EXCHANGE AGREEMENT
Exhibit 10.1
THIS
EXCHANGE AGREEMENT (the “Agreement”), effective as
October ____, 2017, is
made by and between MabVax Therapeutics Holdings, Inc., a Delaware
corporation (“Company”), and the holder of Exchange
Securities (as defined herein) signatory hereto (the
“Holder”).
WHEREAS, the Holder
owns shares of the Company’s Series ________1 Convertible Preferred Stock as set forth
on column 1 on Schedule A, annexed hereto (the “Exchange
Securities”);
WHEREAS, the
Company wishes to issue the Series L Preferred Shares (as such term
is defined below) for the Exchange Securities as provided
herein; and
WHEREAS, the
Company has authorized a new series of convertible preferred stock
of the Company designated as Series L Convertible Preferred Stock,
$0.01 par value, the terms of which are set forth in the
Certificate of Designation of Preferences, Rights and Limitations
of 0% Series L Convertible Preferred Stock (the “Certificate
of Designations”) in the form attached hereto as Exhibit A (together with any
convertible preferred shares issued in replacement thereof in
accordance with the terms thereof, the “Series L Preferred
Shares”), which Series L Preferred Shares shall be
convertible into Common Stock, in accordance with the terms of the
Certificate of Designations;
WHEREAS, subject to
the terms and conditions set forth in this Agreement and pursuant
to Section 3(a)(9) of the Securities Act of 1933, as amended (the
“Securities Act”), the Company desires to exchange with
the Holder, and the Holder desires to exchange with the Company,
the Exchange Securities for the Series L Preferred Shares (the
“Exchange”).
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 Holder agree as follows:
1. Terms of the Exchange. The
Company and Holder agree that (i) the Holder will exchange the
Exchange Securities and will relinquish any and all other rights it
may have under the Exchange Securities in exchange for such number
of Series L Preferred Shares as set forth in column 2 on
Schedule A, annexed
hereto.
2. Closing. Upon satisfaction of
the conditions set forth herein, a closing shall occur at the
principal offices of the Company, or such other location as the
parties shall mutually agree (the “Closing”). At
Closing, Holder shall surrender the Exchange Securities and the
Company shall deliver to Holder the Series L Preferred Shares, in
such amounts as are set forth on Schedule A. Upon Closing, any
and all obligations of the Company to Holder under the Exchange
Securities shall be fully satisfied and Holder will have no
remaining rights, powers, privileges, remedies or interests under
the Exchange Securities.
3. Further Assurances. Each party
shall do and perform, or cause to be done and performed, all such
further acts and things, and shall execute and deliver all such
other agreements, certificates, instruments and documents, as any
other party may reasonably request in order to carry out the intent
and accomplish the purposes of this Agreement and the consummation
of the transactions contemplated hereby.
4. Representations and Warranties of the
Holder. The Holder represents and warrants as of the date
hereof and as of the closing to the Company as
follows:
a. Authorization; Enforcement. The
Holder has the requisite corporate power and authority to enter
into and to consummate the transactions contemplated by this
Agreement, and otherwise to carry out its obligations hereunder and
thereunder. The execution and delivery of the Agreement by the
Holder and the consummation by it of the transactions contemplated
hereby and thereby have been duly authorized by all necessary
action on the part of the Holder and no further action is required
by the Holder. This Agreement has been (or upon delivery will have
been) duly executed by the Holder and, when delivered in accordance
with the terms hereof, will constitute the valid and binding
obligation of the Holder enforceable against the Holder 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. Tax Advisors. The Holder has
reviewed with its own tax advisors the U.S. federal, state, local
and foreign tax consequences of this investment and the
transactions contemplated by this Agreement. With respect to such
matters, the Holder relies solely on such advisors and not on any
statements or representations of the Company or any of its agents,
written or oral. The Holder understands that it (and not the
Company) shall be responsible for its own tax liability that may
arise as a result of this investment or the transactions
contemplated by this Agreement.
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c. Information Regarding Holder.
Holder is an “accredited investor”, as such term is
defined in Rule 501 of Regulation D promulgated by the United
States Securities and Exchange Commission (the
“Commission”) under the Securities Act, is experienced
in investments and business matters, has made investments of a
speculative nature and has purchased securities of companies in
private placements in the past and, with its representatives, has
such knowledge and experience in financial, tax and other business
matters as to enable the Holder to utilize the information made
available by the Company to evaluate the merits and risks of and to
make an informed investment decision with respect to the proposed
purchase, which represents a speculative investment. Holder has the
authority and is duly and legally qualified to purchase and own the
Securities (as defined below). Holder is able to bear the risk of
such investment for an indefinite period and to afford a complete
loss thereof.
