SECURITIES PURCHASE AGREEMENT
Exhibit 10.1
THIS SECURITIES PURCHASE AGREEMENT (this “Agreement” ), dated as of February 24, 2009, by and
between Alseres Pharmaceuticals, Inc., a Delaware corporation with headquarters located at 000
Xxxxx Xxxxxx, Xxxxxxxxx, XX 00000 (the “Company” ), and Cato Holding Company, a North Carolina
corporation dba Cato BioVentures (the “Investor” ).
PREAMBLE
A. The Company and the Investor are 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. The Investor 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 the Investor’s signature
page to this Agreement (which shall not be in excess of 200,000 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 in excess of 19.99% of the then outstanding Common Stock of the Company or
to the Investor which would result in the Investor beneficially owning more than 19.99% of the then
outstanding Common Stock of the Company immediately after the Closing (as defined below) unless the
Investor owned more than 19.99% of the outstanding Common Stock of the Company immediately prior to
the Closing.
C. The purchase price for each Common Share to be issued at the Closing shall be one dollar
($1.00) per share. 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 Investor, 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 Section 2.1.
“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(z).
“Convertible Securities” means any stock or securities (other than Options) convertible into
or exercisable or exchangeable for Common Stock.
“Disclosure Materials” has the meaning set forth in Section 3.1(f).
“Environmental Laws” has the meaning set forth in Section 3.1(cc).
“Exchange Act” means the Securities Exchange Act of 1934, as amended.
“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(cc).
“Indebtedness” has the meaning set forth in Section 3.1(z).
“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(s).
“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.
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“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 this Agreement, 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(u).
“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(z).
“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 issued or issuable pursuant to this
Agreement, together with any securities issued or issuable 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.
“Rule 144,” “Rule 172” , and “Rule 424” means Rule 144, 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.
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“SEC Reports” has the meaning set forth in Section 3.1(f).
“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 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).
“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. Subject to the terms and conditions of this Agreement, the closing (the
“Closing” ) of the sale and purchase of the Common Shares under this Agreement shall take place on
the third business day after which all conditions for the Closing have been satisfied or are
capable of being satisfied, or such other date as agreed to by the Company and the Investor (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 Investor.
2.2 Closing Deliveries.
(a) At the Closing, the Company shall deliver or cause to be delivered to the Investor the
following:
(i) evidence of a direct registration account in the Investor’s name as set forth on the
Investor’s signature page to this Agreement, and the deposit, by direct registration, into such
account of the number of Common Shares purchased by the Investor;
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(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 this Agreement 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 this Agreement 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, the Investor shall deliver or cause to be delivered to the Company the
purchase price, which shall be in the form of the Investor’s written cancellation of that portion
of the Company’s indebtedness to the Investor equal to the purchase price, as set forth on the
Investor’s signature page to this Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
REPRESENTATIONS AND WARRANTIES
3.1 Representations and Warranties of the Company. The Company hereby represents and
warrants to the Investor 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.
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(c) Authorization; Enforcement. The Company has the requisite corporate authority to
enter into and to consummate the transactions contemplated by this Agreement and otherwise to carry
out its obligations hereunder. The execution and delivery of this Agreement by the Company and the
consummation by it of the transactions contemplated hereby have been duly authorized by 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. The Agreement 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.
(d) No Conflicts. The execution, delivery and performance of this Agreement by the
Company and the consummation by the Company of the transactions contemplated hereby 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 Investor 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 this Agreement, 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 this Agreement).
(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
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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 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 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 filing prior to the 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 January 31,
2009, consisted of 80,000,000 shares of Common Stock, of which 22,399,123 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 Investor) 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.
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(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 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
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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 this Agreement to be
integrated with prior offerings by the Company. Assuming the accuracy of the representations and
warranties of the Investor 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 Investor 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 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) Listing and Maintenance Requirements. Except as set forth in the SEC Reports, 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.
(o) 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 Investor.
