COMMON STOCK PURCHASE AGREEMENT
This Common Stock Purchase Agreement (this "Agreement") is made as of March
8, 2005 between Callisto Pharmaceuticals, Inc., a Delaware corporation (the
"Company"), and the investors listed on EXHIBIT A hereto, each of which is
herein referred to as an "Investor" and collectively, the "Investors".
RECITALS:
WHEREAS, the Investors desire to purchase from the Company, and the Company
desires to sell to the Investors, 1,985,791 shares of the Company's common
stock, par value $0.0001 per share (the "Common Stock"), upon the terms and
subject to the conditions set forth herein;
NOW, THEREFORE, in consideration of the premises and mutual covenants
contained herein, the parties hereto agree as follows:
1. PURCHASE AND SALE OF SHARES.
1.1 PURCHASE AND SALE OF SHARES. Upon the terms and subject to the
conditions of this Agreement, at the Closing (as defined below), the Company
agrees to sell to the Investors, and each Investor agrees to purchase from the
Company the number of shares of the Company's Common Stock set forth opposite
such Investor's name on EXHIBIT A hereto (the "Shares") at the per share
purchase price of $1.52 ("Purchase Price").
1.2 CLOSING. The closing of the purchase and sale of the Shares (the
"Closing") shall take place at the offices of the Company at 12:00 noon, Eastern
time on March 9, 2005, or such other location, time or date as the parties shall
mutually agree, but only after the satisfaction or waiver of each of the
conditions set forth in Sections 6 and 7 (the "Closing Date").
1.3 DELIVERIES. At the Closing, the Company shall deliver to each
Investor at the address set forth on such Investor's signature page hereto, a
certificate or certificates, registered in the name of the applicable Investor,
representing the Shares purchased by such Investor, and each Investor shall
deliver to the Company the aggregate Purchase Price, by wire transfer of
immediately available funds to the following account:
2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
For purposes of this Section, all references to "Company" in Sections 2.1,
2.4 (with the exception of subsection (a) thereof), 2.7, 2.9 through 2.12, and
2.14 through 2.20 shall be deemed to be a reference to the Company and all of
its direct and indirect subsidiaries. The Company hereby represents and warrants
to each Investor that, except as set forth on a Schedule of Exceptions (the
"Company Schedule of Exceptions") attached hereto as SCHEDULE A, which
exceptions shall be deemed to be representations and warranties as if made
hereunder:
1
2.1 CORPORATE ORGANIZATION. The Company is a corporation duly
organized, validly existing and in good standing under the laws of its state of
incorporation, and has the requisite corporate power and authority to own or
lease its properties and to carry on its business as now being conducted. The
Company is duly qualified as a foreign corporation to do business and is in good
standing in every jurisdiction in which the property owned or leased by it or
the nature of the business conducted by it makes such qualification necessary,
except to the extent that the failure to be so qualified or in good standing
would not have, individually or in the aggregate, a Material Adverse Effect. For
purposes of this Agreement, "Material Adverse Effect" shall mean, as to any
entity, any material adverse effect on the business, operations, conditions
(financial or otherwise), assets, results of operations or prospects of that
entity individually or of the Company and its subsidiaries as a whole.
2.2 CAPITALIZATION; ORGANIZATIONAL DOCUMENTS.
(a) The authorized capital stock of the Company will consist
immediately prior to the Closing of 75,000,000 shares of Common Stock, of which
as of the date hereof, 29,243,102 shares are issued and outstanding, and
20,000,000 shares of preferred stock of the Company, of which, as of the date
hereof, no shares are issued or outstanding. All of the issued and outstanding
shares have been duly and validly issued and are fully paid and nonassessable
and have been issued in accordance with all applicable federal and state
securities laws. No shares of Common Stock are subject to preemptive rights or
any other similar rights or any liens suffered or permitted by the Company.
There are no preemptive rights or rights of first refusal or similar rights
which are binding on the Company permitting any person to subscribe for or
purchase from the Company shares of its capital stock pursuant to any provision
of applicable law, the Certificate of Incorporation (as defined below) or the
Company's By-laws. There are no securities or instruments containing
anti-dilution or similar provisions that will be triggered by the issuance of
the Shares. The Company has made available to each Investor true and correct
copies of the Company's Certificate of Incorporation, as amended and as in
effect on the date hereof (the "Certificate of Incorporation"), and the
Company's By-laws, as in effect on the date hereof (the "By-laws").
(b) Upon issuance of the Shares and payment of the Purchase Price
therefor in accordance with the terms of this Agreement, the Shares will be duly
authorized, validly issued, fully paid and nonassessable, and free and clear of
any restrictions on transfer and any taxes, claims, liens, pledges, options,
security interests, purchase rights, preemptive rights, trusts, encumbrances or
other rights or interests of any other person (other than any restrictions under
the Securities Act of 1933, as amended (the "Securities Act").
2.3 AUTHORIZATION; ENFORCEMENT. (a) The Company has the requisite
corporate power and authority to enter into and perform its obligations under
this Agreement and to issue, sell and perform its obligations with respect to
the Shares in accordance with the terms hereof, (b) the execution and delivery
of this Agreement by the Company and the consummation by it of the transactions
contemplated hereby have been duly authorized by the Company's Board of
Directors and its stockholders and no further consent or authorization is
required by the Company, its Board of Directors or its stockholders, except as
disclosed on the Company Schedule of Exceptions and (c) this Agreement has been
duly executed and delivered by the
2
Company. This Agreement, when executed and delivered by the Company, constitutes
a valid and binding obligation of the Company enforceable against the Company in
accordance with its terms, except as such enforceability may be limited by
general principles of equity or applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation or similar laws relating to, or
affecting generally, the enforcement of creditors' rights and remedies.
2.4 NO CONFLICTS. The execution, delivery and performance of this
Agreement by the Company, and the consummation by the Company of the
transactions contemplated hereby, will not (a) result in a violation of the
Certificate of Incorporation or By-laws of the Company, or (b) violate or
conflict with, or result in a breach of, any provision of, or constitute a
default (or an event which with notice or lapse of time or both would become a
default) under, or give to others any rights of termination, amendment,
acceleration or cancellation of, or result in the creation of any lien on or
against any of the properties of the Company, any note, bond, mortgage,
agreement, license, indenture or instrument to which the Company is a party, or
result in a violation of any statute, law, rule, regulation, writ, injunction,
order, judgment or decree applicable to the Company or by which any property or
asset of the Company is bound or affected, except where such violation,
conflict, breach or other consequence would not have a Material Adverse Effect.
Except as specifically contemplated by this Agreement, the Company is not
required to obtain any consent, authorization or order of, or make any filing or
registration with, any court or governmental or regulatory or self-regulatory
agency in order for it to execute, deliver or perform any of its obligations
under or contemplated by this Agreement in accordance with the terms hereof. All
consents, authorizations, orders, filings and registrations that the Company is
required to obtain pursuant to the preceding sentence have been obtained or
effected on or prior to the date hereof.