d. Legend. The Holder understands
that the Series L Preferred Shares and the shares of Common Stock
issuable upon conversion of the Series L Preferred Shares (the
“Conversion Shares” and, together with the Series L
Preferred Shares, the “Securities”) when issued, shall
be issued, pursuant to an exemption from registration or
qualification under the Securities Act and applicable state
securities laws, and except as set forth below, the Securities
shall bear any legend as required by the “blue sky”
laws of any state and a restrictive legend in substantially the
following form (and a stop-transfer order may be placed against
transfer of such stock certificates):
THE
SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE
SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD,
TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE
REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT
OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL TO THE HOLDER (IF
REQUESTED BY THE COMPANY), IN A FORM REASONABLY ACCEPTABLE TO THE
COMPANY, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II)
UNLESS SOLD OR ELIGIBLE TO BE SOLD PURSUANT TO RULE 144 OR RULE
144A UNDER SAID ACT. NOTWITHSTANDING THE FOREGOING, THE SECURITIES
MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR
OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE
SECURITIES.
e. Removal of Legends.
Certificates evidencing the Securities shall not be required to
contain the legend set forth in Section 4(d) above or any
other legend (i) while a registration statement covering the resale
of such Securities is effective under the Securities Act, (ii)
following any sale of such Shares pursuant to Rule 144 (as defined
herein) (assuming the transferor is not an affiliate of the
Company), (iii) if such Shares are eligible to be sold, assigned or
transferred under Rule 144 and the Holder is not an affiliate of
the Company (provided that the Holder provides the Company with
reasonable assurances that such Shares are eligible for sale,
assignment or transfer under Rule 144 which shall not include an
opinion of the Holder’s counsel), (iv) in connection with a
sale, assignment or other transfer (other than under Rule 144),
provided that the Holder provides the Company with an opinion of
counsel to the Holder, in a generally acceptable form, to the
effect that such sale, assignment or transfer of the Securities may
be made without registration under the applicable requirements of
the Securities Act or (v) if such legend is not required under
applicable requirements of the Securities Act (including, without
limitation, controlling judicial interpretations and pronouncements
issued by the Commission). If a legend is not required pursuant to
the foregoing, the Company shall no later than three (3) business
days following the delivery by the Holder to the Company or the
transfer agent (with notice to the Company) of a legended
certificate representing such Shares (endorsed or with stock powers
attached, signatures guaranteed, and otherwise in form necessary to
affect the reissuance and/or transfer, if applicable), together
with any other deliveries from the Holder as may be required above
in this Section 4(e), as directed by the Holder, either: (A)
provided that the Company’s transfer agent is participating
in the DTC Fast Automated Securities Transfer Program, credit the
aggregate number of shares of Common Stock to which the Holder
shall be entitled to the Holder’s or its designee’s
balance account with DTC through its Deposit/Withdrawal at
Custodian system or (B) if the Company’s transfer agent is
not participating in the DTC Fast Automated Securities Transfer
Program, issue and deliver (via reputable overnight courier) to the
Holder, a certificate representing such Shares that is free from
all restrictive and other legends, registered in the name of the
Holder or its designee. The Company shall be responsible for any
transfer agent fees or DTC fees with respect to any issuance of
Shares or the removal of any legends with respect to any Shares in
accordance herewith, including, but not limited to, fees for the
opinions of counsel rendered to the transfer agent in connection
with the removal of any legends.
f. Restricted Securities. The
Holder understands that: (i) the Securities have not been and are
not being registered under the Securities Act or any state
securities laws, and may not be offered for sale, sold, assigned or
transferred unless (A) subsequently registered thereunder, (B) the
Holder shall have delivered to the Company (if requested by the
Company) an opinion of counsel to the Holder, in a form reasonably
acceptable to the Company, to the effect that such Shares to be
sold, assigned or transferred may be sold, assigned or transferred
pursuant to an exemption from such registration, or (C) the Holder
provides the Company with reasonable assurance that such Shares can
be sold, assigned or transferred pursuant to Rule 144 or Rule 144A
promulgated under the Securities Act (or a successor rule thereto)
(collectively, “Rule 144”); (ii) any sale of the
Securities made in reliance on Rule 144 may be made only in
accordance with the terms of Rule 144, and further, if Rule 144 is
not applicable, any resale of the Securities under circumstances in
which the seller (or the Person through whom the sale is made) may
be deemed to be an underwriter (as that term is defined in the
Securities Act) may require compliance with some other exemption
under the Securities Act or the rules and regulations of the
Commission promulgated thereunder; and (iii) neither the Company
nor any other Person is under any obligation to register the
Securities under the Securities Act or any state securities laws or
to comply with the terms and conditions of any exemption thereunder
except as set forth herein.