(p) 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 the Investor as a result of the Investor and
the Company fulfilling their obligations or exercising their rights under this Agreement,
including, without limitation, as a result of the Company’s issuance of the Securities and the
Investor’s ownership of the Securities.
(q) Disclosure. The Company confirms that neither it nor any of its officers,
directors or Affiliates, has provided the Investor or its 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
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understands and confirms that the Investor 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 the Investor does not make nor has made any representations or
warranties with respect to the transactions contemplated hereby other than those set forth in this
Agreement.
(r) Acknowledgment Regarding Investor’s Purchase of Securities. Based upon the
assumption that the transactions contemplated by this Agreement are consummated in all material
respects in conformity with this Agreement, the Company acknowledges and agrees that the Investor
is acting solely in the capacity of an arm’s length purchaser with respect to this Agreement and
the transactions contemplated hereby. The Company further acknowledges that the Investor is not
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 the Investor or
any of its representatives or agents in connection with this Agreement and the transactions
contemplated hereby is merely incidental to the Investor’s purchase of the Securities. The Company
further represents to the 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.
(s) 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.
(t) 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.
(u) 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
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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.
(v) 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.
(w) 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.
(x) 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.
(y) 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.
(z) 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
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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 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.
(aa) 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.
(bb) 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.
(cc) 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
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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.
(dd) 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.
(ee) 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.
(ff) Certain Fees. 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 Investor. The Investor hereby represents
and warrants to the Company as follows:
(a) Organization; Authority. The 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 the Investor of the Securities hereunder has been duly authorized by all necessary
corporate, partnership or other action on the part of the Investor. This Agreement has been duly
executed and delivered by the Investor and constitutes the valid and binding obligation of the
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.
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(b) No Public Sale or Distribution. The Investor is acquiring the Common Shares 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 the 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, the Investor does not agree to hold any
of the Securities for any 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 the Investor was offered the Securities, it was, and
as of the date hereof it is, 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. The 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. On or prior to
the date of this Agreement, the 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. The 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 the Investor. The 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. The 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. The 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) 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
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conducted by or on behalf of the Investor or its representatives or counsel shall modify, amend or
affect the Investor’s right to rely on the Company’s representations and warranties contained
herein. The Investor acknowledges that no third party has made or will make any representation or
warranty to the Investor regarding the adequacy or completeness for the Investor’s purpose of the
information the Investor has requested.
(g) No Governmental Review. The 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 the Investor of this
Agreement and the consummation by the Investor of the transactions contemplated hereby will not (i)
result in a violation of the organizational documents of the 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 the 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 the 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 the Investor to
consummate the transactions contemplated hereby.
(i) Prohibited Transactions; Confidentiality. The Investor, directly or indirectly,
has not and no Person acting on behalf of or pursuant to any understanding with the 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 the Investor was first contacted by the Company or any other Person
regarding the investment in the Company contemplated by this Agreement. The Investor covenants
that neither it nor any Person acting on its behalf or pursuant to any understanding with the
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. The 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 the Investor set forth herein in order to determine the
availability of such exemptions of the Investor and the eligibility of the 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. The 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. The
Investor has consulted such legal, tax and investment advisors as it, in its sole discretion, has
deemed necessary or appropriate in connection with its purchase of the Securities.
(m) Offering Documents. The 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. The 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 the 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. The 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.
