SECURITIES PURCHASE AGREEMENT
Exhibit 10.33
THIS SECURITIES PURCHASE AGREEMENT (this “Agreement”), dated as of January 8, 2009, by and
among Alseres Pharmaceuticals, Inc., a Delaware corporation with headquarters located at 000 Xxxxx
Xxxxxx, Xxxxxxxxx, XX 00000 (the “Company”), and each investor identified on the signature pages
hereto (individually, an “Investor” and collectively, the “Investors”).
PREAMBLE
A. The Company and each Investor is executing and delivering this Agreement in reliance upon
the exemption from 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 (the “SEC”) under the Securities Act.
B. Each Investor, 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 of
the common stock, par value $0.01 per share, of the Company (the “Common Stock”), set forth on such
Investor’s signature page to this Agreement (which aggregate amount for all Investors together
shall be not more than 1,000,000 shares of Common Stock and shall collectively be referred to
herein as the “Common Shares”). The Company shall in no event issue shares of Common Stock and
Warrant Shares in excess of 19.99% of the then outstanding Common Stock of the Company or to any
one Investor which would result in such Investor beneficially owning more than 19.99% of the then
outstanding Common Stock of the Company immediately after the Closings (including shares issued
pursuant to the letter agreement referenced in paragraph D below of this Preamble) unless such
Investor owned more than 19.99% of the outstanding Common Stock of the Company immediately prior to
the Initial Closing. Each Investor, in consideration of this transaction agrees to immediately
cancel all outstanding warrants issued to each Investor as part of the share purchase transaction
between such Investor and the Company that was effective as of November 20, 2008.
C. The purchase price for each Common Share to be issued at the Closing shall be one dollar
($1.00) per share (the “Purchase Price”). The Common Shares are collectively referred to herein as
the “Securities.”
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 Investors, severally and not jointly, agree as follows:
ARTICLE I
DEFINITIONS
DEFINITIONS
1.1 Definitions. In addition to the terms defined elsewhere in this Agreement, the
following terms have the meanings indicated:
“Affiliate” means any Person that, directly or indirectly through one or more intermediaries,
controls or is controlled by or is under common control with a Person, as such terms are used in
and construed under Rule 144 under the Securities Act.
“Agreement” has the meaning set forth in the Preamble.
“Business Day” means any day other than Saturday, Sunday, any day which shall be a federal
legal holiday in the United States or any day on which banking institutions in The State of New
York are authorized or required by law or other governmental action to close.
“Closing” has the meaning set forth in the Preamble.
“Closing Date” has the meaning set forth in Section 2.1.
“Company” has the meaning set forth in the Preamble.
“Company Counsel” means Xxxxxx Xxxxxx Xxxxxxxxx Xxxx and Xxxx LLP, counsel to the Company.
“Common Shares” has the meaning set forth in the Preamble.
“Common Stock” has the meaning set forth in the Preamble.
“Contingent Obligation” has the meaning set forth in Section 3.1(aa).
“Convertible Securities” means any stock or securities (other than Options) convertible into
or exercisable or exchangeable for Common Stock.
“Cut-Back Shares” has the meaning set forth in Section 6.1(d).
“Disclosure Materials” has the meaning set forth in Section 3.1(f).
“Effective Date” means the date that the Registration Statement is first declared effective by
the SEC.
“Effectiveness Period” has the meaning set forth in Section 6.1(b).
“Environmental Laws” has the meaning set forth in Section 3.1(dd).
“Exchange Act” means the Securities Exchange Act of 1934, as amended.
“Filing Date” means the date that is sixty (60) days after the Closing Date or, if such date
is not a Business Day, the next date that is a Business Day.
“FINRA” has the meaning set forth in Section 3.2(c).
“GAAP” has the meaning set forth in Section 3.1(f).
“Hazardous Materials” has the meaning set forth in Section 3.1(dd).
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“Indebtedness” has the meaning set forth in Section 3.1(aa).
“Indemnified Party” has the meaning set forth in Section 6.4(c).
“Indemnifying Party” has the meaning set forth in Section 6.4(c).
“Intellectual Property Rights” has the meaning set forth in Section 3.1(t).
“Investor” has the meaning set forth in the Preamble.
“Lien” means any lien, charge, claim, security interest, encumbrance, right of first refusal
or other restriction.
“Losses” means any and all losses, claims, damages, liabilities, settlement costs and
expenses, including, without limitation, reasonable attorneys’ fees.
“Material Adverse Effect” means (i) a material adverse effect on the results of operations,
assets, business or financial condition of the Company and the Subsidiaries taken as a whole on a
consolidated basis or (ii) material and adverse impairment of the Company’s ability to perform its
obligations under any of the Transaction Documents, provided, that none of the following alone
shall be deemed, in and of itself, to constitute a Material Adverse Effect: (i) a change in the
market price or trading volume of the Common Stock or (ii) changes in general economic conditions
or changes affecting the industry in which the Company operates generally (as opposed to
Company-specific changes) so long as such changes do not have a disproportionate effect on the
Company and its Subsidiaries taken as a whole.
“Material Permits” has the meaning set forth in Section 3.1(v).
“Options” means any outstanding rights, warrants or options to subscribe for or purchase
Common Stock or Convertible Securities.
“Person” has the meaning set forth in Section 3.1(aa).
“Proceeding” means an action, claim, suit, investigation or proceeding (including, without
limitation, a partial proceeding, such as a deposition), whether commenced or threatened in
writing.
“Prospectus” means the prospectus included in the Registration Statement (including, without
limitation, a prospectus that includes any information previously omitted from a prospectus filed
as part of an effective registration statement in reliance upon Rule 430A promulgated under the
Securities Act), as amended or supplemented by any prospectus supplement, with respect to the terms
of the offering of any portion of the Registrable Securities covered by the Registration Statement,
and all other amendments and supplements to the Prospectus including post-effective amendments, and
all material incorporated by reference or deemed to be incorporated by reference in such
Prospectus.
“Registrable Securities” means the Common Shares and the Warrant Shares issued or issuable
pursuant to the Transaction Documents, together with any securities issued or issuable
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upon any stock split, dividend or other distribution, recapitalization or similar event with
respect to the foregoing.
“Registration Statement” means each registration statement required to be filed under Article
VI, including (in each case) the Prospectus, amendments and supplements to such registration
statement or Prospectus, including pre- and post-effective amendments, all exhibits thereto, and
all material incorporated by reference or deemed to be incorporated by reference in such
registration statement.
“Regulation D” has the meaning set forth in the Preamble.
“Required Effectiveness Date” means (i) if the Registration Statement does not become subject
to review by the SEC, the date which is the earlier of (a) ninety (90) days after the Filing Date
or (b) five (5) Trading Days after the Company receives notification from the SEC that the
Registration Statement will not become subject to review, or (ii) if the Registration Statement
becomes subject to review by the SEC, the date which is the earlier of (a) one hundred and twenty
(120) days after the Filing Date or (b) five (5) Trading Days after the Company receives
notification from the SEC that the SEC has no further comment to the Registration Statement.
“Restriction Termination Date” has the meaning set forth in Section 6.1(d).
“Rule 144,” “Rule 172”, “Rule 415,” and “Rule 424” means Rule 144, Rule 415 and Rule 424,
respectively, promulgated by the SEC pursuant to the Securities Act, as such Rules may be amended
from time to time, or any similar rule or regulation hereafter adopted by the SEC having
substantially the same effect as such Rule.
“SEC” has the meaning set forth in the Preamble.
“SEC Reports” has the meaning set forth in Section 3.1(f).
“SEC Restrictions” has the meaning set forth in Section 6.1(d).
“Securities” has the meaning set forth in the Preamble.
“Securities Act” has the meaning set forth in the Preamble.
“Short Sales” has the meaning set forth in Section 3.2(i).
“Subsidiary” has the meaning set forth in Section 3.1(a).
“Trading Day” means (i) a day on which the Common Stock is traded on a Trading Market (other
than the OTC Bulletin Board), or (ii) if the Common Stock is not listed or quoted 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
listed or quoted on any Trading Market, a day on which the Common Stock is quoted in the
over-the-counter market as reported by the Pink Sheets LLC (or any similar organization or agency
succeeding to its functions of reporting prices); provided, that in
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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” has the meaning set forth in Section 3.2(i).
“Transaction Documents” means this Agreement and the Warrants.
“Transfer Agent” means Continental Stock Transfer & Trust Company, or any successor transfer
agent for the Company.
ARTICLE II
PURCHASE AND SALE
PURCHASE AND SALE
2.1 Closing. The Closing shall take place on the third business day after which all
conditions for such Closing have been satisfied or are capable of being satisfied, or such other
date as agreed to by the Company and the Investors (the “Closing Date”) at 10:00 a.m., at the
offices of Company Counsel, or at such other times and places as shall be mutually agreed to by the
Company and the Investors.
2.2 Closing Deliveries.
(a) At the Closing, the Company shall deliver or cause to be delivered to each Investor the
following:
(i) evidence of a direct registration account in such Investor’s name as set forth on such
Investor’s signature page to this Agreement, and the deposit, by direct registration, into such
account of the number of Common Shares purchased by such Investor;
(ii) a certificate of the Secretary of the Company, dated as of the Closing Date, (a)
certifying the resolutions adopted by the Board of Directors of the Company approving the
transactions contemplated by the Transaction Documents and the issuance of the Securities, (b)
certifying as to 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; and
(iii) a certificate of the Chief Executive Officer or Chief Financial Officer of the Company,
dated as of the Closing Date, certifying to the fulfillment of the conditions specified in
Section 5.1(a) and (b).
(b) At the Closing, each Investor shall deliver or cause to be delivered to the Company the
purchase price set forth on such Investor’s signature page to this Agreement in United States
dollars and in immediately available funds, by wire transfer to an account designated in writing to
such Investor by the Company for such purpose.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES
REPRESENTATIONS AND WARRANTIES
3.1 Representations and Warranties of the Company. The Company hereby represents and
warrants to the Investors as follows (which representations and warranties shall be deemed to
apply, where appropriate, to each Subsidiary of the Company):
(a) Subsidiaries. The Company owns or controls, directly or indirectly, all of the
capital stock or comparable equity interests of each Subsidiary free and clear of any Lien, and all
issued and outstanding shares of capital stock or comparable equity interest of each Subsidiary are
validly issued and are fully paid, non-assessable and free of preemptive and similar rights. The
Company owns or controls, directly or indirectly, only the following corporations, partnerships,
limited liability partnerships, limited liability companies, associations or other entities: (i)
Acumed Pharmaceuticals, Inc., a Delaware corporation, (ii) Ara Pharmaceuticals, Inc., a Delaware
corporation, (iii) Boston Life Sciences International, Inc., a Delaware corporation, (iv) Coda
Pharmaceuticals, Inc., a Delaware corporation, (v) Neurobiologics, Inc., a Delaware corporation
and (vi) XxxXxxx Pharmaceuticals, Inc., a Delaware corporation (each, a “Subsidiary”).
(b) Organization and Qualification. The Company and each Subsidiary is an entity duly
organized, validly existing and in good standing under the laws of the jurisdiction of its
incorporation, with the requisite power and authority to own and occupy its properties and to carry
on its business as currently conducted. Neither the Company nor any Subsidiary is in violation of
any of the provisions of its respective certificate of incorporation or bylaws. The Company and
each Subsidiary is duly qualified to do business and is in good standing as a foreign corporation
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, would not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect.
(c) Authorization; Enforcement. The Company has the requisite corporate authority to
enter into and to consummate the transactions contemplated by each of the Transaction Documents and
otherwise to carry out its obligations hereunder and thereunder. The execution and delivery of
each of the Transaction Documents by the Company and the consummation by it of the transactions
contemplated hereby and thereby have been duly authorized by all necessary corporate action on the
part of the Company and no further consent or action is required by the Company, its Board of
Directors or its stockholders. Each of the Transaction Documents has been (or upon delivery will
be) duly executed by the Company and, assuming the due authorization, execution and delivery by the
other parties thereof, 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 (i) as limited by general equitable principles and applicable bankruptcy,
insolvency, reorganization, moratorium and other laws of general application affecting enforcement
of creditors’ rights generally, (ii) as limited by laws relating to the availability of specific
performance, injunctive relief or other equitable remedies and (iii) insofar as indemnification and
contribution provisions may be limited by applicable law.