2.5 SEC DOCUMENTS; FINANCIAL STATEMENTS. The Company has filed all
reports, schedules, forms, statements and other documents required to be filed
by it with the Securities and Exchange Commission (the "SEC") pursuant to the
reporting requirements of the Securities Exchange Act of 1934, as amended (the
"Exchange Act") (all of the foregoing, and all other documents and registration
statements heretofore filed by the Company with the SEC being hereinafter
referred to as the "SEC Documents"). The Common Stock is currently listed on the
American Stock Exchange. The Company has delivered or made available to each
Investor true and complete copies of the SEC Documents. As of their respective
dates, the SEC Documents complied in all material respects with the requirements
of the Securities Act, and the Exchange Act and the rules and regulations of the
SEC promulgated thereunder applicable to the SEC Documents, and none of the SEC
Documents, at the time they were filed with the SEC (except those SEC Documents
that were subsequently amended), contained any untrue statement of a material
fact or omitted to state a material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading. Except as disclosed in the Company
Schedule of Exceptions, as of their respective dates, the financial statements
of the Company and its subsidiaries included (or incorporated by reference) in
the SEC Documents complied as to form in all material respects with applicable
accounting requirements and the published rules and regulations of the SEC or
other applicable rules and regulations with respect thereto. Such financial
statements have been prepared in accordance with generally accepted accounting
principles applied on a consistent basis during the periods involved (except (a)
as may be otherwise indicated in such financial statements or the
3
notes thereto, or (b) in the case of unaudited interim statements, to the extent
they may exclude footnotes or may be condensed or summary statements) and fairly
present the financial position of the Company and its subsidiaries as of the
dates thereof and the results of its operations and cash flows for the periods
then ended (subject, in the case of unaudited statements, to normal year-end
audit adjustments). As of the date hereof, the Company has, on a timely basis,
made all filings required to be made by the Company with the SEC and the Company
is eligible to file a registration statement on Form S-3 with respect to
outstanding shares of its Common Stock to be offered for sale for the account of
any person other than the Company.
2.6 SECURITIES LAW EXEMPTION. Assuming the truth and accuracy of each
Investor's representations set forth in this Agreement, the offer, sale and
issuance of the Shares as contemplated by this Agreement are exempt from the
registration requirements of the Securities Act and applicable state securities
laws, and neither the Company nor any authorized agent acting on its behalf has
taken or will take any action hereafter that would cause the loss of such
exemption.
2.7 LITIGATION. All actions, suits, arbitrations or other proceedings
or, to the Company's knowledge, investigations pending or threatened against the
Company that would have a Material Adverse Effect on the Company, are disclosed
in the SEC Documents. There is no action, suit, proceeding or, to the Company's
knowledge, investigation that questions this Agreement or the right of the
Company to execute, deliver and perform under same.
2.8 USE OF PROCEEDS. The net proceeds from the sale of the Shares
shall be used solely for general corporate and working capital purposes.
2.9 INTELLECTUAL PROPERTY. The Company owns, or has the contractual
right to use, sell or license all intellectual property necessary or required
for the conduct of its business as presently conducted and as proposed to be
conducted, including, without limitation, all trade secrets, processes, source
code, licenses, trademarks, service marks, trade names, logos, brands,
copyrights, patents, franchises, domain names and permits. The Company has not
received any communications alleging that the Company has violated or, by
conducting its business presently conducted or as proposed to be conducted,
violates or will violate any intellectual property rights of any other person or
entity.
2.10 TITLE TO PROPERTY AND ASSETS. The Company has good and marketable
title to or, in the case of leases and licenses, has valid and subsisting
leasehold interests or licenses in, all of its properties and assets (whether
real or personal, tangible or intangible) free and clear of any liens or other
encumbrances, except for liens or other encumbrances that do not, individually
or in the aggregate, have a Material Adverse Effect. With respect to property
leased by the Company, the Company has a valid leasehold interest in such
property pursuant to leases which are in full force and effect, and the Company
is in compliance in all material respects with the provisions of such leases.
2.11 COMPLIANCE WITH LAWS. The Company is and has been in compliance
with all laws, rules, regulations, orders, judgments or decrees that are
applicable to the Company, the conduct of its business as presently conducted
and as proposed to be conducted, and the
4
ownership of its property and assets (including, without limitation, all
Environmental Laws (as defined below) and laws related to occupational safety,
health, wage and hour, and employment discrimination). All required reports and
filings with governmental authorities have been properly made as and when
required, except where the failure to report or file would not, individually or
in the aggregate, have a Material Adverse Effect. "Environmental Laws" means all
federal, state, local and foreign laws, ordinances, treaties, rules,
regulations, guidelines and permit conditions relating to contamination or
pollution of the environment (including ambient air, surface water, ground
water, land surface or subsurface strata) or the protection of human health and
worker safety, including, without limitation, laws and regulations relating to
transportation, storage, use, manufacture, disposal or release of, or exposure
of employees or others to, Hazardous Materials (as defined below) or emissions,
discharges, releases or threatened releases of Hazardous Materials. "Hazardous
Materials" means any substance that has been designated by any governmental
entity or by applicable Environmental Laws to be radioactive, toxic, hazardous
or otherwise a danger to health or the environment, including, without
limitation, PCBs, asbestos, petroleum, urea formaldehyde and all substances
listed as hazardous substances pursuant to the Comprehensive Environmental
Response, Compensation, and Liability Act of 1980, as amended, or defined as a
hazardous waste pursuant to the Resource Conservation and Recovery Act of 1976,
as amended, and the regulations promulgated pursuant to Environmental Laws, but
excluding office and janitorial supplies maintained in accordance with
Environmental Laws.
2.12 LICENSES AND PERMITS. The Company has obtained and maintains all
material federal, state, local and foreign licenses, permits, consents,
approvals, registrations, memberships, authorizations and qualifications
required to be maintained in connection with the operations of the Company as
presently conducted and as proposed to be conducted, the lack of which could
have a Material Adverse Effect. The Company is not in default in any material
respect under any of such licenses, permits, consents, approvals, registrations,
memberships, authorizations and qualifications.
2.13 RELATED ENTITIES. Except for the Subsidiaries set forth on the
Company Schedule of Exceptions, the Company does not presently own or control,
directly or indirectly, any interest in any other subsidiary, corporation,
association or other business entity. The Company is not a party to any joint
venture, partnership or similar arrangement.
2.14 CHANGES. Except as disclosed on the Company Schedule of
Exceptions, since December 31, 2004, the Company has operated its business
diligently and in the ordinary course of business and, to the knowledge of the
Company, there has not been, or the Company has not (as the case may be):
(a) any Material Adverse Effect;
(b) any damage, destruction or loss, whether or not covered by
insurance, which would have a Material Adverse Effect;
(c) any waiver or compromise by the Company of a valuable right
or of a material debt owed it;
5
(d) sold, encumbered, assigned or transferred any material assets
or properties of the Company, other than in the ordinary course of business;
(e) incurred any liability, whether accrued, absolute, contingent
or otherwise, and whether due or to become due, other than (i) in the ordinary
course of business or (ii) liabilities that are not, individually or in the
aggregate, material to the business, operations, condition (financial or
otherwise), assets or results of operations of the Company;
(f) created, incurred, assumed or guaranteed any indebtedness or
subjected any of its assets to any lien or encumbrance, except for indebtedness,
liens or encumbrances that are not, individually or in the aggregate, material
to the business, operations, condition (financial or otherwise), assets or
results of operations of the Company;
(g) directly or indirectly redeemed, purchased or otherwise
acquired any shares of capital stock of the Company;
(h) declared, set aside or paid any dividends or made any other
distributions in cash or property on the Company's capital stock;
(i) except in the ordinary course of business of the Company,
materially increased the compensation payable or to become payable by the
Company to any of its officers, employees or directors or materially increased
any bonus, insurance, pension or other employee benefit plan, payment or
arrangement made by the Company for or with any such officers, employees or
directors;
(j) made any direct or indirect loan to any stockholder,
employee, officer or director of the Company, other than advances made in the
ordinary course of business;
(k) changed any agreement to which the Company is a party which
would have a Material Adverse Effect; or
(l) entered into any agreement or commitment to do any of the
things described in this Section 2.14.
