Contract
Exhibit
10.4
Execution
Copy
This
SECURITIES PURCHASE AGREEMENT (this “Agreement”) is made and entered into
as of November 20, 2007, by and between Rexahn Pharmaceuticals, Inc., a Delaware
corporation (the “Company”), and Rexgene Biotech Co., Ltd., a Korean
corporation (the "Purchaser").
Recitals
The
Company and the Purchaser are executing and delivering this Agreement in
reliance upon the exemption from securities registration afforded by Section
4(2) under the Securities Act of 1933, as amended (the “1933 Act”), and
the provisions of Regulation D (“Regulation D”), as promulgated by the
U.S. Securities and Exchange Commission (the “SEC”) under the 1933
Act.
The
Purchaser wishes to purchase, and the Company wishes to sell and issue to
the
Purchaser, upon the terms and subject to the conditions stated in this
Agreement, (i) 714,286 shares (the “Initial Shares”) of its common stock,
par value $0.0001 per share (the “Common Stock”), and (ii) a warrant, in
substantially the form attached hereto as Exhibit A (the
“Warrant”), to acquire up to 142,857 shares of Common Stock (as
exercised, the “Warrant Shares”) at an exercise price of $1.80 per share,
for aggregate cash consideration of $1,000,000.40.
Contemporaneous
with the execution and delivery of this Agreement, the parties hereto are
executing and delivering a Registration Rights Agreement, in the form attached
hereto as Exhibit B (the “Registration Rights Agreement”),
pursuant to which the Company has agreed to provide certain registration
rights
under the 1933 Act and the rules and regulations promulgated thereunder,
and
applicable state securities laws.
Agreement
NOW,
THEREFORE, IN CONSIDERATION of the mutual covenants contained in this Agreement,
and for other good and valuable consideration, the receipt and sufficiency
of
which is hereby acknowledged, the Company and the Purchaser agree as
follows:
1.
DEFINITIONS. In addition to
those terms defined above and elsewhere in this Agreement, for the purposes
of
this Agreement, the following terms shall have the meanings here set
forth:
1.1 “1934
Act” means the Securities Exchange Act of 1934, as amended.
1.2 “Affiliate”
means, with respect to any Person, any other Person that directly or indirectly
through one or more intermediaries controls, is controlled by or is under
common
control with, such Person, as such terms are used in and construed under
Rule
144 under the 1933 Act.
1.3 “Business
Day” means any day other than Saturday, Sunday or any other day on which
commercial banks in the City of New York are authorized or required by law
to
remain closed.
1.4 “Closing”
means the closing of the purchase and sale of the Securities pursuant to
Section 2.1.
1.5 “Closing
Date” means the date and time of the Closing.
1.6 “Effective
Date” means the date that the Registration Statement is first declared
effective by the SEC.
1.7 “Eligible
Market” means any 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 NASD Over-the-Counter Bulletin Board.
1.8 “Lien”
means any lien, charge, claim, security interest, encumbrance, right of first
refusal or other restriction.
1.9 “Material
Adverse Effect” means a material adverse effect on (i) the condition
(financial or otherwise), business, assets or results of operations of the
Company, (ii) the Company’s ability to perform any of its obligations
under the terms of the Transaction Documents in any material respect or (iii)
the rights and remedies of the Purchaser under the Transaction
Documents.
1.10 “Person”
means an individual, corporation, partnership, limited liability company,
trust,
business trust, association, joint stock company, joint venture, pool,
syndicate, sole proprietorship, unincorporated organization, governmental
authority or any other form of entity not specifically listed
herein.
1.11 “Registration
Statement” means a registration statement meeting the requirements set forth
in the Registration Rights Agreement and covering the resale of the Initial
Shares and the Warrant Shares.
1.12 “Securities”
means the Common Stock, the Warrant and the Warrant Shares issued or issuable
pursuant to the Transaction Documents.
1.13 “Subsidiary”
means any Person in which the Company, directly or indirectly, owns capital
stock or holds an equity or similar interest.
1.14 “Trading
Day” means (a) any day on which the Common Stock is listed or quoted and
traded on its primary Trading Market, (b) if the Common Stock is not then
listed
or quoted and traded on any Eligible Market, then a day on which trading
occurs
on the NASDAQ Global Market (or any successor thereto), or (c) if trading
ceases
to occur on the NASDAQ Global Market (or any successor thereto), any Business
Day.
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1.15 “Trading
Market” means the NASD Over-the-Counter Bulletin Board or any other Eligible
Market, or any other national securities exchange, market or trading or
quotation facility on which the Common Stock is then listed or
quoted.