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(d) No Conflicts. The execution, delivery and performance of the Transaction
Documents by the Company and the consummation by the Company of the transactions contemplated
hereby and thereby do not, and will not, (i) conflict with or violate any provision of the
Company’s or any Subsidiary’s certificate of incorporation or bylaws, (ii) conflict with, or
constitute a default (or an event that 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 (with
or without notice, lapse of time or both) of, any agreement, credit facility, debt or other
instrument (evidencing a Company or Subsidiary debt or otherwise) or other agreement to which the
Company or any Subsidiary is a party or by which any property or asset of the Company or any
Subsidiary are bound, or affected, except to the extent that such conflict, default, termination,
amendment, acceleration or cancellation right would not reasonably be expected to have a Material
Adverse Effect, or (iii) 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
or any Subsidiary is subject (including, assuming the accuracy of the representations and
warranties of the Investors set forth in Section 3.2 hereof, federal and state securities
laws and regulations and the rules and regulations of any self-regulatory organization to which the
Company or its securities are subject), or by which any property or asset of the Company or any
Subsidiary is bound or affected, except to the extent that such violation would not, individually
or in the aggregate, reasonably be expected to have a Material Adverse Effect.
(e) The Securities. The Securities are duly authorized and, when issued and paid for
in accordance with the applicable Transaction Documents, will be duly and validly issued, fully
paid and nonassessable, free and clear of all Liens and will not be subject to preemptive or
similar rights of stockholders (other than those provided for in the Transaction Documents). The
Company has reserved from its duly authorized capital stock the maximum number of shares of Common
Stock issuable upon exercise of the Warrants.
(f) SEC Reports; Financial Statements. The Company has filed all documents required
to be filed by it under the Exchange Act, including pursuant to Section 13(a) or 15(d) thereof, for
the twelve months preceding the date hereof on a timely basis or has received a valid extension of
such time of filing and has filed any such documents prior to the expiration of any such extension
and has filed all 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, such documents,
together with any materials filed or furnished by the Company under the Exchange Act, whether or
not any such reports were required being collectively referred to herein as the “SEC Reports” and,
together with this Agreement, the “Disclosure Materials”. As of their respective dates (or, if
amended or superseded by a filing prior to the Initial Closing Date, then on the date of such
filing), the SEC Reports filed by the Company 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, and none of the SEC Reports, when filed (or, if amended or superseded by a
filing prior to the Initial Closing Date, then on the date of such filing) by the Company,
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. 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 SEC with respect thereto as in effect at the time of filing
(or, if amended or superseded by a
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filing prior to the Initial Closing Date, then on the date of such filing). Such financial
statements have been prepared in accordance with United States generally accepted accounting
principles applied on a consistent basis during the periods involved (“GAAP”), except as may be
otherwise specified in such financial statements, the notes thereto and except that unaudited
financial statements may not contain all footnotes required by GAAP or may be condensed or summary
statements, and fairly present in all material respects the consolidated financial position of the
Company and its consolidated Subsidiaries as 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.
(g) Capitalization. The authorized capital stock of the Company as of October 31,
2008, consisted of 80,000,000 shares of Common Stock, of which [21,351,123] were issued and
outstanding as of such date and 1,000,000 shares of preferred stock, $.01 par value per share, of
which 25,000 shares are designated as Series A Convertible Preferred Stock, 500,000 shares are
designated as Series D Convertible Preferred Stock and 800 shares designated Series E Convertible
Preferred Stock, of which no shares were issued and outstanding as of such date. All outstanding
shares of capital stock are duly authorized, validly issued, fully paid and nonassessable and have
been issued in compliance in all material respects with all applicable securities laws. Except as
disclosed in or contemplated the SEC Reports, the Company does not have outstanding any other
Options, script rights to subscribe to, calls or commitments relating to, or securities, rights or
obligations convertible into or exercisable or exchangeable for, or entered into any agreement
giving any Person any right to subscribe for or acquire, any shares of Common Stock, or securities
or rights convertible or exchangeable into shares of Common Stock. Except as set forth in the SEC
Reports, and except for customary adjustments as a result of stock dividends, stock splits,
combinations of shares, reorganizations, recapitalizations, reclassifications or other similar
events, there are no anti-dilution or price adjustment provisions contained in any security issued
by the Company (or in any agreement providing rights to security holders) and the issuance and sale
of the Securities will not obligate the Company to issue shares of Common Stock or other securities
to any Person (other than the Investors and the Agent) and will not result in a right of any holder
of the Company’s securities to adjust the exercise, conversion, exchange or reset price under such
securities.
(h) Material Changes; Undisclosed Events, Liabilities or Developments; Solvency.
Since the date of the latest audited financial statements included within the SEC Reports, except
as disclosed in the SEC Reports, (i) there has been no event, occurrence or development that,
individually or in the aggregate, has had a Material Adverse Effect, (ii) the Company has not
incurred any material liabilities other than (A) trade payables and accrued expenses 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 SEC, (iii) the Company has not altered its method of accounting or changed
its auditors, (iv) the Company has not declared or made any dividend or distribution of cash or
other property to its stockholders, in their capacities as such, or purchased, redeemed or made any
agreements to purchase or redeem any shares of its capital stock, and (v) the Company has not
issued any equity securities to any officer, director or Affiliate, except pursuant to existing
Company stock-based plans. The Company has not taken any steps to seek protection pursuant to any
bankruptcy law nor does the Company have any knowledge or reason to believe that its creditors
intend to initiate involuntary bankruptcy
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proceedings or any actual knowledge of any fact which would reasonably lead a creditor to do
so.
(i) Absence of Litigation. Except as disclosed in the SEC Reports, there is no
action, suit, claim, or Proceeding, or, to the Company’s knowledge, inquiry or investigation,
before or by any court, public board, government agency, self-regulatory organization or body
pending or, to the knowledge of the Company, threatened against the Company or any Subsidiary that
would, individually or in the aggregate, have a Material Adverse Effect.
(j) Compliance. Except as would not, individually or in the aggregate, reasonably be
expected to have or result in a Material Adverse Effect, (i) neither the Company nor any
Subsidiary is 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 or any
Subsidiary under), nor has the Company or any Subsidiary received written 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) neither the Company nor any
Subsidiary is in violation of any order of any court, arbitrator or governmental body, or (iii)
neither the Company nor any Subsidiary is or has been in violation of any statute, rule or
regulation of any governmental authority.
(k) Title to Assets. Neither the Company nor any Subsidiary owns real property. The
Company and each Subsidiary has good and marketable title in all personal property owned by them
that is material to the business of the Company and each Subsidiary, in each case free and clear of
all Liens, except for Liens that do not, individually or in the aggregate, have or result in a
Material Adverse Effect. Any real property and facilities held under lease by the Company or any
Subsidiary is held by it under valid, subsisting and enforceable leases of which the Company and
each Subsidiary is in material compliance.
(l) No General Solicitation. Neither the Company, nor any of its Affiliates, nor any
Person acting on its or their behalf, has engaged in any form of general solicitation or general
advertising (within the meaning of Regulation D) in connection with the offer or sale of the
Securities.
(m) Private Placement; Investment Company; U.S. Real Property Holding Corporation.
Neither the Company nor any of its Affiliates nor, any Person acting on the Company’s behalf has,
directly or indirectly, at any time within the past six months, made any offer or sale of any
security or solicitation of any offer 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. Assuming the accuracy of the
representations and warranties of the Investors set forth in Section 3.2, no registration
under the Securities Act is required for the offer and sale of the Securities by the Company to the
Investors as contemplated hereby. The sale and issuance of the Securities hereunder does not
contravene the rules and regulations of any Trading Market on which the Common Stock is listed or
quoted. The Company is not an “investment company” within the meaning of the Investment Company
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Act of 1940, as amended. The Company is not required to be registered as a United States real
property holding corporation within the meaning of the Foreign Investment in Real Property Tax Act
of 1980.
(n) Form S-3 Eligibility. The Company is eligible to register the Common Shares and
the Warrant Shares for resale by the Investors using Form S-3 promulgated under the Securities Act.
(o) Listing and Maintenance Requirements. The Company has not, in the twelve months
preceding the date hereof, received notice (written or oral) 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. Except as set forth in the
SEC Reports, as of the date hereof there are no proceedings pending or, to the Company’s knowledge,
threatened against the Company relating to the continued listing of its Common Stock.
(p) Registration Rights. Other than as disclosed in the SEC Reports, the Company has
not granted or agreed to grant to any Person any rights (including “piggy-back” registration
rights) to have any securities of the Company registered with the SEC or any other governmental
authority that have not expired or been satisfied or waived, other than to the Investors and the
Agent.
(q) Application of Takeover Protections. The Company and its Board of Directors have
taken all necessary action, if any, 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 become applicable to any of the Investors as a result of the
Investors and the Company fulfilling their obligations or exercising their rights under the
Transaction Documents, including, without limitation, as a result of the Company’s issuance of the
Securities and the Investors’ ownership of the Securities.
(r) Disclosure. The Company confirms that neither it nor any of its officers,
directors or Affiliates, has provided any of the Investors (other than Excluded Investors or those
certain investors who signed a confidentiality agreement with the Company) or their agents or
counsel with any information that constitutes or might constitute material, nonpublic information
(other than the existence and terms of the issuance of Securities, as contemplated by this
Agreement). The Company understands and confirms that each of the Investors (other than Excluded
Investors or those certain investors who signed a confidentiality agreement with the Company) will
rely on the foregoing representations in effecting transactions in securities of the Company. To
the Company’s knowledge, except for the transactions contemplated by this Agreement, no event or
circumstance has occurred or information exists with respect to the Company or any Subsidiary or
their businesses, 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. The Company acknowledges and agrees that no Investor (other than
Excluded Investors) makes or has made any representations or warranties with respect to the
transactions contemplated hereby other than those set forth in the Transaction Documents.
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(s) Acknowledgment Regarding Investors’ Purchase of Securities. Based upon the
assumption that the transactions contemplated by this Agreement are consummated in all material
respects in conformity with the Transaction Documents, the Company acknowledges and agrees that
each of the Investors (other than Excluded Investors) is acting solely in the capacity of an arm’s
length purchaser with respect to the Transaction Documents and the transactions contemplated hereby
and thereby. The Company further acknowledges that no Investor (other than Excluded Investors) is
acting as a financial advisor or fiduciary of the Company (or in any similar capacity) with respect
to this Agreement and the transactions contemplated hereby and any advice given by any Investor
(other than Excluded Investors) or any of their respective representatives or agents in connection
with the Transaction Documents and the transactions contemplated hereby and thereby is merely
incidental to the Investors’ purchase of the Securities. The Company further represents to each
Investor that the Company’s decision to enter into this Agreement has been based solely on the
independent evaluation of the transactions contemplated hereby by the Company and its advisors and
representatives.
(t) Patents and Trademarks. The Company and each Subsidiary owns, or possesses
adequate rights or licenses to use, all trademarks, trade names, service marks, service xxxx
registrations, service names, patents, patent rights, copyrights, inventions, licenses, approvals,
governmental authorizations, trade secrets and other intellectual property rights (“Intellectual
Property Rights”) necessary to conduct their respective businesses as now conducted. None of the
Company’s or any Subsidiary’s Intellectual Property Rights have expired or terminated, or are
expected to expire or terminate within three years from the date of this Agreement. Neither the
Company nor any Subsidiary has received any written notice of, or have any actual knowledge of, any
infringement by the Company of Intellectual Property Rights of any third party, that, individually
or in the aggregate, would reasonably be expected to have a Material Adverse Effect. Except as
disclosed in the SEC Reports, there is no claim, action or proceeding being made or brought, or to
the knowledge of the Company, being threatened, against the Company or any Subsidiary regarding its
Intellectual Property Rights.
(u) Insurance. The Company and each Subsidiary is insured by insurers of recognized
financial responsibility against such losses and risks and in such amounts as it believes are
prudent and customary in the businesses and locations in which the Company and each Subsidiary is
engaged.
(v) Regulatory Permits. The Company and each Subsidiary possesses all certificates,
authorizations and permits issued by the appropriate federal, state, local or foreign regulatory
authorities necessary to conduct their respective businesses as presently conducted and described
in the SEC Reports (“Material Permits”), except where the failure to possess such permits would
not, individually or in the aggregate, have or reasonably be expected to result in a Material
Adverse Effect, and neither the Company nor any Subsidiary has received any written notice of
proceedings relating to the revocation or modification of any Material Permit.
(w) Transactions With Affiliates and Employees. Except as set forth in the SEC
Reports, no transaction has occurred between or among the Company, on the one hand, and its
Affiliates, officers or directors or any Affiliates of any such officer or director, on the other
hand, that is required to be disclosed pursuant to Regulation S-K Item 404(a) that was not
disclosed.
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(x) 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 generally accepted
accounting principles 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.
(y) Xxxxxxxx-Xxxxx Act. The Company is in compliance in all material respects with
applicable requirements of the Xxxxxxxx-Xxxxx Act of 2002 and applicable rules and regulations
promulgated by the SEC thereunder, except where such noncompliance would not have, individually or
in the aggregate, a Material Adverse Effect.