2.15 EMPLOYEE BENEFIT PLANS. All "employee benefit plans," as such
term is defined in the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), to which the Company has any liability or obligation,
contingent or otherwise, comply in all material respects and have been
maintained and administered in material compliance with ERISA, the Internal
Revenue Code of 1986, as amended (the "Code"), and all other statutes, orders
and governmental rules and regulations applicable to such employee benefit
plans. To the Company's knowledge, the Company has not incurred any liability
pursuant to ERISA or the penalty or excise tax provisions of the Code relating
to employee benefit plans (as defined in ERISA), and no event, transaction or
condition has occurred or exists that could reasonably be
6
expected to result in the incurrence of any such liability by the Company, or in
the imposition of any lien on any of the rights, properties or assets of the
Company pursuant to ERISA or to such penalty or excise tax provisions of the
Code. The Company does not maintain or contribute to, and has not maintained or
contributed to, any "multiemployer plan," as such term is defined in ERISA.
2.16 TAXES. The Company has timely filed all tax returns and reports
(federal, state and local) required to be filed and these returns and reports
are true and correct in all material respects. The Company has paid all taxes
and other assessments shown to be due on such returns or reports. Neither the
Internal Revenue Service nor any state or local taxing authority has, during the
past three (3) years, examined or informed the Company it is in the process of
examining any such tax returns and reports. The provision for taxes of the
Company as shown on the financial statements included in the most recent SEC
Filing, is adequate for taxes due or accrued as of the date thereof and since
that date the Company has provided adequate accruals in accordance with
generally accepted accounting principals in its financial statements for any
taxes incurred that have not been paid, whether or not shown as being due on any
tax returns. The Company has not elected, pursuant to the Code, to be treated as
a collapsible corporation pursuant to Section 341(f) of the Code, nor has it
made any other elections pursuant to the Code (other than elections that relate
solely to methods of accounting, depreciation or amortization) that would have a
Material Adverse Effect.
2.17 INSURANCE. The Company has in full force and effect fire,
casualty and liability insurance policies sufficient in amount (subject to
reasonable deductibles) to allow the Company to replace any of its properties
that might be damaged or destroyed to the extent and in the manner customary for
companies in similar business similarly situated.
2.18 EMPLOYEES. The Company does not have any collective bargaining
agreements with any of its employees. There is no labor union organizing
activity pending or, to the Company's knowledge, threatened with respect to the
Company.
2.19 MATERIAL CONTRACTS. All contracts, agreements, instruments,
leases, licenses, arrangements, understandings or other documents filed with or
required to be filed as exhibits to the SEC Documents to which the Company
therein is a party or by which it may be bound have been so filed (the "Material
Contracts"). The Material Contracts that have been filed as exhibits are
complete and correct copies of the contracts, agreements, instruments, leases,
licenses, arrangement, understanding or other documents of which they purport to
be copies. The Material Contracts are valid and in full force and effect as to
the Company, and, to the Company's knowledge, to the other parties thereto.
Except as otherwise disclosed herein, the Company is not in violation of, or
default under (and there does not exist any event or condition which, after
notice or lapse of time or both, would constitute such a default under), the
Material Contracts, except to the extent that such violations or defaults,
individually or in the aggregate, could not reasonably be expected to have a
Material Adverse Effect. The Company has not received any notice of cancellation
or any written communication threatening cancellation of any Material Contract
by any other party thereto. The Company is not a party to and is not bound by
any contract, agreement or instrument, or subject to any restriction under the
Certificate of
7
Incorporation, its bylaws or other governing documents that would have a
Material Adverse Effect.
2.20 SUPPLIERS. No supplier that was material to the Company during
the previous twenty-four (24) months, has terminated, materially reduced or
threatened to terminate or material reduce its provision of products or services
to the Company.
2.21 BROKERS AND FINDERS. The Company has not employed any broker,
finder, consultant or intermediary in connection with the transactions
contemplated by this Agreement that would be entitled to a broker's, finder's or
similar fee or commission in connection herewith and therewith.
2.22 DISCLOSURE. This Agreement, Schedules and Exhibits hereto and all
other documents delivered to the Investors in connection herewith or therewith
at the Closing, do not contain any untrue statement of a material fact, or omit
to state a material fact necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading. There are no facts
that, individually or in the aggregate, would have a Material Adverse Effect
that have not been disclosed to each Investor in this Agreement (including the
Schedules and Exhibits hereto), the SEC Documents or any other documents
delivered to each Investor in connection herewith or therewith at the Closing.
3. REPRESENTATIONS AND WARRANTIES OF INVESTOR.
Each of the Investors, severally and not jointly, hereby represents and
warrants to the Company as to itself and not as to any other Investor, that:
3.1 ORGANIZATION. The Investor is a corporation, limited liability
company or limited partnership, as the case may be, duly organized, validly
existing and in good standing in the jurisdiction of its formation. The Investor
has all requisite power and authority to execute, deliver and perform all of its
obligations of this Agreement.
3.2 AUTHORIZATION; ENFORCEMENT. (a) The Investor has the requisite
power and authority to enter into and perform its obligations under this
Agreement, (b) the execution and delivery of this Agreement by the Investor and
the consummation by it of the transactions contemplated hereby have been duly
authorized by all necessary corporate action on the part of the Investor, and
(c) this Agreement has been duly executed and delivered by the Investor. To the
knowledge of the Investor, no other proceedings on the part of the Investor are
necessary to approve and authorize the execution and delivery of this Agreement.
This Agreement, when executed and delivered, constitutes a valid and binding
obligation of the Investor, enforceable against the Investor in accordance with
its terms, except as such enforceability may be limited by general principles of
equity or applicable bankruptcy, insolvency, reorganization, moratorium,
liquidation or similar laws relating to, or affecting generally, the enforcement
of creditors' rights and remedies.
3.3 NO CONFLICTS. The execution, delivery and performance of this
Agreement by the Investor, and the consummation by the Investor of the
transactions contemplated hereby will not (a) result in a violation of the
organizational documents of the Investor, or (b) result in a
8
violation of any statute, law, rule, regulation, writ, injunction, order,
judgment or decree applicable to the Investor, except where such violation,
conflict, breach or other consequence would not have a Material Adverse Effect.
The Investor is not required to obtain any consent, authorization or order of,
or make any filing or registration with, any court or governmental or regulatory
or self-regulatory agency in order for it to execute, deliver or perform any of
its obligations under or contemplated by this Agreement in accordance with the
terms hereof.
3.4 INVESTMENT REPRESENTATIONS.
(a) The Investor is an "accredited investor", as defined in
Regulation D promulgated under the Securities Act, and has such knowledge,
sophistication and experience in financial and business matters that the
Investor is capable of evaluating the merits and risks of the investment in the
Shares.
(b) The Investor (i) has adequate means of providing for its
current financial needs and possible contingencies, and has no need for
liquidity of investment in the Company, (ii) can afford to hold unregistered
Shares for an indefinite period of time and sustain a complete loss of the
entire amount of the subscription, and (iii) has not made an overall commitment
to investments which are not readily marketable that is so disproportionate as
to cause such overall commitment to become excessive.