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5. Representations and Warranties of the
Company. The Company hereby makes the following
representations and warranties to the Holder:
a. Authorization; Enforcement. The
Company has the requisite corporate power and authority to enter
into and to consummate the transactions contemplated by this
Agreement and each of the other agreements entered into by the
parties hereto in connection with the transactions contemplated by
this Agreement (collectively, the “Exchange Documents”)
and otherwise to carry out its obligations hereunder and
thereunder. The execution and delivery of this Agreement
by the Company and the consummation by it of the transactions
contemplated hereby and thereby have been duly authorized by all
necessary action on the part of the Company and no further action
is required by the Company, the Board of Directors of the Company
or the Company’s stockholders in connection therewith,
including, without limitation, the issuance of the Securities, and
no further filing, consent, or authorization is required by the
Company, its Board of Directors or its stockholders, subject to
acceptance by the Nasdaq Capital Market of the LAS. This
Agreement and any Other Agreement (as defined herein) have been (or
upon delivery will have been) duly executed by the Company and,
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.
b. Organization and Qualification.
Each of the Company and its subsidiaries (the
“Subsidiaries”) are entities duly organized and validly
existing and in good standing under the laws of the jurisdiction in
which they are formed, and have the requisite power and
authorization to own their properties and to carry on their
business as now being conducted and as presently proposed to be
conducted. Each of the Company and each of its Subsidiaries is duly
qualified as a foreign entity to do business and is in good
standing in every jurisdiction in which its ownership of property
or the nature of the business conducted by it makes such
qualification necessary, except to the extent that the failure to
be so qualified or be in good standing would not have a Material
Adverse Effect. As used in this Agreement, “Material Adverse
Effect” means any material adverse effect on (i) the
business, properties, assets, liabilities, operations (including
results thereof), condition (financial or otherwise) or prospects
of the Company or any Subsidiary, individually or taken as a whole,
(ii) the transactions contemplated hereby or in any of the other
Exchange Documents or (iii) the authority or ability of the Company
to perform any of its obligations under any of the Exchange
Documents. Other than its Subsidiaries, there is no Person (as
defined below) in which the Company, directly or indirectly, owns
capital stock or holds an equity or similar interest.
“Person” means an individual, a limited liability
company, a partnership, a joint venture, a corporation, a trust, an
unincorporated organization, any other entity and any governmental
entity or any department or agency thereof.
c. No Conflict. The execution,
delivery and performance of the Exchange Documents by the Company
and the consummation by the Company of the transactions
contemplated hereby and thereby (including, without limitation, the
issuance of the Securities and reservation for issuance of the
Conversion Shares) will not (i) result in a violation of the
Certificate of Incorporation (as defined below) or other
organizational documents of the Company or any of its Subsidiaries,
any capital stock of the Company or any of its Subsidiaries or
Bylaws (as defined below) of the Company or any of its
Subsidiaries, (ii) conflict with, or constitute a default (or an
event which with notice or lapse of time or both would become a
default) under, or give to others any rights of termination,
amendment, acceleration or cancellation of, any agreement,
indenture or instrument to which the Company or any of its
Subsidiaries is a party, or (iii) result in a violation of any law,
rule, regulation, order, judgment or decree (including foreign,
federal and state securities laws and regulations and the rules and
regulations of the Principal Market applicable to the Company
except, in the case of clause (ii) or (iii) above, to the extent
such violations that could not reasonably be expected to have a
Material Adverse Effect.
d. No Consents. Neither the
Company nor any Subsidiary is required to obtain any consent from,
authorization or order of, or make any filing or registration with,
any court, governmental agency or any regulatory or self-regulatory
agency or any other Person in order for it to execute, deliver or
perform any of its respective obligations under or contemplated by
the Exchange Documents, in each case, in accordance with the terms
hereof or thereof. All consents, authorizations, orders, filings
and registrations which the Company or any Subsidiary is required
to obtain pursuant to the preceding sentence have been obtained or
effected on or prior to the date of this Agreement, and neither the
Company nor any of its Subsidiaries is aware of any facts or
circumstances which might prevent the Company or any of its
Subsidiaries from obtaining or effecting any of the registration,
application or filings contemplated by the Exchange Documents.
Except as disclosed in the Company’s filings with the
Commission (the “SEC Documents”), the Company is not in
violation of the requirements of the Principal Market and has no
knowledge of any facts or circumstances which could reasonably lead
to delisting or suspension of the Common Stock in the foreseeable
future. The Company has obtained or submitted all necessary
consents and approvals from the Principal Market, including, if
required, a LAS application covering the listing of the Conversion
Shares with the Principal Market. In the event that the LAS has not
been approved prior to the Closing, the Conversion Shares shall be
subject to all limitations imposed by NASDAQ Listing Rule 5635 (d)
until such time as shareholder approval of the issuance of
Conversion Shares has been obtained.
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e. Securities Law Exemptions.
