by the Securities and Exchange Commission
(the “Commission”)
under
the Securities Act of 1933, as amended (the “Securities
Act”),
or
(2) the Shares and the Warrant Shares are eligible for sale in conformity
with Rule 144 under the Securities Act (“Rule 144”)
and
(b) if applicable, a copy of such registration statement, then, unless
otherwise required by law, as soon as reasonably practicable following your
receipt of Shares or Warrant Shares, you shall issue the certificates
representing the Shares and the Warrant Shares so sold to the Holders or their
transferees, as the case may be, registered in the names of such Holders or
transferees, as the case may be, and such certificates shall not bear any legend
restricting transfer of the Shares and the Warrant Shares thereby and should
not
be subject to any stop-transfer restriction; provided,
however,
that if
such Shares and Warrant Shares are not registered for resale under the
Securities Act or able to be sold under Rule 144, then the certificates for
such
Shares and/or Warrant Shares shall bear the following legend:
THE
SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE
SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN
THE
ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER
THE
SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL, IN A GENERALLY
ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS
SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID ACT. NOTWITHSTANDING THE
FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN
ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE
SECURITIES.
A
form of
written confirmation (to be used in connection with any sale) from the Company’s
outside legal counsel that a registration statement covering resales of the
Shares and the Warrant Shares has been declared effective by the Commission
under the Securities Act is attached hereto as Annex II.
Please
be
advised that the Holders are relying upon this letter as an inducement to enter
into the Agreement and, accordingly, each Holder is a third party beneficiary
to
these instructions.
Please
execute this letter in the space indicated to acknowledge your agreement to
act
in accordance with these instructions.
Very
truly yours,
ZIOPHARM
ONCOLOGY, INC.
By:
__________________________________
Name:
________________________________
Title:
________________________________
Acknowledged
and Agreed:
AMERICAN
STOCK TRANSFER & TRUST COMPANY
By:
__________________________________
Name:
________________________________
Title:
________________________________
Date:
_________________, 2007
Annex
I
Form
of
Exercise Notice
(To
be
executed by the Holder to exercise the right to purchase shares
of
Common
Stock under the foregoing Warrants)
To:
ZIOPHARM
Oncology, Inc.
(1) The
undersigned hereby elects to purchase _________ shares of Common Stock pursuant
to the above-referenced Warrant. Capitalized terms used herein and not otherwise
defined herein have the respective meanings set forth in the Warrant.
(2) The
Holder intends that payment of the Exercise Price shall be made as (check
one):
o Cash
Exercise under Section 10
o
Cashless
Exercise under Section 10
(3) If
the
Holder has elected a Cash Exercise, the holder shall pay the sum of $_______
to
the Company in accordance with the terms of the Warrant.
(4) Pursuant
to this Exercise Notice, the Company shall deliver to the Holder _____________
Warrant Shares in accordance with the terms of the Warrant.
(5) By
its
delivery of this Exercise Notice, the undersigned represents and warrants to
the
Company that in giving effect to the exercise evidenced hereby, the Holder
will
not beneficially own in excess of the number of shares of Common Stock (as
determined in accordance with Section 13(d) of the Securities Exchange Act
of
1934) permitted to be owned under Section 11 of this Warrant to which this
notice relates.
Dated:_______________,
_____
Name
of
Holder: ________________________
By:_________________________________
Name:
______________________________
Title:
_______________________________
(Signature
must conform in all respects to name of Holder as specified on the face of
the
Warrant)
Acknowledgement
The
Company hereby acknowledges this Exercise Notice and receipt of the appropriate
exercise price and hereby directs American Stock Transfer & Trust Company to
issue the above indicated number of shares of Common Stock in accordance with
the Transfer Agent Instructions dated February __ 2007, from the Company and
acknowledged and agreed to by American Stock Transfer & Trust Company.
ZIOPHARM
ONCOLOGY, INC.
By:
__________________________________
Name:
________________________________
Title:
________________________________
Annex
II
Form
of
Notice of Effectiveness of Registration Statement
|
|
|
|
|
American
Stock Transfer and Trust Company
0000
00 Xxxxxx
Xxxxxxxx
Xxx Xxxx 00000
Attn:
_________________
|
||
|
|
|
|
|
|
|
Re:
ZIOPHARM
Oncology, Inc.
|
Ladies
and Gentlemen:
We
are
counsel to ZIOPHARM Oncology, Inc. a Delaware corporation (the “Company”),
and
have represented the Company in connection with that certain Securities Purchase
Agreement, dated as of February __, 2007, entered into by and among the Company
and the buyers named therein (collectively, the “Purchasers”)
pursuant to which the Company issued to the Purchasers shares of the Company’s
Common Stock, $0.001 par value per share (the “Common
Stock”),
and
warrants exercisable for shares of Common Stock (the “Warrants”).
Pursuant to that certain Registration Rights Agreement of even date, the Company
agreed to register the resale of the Common Stock, including the shares of
Common Stock issuable upon exercise of the Warrants (collectively, the
“Registrable
Securities”),
under
the Securities Act of 1933, as amended (the “Securities
Act”).
In
connection with the Company’s obligations under the Registration Rights
Agreement, on ,
2007,
the Company filed a Registration Statement on Form S-3 (File
No. 333- )
(the
“Registration
Statement”)
with
the Securities and Exchange Commission (the “Commission”)
relating to the Registrable Securities which names each of the Purchasers as
a
selling shareholder thereunder.
In
connection with the foregoing, we advise you that a member of the Commission’s
staff has advised us by telephone that the Commission has entered an order
declaring the Registration Statement effective under the Securities Act at
____
[a.m.][p.m.] on __________, 200_, and we have no knowledge, after telephonic
inquiry of a member of the staff, that any stop order suspending its
effectiveness has been issued or that any proceedings for that purpose are
pending before, or threatened by, the Commission and the Registrable Securities
are available for resale under the Securities Act pursuant to the Registration
Statement.
This
letter shall serve as our standing notice to you that the Common Stock may
be
freely transferred by the Purchasers pursuant to the Registration Statement.
You
need not require further letters from us to effect any future legend-free
issuance or reissuance of shares of Common Stock to the Purchasers or the
transferees of the Purchasers, as the case may be, as contemplated by the
Company’s Irrevocable Transfer Agent Instructions dated February __, 2007. This
letter shall serve as our standing instructions with regard to this matter.
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Very
truly yours,
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XXXXXX
XXXXXXX XXXXXX & BRAND, LLP
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By:
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CC: Purchasers
Xxxxxxxxxxx
& Co. Inc.
Xxxxxxx
Securities, Inc.
Paramount
BioCapital, Inc.
EXHIBIT
F
WIRE
INSTRUCTIONS