(z) Foreign Corrupt Practices. Neither the Company nor any Subsidiary nor, to the
knowledge of the Company, any director, officer, agent, employee or other Person acting on behalf
of the Company or any Subsidiary has, in the course of its actions for, or on behalf of, the
Company (i) used any corporate funds for any unlawful contribution, gift, entertainment or other
unlawful expenses relating to political activity; (ii) made any direct or indirect unlawful payment
to any foreign or domestic government official or employee or to any foreign or domestic political
parties or campaigns from corporate funds; (iii) violated or is in violation in any material
respect of any provision of the U.S. Foreign Corrupt Practices Act of 1977, as amended; or (iv)
made any unlawful bribe, rebate, payoff, influence payment, kickback or other unlawful payment to
any foreign or domestic government official or employee.
(aa) Indebtedness. Except as disclosed in the SEC Reports, neither the Company nor
any Subsidiary (i) has any outstanding Indebtedness (as defined below), (ii) is in violation of any
term of or is in default under any contract, agreement or instrument relating to any Indebtedness,
except where such violations and defaults would not result, individually or in the aggregate, in a
Material Adverse Effect, and (iii) is a party to any contract, agreement or instrument relating to
any Indebtedness, the performance of which, in the judgment of the Company’s officers, has or is
reasonably expected to have a Material Adverse Effect. For purposes of this Agreement: (x)
“Indebtedness” of any Person means, without duplication (A) all indebtedness for borrowed money,
(B) all obligations issued, undertaken or assumed as the deferred purchase price of property or
services (other than trade payables entered into in the ordinary course of business), (C) all
reimbursement or payment obligations with respect to letters of credit, surety bonds and other
similar instruments, (D) all obligations evidenced by notes, bonds, debentures or similar
instruments, including obligations so evidenced incurred in connection with the acquisition of
property, assets or businesses, (E) all indebtedness created or arising under any conditional sale
or other title retention agreement, or incurred as financing, in either case with respect to any
property or assets acquired with the proceeds of such indebtedness (even though the rights and
remedies of the seller or bank under such agreement in the event of default are limited to
repossession or sale of such property), (F) all monetary obligations under any leasing or similar
arrangement which, in connection with generally accepted accounting principles, consistently
applied for the periods covered thereby, is classified as a capital lease, (G) all indebtedness
referred to in clauses (A) through (F) above secured by (or for which the holder of such
Indebtedness has an existing right, contingent or otherwise, to be secured by) any
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mortgage, lien, pledge, charge, security interest or other encumbrance upon or in any property
or assets (including accounts and contract rights) owned by any Person, even though the Person
which owns such assets or property has not assumed or become liable for the payment of such
indebtedness, and (H) all Contingent Obligations in respect of indebtedness or obligations of
others of the kinds referred to in clauses (A) through (G) above; (y) “Contingent Obligation”
means, as to any Person, any direct or indirect liability, contingent or otherwise, of that Person
with respect to any indebtedness, lease, dividend or other obligation of another Person if the
primary purpose or intent of the Person incurring such liability, or the primary effect thereof, is
to provide assurance to the obligee of such liability that such liability will be paid or
discharged, or that any agreements relating thereto will be complied with, or that the holders of
such liability will be protected (in whole or in part) against loss with respect thereto; and (z)
“Person” means an individual, a limited liability company, a partnership, a joint venture, a
corporation, a trust, an unincorporated organization, a government or any department or agency
thereof.
(bb) Employee Relations. Neither the Company nor any Subsidiary is a party to any
collective bargaining agreement or employs any member of a union. The Company believes that its
relations with its employees are as disclosed in the SEC Reports. To the knowledge of the Company
or any Subsidiary, no executive officer of the Company or any Subsidiary is in violation of any
material term of any employment contract, confidentiality, disclosure or proprietary information
agreement, non-competition agreement, or any other contract or agreement or any restrictive
covenant, and the continued employment of each such executive officer does not subject the Company
or any Subsidiary to any liability with respect to any of the foregoing matters.
(cc) Labor Matters. The Company and each Subsidiary is in compliance in all material
respects with all federal, state, local and foreign laws and regulations respecting labor,
employment and employment practices and benefits, terms and conditions of employment and wages and
hours, except where failure to be in compliance would not, either individually or in the aggregate,
reasonably be expected to result in a Material Adverse Effect.
(dd) Environmental Laws. The Company and each Subsidiary (i) is in compliance in all
material respects with any and all Environmental Laws (as hereinafter defined), (ii) has received
all permits, licenses or other approvals required of them under applicable Environmental Laws to
conduct their respective businesses and (iii) is in compliance in all material respects with all
terms and conditions of any such permit, license or approval where, in each of the foregoing
clauses (i), (ii) and (iii), the failure to so comply would be reasonably expected to have,
individually or in the aggregate, a Material Adverse Effect. The term “Environmental Laws” means
all federal, state, local or foreign laws relating to pollution or protection of human health or
the environment (including, without limitation, ambient air, surface water, groundwater, land
surface or subsurface strata), including, without limitation, laws relating to emissions,
discharges, releases or threatened releases of chemicals, pollutants, contaminants, or toxic or
hazardous substances or wastes (collectively, “Hazardous Materials”) into the environment, or
otherwise relating to the manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of Hazardous Materials, as well as all authorizations, codes, decrees,
demands or demand letters, injunctions, judgments, licenses, notices or notice letters, orders,
permits, plans or regulations issued, entered, promulgated or approved thereunder.
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(ee) Subsidiary Rights. The Company or one of its Subsidiaries has the unrestricted
right to vote, and (subject to limitations imposed by applicable law) to receive dividends and
distributions on, all capital securities of its Subsidiaries as owned by the Company or such
Subsidiary.
(ff) Tax Status. The Company and each Subsidiary (i) has made or 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 and (iii) has set aside on its books
provision reasonably adequate for the payment of all taxes for periods subsequent to the periods to
which such returns, reports or declarations apply. There are no unpaid taxes in any material
amount claimed to be due by the taxing authority of any jurisdiction, and the officers of the
Company know of no basis for any such claim.
(gg) Certain Fees. Other than fees payable to the Agent (for which the Company shall
be responsible), no brokers’, finders’ or financial advisory fees or commissions will be payable by
the Company with respect to the transactions contemplated by this Agreement.
3.2 Representations and Warranties of the Investors. Each Investor hereby, as to
itself only and for no other Investor, represents and warrants to the Company as follows:
(a) Organization; Authority. Such Investor is an entity duly organized, validly
existing and in good standing under the laws of the jurisdiction of its organization with the
requisite corporate, partnership or other power and authority to enter into and to consummate the
transactions contemplated by this Agreement and otherwise to carry out its obligations hereunder.
The purchase by such Investor of the Securities hereunder has been duly authorized by all necessary
corporate, partnership or other action on the part of such Investor. This Agreement has been duly
executed and delivered by such Investor and constitutes the valid and binding obligation of such
Investor, enforceable against it in accordance with its terms, except (i) as limited by general
equitable principles and applicable bankruptcy, insolvency, reorganization, moratorium and other
laws of general application affecting enforcement of creditors’ rights generally, (ii) as limited
by laws relating to the availability of specific performance, injunctive relief or other equitable
remedies and (iii) insofar as indemnification and contribution provisions may be limited by
applicable law.
(b) No Public Sale or Distribution. Such Investor is (i) acquiring the Common Shares
and the Warrants and (ii) upon exercise of the Warrants will acquire the Warrant Shares issuable
upon exercise thereof, in the ordinary course of business for its own account and not with a view
towards, or for resale in connection with, the public sale or distribution thereof, except pursuant
to sales registered under the Securities Act or under an exemption from such registration and in
compliance with applicable federal and state securities laws, and such Investor does not have a
present intention to effect any distribution of the Securities to or through any person or entity;
provided, however, that by making the representations herein, such Investor does
not agree to hold any of the Securities for any
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minimum or other specific term and reserves the right to dispose of the Securities at any time
in accordance with or pursuant to a registration statement or an exemption under the Securities
Act.
(c) Investor Status. At the time such Investor was offered the Securities, it was, at
the date hereof it is, and on the date which it exercises any Warrants it will be an “accredited
investor” as defined in Rule 501(a) under the Securities Act or a “qualified institutional buyer”
as defined in Rule 144A(a) under the Securities Act. Such Investor is not a registered broker
dealer registered under Section 15(a) of the Exchange Act, nor required to be registered as such,
or a member of The Financial Industry Regulatory Authority (“FINRA”) or an entity engaged in the
business of being a broker dealer. Except as otherwise disclosed in writing to the Company on
Exhibit B-2 (attached hereto) on or prior to the date of this Agreement, such Investor is
not affiliated with any broker dealer registered under Section 15(a) of the Exchange Act, or a
member of FINRA or an entity engaged in the business of being a broker dealer.
(d) General Solicitation. Such Investor 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, broadcast over television or radio, disseminated over the
Internet or presented at any seminar or any other general solicitation or general advertisement.
(e) Experience of Such Investor. Such Investor, 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, including the risk of total loss of the Investor’s investment, and has so evaluated the
merits and risks of such investment. Such Investor understands that it must bear the economic risk
of this investment in the Securities indefinitely, and is able to bear such risk and is able to
afford a complete loss of such investment. The Investor understands that the market price of the
Common Stock can be volatile and that no representation is being made as to the future value of the
Common Stock.
(f) Access to Information. Such Investor acknowledges that it has reviewed the
Disclosure Materials and has been afforded: (i) the opportunity to ask such questions as it has
deemed necessary of 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 (other than material non-public information for those certain investors who did not
enter into a confidentiality agreement with the Company) about the Company and each Subsidiary and
their respective 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
Investor or its representatives or counsel shall modify, amend or affect such Investor’s right to
rely on the Company’s representations and warranties contained herein. Such Investor acknowledges
that no third party has made or will make any representation or warranty to such Investor regarding
the adequacy or completeness for such
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Investor’s purpose of the information such Investor has requested. Such Investor acknowledges
receipt of copies of the SEC Reports filed through the date hereof.
(g) No Governmental Review. Such Investor 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.
(h) No Conflicts. The execution, delivery and performance by such Investor of this
Agreement and the consummation by such Investor of the transactions contemplated hereby will not
(i) result in a violation of the organizational documents of such Investor or (ii) conflict with,
or constitute a default (or an event which with notice or lapse of time or both would become a
default) under, or give to others any rights of termination, amendment, acceleration or
cancellation of, any agreement, indenture or instrument to which such Investor is a party, or (iii)
result in a violation of any law, rule, regulation, order, judgment or decree (including federal
and state securities laws) applicable to such Investor, except in the case of clauses (ii) and
(iii) above, for such that are not material and do not otherwise affect the ability of such
Investor to consummate the transactions contemplated hereby.
(i) Prohibited Transactions; Confidentiality. Such Investor, directly or indirectly,
has not and no Person acting on behalf of or pursuant to any understanding with such Investor, has
engaged in any purchases or sales in the securities, including derivatives, of the Company
(including, without limitation, any Short Sales (a “Transaction”) involving any of the Company’s
securities) since the time that such Investor was first contacted by the Company, Xxxxxx Xxxxx
Securities, Inc. (the “Agent”) or any other Person regarding the investment in the Company
contemplated by this Agreement. Such Investor covenants that neither it nor any Person acting on
its behalf or pursuant to any understanding with such Investor will engage, directly or indirectly,
in any Transactions in the securities of the Company (including Short Sales) prior to the time the
transactions contemplated by this Agreement are publicly disclosed. “Short Sales” include, without
limitation, all “short sales” as defined in Rule 200 promulgated under Regulation SHO under the
Exchange Act and all types of direct and indirect stock pledges, forward sale contracts, options,
puts, calls, short sales, swaps, derivatives and similar arrangements (including on a total return
basis), and sales and other transactions through non-U.S. broker-dealers or foreign regulated
brokers.
(j) Restricted Securities. Such Investor understands that the Securities are
characterized as “restricted securities” under the U.S. federal securities laws inasmuch as they
are being acquired from the Company in a transaction not involving a public offering and that under
such laws and applicable regulations such securities may be resold without registration under the
Securities Act only in certain limited circumstances and that the Company is relying upon the truth
and accuracy of, and the Investor’s compliance with, representations, warranties, agreements,
acknowledgements, understandings of such Investor set forth herein (including the Registration
Statement Questionnaire) in order to determine the availability of such exemptions of the Investor
and the eligibility of such Investor to acquire the Securities.
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(k) Legends. It is understood that, except as provided in Section 4.1(b) of
this Agreement, certificates evidencing such Securities may bear the legend set forth in
Section 4.1(b).
(l) No Legal, Tax or Investment Advice. Such Investor understands that nothing in
this Agreement or any other materials presented by or on behalf of the Company to the Investor in
connection with the purchase of the Securities constitutes legal, tax or investment advice. Such
Investor has consulted such legal, tax and investment advisors as it, in its sole discretion, has
deemed necessary or appropriate in connection with its purchase of the Securities. Such Investor
understands that the Agent has acted solely as the agent of the Company in this placement of the
Securities, and that the Agent makes no representation or warranty with regard to the merits of
this transaction or as to the accuracy of any information such Investor may have received in
connection therewith. Such Investor acknowledges that he has not relied on any information or
advice furnished by or on behalf of the Agent.