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ARTICLE IV
OTHER AGREEMENTS OF THE PARTIES
OTHER AGREEMENTS OF THE PARTIES
4.1 Transfer Restrictions.
(a) The Investor 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 a transfer (i) pursuant to an effective registration
statement or (ii) to the Company, or (iii) 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 the Investor to an
Affiliate of the 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) The Investor 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 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 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,
(ii) following any sale of such Common Shares pursuant to Rule 144, or (iii) if such Common Shares
are eligible for sale under Rule 144(b)(1), or (iv) if such legend is not required
-17-
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, the Company
will, no later than three Trading Days following the delivery by the Investor to the Company or the
Company’s Transfer Agent of a legended certificate representing such Common 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 the Investor, which counsel may be Investor’s internal counsel, to the effect
that such legend is not required, deliver or cause to be delivered to the Investor a certificate
representing such Common 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) the 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) the 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. The 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 the 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 the Investor owning Common 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 the Investor to sell such Common 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
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
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under the Securities Act of the sale of the Securities to the Investor 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 Securities Laws Disclosure; Publicity. Within four business days of the Closing
Date, the Company shall file a Current Report on Form 8-K with the SEC describing the terms of the
transactions contemplated by this Agreement and including as exhibits to such Current Report on
Form 8-K this Agreement (including the name of the Investor and the amount of Securities
purchased), 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 Investor promptly after filing. Except as
herein provided, neither the Company nor any Subsidiary shall publicly disclose the name of the
Investor, or include the name of the Investor in any press release without the prior written
consent of the 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 the 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 the Investor.
4.5 FINRA Compliance. The 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.
4.6 No Sale of Securities. The Investor hereby 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. The 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. The Investor hereby 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 the Investor written notice of any suspension of the use of the
Registration Statement and ending at the time the Company gives the Investor written notice that it
may thereafter effect sales pursuant to the Registration Statement.
4.7 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 this
Agreement 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
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information. The Investor understands that the federal securities laws impose restrictions on
trading based on information regarding the transactions contemplated by this Agreement.
ARTICLE V
CONDITIONS
CONDITIONS
5.1 Conditions Precedent to the Obligations of the Investor. The obligation of the
Investor to purchase the Securities at Closing is subject to the satisfaction or waiver by the
Investor, at or before the 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 the 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
this Agreement to be performed, satisfied or complied with by it at or prior to the 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 the Closing Date, which action, suit or proceeding would, if determined adversely, have a
Material Adverse Effect.
(e) Payment of Account Receivable. The Company shall have delivered to Cato Research Ltd. a
payment, by check or wire transfer, of $100,000 for certain contract research and development
services rendered to the Company by Cato Research prior to the date of this Agreement.
5.2 Conditions Precedent to the Obligations of the Company. The obligation of the
Company to sell the Securities at the Closing is subject to the satisfaction or waiver by the
Company, at or before the Closing, of each of the following conditions:
(a) Representations and Warranties. The representations and warranties of the
Investor contained herein shall be true and correct in all material respects as of the date when
made and as of the Closing Date as though made on and as of such date (except for representations
and warranties that speak as of a specific date, which shall be true and correct in all material
respects as of such date); and
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(b) Performance. The Investor shall have performed, satisfied and complied in all
material respects with all covenants, agreements and conditions required by this Agreement to be
performed, satisfied or complied with by the Investor at or prior to the Closing.
ARTICLE VI
REGISTRATION RIGHTS
REGISTRATION RIGHTS
6.1 Incidental Registration.
(a) If (but without any obligation to do so) the Company proposes to register
(including for this purpose a registration effected by the Company for stockholders other
than the Investor) any of its Common Stock under the Securities Act in connection with the
public offering of such securities solely for cash (other than a registration on Form S-8
(or similar or successor form) relating solely to the sale of securities to participants in
a Company stock plan or to other compensatory arrangements to the extent includable on Form
S-8 (or similar or successor form), or a registration on Form S-4 (or similar or successor
form), it will, prior to such filing, give written notice to the Investor of its intention
to do so. Upon the written request of the Investor given within 20 days after the Company
provides such notice (which request shall state the intended method of disposition of such
Registrable Securities), the Company shall use its commercially reasonable efforts to cause
to be registered under the Securities Act all of the Registrable Securities that the
Investor has requested to be registered; provided that (i) if such registration
involves an underwritten offering to the public, the Investor must sell its Registrable
Securities to the underwriters selected by the Company on the same terms and conditions as
apply to the Company or other selling stockholders; and (ii) if, at any time after giving
notice of the Company’s intention to register any securities pursuant to this
Section 6.1(a) and prior to the effective date of the registration statement filed
in connection with such registration, the Company shall determine for any reason not to
register such securities, the Company shall give written notice to the Investor and,
thereupon, shall be relieved of its obligation to register any Registrable Securities in
connection with such registration. The Company shall have no obligation under this
Section 6.1(a) to make any offering of its securities, or to complete an offering of
its securities that it proposes to make.