(c) The Investor agrees and understands that the Shares are being
offered and sold to the Investor in reliance upon specific exemptions from the
registration requirements of the Securities Act and the rules and regulations
promulgated thereunder and that, in order to determine the availability of such
exemptions and the eligibility of the Investor to acquire the Shares, the
Company is relying upon the truth and accuracy of the Investor's representations
and warranties, and compliance with the Investor's covenants and agreements, set
forth in this Agreement. The Investor further agrees with the Company that (i)
no Shares were offered or sold to the Investor by means of any form of general
solicitation or general advertising, and in connection therewith, the Investor
did not (1) receive or review any advertisement, article, notice or other
communication published in a newspaper or magazine or similar media or broadcast
over television or radio, whether closed circuit or generally available; or (2)
attend any seminar meeting or industry investor conference whose attendees were
invited by any general solicitation or general advertising. The Investor hereby
acknowledges that the offering of the Shares has not been reviewed by the SEC or
any state regulatory authority since the offering of the Shares is intended to
be exempt from the registration requirements of Section 5 of the Securities Act
pursuant to Regulation D promulgated thereunder. The Investor understands that
the Shares have not been registered under the Securities Act and agrees not to
sell or otherwise transfer the Shares unless they are registered under the
Securities Act or unless an exemption from such registration is available.
(d) The Shares are being purchased by the Investor for its own
account, for investment purposes only, not for the account of any other person,
or corporation and not with a view to distribution, assignment or resale to
others in whole or in part. The Investor has no present intention of selling,
granting any participation in, or otherwise distributing the Shares. The
Investor does not have any contract, undertaking, agreement or
9
arrangement with any person to sell, transfer, pledge, hypothecate, grant any
option to purchase or otherwise dispose of any of the Shares. Nothing herein
shall prevent the distribution of any Shares to any subsidiary, member, partner,
stockholder, affiliate or former member, partner, stockholder or affiliate of
the Investor in compliance with the Securities Act and applicable state "blue
sky" laws.
(e) The Investor has had access to the Company's SEC Documents
and other public filings.
(f) With respect to corporate tax and other economic
considerations involved in an investment in the Shares, the Investor is not
relying on the Company. The Investor has carefully considered and has, to the
extent the Investor believes such discussion necessary, discussed with its
professional legal, tax, accounting and financial advisors the suitability of an
investment in the Shares for its particular tax and financial situation and has
determined that the Shares are a suitable investment for the Investor.
(g) The Company has made available to the Investor all documents
and information that the Investor has requested relating to an investment in the
Shares.
(h) Subject to the Company's disclosures in this Agreement and
the SEC Documents, the Investor recognizes that the Company has generated no
revenues to date, is not expected to have any products commercially available
for a number of years, if at all, and that investment in the Company involves
substantial risks, including loss of the entire amount of such investment and
has taken full cognizance of and understands all of the risk factors relating to
the purchase of the Shares.
(i) The Investor has not been formed for the specific purpose of
acquiring the Shares.
4. COVENANTS.
4.1 CONFIDENTIALITY. Each Investor hereby acknowledges that
unauthorized disclosure of information regarding the offering of the Shares
pursuant to this Agreement may cause the Company to violate Regulation FD and
each Investor agrees to keep such information confidential. The Company shall
not publicly disclose the name of any Investor, or include the name of any
Investor in any filing with the Commission or any regulatory agency or trading
market, without the prior written consent of such Investor, except (i) as
required by the federal securities laws and in connection with the registration
statement contemplated by this Agreement and (ii) to the extent such disclosure
is required by law or trading market regulations.
4.2 RESTRICTIONS ON TRANSFER.
(a) Each Investor hereby agrees, severally and not jointly, that,
except in accordance with a registration statement filed pursuant to Section 5.2
of this Agreement, it will not dispose of any of such Investor's Shares (other
than pursuant to Rule 144 promulgated under the Securities Act ("Rule 144") or
pursuant to a registration statement filed with the SEC pursuant to the
Securities Act) unless and until such Investor shall have (A) notified the
10
Company of the proposed disposition and shall have furnished the Company with a
statement of the circumstances surrounding the proposed disposition and (B) if
requested by the Company, furnished the Company with an opinion of counsel,
reasonably satisfactory in form and substance to the Company and the Company's
counsel, to the effect that such disposition will not require registration under
the Securities Act. The restrictions on transfer imposed by this Section 4.2
shall cease and terminate as to the Shares held by an Investor when: (x) such
Shares shall have been effectively registered under the Securities Act and sold
by the holder thereof in accordance with such registration, or (y) on delivery
of an opinion of the kind described in the preceding sentence with respect to
such Shares. Each certificate evidencing the Shares shall bear an appropriate
restrictive legend as set forth in Section 4.2(b), except that such legend shall
not be required after a transfer is made in compliance with Rule 144 or pursuant
to a registration statement or if the opinion of counsel referred to above is
issued and provides that such legend is not required in order to establish
compliance with any provisions of the Securities Act. The Company agrees that
pursuant to the prior sentence, it will, no later than five Business Days
("Business Day" shall mean any day banks are open for business in New York, New
York) following (a) receipt by the Company's transfer agent of a certificate
representing Shares issued with a restrictive legend, accompanied by a
certification of the Investor in form suitable for processing by the Company
that a prospectus has been delivered (in the case of sale pursuant to
prospectus, a "Prospectus Letter") or customary supporting documentation,
including legal opinion if required pursuant to Clause (B) above, "Supporting
Documentation") and (b) receipt by the Company of notice of such delivery to the
transfer agent and Prospectus Letter or Supporting Documentation, as the case
may be (such notice to be sent by facsimile to the attention of the Company's
president and CEO at the fax number set forth in Section 8.6 hereof) deliver or
cause to be delivered (evidence of deposit for next day delivery with a
nationally recognized overnight delivery service shall be deemed delivery) to
such Investor a certificate representing such Shares that is free from all
restrictive and other legends. The Company may not make any notation on its
records or give instructions to any transfer agent of the Company that enlarge
the restrictions on transfer set forth in this Section. In the event the
Prospectus Letter or Supporting Documentation is not in form suitable for
processing by to the Company, the five Business Days shall toll until the
Company receives a Prospectus Letter or Supporting Documentation that is in form
suitable for processing.
(b) Notwithstanding the provisions of Section 4.2(a), no
registration statement or opinion of counsel shall be necessary for a transfer
by an Investor of the Securities to a subsidiary, member, partner, stockholder
or affiliate of that Investor, if the transferee agrees in writing to be subject
to the terms hereof to the same extent as if such transferee were an Investor
hereunder.
(c) It is understood that, subject to Sections 4.2(a) and 4.2(b),
the certificates evidencing the Shares will bear the following legends:
(i) THESE SHARES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933 (THE "SECURITIES ACT") OR UNDER APPLICABLE STATE SECURITIES LAWS AND
MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS REGISTERED UNDER
THE SECURITIES ACT AND ANY APPLICABLE STATE SECURITIES LAWS OR PURSUANT TO
AVAILABLE
11
EXEMPTIONS FROM SUCH REGISTRATION, PROVIDED THAT THE SELLER DELIVERS TO THE
COMPANY AN OPINION OF COUNSEL (WHICH OPINION IS REASONABLY SATISFACTORY TO THE
COMPANY) CONFIRMING THE AVAILABILITY OF SUCH EXEMPTION.
(ii) Any legend required by the laws of any other applicable
jurisdiction.
(d) In addition to such Investor's other available remedies, the
Company shall pay to an Investor, in cash, as liquidated damages and not as a
penalty, for each $1,000 of Shares (based on the closing price of the Common
Stock on the date such Securities are submitted to the Company's transfer agent)
delivered to the transfer agent subject to Section 4.2(a), $10 per Business Day
(increasing to $20 per Business Day five (5) Business Days after such damages
have begun to accrue) for each Business Day after such fifth Business Day until
such certificate is delivered. Nothing herein shall limit such Investor's right
to pursue actual damages for the Company's failure to deliver certificates
representing any Shares as required by the transaction documents, and such
Investor shall have the right to pursue all remedies available to it at law or
in equity including, without limitation, a decree of specific performance and/or
injunctive relief.