Assuming the accuracy of the representations and warranties of the
Holder contained herein, the offer and issuance by the Company of
the Securities is exempt from registration under the Securities
Act. The offer and issuance of the Securities is exempt from
registration under the Securities Act pursuant to the exemption
provided by Section 3(a)(9) thereof. The Company covenants and
represents to the Holder that neither the Company nor any of its
Subsidiaries has received, anticipates receiving, has any agreement
to receive or has been given any promise to receive any
consideration from the Holder or any other Person in connection
with the transactions contemplated by the Exchange
Documents.
f. Issuance of Securities. The
issuance of the Series L Preferred Shares is duly authorized and
upon issuance in accordance with the terms of the Exchange
Documents shall be validly issued, fully paid and non-assessable
and free from all taxes, liens, charges and other encumbrances with
respect to the issue thereof. The issuance of the Conversion Shares
is duly authorized and upon issuance in accordance with the terms
of the Exchange Documents and Certificates of Designations shall be
validly issued, fully paid and non-assessable and free from all
taxes, liens, charges and other encumbrances with respect to the
issue thereof.
g. Transfer Taxes. As of the date
of this Agreement, all share transfer or other taxes (other than
income or similar taxes) which are required to be paid in
connection with the issuance of the Series L Preferred Shares to be
exchanged with the Holder hereunder will be, or will have been,
fully paid or provided for by the Company, and all laws imposing
such taxes will be or will have been complied with.
h. Equity Capitalization. Except
as disclosed in the SEC Documents: (i) none of the Company’s
or any Subsidiary’s capital stock is subject to preemptive
rights or any other similar rights or any liens or encumbrances
suffered or permitted by the Company or any Subsidiary; (ii) there
are no outstanding options, warrants, scrip, rights to subscribe
to, calls or commitments of any character whatsoever relating to,
or securities or rights convertible into, or exercisable or
exchangeable for, any capital stock of the Company or any of its
Subsidiaries, or contracts, commitments, understandings or
arrangements by which the Company or any of its Subsidiaries is or
may become bound to issue additional capital stock of the Company
or any of its Subsidiaries or options, warrants, scrip, rights to
subscribe to, calls or commitments of any character whatsoever
relating to, or securities or rights convertible into, or
exercisable or exchangeable for, any capital stock of the Company
or any of its Subsidiaries, other than future potential issuances
of additional shares of Common Stock to Sichenzia Xxxx Xxxxxxx
Xxxxxx LLP for any future financings by the Company at a price per
share less than $0.50, and the potential issuance to a certain lead
investor in the Company’s prior financings of additional
shares of common stock or convertible preferred stock to obtain the
consent of the lead investor to future financings below $2.25 per
share, with such issuance obligations to cease when the investor no
longer owns any Series L Preferred Shares; (iii) there are no
outstanding debt securities, notes, credit agreements, credit
facilities or other agreements, documents or instruments evidencing
indebtedness of the Company
or any of its Subsidiaries or by which the Company or any of its
Subsidiaries is or may become bound, other than that certain loan
and security agreement with Oxford Finance LLC dated January 15,
2016, and equipment leases and equipment financing in the ordinary
course of business; (iv) there are no financing statements securing
obligations in any amounts filed in connection with the Company or
any of its Subsidiaries; (v) there are no agreements or
arrangements under which the Company or any of its Subsidiaries is
obligated to register the sale of any of their securities under the
Securities Act other than various prior issuances of securities
that have not been previously registered; (vi) there are no
outstanding securities or instruments of the Company or any of its
Subsidiaries which contain any redemption or similar provisions,
and there are no contracts, commitments, understandings or
arrangements by which the Company or any of its Subsidiaries is or
may become bound to redeem a security of the Company or any of its
Subsidiaries; (vii) there are no securities or instruments
containing anti-dilution or similar provisions that will be
triggered by the issuance of the Securities; (viii) neither the
Company nor any Subsidiary has any stock appreciation rights or
“phantom stock” plans or agreements or any similar plan
or agreement; and (ix) neither the Company nor any of its
Subsidiaries have any liabilities or obligations required to be
disclosed in the SEC Documents which are not so disclosed in the
SEC Documents, other than those incurred in the ordinary course of
the Company’s or its Subsidiaries’ respective
businesses and which, individually or in the aggregate, do not or
could not have a Material Adverse Effect. The Company has furnished
to the Holder true, correct and complete copies of the
Company’s Certificate of Incorporation, as amended and as in
effect on the date hereof (the “Certificate of
Incorporation”), and the Company’s bylaws, as amended
and as in effect on the date hereof (the “Bylaws”), and
the terms of all securities convertible into, or exercisable or
exchangeable for, shares of Common Stock and the material rights of
the holders thereof in respect thereto that have not been disclosed
in the SEC Documents.
i. Shell Company Status. The
Company is not and has not, for a period of at least two years,
been an issuer identified in Rule 144(i)(1) of the Securities Act.
The Company is, and has been for a period of at least 90 days,
subject to the reporting requirements of Section 13 or Section
15(d) of the Securities Exchange Act of 1934, as amended (the
“Exchange Act”).
j. Non-Affiliate. The Company is
not, and is not an Affiliate of, and immediately after consummation
of the transactions contemplated by the Exchange Documents, will
not be or be an Affiliate of, an “investment company”
within the meaning of the Investment Company Act of 1940, as
amended. The Company shall conduct its business in a manner so that
it will not become an “investment company” subject to
registration under the Investment Company Act of 1940, as
amended.