(m) Offering Documents. Such Investor understands that other than this Agreement and
the SEC Reports, no disclosure or offering document will be provided or prepared in connection with
the offer and sale of the Securities contemplated hereby.
(n) Restrictions on Securities. Such Investor acknowledges that the Company has
represented that no action has been or will be taken in any jurisdiction outside the United States
by the Company that would permit an offering of the Securities, or possession or distribution of
offering materials in connection with the issuance of the Securities, in any jurisdiction outside
the United States where action for that purpose is required. If such Investor is located or
domiciled outside the United States, it agrees to comply with all applicable laws and regulations
in each foreign jurisdiction in which it purchases, offers, sells or delivers Securities or has in
its possession or distributes any offering material, in all cases at its own expense.
(o) Acquiring Person. Such Investor, after giving effect to the transactions
contemplated hereby, will not, either individually or with a group (as defined in Section 13(d)(3)
of the Exchange Act), be the beneficial owner of 15% or more of the Company’s outstanding Common
Stock. For purposes of this Section 3.2(o), beneficial ownership shall be determined
pursuant to a Rule 13d-3 under the Exchange Act.
(p) Agent Acknowledgement. The Purchaser acknowledges that the Company has engaged the
Agent in connection with the sale of the Common Shares and Warrants and, as consideration for its
services, has agreed to pay the Agent, on the Subsequent Closing Date (so long as the same occurs
on or before December 15, 2008), an aggregate cash commission equal to 7% of the gross proceeds
resulting from such sale (exclusive of any proceeds received from Xxxxxxx & Xxxxxx LLC or their
Affiliates), and to reimburse the Agent for up to 2% of certain of their expenses incurred in
connection with such sale, and to issue the Agent Warrants to purchase [ ] shares of Common
Stock. The Agent Warrants will have a term of five years and will be exercisable at a price equal
to $[ ]1.
| 1 | Fair market value on the Subsequent Closing Date. |
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ARTICLE IV
OTHER AGREEMENTS OF THE PARTIES
OTHER AGREEMENTS OF THE PARTIES
4.1 Transfer Restrictions.
(a) Each Investor, severally but not jointly, covenants to the Company that the Securities
will only be disposed of pursuant to an effective registration statement under, and in compliance
with the requirements of, the Securities Act or pursuant to an available exemption from the
registration requirements of the Securities Act, and in compliance with any applicable state
securities laws. In connection with any transfer of Securities other than pursuant to an effective
registration statement or to the Company, or pursuant to Rule 144, the Company may require the
transferor to provide to the Company an opinion of counsel selected by the transferor, the form and
substance of which opinion shall be reasonably satisfactory to the Company, to the effect that such
transfer does not require registration under the Securities Act. Notwithstanding the foregoing,
the Company hereby consents to and agrees to register on the books of the Company and with its
Transfer Agent, without any such legal opinion any transfer of Securities by an Investor to an
Affiliate of such Investor, provided that the transferee certifies to the Company that it is an
“accredited investor” as defined in Rule 501(a) under the Securities Act and provided that such
Affiliate does not request any removal of any existing legends on any certificate evidencing the
Securities.
(b) Each Investor, severally but not jointly, agrees to the imprinting, until no longer
required by this Section 4.1(b), of the following legend on any certificate evidencing any
of the Securities, together with any additional legend required by (i) any applicable state
securities laws and (ii) any securities exchange upon which such Securities may be listed:
| “NEITHER THESE SECURITIES NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE CONVERTIBLE HAVE 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”), OR ANY APPLICABLE STATE SECURITIES LAWS AND, ACCORDINGLY, MAY NOT BE OFFERED, SOLD, TRANSFERRED, ASSIGNED, PLEDGED OR HYPOTHECATED 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 COMPLIANCE WITH APPLICABLE STATE SECURITIES LAWS OR BLUE SKY LAWS.” |
Certificates evidencing the Common Shares and the Warrant Shares shall not be required to contain
such legend or any other legend (i) while a registration statement (including the Registration
Statement) covering the resale of the Common Shares and the Warrant Shares is effective under the
Securities Act and a prospectus meeting the requirements of Section 10 of the Securities Act is
available with respect to such Common Shares or Warrant Shares, (ii) following any sale of such
Common Shares or Warrant Shares pursuant to Rule 144, or (iii) if such
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Common Shares or Warrant Shares are eligible for sale under Rule 144(b)(1), or (iv) if such legend
is not required under applicable requirements of the Securities Act (including pronouncements
issued by the Staff of the SEC). At such time as a legend is no longer required for certain Common
Shares and Warrant Shares, the Company will, no later than three Trading Days following the
delivery by an Investor to the Company or the Company’s Transfer Agent of a legended certificate
representing such Common Shares or Warrant Shares, and a request for legend removal, accompanied in
the case of a request under Section 4.1(c)(iv) by an opinion of counsel to an Investor to
the effect that such legend is not required, deliver or cause to be delivered to such Investor a
certificate representing such Common Shares or Warrant Shares that is free from all restrictive and
other legends. The Company may not give instructions to any transfer agent of the Company that
enlarge the restrictions on transfer set forth in this Section 4.1(b).
(c) The Company will not object to and shall permit (except as prohibited by law) an Investor
to pledge or grant a security interest in some or all of the Securities in connection with a bona
fide margin agreement with a registered broker-dealer or grant a security interest in some or all
of the Securities to a financial institution that is an “accredited investor” as defined in Rule
501(a) under the Securities Act and who agrees to be bound by the provisions of this Agreement, and
if required under the terms of such arrangement, the Company will not object to and shall permit
(except as prohibited by law) such Investor to transfer pledged or secured Securities to the
pledgees or secured parties. Except as required by law, such a pledge or transfer would not be
subject to approval of the Company, no legal opinion of the pledgee, secured party or pledgor shall
be required in connection therewith (but such legal opinion shall be required in connection with a
subsequent transfer or foreclosure following default by the Investor transferee of the pledge), and
no notice shall be required of such pledge. Each Investor 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 Investor and its pledgee
or secured party. At the appropriate Investor’s expense, the Company will execute and deliver such
reasonable documentation as a pledgee or secured party of Securities may reasonably request in
connection with a pledge or transfer of the Securities, including the preparation and filing of any
required prospectus supplement under Rule 424(b)(3) of the Securities Act or other applicable
provision of the Securities Act to appropriately amend the list of Selling Stockholders thereunder.
Provided that the Company is in compliance with the terms of this Section 4.1(c), the
Company’s indemnification obligations pursuant to Section 6.4 shall not extend to any
Proceeding or Losses arising out of or related to this Section 4.1(c).
4.2 Furnishing of Information. Until the date that any Investor owning Common Shares
or Warrant Shares may sell all of them under Rule 144 of the Securities Act (or any successor
provision), the Company covenants to use its reasonable best 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. The Company further
covenants that it will take such further action as any holder of Securities may reasonably request,
to the extent required from time to time to enable such Investor to sell such Common Shares and
Warrant Shares without registration under the Securities Act.
4.3 Integration. The Company shall not, and shall use its reasonable best efforts to
ensure that no Affiliate thereof shall, sell, offer for sale or solicit offers to buy or otherwise
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negotiate in respect of any security (as defined in Section 2 of the Securities Act) that
would 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 Investors or that would
be integrated with the offer or sale of the Securities for purposes of the rules and regulations of
any Trading Market.
4.4 Reservation of Securities. At all times during which the Warrants remain
exercisable, the Company shall maintain a reserve from its duly authorized shares of Common Stock
for issuance pursuant to the Transaction Documents in such amount as may be required to fulfill its
obligations to issue such Warrant Shares under the Transaction Documents. In the event that at any
time the then authorized shares of Common Stock are insufficient for the Company to satisfy its
obligations to issue such Warrant Shares under the Transaction Documents, the Company shall
promptly take such actions as may be required to increase the number of authorized shares.
4.5 Securities Laws Disclosure; Publicity. The Company shall, at or before 9:00 a.m.,
Boston time, on the first Trading Day following execution of this Agreement, issue a press release
disclosing all material terms of the transactions contemplated hereby. Within four business days
of the Initial Closing Date, the Company shall file a Current Report on Form 8-K with the SEC
describing the terms of the transactions contemplated by the Transaction Documents and including as
exhibits to such Current Report on Form 8-K the Transaction Documents (including the names of the
Investors and the amount(s) of Securities respectively purchased) and the form of Warrants, in the
form required by the Exchange Act. Thereafter, the Company shall timely file any filings and
notices required by the SEC or applicable law with respect to the transactions contemplated hereby
and provide copies thereof to the Investors promptly after filing. Except as herein provided,
neither the Company nor any Subsidiary shall publicly disclose the name of any Investor, or include
the name of any Investor in any press release without the prior written consent of such Investor
(which consent shall not be unreasonably withheld or delayed), unless otherwise required by law,
regulatory authority or Trading Market. Neither the Company nor any Subsidiary shall, nor shall
any of their respective officers, directors, employees and agents, provide any Investor with any
material nonpublic information regarding the Company or any Subsidiary from and after the issuance
of the above referenced press release without the express written consent of such Investor.
4.6 Use of Proceeds. The Company intends to use the net proceeds from the sale of the
Securities for working capital and general corporate purposes and to fund the Company’s Phase III
development of ALTROPANE® for Xxxxxxxxx’x Disease. The Company also may use a portion of the net
proceeds, currently intended for general corporate purposes, to acquire or invest in technologies,
products or services that complement its business. Pending these uses, the Company intends to
invest the net proceeds from this offering in short-term, interest-bearing, investment-grade
securities, or as otherwise pursuant to the Company’s customary investment policies.
4.7 Registration Questionnaire. Each Investor has completed or caused to be completed
the Registration Statement Questionnaire attached hereto as Exhibit B-2 (or has otherwise
provided in a written form the information requested in such Registration Statement Questionnaire)
and the signature page hereto, each for use in preparation of the Registration
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Statement Questionnaire, and the information contained in such completed Registration
Statement Questionnaire (or such other form provided by the Investor) and on such signature page
are true and correct in all material respects as of the date of this Agreement and will be true and
correct on each Closing Date and the Effective Date. The Investor covenants that, upon the
Company’s reasonable written request, it will promptly notify the Company of any changes in such
information or other information as the Company may reasonably request in connection with any
registration referred to in Article VI.
4.8 FINRA Compliance. Each Investor acknowledges that if it is a Registered
Representative (as defined by the FINRA) of a FINRA member firm, the Investor must give such firm
the notice required by the FINRA’s Rules of Fair Practice, receipt of which must be acknowledged by
such firm on the signature page hereof.
4.9 No Sale of Securities. Each Investor hereby, severally but not jointly, covenants
with the Company not to make any sale of the Securities without (i) complying with the provisions
of this Agreement and (ii) satisfying the requirements of the Securities Act and the rules and
regulations promulgated thereunder, including, without limitation, causing the prospectus delivery
requirement under the Securities Act to be satisfied if the Investor is notified by the Company
pursuant to Section 6.2(j) hereof that the conditions specified in Rule 172(c) of the
Securities Act were not satisfied and, as a result thereof, the Investors are required to deliver a
Prospectus in connection with any disposition of Registrable Securities. Each Investor
acknowledges that there may occasionally be times when the Company determines that, subject to the
limitations of Section 6.1, it must suspend the use of the prospectus forming a part of the
Registration Statement until such time as an amendment to the Registration Statement has been filed
by the Company and declared effective by the SEC, an appropriate report has been filed by the
Company with the SEC pursuant to the Exchange Act or until the Company has amended or supplemented
such prospectus. Each Investor hereby, severally but not jointly, covenants that it will not sell
any Securities pursuant to the Registration Statement during the period commencing at the time at
which the Company gives each Investor written notice of any suspension of the use of the
Registration Statement and ending at the time the Company gives each Investor written notice that
each Investor may thereafter effect sales pursuant to the Registration Statement.
4.10 Treatment of Non-Public Information. The Investor covenants and agrees with the
Company (a) to hold the existence, terms and conditions of the transactions contemplated by the
Transaction Documents in confidence and not to disclose the same to any other person until such
time as the Company files with the SEC a Current Report on Form 8-K disclosing the offering or
publicly announces the offering, and (b) to hold all matters disclosed to it by the Company (other
than any matters included in the SEC Reports) in confidence and not to disclose the same to any
other person until such time as the Company files with the SEC a report publicly disclosing such
information. The Investor understands that the federal securities laws impose restrictions on
trading based on information regarding the transactions contemplated by the Transaction Documents.