4.3 SECURITIES COMPLIANCE. The Company shall take all action necessary
to comply with any federal or state securities laws applicable to the
transactions contemplated hereunder.
5. REGISTRATION RIGHTS.
5.1 REGISTRABLE SHARES. As used herein the term "Registrable Security"
means (a) each of the Shares, and (b) any Common Stock of the Company issued as
(or issuable on the conversion or exercise of any warrant, right or other
security that is issued as) a dividend or other distribution with respect to, or
in exchange for, or in replacement of, the shares referenced in clause (a)
above; PROVIDED, HOWEVER, that with respect to any particular Registrable
Security held by an Investor, such security shall cease to be a Registrable
Security when, as of the date of determination, (a) it has been effectively
registered under the Securities Act and disposed of pursuant thereto, or (b)
registration under the Securities Act is no longer required for the immediate
public distribution of any particular Registrable Shares held by that Investor
and its affiliates. In the event of any merger, reorganization, consolidation,
recapitalization or other change in corporate structure affecting the Common
Stock, such adjustment shall be made in the definition of "Registrable Security"
as is appropriate in order to prevent any dilution or enlargement of the rights
granted pursuant to this Section 5.
5.2 MANDATORY REGISTRATION.
(a) On or before the later of (i) 30 days following the Closing Date
or (ii) five (5) business days after the Company's Form 10-KSB for the year
ended December 31, 2004 is filed with the SEC, the Company shall prepare and
file with the Commission the Registration Statement covering the resale of all
of the Registrable Shares for an offering to be made on a continuous basis
pursuant to Rule 415 (the "Required Filing Date"). The Registration Statement
12
required hereunder shall be on Form S-3 (except if the Company is not then
eligible to register for resale the Registrable Shares on Form S-3, in which
case the Registration Statement shall be on another appropriate form in
accordance herewith). The Company shall use its commercially reasonable efforts
to cause the Registration Statement to be declared effective under the
Securities Act as promptly as possible after the filing thereof, but in any
event not later than the 120th day after the Closing Date (the "Effectiveness
Date"), and shall use its commercially reasonable efforts to keep the
Registration Statement continuously effective under the Securities Act until the
earlier of the date when all Registrable Shares covered by the Registration
Statement (a) have been sold pursuant to the Registration Statement or an
exemption from the registration requirements of the Securities Act or (b) may be
sold without volume restrictions pursuant to Rule 144(k) as determined by the
counsel to the Company pursuant to a written opinion letter to such effect,
addressed and acceptable to the Company's transfer agent and the affected
Investors or (c) the second anniversary of the date on which the Registration
Statement is declared effective (the "EFFECTIVENESS PERIOD") or such longer time
as the Company may determine.
(b) If: (i) the Registration Statement is not filed on or prior to its
Required Filing Date (if the Company files a Registration Statement without
affording the Investor the opportunity to review and comment on the same as
required by Section 5.3(a), the Company shall not be deemed to have satisfied
this clause (i)), or (ii) the Company fails to file with the Commission a
request for acceleration in accordance with Rule 461 promulgated under the
Securities Act, within five business days of the date that the Company is
notified (orally or in writing, whichever is earlier) by the Commission that a
Registration Statement will not be "reviewed", or not subject to further review,
or (iii) a Registration Statement filed or required to be filed hereunder is not
declared effective by the Commission on or before the required Effectiveness
Date, or (iv) after a Registration Statement is first declared effective by the
Commission, it ceases for any reason to remain continuously effective as to all
Registrable Securities for which it is required to be effective, or the
Investors are not permitted to utilize the Prospectus therein to resell such
Registrable Securities, for in any such cases 30 business days (which need not
be consecutive days) in the aggregate during any 12-month period (any such
failure or breach being referred to as an "EVENT") and for purposes of clause
(i) or (iii) the date on which such Event occurs, or for purposes of clause (ii)
the date on which such five business day period is exceeded, or for purposes of
clause (iv) the date on which such 30 business day period is exceeded, being
referred to as "EVENT DATE", then in addition to any other rights the Investors
may have hereunder or under applicable law: (1) the Company shall issue to each
Investor a number of warrants (the "Warrants"), as liquidated damages and not as
a penalty, equal to 1% of the number of Registrable Securities purchased by such
Investor pursuant to this Agreement then held by such Investor for the first
month of an Event; and (2) on each subsequent monthly anniversary of each such
Event Date (if the applicable Event shall not have been cured by such date)
until the applicable Event is cured, the Company shall issue to each Investor a
number of Warrants, as liquidated damages and not as a penalty, equal to 1% of
the number of Registrable Securities purchased by such Investor pursuant to this
Agreement then held by such Investor. The liquidated damages pursuant to the
terms hereof shall apply on a pro-rata basis for any portion of a month prior to
the cure of an Event. The Warrants shall have an exercise price equal to 110% of
the Purchase Price of the Shares and shall be exercisable for five (5) years
from the date of issuance.
13
(c) Notwithstanding the foregoing, if the Company shall furnish to the
Investors a certificate signed by the Chief Executive Officer of the Company
stating that in the good faith judgment of the Board of Directors of the Company
it would not be in the best interest of the Company for such registration
statement to be filed, the Company shall have the right to defer taking such
action with respect to such filing for a period of not more than thirty (30)
days after the date of such certificate; PROVIDED, HOWEVER, that the Company
shall not defer its obligation in this manner more than once in any twelve (12)
month period.
(d) In the event, the Investor fails to provide the Company with any
information that is required to be provided in the Registration Statement with
respect to such Investor pursuant to Section 5.3(k) within ten (10) days of
receiving a request for such information from the Company, the Company shall
send an additional request to the Investor (the "Additional Request") and in the
event the Investor fails to respond to the Company within five (5) days of
receipt of the Additional Request, the Company shall be entitled to exclude such
Investor's Registrable Shares from the Registration Statement.
5.3 COVENANTS OF THE COMPANY WITH RESPECT TO REGISTRATION.
The Company covenants and agrees as follows:
(a) Not less than five business days prior to the filing of the
Registration Statement or any related Prospectus or any amendment or supplement
thereto, furnish to the Investors copies of all such documents proposed to be
filed (including documents incorporated or deemed incorporated by reference to
the extent requested by such person), which documents will be subject to the
review of such Investors within such five business days. The Company shall not
file the Registration Statement or any such Prospectus or any amendments or
supplements thereto to which the holders of a majority of the Registrable Shares
shall reasonably object in good faith based on the advice of counsel and the
Company shall make reasonable efforts to address the objections raised. In the
event the holders of a majority of the Registrable Shares object to any such
filing pursuant to the previous sentence, then the Required Filing Date or
Effectiveness Date, as the case may be, shall be extended by the number of days
that elapse between the date the Company is notified of the objection until the
day following the date the Company has been notified that such objection no
longer exists.
(b) Following the effective date of the Registration Statement under
Section 5.2, the Company shall, upon the request of the Investors, forthwith
supply such reasonable number of copies of the Registration Statement,
preliminary prospectus and prospectus meeting the requirements of the Securities
Act, and other documents necessary or incidental to the public offering of the
Registrable Shares, as shall be reasonably requested by the Investors to permit
the Investors to make a public distribution of the Registrable Shares registered
in connection with the Registration Statement.