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6. Additional Agreements of the
Parties. The Company and the Holder agree as
follows:
a. Registration Rights. The
Company shall file a “resale” registration statement
with the Commission covering the Conversion Shares, so that such
shares of common stock will be registered under the Securities Act.
The Company will maintain the effectiveness of the
“resale” registration statement from the effective date
of the registration statement until all Registrable Securities (as
defined in the Registration Rights Agreement, attached hereto as
Exhibit B) covered by such registration statement have been sold,
or may be sold without the requirement to be in compliance with
Rule 144(c)(1) and otherwise without restriction or limitation
pursuant to Rule 144. The Company will use its
reasonable best efforts to have such “resale”
registration statement filed within ten (10) calendar days of the
Closing and declared effective by the Commission as soon as
possible and, in any event, by thirty (30) calendar days of the
Filing Date (the “Effectiveness Date”). The Company is
obligated to pay to the Holder a fee of one (1%) percent per month
of the stated value of the Series L Preferred Shares, payable in
cash, up to a maximum of six (6%) percent, on the Filing Date and
the Effectiveness Date if the registration obligations set forth
herein have not been met, and pro- rata for each month, or partial
month, in excess of the Filing Date and/or
the Effectiveness Date that the registration statement
has not been declared effective; provided, however, that the
Company shall not be obligated to pay any such liquidated damages
if the Company is unable to fulfill its registration obligations as
a result of rules, regulations, positions or releases issued or
actions taken by the Commission pursuant to its authority with
respect to “Rule 415” or other rules, regulations,
positions or releases issued or actions taken by the Commission,
provided the Company registers at such time the maximum number of
shares of Common Stock permissible upon consultation with the staff
of the Commission.
b. Rule 144 Acknowledgments. The
Holder and the Company confirm that the Company has not received
any consideration for the transactions contemplated by this
Agreement. Pursuant to Rule 144 promulgated by the Commission
pursuant to the Securities Act and the rules and regulations
promulgated thereunder as such Rule 144 may be amended from time to
time, or any similar rule or regulation hereafter adopted by the
Commission having substantially the same effect as such Rule 144,
the holding period of the Securities tacks back to
___________.2 The Company agrees not to take a
position contrary to this paragraph and, at Closing, the
Company’s counsel will deliver an opinion attesting to the
acknowledgements contained in Section 5(d), Section 5(e) and this
Section 6(b).
c. Securities Laws Disclosure;
Publicity. The Company shall within three (3)
Trading Days immediately following the Closing (a) issue a press
release disclosing the material terms of the transactions
contemplated hereby, and (b) file a Current Report on Form 8-K,
including the Exchange Documents as exhibits thereto, with the
Securities and Exchange Commission (the “Commission”)
within the time required by the Exchange Act. The
Company and the Holder shall consult with each other in issuing any
other press releases with respect to the transactions contemplated
hereby, and neither the Company nor the Holder shall issue any such
press release nor otherwise make any such public statement without
the prior consent of the Company, with respect to any press release
of the Holder, or without the prior consent of the Holder, with
respect to any press release of the Company, which consent shall
not unreasonably be withheld or delayed, except if such disclosure
is required by law, in which case the disclosing party shall
promptly provide the other party with prior notice of such public
statement or communication. Notwithstanding the foregoing, the
Company shall not publicly disclose the name of the Holder, or
include the name of the Holder in any filing with the Commission or
any regulatory agency or Trading Market, without the prior written
consent of the Holder, except (a) as required by federal securities
law in connection with the filing of final Exchange Documents
(including signature pages thereto) with the Commission and (b) to
the extent such disclosure is required by law or Trading Market
regulations, in which case the Company shall provide the Holder
with prior notice of such disclosure permitted under this Section
6(c).
d. Reserved.
e. Material Non-Public
Information. Except with respect to the material terms and
conditions of the transactions contemplated by the Exchange
Documents, the Company covenants and agrees that neither it, nor
any other Person acting on its behalf, will provide Holder or its
agents or counsel with any information that the Company believes
constitutes material non-public information, unless prior thereto
Holder shall have entered into a written agreement with the Company
regarding the confidentiality and use of such information. The
Company understands and confirms that Holder shall be relying on
the foregoing covenant in effecting transactions in securities of
the Company.
f. Conversion Procedures. The form
of Notice of Conversion included in the Certificate of Designations
sets forth the totality of the procedures required of the Holder in
order to convert the Series L Preferred Shares. No additional legal
opinion, other information or instructions shall be required of the
Holder to convert their Series L Preferred Shares. The Company
shall honor conversions of the Series L Preferred Shares and shall
deliver the Securities in accordance with the terms, conditions and
time periods set forth in the Exchange Documents.