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ARTICLE V
CONDITIONS
CONDITIONS
5.1 Conditions Precedent to the Obligations of the Investors. The obligation of each
Investor to purchase the Securities at each Closing is subject to the satisfaction or waiver by
such Investor, at or before each Closing, of each of the following conditions:
(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 each Closing as though made on and as of such date (except for representations and warranties
that speak as of a specific date, which shall be true and correct in all material respects as of
such date).
(b) Performance. The Company and each other Investor 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 each
Closing.
(c) No Suspensions of Trading in Common Stock; Listing. Trading in the Common Stock
shall not have been suspended by the SEC or any Trading Market (except for any suspensions of
trading of not more than one Trading Day solely to permit dissemination of material information
regarding the Company) at any time since the date of execution of this Agreement, and the Common
Stock shall have been at all times since such date listed for trading on a Trading Market.
(d) Absence of Litigation. No action, suit or proceeding by or before any court or any
governmental body or authority, against the Company or any Subsidiary or pertaining to the
transactions contemplated by this Agreement or their consummation, shall have been instituted on or
before each Closing Date, which action, suit or proceeding would, if determined adversely, have a
Material Adverse Effect.
5.2 Conditions Precedent to the Obligations of the Company. The obligation of the
Company to sell the Securities at each Closing is subject to the satisfaction or waiver by the
Company, at or before each Closing, of each of the following conditions:
(a) Representations and Warranties. The representations and warranties of the
Investors contained herein shall be true and correct in all material respects as of the date when
made and as of each Closing Date as though made on and as of such date (except for representations
and warranties that speak as of a specific date, which shall be true and correct in all material
respects as of such date); and
(b) Performance. The Investors 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 Investors at or prior to each Closing.
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ARTICLE VI
REGISTRATION RIGHTS
REGISTRATION RIGHTS
6.1 Registration Statement.
(a) Subject to the receipt of necessary information from the Investors and the Agent,
including the information requested in the Registration Statement Questionnaire, as promptly as
possible, and in any event on or prior to the Filing Date, the Company shall prepare and file with
the SEC a Registration Statement covering the resale of all Registrable Securities for an offering
to be made on a continuous basis pursuant to Rule 415. The Registration Statement shall be on Form
S-3 (except if the Company is not then eligible to register for resale the Registrable Securities
on Form S-3, in which case such registration shall be on another appropriate form in accordance
with the Securities Act and the Exchange Act) and shall contain (except if otherwise requested by
the SEC) the “Plan of Distribution” in substantially the form attached hereto as Exhibit C.
(b) Subject to the receipt of necessary information from the Investors and the Agent,
including the information requested in the Registration Statement Questionnaire, the Company shall
use its reasonable best efforts to cause the Registration Statement to be declared effective by the
SEC as promptly as possible after the filing thereof, but in any event prior to the Required
Effectiveness Date, and shall use its reasonable best efforts to keep the Registration Statement
continuously effective under the Securities Act until the earlier of the date that all Registrable
Securities covered by such Registration Statement have been sold or can be sold publicly under Rule
144 without any volume, manner of sale or other restrictions (the “Effectiveness Period”); provided
that, upon notification by the SEC that a Registration Statement will not be reviewed or is no
longer subject to further review and comments, the Company shall request acceleration of such
Registration Statement within five (5) Trading Days after receipt of such notice and request that
it become effective on 4:00 p.m. Boston time on the Effective Date and file a prospectus supplement
for any Registration Statement, if required under Rule 424 (or otherwise), by 9:00 a.m. Boston time
the day after the Effective Date.
(c) Notwithstanding anything in this Agreement to the contrary, after 60 consecutive Trading
Days of continuous effectiveness of the initial Registration Statement filed and declared effective
pursuant to this Agreement, the Company may, by written notice to the Investors and the Agent,
suspend sales under a Registration Statement after the Effective Date thereof and/or require that
the Investors and the Agent immediately cease the sale of shares of Common Stock pursuant thereto
and/or defer the filing of any subsequent Registration Statement if (i) the Company is engaged in a
merger, acquisition or sale and the Board of Directors of the Company determines in good faith, by
appropriate resolutions, that, as a result of such activity, (A) it would be materially detrimental
to the Company (other than as relating solely to the price of the Common Stock) to maintain a
Registration Statement at such time or (B) it is in the best interests of the Company to suspend
sales under such registration at such time, (ii) requested by the SEC or any other federal or state
governmental authority during the Effectiveness Period of the Registration Statement for amendments
or supplements to a Registration Statement or related Prospectus or for additional information;
(iii) the SEC or any other federal or state governmental authority issued any stop order suspending
the effectiveness of a Registration Statement or the initiation of any proceedings for that
purpose; (iv) the Company receives any notification with
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respect to the suspension of the qualification or exemption from qualification of any of the
Registrable Securities for sale in any jurisdiction or the initiation or threatening of any
proceeding for such purpose, (v) the Company elected to delay the disclosure of material non-public
information concerning the Company, the disclosure of which at the time is not, in the good faith
judgment of the Board of Directors of the Company, in the best interest of the Company; or (vi) any
event or circumstance which necessitates the making of any changes in the Registration Statement or
Prospectus, or any document incorporated or deemed to be incorporated therein by reference, so
that, in the case of the Registration Statement, it will not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances under which they were made, not misleading,
or that in the case of the Prospectus, it will 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. Upon receipt of such notice, each
Investor and the Agent shall immediately discontinue any sales of Registrable Securities pursuant
to such registration until such Investor and the Agent are advised in writing by the Company that
the current Prospectus or amended Prospectus, as applicable, may be used. In no event, however,
shall this right be exercised to suspend sales beyond the period during which (in the good faith
determination of the Company’s Board of Directors) the failure to require such suspension would be
materially detrimental to the Company. The Company’s rights under this Section 6.1(c) may
be exercised for a period of no more than 20 Trading Days at a time and not more than three times
in any twelve-month period. Immediately after the end of any suspension period under this
Section 6.1(c), the Company shall take all necessary actions (including filing any required
supplemental prospectus) to restore the effectiveness of the applicable Registration Statement and
the ability of the Investors and the Agent to publicly resell their Registrable Securities pursuant
to such effective Registration Statement.
(d) Notwithstanding the other provisions of this Agreement, if at any time the SEC takes the
position that some or all of the Registrable Securities may not be included in the Registration
Statement because (i) the inclusion of such Registrable Securities violates the provisions of Rule
415 as a result of the number of shares included in such Registration Statement, (ii) the
Registrable Securities cannot be sold as an “at the market offering,” and/or (iii) the Warrant
Shares may not be registered prior to exercise of the Warrants and/or many not be sold on a delayed
or continuous basis under Rule 415, the Company shall (A) remove from the Registration Statement
such portion of the Registrable Securities (the “Cut Back Shares”) and/or (B) agree to such
restrictions and limitations on the registration and resale of the Registrable Securities as the
SEC may require to assure the Company’s compliance with the requirements of Rule 415 (collectively,
the “SEC Restrictions”). Any cut-back imposed pursuant to this Section 6.1(d) shall be
allocated among the Investors and the Agent on a pro rata basis and shall be allocated first to any
Warrant Shares. From and after such time as the Company is able to effect the registration of the
Cut Back Shares in accordance with any SEC Restrictions (such date, the “Restriction Termination
Date”) all of the provisions of this Section 6.1(d) shall again be applicable to the Cut
Back Shares; provided, however, that for such purposes the Filing Date shall be deemed to be the
Restriction Termination Date.
6.2 Registration Procedures. In connection with the Company’s registration
obligations hereunder, the Company shall:
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(a) Not less than three Trading Days prior to the filing of a Registration Statement or any
related Prospectus or any amendment or supplement thereto, furnish via email to those Investors who
have supplied the Company with email addresses copies of all such documents proposed to be filed,
which documents (other than any document that is incorporated or deemed to be incorporated by
reference therein) will be subject to the review (but not approval) of such Investors; provided
that, the failure of any Investor or his, her or its counsel to respond to such proposed documents
within two Trading Days after the Investors have been so furnished with copies of such documents
shall be deemed approval of same; and provided, further, that no such review and comment shall
inhibit the Company from filing the Registration Statement, any Prospectus or any such amendment or
supplement within five Business Days after such notice has been provided or otherwise from
complying with its obligations hereunder.
(b) (i) Subject to Section 6.1(c), prepare and file with the SEC such amendments,
including post-effective amendments, to each Registration Statement and the Prospectus used in
connection therewith as may be necessary to keep the Registration Statement continuously effective,
as to the applicable Registrable Securities for the Effectiveness Period and prepare and file with
the SEC such additional Registration Statements in order to register for resale under the
Securities Act all of the Registrable Securities; (ii) cause the related Prospectus to be amended
or supplemented by any required Prospectus supplement, and as so supplemented or amended to be
filed pursuant to Rule 424; (iii) respond as promptly as reasonably possible to any comments
received from the SEC with respect to the Registration Statement or any amendment thereto; and (iv)
comply in all material respects with the provisions of the Securities Act and the Exchange Act with
respect to the disposition of all Registrable Securities covered by the Registration Statement
during the applicable period in accordance with the intended methods of disposition by the
Investors and the Agent thereof set forth in the Registration Statement as so amended or in such
Prospectus as so supplemented.
(c) During the Effectiveness Period, notify the Investors and the Agent as promptly as
reasonably possible, and if requested by the Investors and the Agent confirm such notice in writing
no later than two Trading Days thereafter, of any of the following events: (i) the SEC notifies
the Company whether there will be a “review” of any Registration Statement; (ii) the SEC comments
in writing on any Registration Statement; (iii) any Registration Statement or any post-effective
amendment is declared effective; (iv) the SEC or any other federal or state governmental authority
requests any amendment or supplement to any Registration Statement or Prospectus or requests
additional information related thereto; (v) the SEC issues any stop order suspending the
effectiveness of any Registration Statement or initiates any Proceedings for that purpose; (vi) the
Company receives notice of any suspension of the qualification or exemption from qualification of
any Registrable Securities for sale in any jurisdiction, or the initiation or threat of any
Proceeding for such purpose; or (vii) the financial statements included in any Registration
Statement become ineligible for inclusion therein or any Registration Statement or Prospectus or
other document contains any untrue statement of a material fact or omits to state any material fact
required to be stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
(d) Use its reasonable best efforts to avoid the issuance of or, if issued, obtain the
withdrawal of (i) any order suspending the effectiveness of any Registration Statement, or
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(ii) any suspension of the qualification (or exemption from qualification) of any of the
Registrable Securities for sale in any jurisdiction, as soon as possible.
(e) Prior to any public offering of Registrable Securities, use reasonable best efforts to
register or qualify or cooperate with the selling Investors in connection with the registration or
qualification (or exemption from such registration or qualification) of such Registrable Securities
for offer and sale under the securities or Blue Sky laws of such jurisdictions within the United
States as any Investor requests in writing, to keep each such registration or qualification (or
exemption therefrom) effective for so long as required, but not to exceed the duration of the
Effectiveness Period, and to do any and all other acts or things reasonably necessary or advisable
to enable the disposition in such jurisdictions of the Registrable Securities covered by a
Registration Statement; provided, however, that the Company shall not be obligated
to file any general consent to service of process or to qualify as a foreign corporation or as a
dealer in securities in any jurisdiction in which it is not so qualified or to subject itself to
taxation in respect of doing business in any jurisdiction in which it is not otherwise so subject
or provide any undertaking that causes the Company undue expense or burden.
(f) Upon any sale of Registrable Securities pursuant to the Registration Statement for the
account of an Investor, cooperate with the Investors to facilitate the timely preparation and
delivery of certificates representing such Registrable Securities to be delivered to a transferee
pursuant to a Registration Statement, which certificates shall be free, to the extent permitted by
this Agreement and under law, of all restrictive legends, and to enable such certificates to be in
such denominations and registered in such names as any such Investors may reasonably request;
provided, that, the delivery of such certificates shall be subject to the payment by the Investor
of any transfer taxes, if applicable.
(g) The Company, as promptly as reasonably possible, shall prepare a supplement or amendment,
including a post-effective amendment, to the Registration Statement or a supplement to the related
Prospectus or any document incorporated or deemed to be incorporated therein by reference, and file
any other required document so that, as thereafter delivered, neither the Registration Statement
nor such Prospectus will contain an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
(h) Comply in all material respects with all rules and regulations of the SEC with respect to
the Registration Statement and the disposition of all Registrable Securities covered by the
Registration Statement.