(c) The Company shall prepare and file with the SEC such amendments
and supplements to such Registration Statement and the prospectus used in
connection with such Registration Statement as may be necessary to comply with
the Securities Act with respect to the
14
disposition of all Shares covered by such Registration Statement during the
period of time such Registration Statement remains effective;
(d) The Company shall use its commercially reasonable efforts to
register and qualify the Shares covered by such Registration Statement under
such other securities or Blue Sky laws of such jurisdictions as shall be
reasonably requested by the Investors; provided that the Company shall not be
required in connection therewith or as a condition thereto to qualify to do
business or to file a general consent to service of process in any such states
or jurisdictions;
(e) During the period of time such Registration Statement remains
effective, the Company shall notify each Investor of Registrable Shares covered
by such registration statement at any time when a prospectus relating thereto is
required to be delivered under the Securities Act or the happening of any event
as a result of which the prospectus included in such Registration Statement, as
then in effect, includes an untrue statement of a material fact or omits to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the circumstances then
existing;
(f) The Company shall use its commercially reasonable efforts
to cause all such Registrable Shares registered hereunder to be listed on each
securities exchange on which securities of the same class issued by the Company
are then listed;
(g) The Company shall provide a transfer agent and registrar for all
Registrable Shares registered hereunder and a CUSIP number for all such
Registrable Shares, in each case not later than the effective date of such
registration; and
(k) The obligations of the Company hereunder with respect to the
Registrable Shares are subject to the Investors' furnishing to the Company such
information concerning the Investors, the Registrable Shares and the terms of
the Investors' offering of such Registrable Shares as are required to be
included in the Registration Statement by Commission regulations or pursuant to
a specific Commission comment on the Registration Statement.
5.4 EXPENSES. All expenses incurred in effecting a registration
pursuant to this Agreement (including, without limitation, all registration,
qualification and filing fees, printing expenses, fees and disbursements of
counsel for the Company, blue sky fees and expenses) shall be borne by the
Company. All transfer taxes, underwriting discounts and selling commissions
applicable to the sale of the Registrable Shares shall be borne by the Investors
thereof.
5.5 INDEMNIFICATION. In the event any Registrable Shares are included
in a Registration Statement under this Section 5:
(a) To the extent permitted by law, the Company will indemnify
and hold harmless each Investor, the partners, officers, directors,
stockholders, members and managers of such Investor, each person, if any, who
controls such Investor within the meaning of the Securities Act or the Exchange
Act, against any losses, claims, damages, or liabilities (joint or several) to
which they may become subject under the Securities Act, the Exchange Act or
other federal or state law, insofar as such losses, claims, damages, or
liabilities (or actions in respect thereof) arise out of or are based upon any
of the following statements, omissions or
15
violations (each, a "Violation"): (i) any untrue statement or alleged untrue
statement of a material fact contained in such Registration Statement, including
any preliminary prospectus or final prospectus contained therein or any
amendments or supplements thereto, (ii) the omission or alleged omission to
state therein a material fact required to be stated therein, or necessary to
make the statements therein not misleading, or (iii) any violation or alleged
violation by the Company of the Securities Act, the Exchange Act, any state
securities law or any rule or regulation promulgated under the Securities Act,
the Exchange Act or any state securities law; and the Company will pay to each
such Investor, underwriter or controlling person, as incurred, any legal or
other expenses reasonably incurred by them in connection with investigating or
defending any such loss, claim, damage, liability, or action; PROVIDED, HOWEVER,
that the indemnity agreement contained in this Section 5.5(a) shall not apply to
amounts paid in settlement of any such loss, claim, damage, liability, or action
if such settlement is effected without the consent of the Company (which consent
shall not be unreasonably withheld or delayed), nor shall the Company be liable
to any Investor, underwriter or controlling person for any such loss, claim,
damage, liability, or action to the extent that it arises out of or is based
upon a Violation which occurs in reliance upon and in conformity with written
information furnished expressly for use in connection with such registration by
any such Investor, underwriter or controlling person.
(b) To the extent permitted by law, each selling Investor will
indemnify and hold harmless the Company, each of its directors, each of its
officers who has signed the Registration Statement, each person, if any, who
controls the Company within the meaning of the Securities Act, against any
losses, claims, damages, or liabilities (joint or several) to which any of the
foregoing persons may become subject, under the Securities Act, the Exchange Act
or other federal or state law, insofar as such losses, claims, damages, or
liabilities (or actions in respect thereto) arise out of or are based upon any
Violation, in each case to the extent (and only to the extent) that such
Violation occurs in reliance upon and in conformity with written information
furnished by such Investor expressly for use in connection with such
registration; and each such Investor will pay, as incurred, any legal or other
expenses reasonably incurred by any person indemnified pursuant to this Section
5.5(b), in connection with investigating or defending any such loss, claim,
damage, liability, or action; PROVIDED, HOWEVER, that the indemnity agreement
contained in this Section 5.5(b) shall not apply to amounts paid in settlement
of any such loss, claim, damage, liability or action if such settlement is
effected without the consent of the Investor (which consent shall not be
unreasonably withheld or delayed); PROVIDED FURTHER that in no event shall any
indemnity under this Section 5.5(b) exceed the net proceeds from the offering
received by such Investor.
(c) Promptly after receipt by an indemnified party under this
Section 5.5 of notice of the commencement of any action (including any
governmental action), such indemnified party will, if a claim in respect thereof
is to be made against any indemnifying party under this Section 5.5, deliver to
the indemnifying party a written notice of the commencement thereof and the
indemnifying party shall have the right to participate in, and, to the extent
the indemnifying party so desires, jointly with any other indemnifying party
similarly noticed, to assume the defense thereof with counsel mutually
satisfactory to the parties; PROVIDED, HOWEVER, that an indemnified party
(together with all other indemnified parties which may be represented without
conflict by one counsel) shall have the right to retain one separate counsel,
with the
16
reasonable fees and expenses to be paid by the indemnifying party, if
representation of such indemnified party by the counsel retained by the
indemnifying party would be inappropriate due to actual or potential differing
interests between such indemnified party and any other party represented by such
counsel in such proceeding. The failure to deliver written notice to the
indemnifying party within a reasonable time after receipt of notice of the
commencement of any such action, if prejudicial to its ability to defend such
action, shall relieve such indemnifying party of any liability to the
indemnified party under this Section 5.5, but the omission so to deliver written
notice to the indemnifying party will not relieve it of any liability that it
may have to any indemnified party otherwise than under this Section 5.5.
(d) If the indemnification provided for in this Section 5.5 is
held by a court of competent jurisdiction to be unavailable to an indemnified
party with respect to any loss, liability, claim, damage or expense referred to
therein, then the indemnifying party, in lieu of indemnifying such indemnified
party hereunder, shall contribute to the amount paid or payable by such
indemnified party as a result of such loss, liability, claim, damage, or expense
in such proportion as is appropriate to reflect the relative fault of the
indemnifying party on the one hand and of the indemnified party on the other in
connection with the statements or omissions that resulted in such loss,
liability, claim, damage or expense as well as any other relevant equitable
considerations; PROVIDED that in no event shall any contribution by an Investor
under this Section 5.5(d) exceed the net proceeds from the offering received by
such Investor. The relative fault of the indemnifying party and of the
indemnified party shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission to state a material fact relates to information supplied by the
indemnifying party or by the indemnified party and the parties' relative intent,
knowledge, access to information, and opportunity to correct or prevent such
statement or omission.
(e) Notwithstanding the foregoing, to the extent that the
provisions on indemnification and contribution contained in the underwriting
agreement entered into in connection with the underwritten public offering are
in conflict with the foregoing provisions, the provisions in the underwriting
agreement shall control.