1.16 “Transaction
Documents” means this Agreement, the Registration Rights Agreement, the
Warrant and any other agreement entered into, now or in the future, by the
Company in connection with this Agreement or any of the other Transaction
Documents.
1.17 List
of Additional Definitions. The following is a list of additional
terms used in this Agreement and a reference to the Section hereof in which
such
term is defined:
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Term
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Section
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Action
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3.8
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Additional
Shares of Stock
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5.7(b)
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Adjusted
Initial Shares
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5.7(b)
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Adjusted
Purchase Price
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5.7(b)
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Aggregate
Consideration
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5.7(b)
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Agreement
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Preamble
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Common
Stock
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Recitals
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Company
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Preamble
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Diluted
Price
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5.8(a)
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Initial
Shares
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Recitals
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Make-Whole
Number
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5.7(b)
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Purchase
Price
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2.1
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Purchaser
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Preamble
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Registration
Rights Agreement
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Recitals
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Regulation
D
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Recitals
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SEC
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Recitals
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Warrant
|
Recitals
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Warrant
Shares
|
Recitals
|
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1933
Act
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Preamble
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2.
PURCHASE AND SALE OF SECURITIES.
2.1 Purchase
of the Initial Shares and Warrant. Subject to the terms and
conditions of this Agreement and on the basis of the representations and
warranties made herein, at the Closing the Company hereby agrees to sell
and
issue to the Purchaser, and the Purchaser hereby agrees to purchase from
the
Company, the Initial Shares and the Warrant for the aggregate purchase price
of
US$1,000,000.40 (the “Purchase Price”).
2.2 Time
and Place of Closing. The Closing shall take place at the offices
of Xxxxxxxxxx & Xxxxx LLP, 0000 Xxx Xxxxxxxxx Xxxxxx, X.X., Xxxxxxxxxx,
XX 00000, on the third Business Day following the date on which each
of the conditions to the obligations of the parties to consummate the
transactions contemplated hereby have been satisfied.
2.3 Closing
Deliveries.
(a) At the
Closing, the Company shall deliver or cause to be delivered to the Purchaser
the
following:
(i) a
stock certificate, free and clear of all restrictive legends (except as
expressly provided in Section 6.1(b)), evidencing the Initial Shares,
registered in the name of the Purchaser;
(ii) the
Warrant, issued in the name of the Purchaser, exercisable for up to
142,857 Warrant Shares;
(iii) the
executed Registration Rights Agreement; and
(iv) any
other documents reasonably requested by the Purchaser or its counsel in
connection with the Closing, including, without limitation, certified copies
of
the Company’s certificate of incorporation, certificates of good standing and
customary officers’ and secretary’s certificates.
(b) At the
Closing, the Purchaser shall deliver or cause to be delivered to the Company
the
Purchase Price of US$1,000,000.40 by wire transfer of immediately available
federal funds to the account of the Company. Prior to Closing, the
Company shall notify the Purchaser as to the account number and ABA routing
number for such account.
2.4
Use of Proceeds. The Company will use the net proceeds of the
issuance and sale of Initial Shares and the Warrant for its general working
capital and other corporate purposes.
3.
REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The
Company hereby represents and warrants to the Purchaser as follows:
3.1 Subsidiaries. The
Company has no direct or indirect Subsidiaries other than those listed in
Schedule 3.1. Except as disclosed in Schedule 3.1, the
Company owns, directly or indirectly, all of the capital stock or comparable
equity interests of each Subsidiary free and clear of any Lien, and all the
issued and outstanding shares of capital stock or comparable equity interests
of
each Subsidiary are validly issued and are fully paid, non-assessable and
free
of preemptive and similar rights.
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3.2 Organization
and Good Standing. Each of the Company and each Subsidiary is a
corporation validly existing and in good standing under the laws of the
jurisdiction of its incorporation or organization (as applicable), with all
requisite power and authority to carry on its business as presently conducted
and own and use its properties and assets. Each of the Company and
each Subsidiary is authorized to conduct business as a foreign corporation
and
is in good standing in each jurisdiction where the conduct of its business
or
the ownership of its property requires such qualification, except where the
failure to be so qualified and in good standing would not, individually or
in
the aggregate, reasonably be expected to have or result in a Material Adverse
Effect.