(i) It shall be a condition precedent to the obligations of the Company to complete the
registration pursuant to this Agreement with respect to the Registrable Securities of any
particular Investor that such Investor furnish to the Company the information specified in
Exhibits X-0, X-0 and B-3 hereto and such other information regarding
itself, the Registrable Securities and other shares of Common Stock held by it and the intended
method of disposition of the Registrable Securities held by it (if different from the Plan of
Distribution set forth on Exhibit C hereto) as shall be reasonably required to effect the
registration of such Registrable Securities and shall complete and execute such documents in
connection with such registration as the Company may reasonably request. Upon the Company’s
reasonable written request, an
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Investor will promptly notify the Company of any changes in the information set forth in the
Registration Statement or the Registration Statement Questionnaire regarding such Investor or its
plan of distribution or other information as the Company may reasonably request in connection with
any registration referred to in Article VI. The Company shall not be required to include any
Common Shares or Warrant Shares held by an Investor in the Registration Statement if such Investor
fails to complete or update the Registration Statement Questionnaire or provide the information
requested in the Registration Statement Questionnaire in accordance with this Section
6.2(i).
(j) The Company shall use reasonable best efforts to comply with all applicable rules and
regulations of the SEC under the Securities Act and the Exchange Act, including, without
limitation, Rule 172 under the Securities Act, file any final Prospectus, including any supplement
or amendment thereof, with the SEC pursuant to Rule 424 under the Securities Act, promptly inform
the Investors and the Agent in writing if, at any time during the Effectiveness Period, the Company
does not satisfy the conditions specified in Rule 172(c) and, as a result thereof, the Investors
and the Agent are required to deliver a Prospectus in connection with any disposition of
Registrable Securities and take such other actions as may be reasonably necessary to facilitate the
registration of the Registrable Securities hereunder.
6.3 Registration Expenses. The Company shall pay all fees and expenses incident to
the performance of or compliance with Article VI of this Agreement by the Company, including
without limitation (a) all registration and filing fees and expenses, including without limitation
those related to filings with the SEC, any Trading Market and in connection with applicable state
securities or Blue Sky laws, (b) printing expenses (including without limitation expenses of
printing certificates for Registrable Securities), (c) messenger, telephone and delivery expenses,
(d) fees and disbursements of counsel for the Company, (e) fees and expenses of all other Persons
retained by the Company in connection with the consummation of the transactions contemplated by
this Agreement, and (f) all listing fees to be paid by the Company to the Trading Market.
6.4 Indemnification
(a) Indemnification by the Company. The Company shall, notwithstanding any
termination of this Agreement, indemnify and hold harmless each Investor, the officers, directors,
partners, members, agents and employees of each of them, each Person who controls any such Investor
(within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act) and the
officers, directors, partners, members, agents and employees of each such controlling Person, to
the fullest extent permitted by applicable law, from and against any and all Losses (as determined
by a court of competent jurisdiction in a final judgment not subject to appeal or review), as
incurred, arising out of or relating to (i) any misrepresentation or breach of any representation
or warranty made by the Company in the Transaction Documents or any other certificate, instrument
or document contemplated hereby or thereby, (ii) any breach of any covenant, agreement or
obligation of the Company contained in the Transaction Documents or any other certificate,
instrument or document contemplated hereby or thereby or (iii) any untrue statement of a material
fact contained in the Registration Statement, any Prospectus or any form of prospectus or in any
amendment or supplement thereto, or arising out of or relating to any omission of a material fact
required to be stated therein or necessary to make the statements
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therein (in the case of any Prospectus or form of prospectus or supplement thereto, in light
of the circumstances under which they were made) not misleading; provided however that the Company
will not be liable in any such case to the extent that (A) such untrue statements or omissions are
based solely upon information regarding such Investor furnished in writing to the Company by such
Investor for use therein, or to the extent that such information relates to such Investor or such
Investor’s proposed method of distribution of Registrable Securities and was reviewed and expressly
approved by such Investor in writing expressly for use in the Registration Statement (including
without limitation the information set forth in the Registration Statement Questionnaire), (B) the
failure of the Investor to comply with the covenants and agreements contained in Section
4.9 or 6.2(j) of this Agreement with respect to resale of Registrable Securities, or
(C) with respect to any prospectus, an untrue statement or omission of material fact contained in
such prospectus that was corrected on a timely basis in the prospectus, as then amended or
supplemented, if such corrected prospectus was timely made available by the Company to the
Investor, and the Investor seeking indemnity hereunder was advised in writing not to use the
incorrect prospectus prior to the use giving rise to Losses.
(b) Indemnification by Investors. Each Investor shall, severally and not jointly,
indemnify and hold harmless the Company and its directors and officers, and each Person, if any,
that controlled the Company within the meaning of Section 15 of the Securities Act or Section 20 of
the Exchange Act, to the fullest extent permitted by applicable law, from and against all Losses
(as determined by a court of competent jurisdiction in a final judgment not subject to appeal or
review), as incurred, arising out of or relating to any untrue statement of a material fact
contained in the Registration Statement, any Prospectus, or any form of prospectus, or in any
amendment or supplement thereto, or arising out of or relating to any omission of a material fact
required to be stated therein or necessary to make the statements therein (in the case of any
Prospectus or form of prospectus or supplement thereto, in light of the circumstances under which
they were made) not misleading, but only to the extent that such untrue statements or omissions
are based solely upon information regarding such Investor furnished in writing to the Company by
such Investor for use therein. In no event shall the liability of any selling Investor hereunder
be greater in amount than the dollar amount of the net proceeds received by such Investor upon the
sale of the Registrable Securities giving rise to such indemnification obligation.
(c) Conduct of Indemnification Proceedings. If any Proceeding shall be brought or
asserted against any Person entitled to indemnity hereunder (an “Indemnified Party”), such
Indemnified Party shall promptly notify the Person from whom indemnity is sought (the “Indemnifying
Party”) in writing, and the Indemnifying Party shall assume the defense thereof, including the
employment of counsel reasonably satisfactory to the Indemnified Party and the payment of all fees
and expenses incurred in connection with defense thereof; provided, that the failure of any
Indemnified Party to give such notice shall not relieve the Indemnifying Party of its obligations
or liabilities pursuant to this Agreement, except (and only) to the extent that it shall be finally
determined by a court of competent jurisdiction (which determination is not subject to appeal or
further review) that such failure shall have proximately and materially adversely prejudiced the
Indemnifying Party.
An Indemnified Party shall have the right to employ separate counsel in any such Proceeding
and to participate in the defense thereof, but the fees and expenses of such counsel
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shall be at the expense of such Indemnified Party or Parties unless: (i) the Indemnifying
Party has agreed in writing to pay such fees and expenses; or (ii) the Indemnifying Party shall
have failed promptly to assume the defense of such Proceeding and to employ counsel reasonably
satisfactory to such Indemnified Party in any such Proceeding; or (iii) the named parties to any
such Proceeding (including any impleaded parties) include both such Indemnified Party and the
Indemnifying Party, and such Indemnified Party shall have been advised by counsel that a conflict
of interest is likely to exist if the same counsel were to represent such Indemnified Party and the
Indemnifying Party (in which case, if such Indemnified Party notifies the Indemnifying Party in
writing that it elects to employ separate counsel at the expense of the Indemnifying Party, the
Indemnifying Party shall not have the right to assume the defense thereof and the reasonable fees
and expenses of separate counsel shall be at the expense of the Indemnifying Party). It shall be
understood, however, that the Indemnifying Party shall not, in connection with any one such
Proceeding (including separate Proceedings that have been or will be consolidated before a single
judge) be liable for the fees and expenses of more than one separate firm of attorneys at any time
for all Indemnified Parties, which firm shall be appointed by a majority of the Indemnified
Parties. The Indemnifying Party shall not be liable for any settlement of any such Proceeding
effected without its written consent, which consent shall not be unreasonably withheld or delayed.
No Indemnifying Party shall, without the prior written consent of the Indemnified Party, effect any
settlement of any pending Proceeding in respect of which any Indemnified Party is a party, unless
such settlement includes an unconditional release of such Indemnified Party from all liability on
claims that are the subject matter of such Proceeding.
All reasonable fees and expenses of the Indemnified Party (including reasonable fees and
expenses to the extent incurred in connection with investigating or preparing to defend such
Proceeding in a manner not inconsistent with this Section 6.4) shall be paid to the
Indemnified Party, as incurred, within 20 Trading Days of written notice thereof to the
Indemnifying Party (regardless of whether it is ultimately determined that an Indemnified Party is
not entitled to indemnification hereunder; provided, that the Indemnifying Party may require such
Indemnified Party to undertake to reimburse all such fees and expenses to the extent it is finally
judicially determined that such Indemnified Party is not entitled to indemnification hereunder).
(d) Contribution. If a claim for indemnification under Section 6.4(a) or
(b) is unavailable to an Indemnified Party (by reason of public policy or otherwise), then
each Indemnifying Party, in lieu of indemnifying such Indemnified Party, shall contribute to the
amount paid or payable by such Indemnified Party as a result of such Losses, in such proportion as
is appropriate to reflect the relative fault of the Indemnifying Party and Indemnified Party in
connection with the actions, statements or omissions that resulted in such Losses as well as any
other relevant equitable considerations. The relative fault of such Indemnifying Party and
Indemnified Party shall be determined by reference to, among other things, whether any action in
question, including any untrue statement of a material fact or omission of a material fact, has
been taken or made by, or relates to information supplied by, such Indemnifying Party or
Indemnified Party, and the parties’ relative intent, knowledge, access to information and
opportunity to correct or prevent such action, statement or omission. The amount paid or payable
by a party as a result of any Losses shall be deemed to include, subject to the limitations set
forth in Section 6.4(c), any reasonable attorneys’ or other reasonable fees or expenses
incurred by such party in connection with any Proceeding to the extent such party would have
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been indemnified for such fees or expenses if the indemnification provided for in this
Section 6.4 was available to such party in accordance with its terms.
The parties hereto agree that it would not be just and equitable if contribution pursuant to
this Section 6.4(d) were determined by pro rata allocation or by any other method of
allocation that does not take into account the equitable considerations referred to in the
immediately preceding paragraph. Notwithstanding the provisions of this Section 6.4(d), no
Investor shall be required to contribute, in the aggregate, any amount in excess of the amount by
which the net proceeds actually received by such Investor from the sale of the Registrable
Securities subject to the Proceeding exceed the amount of any damages that such Investor has
otherwise been required to pay by reason of such untrue statement or omission. No Person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be
entitled to contribution from any Person who was not guilty of such fraudulent misrepresentation.
The indemnity and contribution agreements contained in this Section 6.4 are in
addition to any liability that the Indemnifying Parties may have to the Indemnified Parties.
6.5 Dispositions. Each Investor agrees that it will comply with the prospectus
delivery requirements of the Securities Act as applicable to it in connection with sales of
Registrable Securities pursuant to the Registration Statement and shall sell its Registrable
Securities in accordance with the Plan of Distribution set forth in the Prospectus. Each Investor
further agrees that, upon receipt of a notice from the Company of the occurrence of any event of
the kind described in Sections 6.2(c)(v), (vi) or (vii), such Investor will
discontinue disposition of such Registrable Securities under the Registration Statement until such
Investor is advised in writing by the Company that the use of the Prospectus, or amended
Prospectus, as applicable, may be resumed. The Company may provide appropriate stop orders to
enforce the provisions of this paragraph. Each Investor, severally and not jointly with the other
Investors, agrees that the removal of the restrictive legend from certificates representing
Securities as set forth in Section 4.1 is predicated upon the Company’s reliance that the
Investor will comply with the provisions of this subsection. Both the Company and the Transfer
Agent, and their respective directors, officers, employees and agents, may rely on this subsection.
6.6 Registration of Other Securities. Notwithstanding anything contained herein to
the contrary and for the avoidance of doubt, the parties hereto acknowledge that (a) the Company
has granted registration rights to other security holders, and (b) any Registration Statement
prepared, filed and made effective under this Article VI may also cover the resale of securities
held by such security holders to the extent that the Company has an obligation to register such
securities under any of the agreements listed in the SEC Reports.
6.7 Withdrawal of Registration Statement. After the termination of the Effectiveness
Period, the Company shall be entitled to withdraw the Registration Statement, and the Investors
shall have no further right to offer or sell any of the Registrable Securities pursuant to the
Registration Statement.
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ARTICLE VII
MISCELLANEOUS
MISCELLANEOUS
7.1 Termination. This Agreement may be terminated by the Company or any Investor, by
written notice to the other parties, if the Initial Closing has not been consummated by the third
Trading Day following the date of this Agreement; provided that no such termination will affect the
right of any party to xxx for any breach by the other party (or parties).