(f) The obligations of the Company and Investors under this
Section 5.5 shall survive the completion of any offering of Registrable Shares
in a registration statement and the termination of this Agreement.
5.6 SUSPENSION OF SALES.
(a) With respect to the Registration Statement filed pursuant to
Section 5.2, subject to the payment of any liquidated damages which may accrue
pursuant to Section 5.2(b)(iv), the Company may suspend sales of Registrable
Shares under such Registration Statement for a period of not more than ninety
(90) days in any twelve (12) month period with respect to such Registration
Statement if, at any time the Company is engaged in confidential negotiations or
other confidential business activities, the disclosure of which would be
required if such sales were not suspended and the Board of Directors of the
Company determines in good faith that such suspension would be in the Company's
best interest at such time; PROVIDED, that the Company shall not be permitted to
suspend such sales for more than
17
ninety (90) days in any twelve (12) month period. In order to suspend sales
pursuant to this Section 5.6(a), the Company shall promptly (but in any event
within five (5) business days), upon determining to seek such suspension,
deliver to each holder of Registrable Shares a certificate signed by an
executive officer of the Company stating that the Company is suspending such
filing pursuant to this Section 5.6(a). Each holder of Registrable Shares hereby
agrees to keep confidential any information disclosed to it in any such
certificate (including the fact that a certificate was delivered).
(b) If the Company suspends such Registration Statement pursuant
to Section 5.6(a) above, the Company shall, as promptly as practicable following
the termination of the circumstances which entitled the Company to do so but in
no event more than fifteen (15) days thereafter, take such actions as may be
necessary to file or reinstate the effectiveness of such Registration Statement
and/or give written notice to the selling Investors authorizing them to resume
sales pursuant to such Registration Statement. If, as a result thereof, the
prospectus included in such Registration Statement has been amended to comply
with the requirements of the Securities Act, the Company shall enclose such
revised prospectus with the notice to the selling Investors given pursuant to
this Section 5.6(b), and the selling Investors shall make no offers or sales of
Shares pursuant to such Registration Statement other than by means of such
revised prospectus.
5.7 TRANSFER OR ASSIGNMENT OF REGISTRATION RIGHTS. The rights to cause
the Company to register Registrable Shares granted to an Investor by the Company
under this Section 5 may be transferred or assigned by an Investor to a
transferee or assignee of such Registrable Shares that (i) is a subsidiary,
parent, current or former partner, current or former limited partner, current or
former member, current or former manager or stockholder of an Investor, (ii) is
an entity controlling, controlled by or under common control, or under common
investment management, with an Investor, including without limitation a
corporation, partnership or limited liability company that is a direct or
indirect parent or subsidiary of the Investor, or (iii) is a transferee or
assignee of not less than 50,000 shares of Registrable Shares (as presently
constituted and subject to subsequent adjustments for stock splits, stock
dividends, reverse stock splits and the like), PROVIDED that the Company is
given written notice at the time of or within a reasonable time after said
transfer or assignment, stating the name and address of said transferee or
assignee and identifying the Shares with respect to which such registration
rights are being transferred or assigned, and PROVIDED FURTHER that the
transferee or assignee of such rights assumes the obligations of such Investor
under this Section 5.
5.8 REPORTS UNDER EXCHANGE ACT. With a view to making available to the
Investors the benefits of Rule 144 promulgated under the Securities Act and any
other rule or regulation of the SEC that may at any time permit an Investor to
sell Shares of the Company to the public without registration, the Company
agrees to:
(a) Make and keep public information available, as those
terms are used in SEC Rule 144, at all times;
(b) File with the SEC in a timely manner all reports and
other documents required of the Company under the Securities Act and the
Exchange Act;
18
(c) Furnish to any Investor, so long as the Investor owns
any Registrable Shares, forthwith on request, (i) a written statement by the
Company that it has complied with the reporting requirements of SEC Rule 144,
the Securities Act and the Exchange Act, (ii) a copy of the most recent annual
or quarterly report of the Company and such other reports and documents so filed
by the Company, and (iii) such other information as may be reasonably requested
in availing any Investor of any rule or regulation of the SEC that permits the
selling of any such securities without registration; and
(d) Undertake any additional actions reasonably necessary to
maintain the availability of the use of Rule 144.
5.9 DELAY OF REGISTRATION. No Investor shall have any right to obtain
or seek an injunction restraining or otherwise delaying any registration as the
result of any controversy that might arise with respect to the interpretation or
implementation of this Section 5.
6. CONDITIONS TO INVESTOR OBLIGATIONS AT CLOSING.
The obligations of the Investors to purchase the Shares at the Closing are
subject to the fulfillment on or prior to the Closing of each of the following
conditions:
6.1 REPRESENTATIONS AND WARRANTIES. The representations and warranties
of the Company contained in Section 2 shall be true in all material respects on
and as of the Closing Date with the same effect as though such representations
and warranties had been made on and as of the Closing Date, except that any
representations and warranties stated as being true and correct as of a date
other than the date hereof shall be true and correct as of such other date.
6.2 PERFORMANCE. The Company shall have performed and complied with
all agreements, obligations and conditions contained in this Agreement that are
required to be performed or complied with by it on or before the Closing.
6.3 QUALIFICATIONS. All authorizations, approvals, or permits, if any,
of any governmental authority or regulatory body of the United States or of any
state of the United States that are required in connection with the lawful
issuance and sale of the Shares to the Investors pursuant to this Agreement
shall have been duly obtained and shall be effective on and as of the Closing.
6.4 PROCEEDINGS AND DOCUMENTS. All corporate and other proceedings
undertaken in connection with the transactions contemplated at the Closing and
all documents incident thereto shall be reasonably satisfactory in form and
substance to each Investor, and they shall have received all such counterpart
original and certified or other copies of such documents as they may reasonably
request.
6.5 ABSENCE OF LITIGATION. No proceeding challenging this Agreement or
the transactions contemplated hereby or thereby, or seeking to prohibit, alter,
prevent or delay the Closing, shall have been instituted against the Company
before any court, arbitrator or governmental body, agency or official and shall
be pending.
19
6.6 COMPLIANCE CERTIFICATE. The Company shall deliver to the Investors
at the Closing, relating to the Investors' purchase of Shares, a certificate
signed by the Chief Executive Officer of the Company stating that the Company
has complied with or satisfied each of the conditions to the Investors'
obligation to consummate the Closing set forth in Sections 6.1 through 6.5,
unless waived in writing by the Investors.
6.7 LEGAL PROHIBITION. The purchase of the Shares by the Investors
shall not be prohibited by any law or governmental order or regulation.
7. CONDITIONS TO THE COMPANY'S OBLIGATIONS AT CLOSING.
The obligations of the Company under Section 1 of this Agreement are
subject to the fulfillment on or before the Closing of each of the following
conditions:
7.1 REPRESENTATIONS AND WARRANTIES. The representations and warranties
of each Investor contained in Section 3 shall be true in all respects on and as
of the Closing Date with the same effect as though such representations and
warranties had been made on and as of the Closing Date, except that any
representations and warranties stated as being true and correct as of a date
other than the date hereof shall be true and correct as of such other date.
7.2 PERFORMANCE. Each Investor shall have performed and complied with
all agreements, obligations and conditions contained in this Agreement that are
required to be performed or complied with by it on or before the Closing.
7.3 QUALIFICATIONS. All authorizations, approvals, or permits, if any,
of any governmental authority or regulatory body of the United States or of any
state of the United States that are required in connection with the lawful
issuance and sale of the Shares to the Investors pursuant to this Agreement
shall have been duly obtained and shall be effective on and as of the Closing.