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g. Reporting Obligations. Until
the earliest of the time that (i) the Holder no longer owns
Securities, the Company covenants to file all periodic reports with
the Commission pursuant to Section 15(d) of the Exchange Act or
alternatively, if registered under Section 12(b) or 12(g) of the
1934 Act, maintain the registration of the Common Stock under
Section 12(b) or 12(g) of the Exchange Act and 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 even if the Company is
not then subject to the reporting requirements of the Exchange Act.
At any time commencing on the Closing Date and ending at such time
that all of the Securities may be sold without the requirement for
the Company to be in compliance with Rule 144(c)(1) and otherwise
without restriction or limitation pursuant to Rule 144, if the
Company shall fail for any reason to satisfy the current public
information requirement under Rule 144(c) (a “Public
Information Failure”) then, in addition to Holder’s
other available remedies, the Company shall pay to a Holder, in
cash, as partial liquidated damages and not as a penalty, by reason
of any such delay in or reduction of its ability to sell the
Securities, an amount in cash equal to two percent (2.0%) of the
aggregate Stated Value (as defined in the Certificates of
Designations) of the Series L Preferred Shares and accrued interest
held by such Holder on the day of a Public Information Failure and
on every thirtieth (30th) day (pro-rated for periods totaling less
than thirty days) thereafter until the earlier of (a) the date such
Public Information Failure is cured and (b) such time that such
public information is no longer required for the Holder to transfer
the Conversion Shares pursuant to Rule 144. The payments to which a
Holder shall be entitled pursuant to this Section 6(h) are referred
to herein as “Public
Information Failure Payments.” Public Information
Failure Payments shall be paid on the earlier of (i) the last day
of the calendar month during which such Public Information Failure
Payments are incurred and (ii) the third (3rd) Business Day after
the event or failure giving rise to the Public Information Failure
Payments is cured. In the event the Company fails to make Public
Information Failure Payments in a timely manner, such Public
Information Failure Payments shall bear interest at the rate of one
(1.0%) percent per month (prorated for partial months) until paid
in full. Nothing herein shall limit Holder’s right to pursue
actual damages for the Public Information Failure, and Holder shall
have the right to pursue all remedies available to it at law or in
equity including, without limitation, a decree of specific
performance and/or injunctive relief.
h. Form D; Blue Sky Filings. The
Company agrees to timely file a Form D with respect to the
Securities as required under Regulation D and to provide a copy
thereof, promptly upon request of Holder. The Company shall take
such action as the Company shall reasonably determine is necessary
in order to obtain an exemption for, or to qualify the Securities
for, sale to the Holder at the Closing under applicable securities
or “Blue Sky” laws of the states of the United States,
and shall provide evidence of such actions promptly upon request of
Holder.
i. Preservation of Corporate
Existence. The Company shall preserve and maintain its
corporate existence, rights, privileges and franchises in the
jurisdiction of its incorporation, and qualify and remain
qualified, as a foreign corporation in each jurisdiction in which
such qualification is necessary in view of its business or
operations and where the failure to qualify or remain qualified
might reasonably have a Material Adverse Effect upon the financial
condition, business or operations of the Company taken as a
whole.
j. Shareholder
Approval of Exchange. The Company shall hold a special
meeting of the shareholders of the Company within 60 days of the
date hereof, or at such other date that Broadridge Financial
Solutions, Inc. recommends for timely processing of materials for
the special meeting, at which the Company shall present to its
shareholders a proposal for approval of the Exchange. In the event
the Exchange is not approved at such shareholder meeting, the
Company shall hold an additional shareholder meeting, within 90
days of the first such shareholder meeting, at which the Company
shall present to shareholders a proposal for approval of the
Exchange. Until such time as the Exchange is approved by
shareholders of the Company, the Company shall continue to hold
shareholder meetings, each held within 90 days of the prior
shareholder meeting. In the event that the Exchange has not been
approved by shareholders of the Company within 60 days of the date
hereof as a result of gross negligence by the Company (the
“Shareholder Approval Deadline”), then, in addition to
any other rights the Holder may have hereunder or under applicable
law, the Company shall pay to the Holder on each 45-day anniversary
of the Shareholder Approval Deadline (if such shareholder approval
has not been obtained) until such shareholder approval has been
obtained as partial liquidated damages and not as a penalty, equal
to 1.0% of the aggregate Stated Value (as defined in the
Certificate of Designations) of the Series L Preferred Shares for
each month past the Shareholder Approval Deadline that the
shareholder approval has not been obtained (pro-rated for any
partial month in which such shareholder approval has not been
obtained), provided, however, the Company shall not pay to the
Holder more than 12.0% of the aggregate Stated Value (as defined in
the Certificates of Designations) of the Series L Preferred Shares
pursuant to this Agreement.