7.2 Fees and Expenses. Except as expressly set forth in the Transaction Documents to
the contrary, each party shall pay the fees and expenses of its advisers, counsel, accountants and
other experts, if any, and all other expenses incurred by such party incident to the negotiation,
preparation, execution, delivery and performance of this Agreement. The Company shall be
responsible for the payment of any placement agent’s fees, financial advisory fees, or brokers’
commission (other than for persons engaged by any Investor or its investment advisor) relating to
or arising out of the issuance of the Securities pursuant to this Agreement. The Company shall
pay, and hold each Investor harmless against, any liability, loss or expense (including, without
limitation, reasonable attorney’s fees and out-of-pocket expenses) arising in connection with any
such claim for fees arising out of the issuance of the Securities pursuant to this Agreement. The
Investors shall pay, and hold the Company harmless against, any liability, loss or expense
(including, without limitation, reasonable attorney’s fees and out-of-pocket expenses) arising in
connection with any claim for fees from persons engages by any Investor or their investment
advisors arising out of the issuance of the Securities pursuant to this Agreement. The Company
shall pay all Transfer Agent fees, stamp taxes and other taxes and duties levied in connection with
the sale and issuance of the applicable Securities.
7.3 Entire Agreement. The Transaction Documents, together with the Exhibits thereto,
contain the entire understanding of the parties with respect to the subject matter hereof and
supersede all prior agreements and understandings, oral or written, with respect to such matters,
which the parties acknowledge have been merged into such documents, exhibits and schedules. At or
after each Closing, and without further consideration, the Company will execute and deliver to the
Investors such further documents as may be reasonably requested in order to give practical effect
to the intention of the parties under the Transaction Documents.
7.4 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 or email at the facsimile number or email address specified in this Section 7.4
prior to 6:30 p.m. (Boston time) on a Trading Day, (b) the next Trading Day after the date of
transmission, if such notice or communication is delivered via facsimile or email at the facsimile
number or email address specified in this Section 7.4 on a day that is not a Trading Day or
later than 6:30 p.m. (Boston time) on any Trading Day, (c) the Trading Day following the date of
deposit with a nationally recognized overnight courier service, or (d) upon actual receipt by the
party to whom such notice is required to be given. The addresses, facsimile numbers and email
addresses for such notices and communications are those set forth on the signature pages hereof, or
such other address or facsimile number as may be designated in writing hereafter, in the same
manner, by any such Person.
-31-
7.5 Amendments; Waivers. 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
Investors 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 any party to exercise any right hereunder in any manner impair the exercise of any such
right. Notwithstanding the foregoing, a waiver or consent to depart from the provisions hereof
with respect to a matter that relates exclusively to the rights of Investors under Article
VI may be given by Investors holding at least a majority of the Registrable Securities to which
such waiver or consent relates.
7.6 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.
7.7 Successors and Assigns. This Agreement shall be binding upon and inure to the
benefit of the parties and their successors and permitted assigns. The Company may not assign this
Agreement or any rights or obligations hereunder without the prior written consent of the
Investors. Any Investor may assign its rights under this Agreement to any Person to whom such
Investor assigns or transfers any Securities, provided (i) such transferor agrees in writing with
the transferee or assignee to assign such rights, and a copy of such agreement is furnished to the
Company after such assignment, (ii) the Company is furnished with written notice of (x) the name
and address of such transferee or assignee and (y) the Registrable Securities with respect to which
such registration rights are being transferred or assigned, (iii) following such transfer or
assignment, the further disposition of such securities by the transferee or assignee is restricted
under the Securities Act and applicable state securities laws, (iv) such transferee agrees in
writing to be bound, with respect to the transferred Securities, by the provisions hereof that
apply to the “Investors” and (v) such transfer shall have been made to an “accredited investor” as
that term is defined in Rule 501(a) of Regulation D of the Securities Act and in accordance with
the applicable requirements of this Agreement and with all laws applicable thereto.
7.8 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 that each Indemnified Party
is an intended third party beneficiary of Section 6.4 and (in each case) may enforce the
provisions of such Section directly against the parties with obligations thereunder.
7.9 Governing Law; Venue; Waiver of Jury Trial. THE CORPORATE LAWS OF THE STATE OF
DELAWARE SHALL GOVERN ALL ISSUES CONCERNING THE RELATIVE RIGHTS OF THE COMPANY AND ITS
STOCKHOLDERS. ALL QUESTIONS CONCERNING THE CONSTRUCTION, VALIDITY, ENFORCEMENT AND INTERPRETATION
OF THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
DELAWARE. THE COMPANY AND INVESTORS HEREBY IRREVOCABLY SUBMIT TO THE NON-EXCLUSIVE JURISDICTION OF
THE STATE AND FEDERAL COURTS SITTING IN THE
-32-
STATE OF DELAWARE FOR THE ADJUDICATION OF ANY DISPUTE BROUGHT BY THE COMPANY OR ANY INVESTOR
HEREUNDER, 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 WAIVE, AND AGREE NOT TO ASSERT IN ANY SUIT, ACTION OR PROCEEDING BROUGHT BY THE COMPANY
OR ANY INVESTOR, ANY CLAIM THAT IT IS NOT PERSONALLY SUBJECT TO THE JURISDICTION OF ANY SUCH COURT,
OR THAT SUCH SUIT, ACTION OR PROCEEDING IS IMPROPER. EACH PARTY HEREBY IRREVOCABLY WAIVES PERSONAL
SERVICE OF PROCESS AND CONSENTS TO PROCESS BEING SERVED IN ANY SUCH SUIT, ACTION OR PROCEEDING BY
MAILING A COPY THEREOF 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. THE COMPANY AND INVESTORS HEREBY WAIVE ALL RIGHTS TO A TRIAL BY JURY.
7.10 Survival. The representations and warranties, agreements and covenants contained
herein shall survive the Initial Closing until the date that is one year after the Initial Closing
Date (at which time they shall expire and be of no further force or effect).
7.11 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 email attachment, 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 or email-attached signature page were an original
thereof.
7.12 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.
7.13 Rescission and Withdrawal Right. Notwithstanding anything to the contrary
contained in (and without limiting any similar provisions of) the Transaction Documents, whenever
any Investor exercises a right, election, demand or option owed to such Investor by the Company
under a Transaction Document and the Company does not timely perform its related obligations within
the periods therein provided, then, prior to the performance by the Company of the Company’s
related obligation, such Investor 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.
-33-
7.14 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 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 for any losses in connection therewith. 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.
7.15 Remedies. In addition to being entitled to exercise all rights provided herein
or granted by law, including recovery of damages, each of the Investors and the Company will be
entitled to seek specific performance under the Transaction Documents. The parties agree that
monetary damages may not be adequate compensation for any loss incurred by reason of any breach of
obligations described in the foregoing sentence and hereby agree to waive in any action for
specific performance of any such obligation (other than in connection with any action for a
temporary restraining order) the defense that a remedy at law would be adequate.
7.16 Payment Set Aside. To the extent that the Company makes a payment or payments to
any Investor hereunder or any Investor enforces or exercises its rights hereunder, and such payment
or payments or the proceeds of such enforcement or exercise or any part thereof are subsequently
invalidated, declared to be fraudulent or preferential, set aside, recovered from, disgorged by or
are required to be refunded, repaid or otherwise restored to the Company by a trustee, receiver or
any other person under any law (including, without limitation, any bankruptcy law, state or federal
law, common law or equitable cause of action), then to the extent of any such restoration the
obligation or part thereof originally intended to be satisfied shall be revived and continued in
full force and effect as if such payment had not been made or such enforcement or setoff had not
occurred.
7.17 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 amended to appropriately account for such event.
7.18 Independent Nature of Investors’ Obligations and Rights. The obligations of each
Investor under any Transaction Document are several and not joint with the obligations of any other
Investor, and no Investor shall be responsible in any way for the performance of the obligations of
any other Investor under any Transaction Documents. The decision of each Investor to purchase
Securities 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.
-34-
Nothing contained herein or in any Transaction Document, 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 the Transaction Document. 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 or out of the other
Transaction Documents, and it shall not be necessary for any other Investor to be joined as an
additional party in any Proceeding for such purpose.
[SIGNATURE PAGES TO FOLLOW]
-35-
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.
| ALSERES PHARMACEUTICALS, INC. |
||||
| By: | /s/ Xxxxxxx X. Xxxx Xx. | |||
| Name: | ||||
| Title: | ||||
| Address for Notice: | ||
| 000 Xxxxx Xxxxxx | ||
| Xxxxxxxxx, XX 00000 | ||
| Tel: (000) 000-0000 | ||
| Fax: (000) 000-0000 | ||
| Attn: Chief Executive Officer | ||
| With a copy to: | ||
| Xxxxxx Xxxxxx Xxxxxxxxx Xxxx and Xxxx LLP | ||
| 00 Xxxxx Xxxxxx | ||
| Xxxxxx, Xxxxxxxxxxxxx 00000 | ||
| Tel (000) 000-0000 | ||
| Fax: (000) 000-0000 | ||
| Attn: Xxxxxx Xxxxxxxx, Esq. |
COMPANY SIGNATURE PAGE
Investor Signature Page
By its execution and delivery of this signature page, the undersigned Investor hereby joins in
and agrees to be bound by the terms and conditions of the Securities Purchase Agreement dated as of
January 8, 2009 (the “Purchase Agreement”) by and among Alseres Pharmaceuticals, Inc. and the
Investors (as defined therein), as to the number of shares of Common Stock and Warrants set forth
below, and authorizes this signature page to be attached to the Purchase Agreement or counterparts
thereof.
| Name of Investor: |
||||
| By: | /s/ Xxxxxx Xxxxxx | |||
| Name: | ||||
| Title: | ||||
| Address: | ||||
| Telephone No.: | ||||
| Facsimile No.: | ||||
| Email Address: | ||||
| Number of Shares: | ||||
| Number of Warrants: | ||||
| Aggregate Purchase Price: $ |
Delivery Instructions (if different than above):
c/o:
Address:
Telephone No.:
Address:
Telephone No.:
Facsimile
No.:
Other
Special Instructions:
| Exhibits: | ||
| A Form of Warrant | ||
| B Instruction Sheet for Investors | ||
| C Plan of Distribution |
-2-
Exhibit A-1
FORM OF WARRANT
A-1-1
Exhibit A-2
FORM OF AGENT WARRANT
A-2-1
Exhibit B
INSTRUCTION SHEET FOR INVESTOR
(to be read in conjunction with the entire Securities Purchase Agreement)
| A. | Complete the following items in the Securities Purchase Agreement: |
| 1. | Complete and execute the Investor Signature Page. The Agreement must be executed by an individual authorized to bind the Investor. | ||
| 2. | Exhibit B-1 — Stock Certificate Questionnaire: |
| Provide the information requested by the Stock Certificate Questionnaire; |
| 3. | Exhibit B-2 — Registration Statement Questionnaire: |
| Provide the information requested by the Registration Statement Questionnaire. |
| 4. | Exhibit B-3 — Investor Certificate: |
| Provide the information requested by the Investor Certificate. |
| 5. | Return, via facsimile, the signed Securities Purchase Agreement including the properly completed Exhibits B-1 through B-3, to: |
Facsimile:
Telephone:
Attn:
Telephone:
Attn:
| 6. | After completing instruction number five (5) above, deliver the original signed Securities Purchase Agreement including the properly completed Exhibits B-1 through B-3 to: |
Address:
| B. | Instructions regarding the wire transfer of funds for the purchase of the Securities will be telecopied to the Investor by the Company at a later date. |
B-1
Exhibit B-1
ALSERES PHARMACEUTICALS, INC.
STOCK CERTIFICATE QUESTIONNAIRE
| 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 and warrant certificate(s)). You may use a nominee name if appropriate: |
|||||
2.
|
The relationship between the Investor of the Securities and the Registered Holder listed in response to item 1 above: |
|||||
3.
|
The mailing address, telephone and telecopy number and email address of the Registered Holder listed in response to item 1 above: |
|||||
4.
|
The Tax Identification Number of the Registered Holder listed in response to item 1 above: |
|||||
X-0-0
Xxxxxxx X-0
ALSERES PHARMACEUTICALS, INC.
REGISTRATION STATEMENT QUESTIONNAIRE
In connection with the Registration Statement, please provide us with the following
information regarding the Investor.
| 1. | Please state your organization’s name exactly as it should appear in the Registration Statement: | |
| 2. | Address of your organization: |
| Telephone: |
|||
| Fax: |
|||
| Contact Person: |
| 3. | Beneficial Ownership of Registrable Securities: |
| (a) | Number of Registrable Securities owned by you: | ||
| (b) | Number of Registrable Securities requested to be registered: |
| 4. | Have you or your organization had any position, office or other material relationship within the past three years with the Company or its affiliates? (Include any relationships involving you or any of your affiliates, officers, directors, or principal equity holders (5% or more) that has held any position or office or has had any other material relationship with the Company (or its predecessors or affiliates) during the past three years.) |
Yes No
| If yes, please indicate the nature of any such relationship below: |
B-2-1
| 5. | Are you the beneficial or registered owner of any other securities of the Company? (Include any equity securities that you beneficially own or have a right to acquire within 60 days after the date hereof, and as to which you have sole voting power, shared voting power, sole investment power or shared investment power.) |
Yes No
| If yes, please describe the nature and amount of such ownership as of a recent date. | ||
| 6. | Except as set forth below, you wish that all the shares of the Company’s common stock beneficially owned by you or that you have the right to acquire from the Company be offered for your account in the Registration Statement. | |
| State any exceptions here: | ||
| 7. | Do you intend to distribute the Registrable Securities in accordance with the “Plan of Distribution” section set forth in the Registration Statement? |
Yes No
| If yes, please describe the nature and amount of such arrangements. |
| 8. | Selling Stockholder Affiliations |
(a) Is the Selling Stockholder a registered broker-dealer?