7.4 PROCEEDINGS AND DOCUMENTS. All corporate and other proceedings
undertaken in connection with the transactions contemplated by this Agreement
and all documents incident thereto shall be reasonably satisfactory in form and
substance to the Company and its counsel, and they shall have received all such
counterpart original and certified or other copies of such documents as they may
reasonably request.
8. MISCELLANEOUS.
8.1 SURVIVAL OF WARRANTIES. The warranties, representations,
agreements, covenants and undertakings of the Company or the Investors contained
in or made pursuant to this Agreement shall survive the execution and delivery
of this Agreement and the Closing and shall in no way be affected by any
investigation of the subject matter thereof made by or on behalf of the
Investors or the Company.
8.2 INCORPORATION BY REFERENCE. All Exhibits and Schedules appended to
this Agreement are herein incorporated by reference and made a part hereof.
20
8.3 SUCCESSOR AND ASSIGNEES. All terms, covenants, agreements,
representations, warranties and undertakings in this Agreement made by and on
behalf of any of the parties hereto shall bind and inure to the benefit of the
respective successors and assigns of the parties hereto (including transferees
of any Shares) whether so expressed or not, subject to Section 5.7.
8.4 AMENDMENTS AND WAIVERS. Neither this Agreement nor any provision
hereof shall be waived, modified, changed, discharged, terminated, revoked or
canceled except by an instrument in writing signed by the party against whom any
change, discharge or termination is sought. Failure of either party to exercise
any right or remedy under this Agreement or any other agreement between the
Company and the Investors, or otherwise, or delay by the Company or the
Investors in exercising such right or remedy, will not operate as a waiver
thereof, nor shall any single or partial exercise thereof preclude any other or
further exercise thereof or the exercise of any other right, power or privilege.
The rights and remedies herein provided shall be cumulative and not exclusive of
any rights or remedies provided by law.
8.5 GOVERNING LAW. This Agreement shall be deemed a contract made
under the laws of the State of New York, without giving effect to the conflicts
of law principles thereof.
8.6 NOTICES. All notices, requests, consents, demands, notice or other
communication required or permitted under this Agreement shall be in writing and
shall be deemed duly given and received when delivered personally or transmitted
by facsimile, or one business day after being deposited for next-day delivery
with a nationally recognized overnight delivery service, or three days after
being deposited as first class mail with the United States Postal Services, all
charges or postage prepaid, and properly addressed:
to the Company at:
Callisto Pharmaceuticals, Inc.
000 Xxxxxxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxx, Xxx Xxxx 00000
Tel: (000) 000-0000
Fax: (000) 000-0000
Attention: Chief Executive Officer
with a copy (which shall not constitute notice) to:
Sichenzia Xxxx Xxxxxxxx Xxxxxxx LLP
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Fax: (000) 000-0000
Attention: Xxxxxxx X. Xxxxxxx
21
or to the Investors at the address set forth opposite each
Investor's name on Exhibit A hereto
or such other address as may be furnished in writing by a party hereto.
8.7 COUNTERPARTS. This Agreement may be executed in counterparts, all
of which together shall constitute one and the same instrument.
8.8 EFFECT OF HEADINGS. The section and paragraph headings herein are
included for convenience only and shall not affect the construction hereof.
8.9 ENTIRE AGREEMENT. This Agreement and the Exhibits and Schedules
hereto and thereto constitute the entire agreement among the Company and the
Investors with respect to the subject matter hereof. There are no
representations, warranties, covenants or undertakings with respect to the
subject matter hereof other than those expressly set forth herein. This
Agreement supersedes all prior agreements between the parties with respect to
the Shares purchased hereunder and the subject matter hereof.
8.10 PUBLICITY. Neither party shall originate any publicity, news
release or other public announcement, written or oral, whether relating to the
performance under this Agreement or the existence of any arrangement between the
parties, without the prior written consent of the other party (which consent
shall not be unreasonably withheld or delayed), except where such publicity,
news release or other public announcement is required by law or by Section 4.1;
PROVIDED that, in such event, each such party shall (a) promptly consult the
other party in connection with any such publicity, news release or other public
announcement prior to its release; (b) promptly provide the other party a copy
thereof; and (c) use commercially reasonable efforts to ensure that such
portions of such information as may reasonably be designated by the other party
are accorded confidential treatment by the applicable governmental entity.
8.11 SEVERABILITY. If any provision of this Agreement is held by a
court of competent jurisdiction to be unenforceable under applicable law, such
provision shall be replaced with a provision that accomplishes, to the extent
possible, the original business purpose of such provision in a valid and
enforceable manner, and the balance of the Agreement shall be interpreted as if
such provision were so modified and shall be enforceable in accordance with its
terms.
8.12 INTERPRETATION. This Agreement shall be construed according to
its fair language. The rule of construction to the effect that any ambiguities
are to be resolved against the drafting party shall not be employed in the
interpretation of this Agreement.
8.13 NO STRICT CONSTRUCTION. The language used in this Agreement will
be deemed to be the language chosen by the parties to express their mutual
intent, and no rules of strict construction will be applied against any party.
8.14 INDEPENDENT NATURE OF INVESTORS' OBLIGATIONS AND RIGHTS. The
obligations of each Investor under this Agreement are several and not joint with
the obligations of any other
22
Investor, and no Investor shall be responsible in any way for the performance of
the obligations of any other Investor under this Agreement. The decision of each
Investor to purchase Shares pursuant to this Agreement has been made by such
Investor independently of any other Investor 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 Investor or by any agent or employee of any other Investor,
and no Investor or any of its agents or employees shall have any liability to
any other Investor (or any other person) relating to or arising from any such
information, materials, statements or opinions. Nothing contained herein, and no
action taken by any Investor pursuant thereto, shall be deemed to constitute the
Investors as a partnership, an association, a joint venture or any other kind of
entity, or create a presumption that the Investors are in any way acting in
concert or as a group with respect to such obligations or the transactions
contemplated by this Agreement. Each Investor acknowledges that no other
Investor has acted as agent for such Investor in connection with making its
investment hereunder and that no other Investor will be acting as agent of such
Investor in connection with monitoring its investment hereunder. Each Investor
shall be entitled to independently protect and enforce its rights, including
without limitation the rights arising out of this Agreement, and it shall not be
necessary for any other Investor to be joined as an additional party in any
proceeding for such purpose. The Company has elected to provide all Investors
with the same terms and form of this Agreement for the convenience of the
Company and not because it was required or requested to do so by the Investors.
23
IN WITNESS WHEREOF, this Agreement has been executed as of the date first
above written, by the duly authorized representatives of the parties hereto.
CALLISTO PHARMACEUTICALS, INC.
By: _________________________________
Name:________________________________
Title:_______________________________
INVESTOR
By:______________________________
24
Schedule A
COMPANY SCHEDULE OF EXCEPTIONS
None
EXHIBIT A
--------------------------------------------------------------------------------
Cash
Investor Name and Investment Number of
Notice Address Amount Shares
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
The Pharmaceutical/Medical
Technology Fund, L.P. $ 380,000 250,000
Atlas Equity I, Ltd. 760,000 500,000
Orion Biomedical Fund, L.P. 821,500.72 540,461
Orion Biomedical Offshore Fund, L.P. 178,499.68 117,434
Alexandra Global Master Fund Ltd. 760,000 500,000
Xxxxxxx Partners, Ltd. 38,000 25,000
Xxxx X. Xxxxx 25,000.96 16,448
Xxxxxxxxx Xxxxxxxx 30,400 20,000
Xxxxxx X'Xxxxxxxx 25,000.96 16,448
---------------- ---------
Total 3,018,402.32 1,985,791