(b) If such registration involves an underwritten offering to the public, if the
managing underwriter of the underwritten offering shall inform the Company by letter of the
underwriter’s opinion that the number of Registrable Securities requested to be included in
such registration would, in its opinion, materially adversely affect such offering,
including the price at which such securities can be sold, and the Company has so advised the
Investor in writing, then the Company shall include in such registration, to the extent of
the number that the Company is so advised can be sold in (or during the time of) such
offering, (i) first, all securities proposed by the Company to be sold for its own account,
then (ii) to the extent that the number of shares of Common Stock proposed to be sold by the
Company or the Investor pursuant to Section 6.1(a) is less than the number of shares
of Common Stock that the Company has been advised can be sold in such offering without
having the material adverse effect referred to above, such
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Registrable Securities requested by the Investor to be included in such registration
pursuant to this Section 6.
(c) Notwithstanding the foregoing, the Company shall not be required, pursuant to
Section 6.1, to include any Registrable Securities in a registration statement if,
as of the date the Company intends to file such registration statement with the Securities
and Exchange Commission, such Registrable Securities can then be sold pursuant to Rule
144(b)(1)(i) under the Securities Act.
6.2 Registration Procedures. In connection with the Company’s registration
obligations hereunder, the Company shall:
(a) Not less than three Trading Days prior to the filing of the Registration Statement
or any related Prospectus or any amendment or supplement thereto, (i) furnish to the
Investor or its counsel copies of all such documents proposed to be filed, and (ii) cause
the Company’s officers and directors, counsel and independent certified public accountants
to respond to such inquiries as shall be necessary, in the reasonable opinion of counsel, to
conduct a reasonable investigation within the meaning of the Securities Act.
(b) (i) Subject to Section 6.2(c), (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 offering.
(c) Notify the Investor as promptly as reasonably possible, and if requested by the
Investor 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 statement made in any Registration
Statement or related Prospectus or any document incorporated or deemed to be incorporated
therein by reference is untrue in any material respect or any revision to a Registration
Statement, related Prospectus or other document is required so that it will not contain any
untrue statement of a material fact or omit to state any material fact required to be stated
therein or necessary to make the
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statements therein, in light of the circumstances under which they were made, not
misleading.
(d) Furnish to the Investor, without charge at least one conformed copy of the
Registration Statement and each amendment thereto, including financial statements and
schedules, and all exhibits to the extent requested by such person (excluding those
previously furnished or incorporated by reference) promptly after the filing of such
documents with the SEC.
(e) Promptly deliver to the Investor, without charge, as many copies of the
Prospectus or Prospectuses (including each form of prospectus) related to the Registration
Statement and each amendment or supplement thereto as it may reasonably request.
(f) Upon any sale of Registrable Securities pursuant to the Registration Statement for
the account of the Investor, cooperate with the Investor 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
the Investor 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) 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.
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 the Investor, or its officers,
directors, partners, members, agents and employees, each Person who controls any the 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
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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 this Agreement 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 this Agreement 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 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 the
Investor furnished in writing to the Company by the Investor for use therein, or to the extent that
such information relates to the Investor or the Investor’s proposed method of distribution of
Registrable Securities and was reviewed and expressly approved by the Investor in writing expressly
for use in the Registration Statement, (B) the failure of the Investor to comply with the covenants
and agreements contained in Section 4.7 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 the Investor. The Investor shall 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 the Investor furnished in writing to the Company by the 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 the 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
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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 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
-25-
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 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),
the Investor shall not be required to contribute, in the aggregate, any amount in excess of the
amount by which the net proceeds actually received by the Investor from the sale of the Registrable
Securities subject to the Proceeding exceed the amount of any damages that the 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. The 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. The 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), the Investor will
discontinue disposition of such Registrable Securities under the Registration Statement until the
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. The Investor 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 such Registrable Securities can be
sold pursuant to Rule 144(b)(1)(i) under the Securities Act, the Company shall be entitled to
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withdraw the Registration Statement, and the Investor shall have no further right to offer or
sell any of the Registrable Securities pursuant to the Registration Statement.