(b) Is the Selling Stockholder an affiliate of a registered broker-dealer(s)? (For purposes
of this response, an “affiliate” of, or person “affiliated ” with, a specified person, is a person
that directly, or indirectly through one or more intermediaries, controls or is controlled by, or
is under common control with, the person specified.)
(c) If the answer to Item (8)(b) is yes, identify the registered broker-dealer(s) and describe
the nature of the affiliation(s):
(d) If the answer to Item (6)(b) is yes, did you acquire the Registrable Securities in the
ordinary course of business (if not, please explain)?
(e) If the answer to Item (8)(b) is yes, did you, at the time of purchase of the Registrable
Securities, have any agreements, plans or understandings, directly or indirectly, with any person
to distribute the Registrable Securities (if yes, please explain)?
B-2-2
ACKNOWLEDGEMENT
The undersigned hereby agrees to notify the Company promptly of any changes in the foregoing
information which should be made as a result of any developments, including the passage of time.
The undersigned also agrees to provide the Company and the Company’s counsel any and all such
further information regarding the undersigned promptly upon request in connection with the
preparation, filing, amending, and supplementing of the Registration Statement (or any prospectus
contained therein). The undersigned hereby consents to the use of all such information in the
Registration Statement.
The undersigned understands and acknowledges that the Company will rely on the information set
forth herein for purposes of the preparation and filing of the Registration Statement.
The undersigned understands that the undersigned may be subject to serious civil and criminal
liabilities if the Registration Statement, when it becomes effective, either contains an untrue
statement of a material fact or omits to state a material fact required to be stated in the
Registration Statement or necessary to make the statements in the Registration Statement not
misleading. The undersigned represents and warrants that all information it provides to the
Company and its counsel is currently accurate and complete and will be accurate and complete at the
time the Registration Statement becomes effective and at all times subsequent thereto, and agrees
during the Effectiveness Period and any additional period in which the undersigned is making sales
of Shares under and pursuant to the Registration Statement, and agrees during such periods to
notify the Company immediately of any misstatement of a material fact in the Registration
Statement, and of the omission of any material fact necessary to make the statements contained
therein, in light of the circumstances under which they were made, not misleading.
Pursuant to Section 6.1 of the Agreement, the undersigned acknowledges that the Company may,
by written notice to the undersigned, suspend or withdraw the Registration Statement and require
that the undersigned immediately cease sales of Registrable Securities pursuant to the Registration
Statement under certain circumstances described in the Agreement. At any time that such notice has
been given, the undersigned may not sell Registrable Securities pursuant to the Registration
Statement.
The undersigned hereby acknowledges receipt of a draft of the Registration Statement dated
___, ___and confirms that the undersigned has reviewed such draft including,
without limitation, the sections captioned “Selling Stockholders” and “Plan of Distribution,” and
confirms that, to the best of the undersigned’s knowledge, the same is true, complete and accurate
in every respect except as indicated in this Questionnaire. The undersigned hereby further
acknowledges that pursuant to Section 6.4(a) of the Agreement, the undersigned shall indemnify the
Company and each of its directors and officers against, and hold the Company and each of its
directors and officers harmless from, any losses, claims, damages, expenses or liabilities
(including reasonable attorneys fees) to which the Company or its directors and officers may become
subject by reason of any statement or omission in the Registration Statement made in reliance upon,
or in conformity with, a written statement by the undersigned, including the information furnished
in this Questionnaire by the undersigned.
1
By signing below, the undersigned consents to the disclosure of the information contained
herein in its answers to Items (1) through (8) above and the inclusion of such information in the
Registration Statement, any amendments thereto and the related prospectus. The undersigned
understands that such information will be relied upon by the Company in connection with the
preparation or amendment of the Registration Statement and the related prospectus.
Dated:
2
Exhibit B-3
ALSERES PHARMACEUTICALS, INC.
CERTIFICATE FOR CORPORATE, PARTNERSHIP, LIMITED LIABILITY
COMPANY, TRUST, FOUNDATION AND JOINT INVESTORS
If the Investor is a corporation, partnership, limited liability company, trust, pension plan,
foundation, joint Investor (other than a married couple) or other entity, an authorized officer,
partner, or trustee must complete, date and sign this Certificate.
CERTIFICATE
The undersigned certifies that the representations and responses below are true and accurate:
(a) The Investor has been duly formed and is validly existing and has full power and authority
to invest in the Company. The person signing on behalf of the undersigned has the authority to
execute and deliver the Securities Purchase Agreement on behalf of the Investor and to take other
actions with respect thereto.
(b) Indicate the form of entity of the undersigned:
Limited Partnership
General Partnership
Limited Liability Company
Corporation
Revocable Trust (identify each grantor and indicate under what circumstances the trust is
revocable by the grantor):
(Continue on a separate piece of paper, if necessary.)
Other type of Trust (indicate type of trust and, for trusts other than pension trusts,
name the grantors and beneficiaries):
(Continue on a separate piece of paper, if necessary.)
Other form of organization (indicate form of organization ( ).
(c) Indicate the approximate date the undersigned entity was formed: .
(d) Indicate name and address of principal place of business:
B-3-1
(e) Was entity formed for the specific purpose of this investment?
Yes No
If answer is yes, each equity owner (shareholder, partner, etc.) of the entity must complete
an Investor Questionnaire for Individual Investors.
(f) Please indicate the amount of the entity’s proposed investment in the Company. $
(g) 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 an investor in 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, which satisfies one of the following criteria: (i) if the investment decision for such plan 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 advisor, (ii) such plan has total assets in excess of $5,000,000 or (iii) if such plan is a self-directed plan, and its investment decisions are made solely by persons who are “accredited investors” within the meaning of Rule 501(a) under the Securities Act; |
B-3-2
| 8. | A private business development company as defined in Section 202(a)(22) of the Investment Advisers Act of 1940; | |
| 9. | Any partnership or corporation or any organization described in Section 501(c)(3) of the Internal Revenue Code, a corporation, a Massachusetts or similar business trust, or partnership, which was not formed for the specific purpose of investing in the Company, and which has total assets in excess of $5,000,000; | |
| 10. | A trust, with total assets in excess of $5,000,000, which was not formed for the specific purpose of investing in the Company and whose investment in the Company directed by a person with such knowledge and experience in financial and business matters that he or she is capable of evaluating the merits and risks of an investment in the Company; | |
| 11. | Any entity in which all of the equity owners are “accredited investors” within the meaning of Rule 501(a) under the Securities Act; | |
| 12. | 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.) |
(h) If the entity has any pre-existing personal or business relationship with the Company
or any of its officers, directors or controlling persons, please describe the nature and duration
of such relationship.
(i) Please provide information detailing the business, financial and investment experience of
the entity and/or the investment manager of such entity which gives such entity or investment
manager the capacity to evaluate the merits and risks of the proposed investment.
Please set forth in the space provided below the (i) states, if any, in the U.S. in which you
maintained your principal office during the past two years and the dates during which you
maintained your office in each state, (ii) state(s), if any, in which you are incorporated or
otherwise organized and (iii) state(s), if any, in which you pay income taxes.
B-3-3
The above information is true and correct in all material respects. The undersigned
recognizes that the Company is relying on the truth and accuracy of such information so that it may
rely on certain exemptions from registration contained in the Securities Act of 1933, as amended,
and the securities laws of certain states. The undersigned agrees to notify the Company promptly
of any changes in the foregoing information which may occur prior to the investment.
Dated: , 2008
Title: |
||||
(Signature and title of authorized officer, partner or trustee) |
B-3-4
Exhibit C
PLAN OF DISTRIBUTION
The selling stockholders may, from time to time, sell any or all of their shares of common
stock on any stock exchange, market or trading facility on which the shares are traded or in
private transactions. These sales may be at fixed or negotiated prices. The selling stockholders
may use any one or more of the following methods when selling shares:
| • | ordinary brokerage transactions and transactions in which the broker-dealer solicits purchasers; | ||
| • | block trades in which the broker-dealer will attempt to sell the shares as agent but may position and resell a portion of the block as principal to facilitate the transaction; | ||
| • | purchases by a broker-dealer as principal and resale by the broker-dealer for its account; | ||
| • | an exchange distribution in accordance with the rules of the applicable exchange; | ||
| • | privately negotiated transactions; | ||
| • | short sales; | ||
| • | broker-dealers may agree with the selling stockholders to sell a specified number of such shares at a stipulated price per share; | ||
| • | a combination of any such methods of sale; and | ||
| • | any other method permitted pursuant to applicable law. |
The selling stockholders may also sell shares under Rule 144 under the Securities Act, if
available, rather than under this prospectus.
Broker-dealers engaged by the selling stockholders may arrange for other brokers-dealers to
participate in sales. Broker-dealers may receive commissions or discounts from the selling
stockholders (or, if any broker-dealer acts as agent for the purchaser of shares, from the
purchaser) in amounts to be negotiated. The selling stockholders do not expect these commissions
and discounts to exceed what is customary in the types of transactions involved. Any profits on
the resale of shares of common stock by a broker-dealer acting as principal might be deemed to be
underwriting discounts or commissions under the Securities Act. Discounts, concessions,
commissions and similar selling expenses, if any, attributable to the sale of shares will be borne
by a selling stockholder. The selling stockholders may agree to indemnify any agent, dealer or
broker-dealer that participates in transactions involving sales of the shares if liabilities are
imposed on that person under the Securities Act.
C-1
The selling stockholders may from time to time pledge or grant a security interest in some or
all of the shares of common stock owned by them and, if they default in the performance of their
secured obligations, the pledgees or secured parties may offer and sell the shares of common stock
from time to time under this prospectus after we have filed a supplement to this prospectus under
Rule 424(b)(3) or other applicable provision of the Securities Act of 1933 supplementing or
amending the list of selling stockholders to include the pledgee, transferee or other successors in
interest as selling stockholders under this prospectus.
The selling stockholders also may transfer the shares of common stock in other circumstances,
in which case the transferees, pledgees or other successors in interest will be the selling
beneficial owners for purposes of this prospectus and may sell the shares of common stock from time
to time under this prospectus after we have filed a supplement to this prospectus under Rule
424(b)(3) or other applicable provision of the Securities Act of 1933 supplementing or amending the
list of selling stockholders to include the pledgee, transferee or other successors in interest as
selling stockholders under this prospectus.
The selling stockholders and any broker-dealers or agents that are involved in selling the
shares of common stock may be deemed to be “underwriters” within the meaning of the Securities Act
in connection with such sales. In such event, any commissions received by such broker-dealers or
agents and any profit on the resale of the shares of common stock purchased by them may be deemed
to be underwriting commissions or discounts under the Securities Act.
We are required to pay all fees and expenses incident to the registration of the shares of
common stock. We have agreed to indemnify the selling stockholders against certain losses, claims,
damages and liabilities, including liabilities under the Securities Act.
The selling stockholders have advised us that they have not entered into any agreements,
understandings or arrangements with any underwriters or broker-dealers regarding the sale of their
shares of common stock, nor is there an underwriter or coordinating broker acting in connection
with a proposed sale of shares of common stock by any selling stockholder. If we are notified by
any selling stockholder that any material arrangement has been entered into with a broker-dealer
for the sale of shares of common stock, if required, we will file a supplement to this prospectus.
If the selling stockholders use this prospectus for any sale of the shares of common stock, they
will be subject to the prospectus delivery requirements of the Securities Act.
The anti-manipulation rules of Regulation M under the Securities Exchange Act of 1934 may
apply to sales of our common stock and activities of the selling stockholders.
C-2
ANNEX I
SCHEDULE OF INVESTORS
SCHEDULE OF INVESTORS
ANNEX II
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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”), OR ANY APPLICABLE STATE SECURITIES LAWS AND, ACCORDINGLY, MAY NOT BE OFFERED,
SOLD, TRANSFERRED, ASSIGNED, PLEDGED OR HYPOTHECATED 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 COMPLIANCE WITH APPLICABLE STATE SECURITIES LAWS OR BLUE
SKY LAWS. THESE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN
ACCOUNT WITH A REGISTERED BROKER-DEALER OR OTHER LOAN WITH A FINANCIAL INSTITUTION
THAT IS AN “ACCREDITED INVESTOR” AS DEFINED IN RULE 501(a) UNDER THE SECURITIES ACT
OR OTHER LOAN SECURED BY SUCH SECURITIES.