7. Miscellaneous.
a. Successors and Assigns. This
Agreement shall be binding upon and inure to the benefit of the
parties and their respective successors and assigns.
b. Governing Law; Jurisdiction; Waiver of
Jury Trial. This Agreement shall be governed by and
construed under the laws of the State of New York without regard to
the choice of law principles thereof. Each party hereby irrevocably
submits to the exclusive jurisdiction of the state and federal
courts sitting in the State of New York located in The City of New
York, Borough of Manhattan for the adjudication of any dispute
hereunder or in connection herewith or therewith or with any
transaction contemplated hereby or thereby, and hereby irrevocably
waives any objection that such suit, action or proceeding is
brought in an inconvenient forum or that the venue of such suit,
action or proceeding is improper. Nothing contained herein shall be
deemed to limit in any way any right to serve process in any manner
permitted by law. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT
MAY HAVE, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE
ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION WITH OR
ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED
HEREBY.
c. Severability. If any provision
of this Agreement shall be invalid or unenforceable in any
jurisdiction, such invalidity or unenforceability shall not affect
the validity or enforceability of the remainder of this Agreement
in that jurisdiction or the validity or enforceability of any
provision of this Agreement in any other jurisdiction.
-6-
d. Counterparts/Execution. This
Agreement may be executed in two or more identical counterparts,
all of which shall be considered one and the same agreement and
shall become effective when counterparts have been signed by each
party and delivered to the other party. In the event that any
signature is delivered by facsimile transmission or by an e-mail
which contains an electronic file of an executed signature page,
such signature page 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 electronic
file signature page (as the case may be) were an original
thereof.
e. Notices. Any notice or
communication permitted or required hereunder shall be in writing
and shall be deemed sufficiently given if hand-delivered or sent
(i) postage prepaid by registered mail, return receipt requested,
or (ii) by facsimile, to the respective parties as set forth below,
or to such other address as either party may notify the other in
writing.
|
If to
the Company, to:
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00000
Xxxxxxxx Xxxxxx Xxxx, Xxxxx 000
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Xxx
Xxxxx, XX 00000
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Attention: Chief
Executive Officer
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If to
Holder, to the address set forth on the signature page of the
Holder.
f. Expenses. The parties hereto
shall pay their own costs and expenses in connection herewith,
provided, however the Company shall pay all costs of registration
under the Securities Act including any Rule 144 opinion
costs.
g. Entire Agreement; Amendments.
This Agreement constitutes the entire agreement between the parties
with regard to the subject matter hereof and thereof, superseding
all prior agreements or understandings, whether written or oral,
between or among the parties. This Agreement may be amended,
modified, superseded, cancelled, renewed or extended, and the terms
and conditions hereof may be waived, only by a written instrument
signed by all parties, or, in the case of a waiver, by the party
waiving compliance. Except as expressly stated herein, no delay on
the part of any party in exercising any right, power or privilege
hereunder shall operate as a waiver thereof, nor shall any waiver
on the part of any party of any right, power or privilege hereunder
preclude any other or future exercise of any other right, power or
privilege hereunder.
h. Headings. The headings used in
this Agreement are used for convenience only and are not to be
considered in construing or interpreting this
Agreement.
i. Independent Nature of the
Holder’s Obligations and Rights. The obligations of
the Holder under the Exchange Documents are several and not joint
with the obligations of any other holder of Exchange Securities
(each, an “Other Holder”) under any other agreement
(each, an “Other Agreement”), and the Holder shall not
be responsible in any way for the performance of the obligations of
any Other Holders under any Other Agreement. Nothing contained
herein or in any Other Agreement, and no action taken by the Holder
pursuant hereto or any Other Holder pursuant to any Other
Agreement, shall be deemed to constitute the Holder or any Other
Holder as, and the Company acknowledges that the Holder and the
Other Holders do not so constitute, a partnership, an association,
a joint venture or any other kind of group or entity, or create a
presumption that the Holder and any Other Holder are in any way
acting in concert or as a group or entity with respect to such
obligations or the transactions contemplated by the Exchange
Documents, any other agreement or any matters, and the Company
acknowledges that the Holder and the Other Holders are not acting
in concert or as a group or entity, and the Company shall not
assert any such claim, with respect to such obligations or the
transactions contemplated by the Exchange Documents and any Other
Agreement. The decision of the Holder to acquire the Securities
pursuant to the Exchange Documents has been made by the Holder
independently of any Other Holder. The Holder acknowledges that no
Other Holder has acted as agent for the Holder in connection with
the Holder making its acquisition hereunder and that no Other
Holder will be acting as agent of the Holder in connection with
monitoring the Holder’s Securities or enforcing its rights
under the Exchange Documents. The Company and the Holder confirm
that the Holder has independently participated with the Company in
the negotiation of the transaction contemplated hereby with the
advice of its own counsel and advisors. The Holder shall be
entitled to independently protect and enforce its rights,
including, without limitation, the rights arising out of this
Agreement or out of any of the Other Agreements, and it shall not
be necessary for any Other Holder to be joined as an additional
party in any proceeding for such purpose. To the extent that any of
the Other Holders and the Company enter into the same or similar
documents, all such matters are solely in the control of the
Company, not the action or decision of the Holder, and would be
solely for the convenience of the Company and not because it was required or
requested to do so by the Holder or any Other Holder. For
clarification purposes only and without implication that the
contrary would otherwise be true, the transactions contemplated by
the Exchange Documents include only the transaction between the
Company and the Holder and do not include any other transaction
between the Company and any Other Holder.