-27-
ARTICLE VII
MISCELLANEOUS
MISCELLANEOUS
7.1 Termination. This Agreement may be terminated by the Company or the Investor, by
written notice to the other party, if the 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 this Agreement 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 the Investor or its investment advisor) relating to
or 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. This Agreement 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 the Closing, and without further
consideration, the Company will execute and deliver to the Investor such further documents as may
be reasonably requested in order to give practical effect to the intention of the parties under
this Agreement.
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.
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 the Investor
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
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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 Investor under Article VI may be given by the Investor.
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 Investor.
The Investor may assign its rights under this Agreement to any Person to whom the 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 “Investor” 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 INVESTOR HEREBY IRREVOCABLY SUBMIT TO THE NON-EXCLUSIVE JURISDICTION OF
THE STATE AND FEDERAL COURTS SITTING IN THE STATE OF DELAWARE FOR THE ADJUDICATION OF ANY DISPUTE
BROUGHT BY THE COMPANY OR THE INVESTOR HEREUNDER, IN CONNECTION HEREWITH OR WITH ANY TRANSACTION
CONTEMPLATED HEREBY OR DISCUSSED HEREIN (INCLUDING WITH RESPECT TO THE ENFORCEMENT OF THIS
AGREEMENT, AND HEREBY IRREVOCABLY WAIVE, AND AGREE NOT TO ASSERT IN ANY SUIT, ACTION OR PROCEEDING
BROUGHT BY THE COMPANY OR THE 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
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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
INVESTOR HEREBY WAIVE ALL RIGHTS TO A TRIAL BY JURY.
7.10 Survival. The representations and warranties, agreements and covenants contained
herein shall survive the Closing until the date that is one year after the 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) this Agreement, whenever the Investor
exercises a right, election, demand or option owed to the Investor by the Company under this
Agreement 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, the 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.
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
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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, the Investor and the Company will be entitled to
seek specific performance under this Agreement. 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
the Investor hereunder or the 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 this Agreement to a number of shares or a price per share shall be
amended to appropriately account for such event.
7.18 Independent Nature of Investor’s Obligations and Rights. The decision of the
Investor to purchase Securities pursuant to this Agreement has been made by the 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.
[SIGNATURE PAGES TO FOLLOW]
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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
Title: EVP & CFO |
|||||
| 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
February 24, 2009 (the “Purchase Agreement”) by and among Alseres Pharmaceuticals, Inc. and the
Investor (as defined therein), as to the number of shares of Common Stock set forth below, and
authorizes this signature page to be attached to the Purchase Agreement or counterparts thereof.
| Name of Investor: | ||||
| CATO HOLDING COMPANY dba Cato BioVentures |
||||
| By: | /s/ Xxxxx Xxxx | |||
| Name: Xxxxx Xxxx, MD, PhD Title: Chief Executive Officer |
||||
| Address: | 0000 Xxxxx Xxxxxx Xxxxxx | |||
| Xxxxxx, XX 00000 |
||||
| Telephone No.: | ||||
| Facsimile No.: | ||||
| Email Address: | ||||
| Number of Shares: 200,000 | ||||
| Aggregate Purchase Price: $200,000; the aggregate purchase shall be delivered in the form of Investor’s cancellation of $200,000 of Company indebtedness to Investor upon the parties’ execution and delivery of this Agreement | ||||
Delivery Instructions (if different than above):
A copy of all communications pursuant to this Agreement and the Securities shall be sent to:
c/o: Xxxxxxxx Xxxxxxx |
||||||
| Address: Cato Research Ltd. | ||||||
0000 Xxxxx Xxxxxx Xxxxxx
| Xxxxxx, XX 00000 | ||||
Telephone No.: |
||||
Facsimile No.: |
||||