j. Shareholder Approval of
Exchange. The Company shall hold a special meeting of the
shareholders of the Company within 60 days of the date hereof, or
at such other date that Broadridge Financial Solutions, Inc.
recommends for timely processing of materials for the special
meeting, at which the Company shall present to its shareholders a
proposal for approval of the Exchange. In the event the Exchange is
not approved at such shareholder meeting, the Company shall hold an
additional shareholder meeting, within 90 days of the first such
shareholder meeting, at which the Company shall present to
shareholders a proposal for approval of the Exchange. Until such
time as the Exchange is approved by shareholders of the Company,
the Company shall continue to hold shareholder meetings, each held
within 90 days of the prior shareholder meeting. In the event that
the Exchange has not been approved by shareholders of the Company
within 60 days of the date hereof as a result of gross negligence
by the Company (the “Shareholder Approval Deadline”),
then, in addition to any other rights the Holder may have hereunder
or under applicable law, the Company shall pay to the Holder on
each 45-day anniversary of the Shareholder Approval Deadline (if
such shareholder approval has not been obtained) until such
shareholder approval has been obtained as partial liquidated
damages and not as a penalty, equal to 1.0% of the aggregate Stated
Value (as defined in the Certificate of Designations) of the Series
L Preferred Shares for each month past the Shareholder Approval
Deadline that the shareholder approval has not been obtained
(pro-rated for any partial month in which such shareholder approval
has not been obtained), provided, however, the Company shall not
pay to the Holder more than 12.0% of the aggregate Stated Value (as
defined in the Certificates of Designations) of the Series L
Preferred Shares pursuant to this Agreement.
-7-
k. Pledge of Securities. The
Company acknowledges and agrees that the Securities may be pledged
by the Holder in connection with a bona fide margin agreement or
other loan or financing arrangement that is secured by the
Securities. The pledge of Securities shall not be deemed to be a
transfer, sale or assignment of the Securities hereunder, and if
the Holder effects a pledge of Securities it shall not be required
to provide the Company with any notice thereof or otherwise make
any delivery to the Company pursuant to this Agreement or any Other
Agreement. The Company hereby agrees to execute and deliver such
documentation as a pledgee of the Securities may reasonably request
in connection with a pledge of the Securities to such pledgee by
the Holder.
l. Separate Counsel. Each party
hereto represents and agrees with each other that it has been
represented by or had the opportunity to be represented by,
independent counsel of its own choosing, and that it has had the
full right and opportunity to consult with its respective
attorney(s), that to the extent, if any, that it desired, it
availed itself of this right and opportunity, that it or its
authorized officers (as the case may be) have carefully read and
fully understand this Agreement in its entirety and have had it
fully explained to them by such party's respective counsel, that
each is fully aware of the contents thereof and its meaning, intent
and legal effect, and that it or its authorized officer (as the
case may be) is competent to execute this Agreement and has
executed this Agreement free from coercion, duress or undue
influence. By their execution of this Agreement, the Company, on
the one hand, and the Holder, on the other hand, hereby waive any
actual or perceived conflict(s) of interest in connection with any
prior, existing and any future representation or other
relationships between the Company’s counsel and the Company
or the Company’s counsel and the Holder, and that neither the
Company nor the Holder has requested additional information;
further the Holder and the Company acknowledge that Company counsel
and members thereof maintain securities holdings in the Company
which may include Exchange Securities, and may in the future
acquire or dispose of additional securities or investments of the
Company.
(Signature
Pages Follow)
-8-
IN WITNESS WHEREOF, the parties have
caused this Agreement to be duly executed as of the day and year
first above written.
By:____________________________________
Name:
J. Xxxxx Xxxxxx
Title:
President and Chief Executive Officer
Date:_________________
HOLDER
____________________________________
Name:
Title:
Date:_________________
-9-
Schedule A
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(1)
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(2)
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Name
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Shares of Series ___ Convertible Preferred Stock
|
Shares of Series L
Convertible Preferred Stock
|
|
|
|
|
-10-
Exhibit A
FORM OF
CERTIFICATE OF DESIGNATION OF PREFERENCES,
RIGHTS AND LIMITATIONS
OF
0% SERIES L CONVERTIBLE PREFERRED STOCK
-11-
Exhibit B
FORM OF
REGISTRATION RIGHTS AGREEMENT
-12-