3.3 Authorization;
Enforcement. The Company has the requisite corporate power and
authority to enter into and to consummate the transactions contemplated by
each
of the Transaction Documents and otherwise to carry out its obligations
hereunder and thereunder. The execution and delivery of each of the
Transaction Documents by the Company and the consummation by it of the
transactions contemplated hereunder and thereunder have been duly authorized
by
all necessary action on the part of the Company and no further action is
required by the Company in connection therewith. Each Transaction
Document has been (or upon delivery will have been) duly executed by the
Company
and, when delivered in accordance with the terms hereof, will constitute
the
valid and binding obligation of the Company enforceable against the Company
in
accordance with its terms.
3.4 No
Conflicts. The execution, delivery and performance of the
Transaction Documents by the Company and the consummation by the Company
of the
transactions contemplated hereby and thereby do not and will not (a) conflict
with or violate any provision of the Company’s or any Subsidiary’s certificate
or articles of incorporation, bylaws or other organizational or charter
documents, (b) 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 understanding to which the Company or any Subsidiary is a party or
by
which any property or asset of the Company or any Subsidiary is bound or
affected, or (c) 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 a Subsidiary is subject (assuming the accuracy
of the Purchaser’s representations and warranties and compliance by the
Purchaser with its respective covenants as set forth in this Agreement),
including 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 a
Subsidiary is bound or affected; except in the case of each of clauses (b)
and
(c), such as would not, individually or in the aggregate, reasonably be expected
to have or result in a Material Adverse Effect.
3.5 Issuance
of the Securities. The Securities have been duly
authorized. The Initial Shares and Warrant, when issued and paid for
in accordance with the terms of this Agreement, and the Warrant Shares issuable
upon exercise of the Warrant when so issued and paid for in accordance with
the
terms of the Warrant, will be validly issued, fully paid and nonassessable,
and
free and clear of all Liens and charges and shall not be subject to preemptive
or similar rights. The Company has reserved from its duly authorized
capital stock the maximum number of shares of Common Stock to be issued to
the
Purchaser upon exercise of the Securities. Assuming the continued
validity of the Purchaser’s representations and warranties contained in
Section 4, the offer, issuance and sale of the Securities to the
Purchaser pursuant to this Agreement and upon exercise of the Warrant are
exempt
from registration requirements of the 1933 Act.
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3.6 Capitalization. The
aggregate number of shares and type of all authorized, issued and outstanding
capital stock, options and other securities of the Company (whether or not
presently convertible into or exercisable or exchangeable for shares of capital
stock of the Company) is set forth in Schedule 3.6. All
outstanding shares of capital stock are duly authorized, validly issued,
fully
paid and nonassessable and have been issued in compliance with all applicable
securities laws. Except as set forth in Schedule 3.6 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 Purchasers) and will not result in a right of
any
holder of Company securities to adjust the exercise, conversion, exchange
or
reset price under such securities.
3.7 Answer
to all Inquires. The Company has answered all inquiries that the
Purchaser has made of it concerning the Company, its business and financial
condition, or any other matter relating to the operation of the Company and
the
offering and sale of the Initial Shares and Warrant. No written statement
or
inducement that is contrary to the information conveyed to the Purchaser
that if
untrue would have a material effect on the Company’s business taken as a whole
has been made by or on behalf of the Company to the Purchaser.
3.8 Absence
of Litigation. Except as set forth in Schedule 3.8, there
is no action, suit, inquiry, notice of violation, proceeding or investigation
pending or, to the knowledge of the Company, threatened against or affecting
the
Company, any Subsidiary, any of the Company’s officers or directors in their
capacities as such and any of their respective properties before or by any
court, arbitrator, governmental or administrative agency or regulatory authority
(federal, state, county, local or foreign) (collectively, an “Action”)
which (a) adversely affects or challenges the legality, validity or
enforceability of any of the Transaction Documents or the Securities or (b)
could, if there were an unfavorable decision, individually or in the aggregate,
have or result in a Material Adverse Effect. To the knowledge of the
Company, no judgment, injunction, writ, award, decree or order has been issued
by any court or other governmental authority against the Company.
3.9 Labor
Relations. No material labor dispute exists or, to the knowledge
of the Company is imminent, with respect to any of the employees of the
Company.
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3.10 Compliance. Neither
the Company nor any Subsidiary (i) 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 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) is in violation of any order of any court,
arbitrator or governmental body, or (iii) is or has been in violation of
any
statute, rule or regulation of any governmental authority, including without
limitation all foreign, federal, state and local laws relating to taxes,
environmental protection, occupational health and safety, product quality
and
safety and employment and labor matters, except in each case as could not,
individually or in the aggregate, reasonably be expected to have or result
in a
Material Adverse Effect.
3.11 Transactions
with Affiliates and Employees. Except as set forth in Schedule
3.11, none of the officers or directors of the Company and, to the knowledge
of the Company, none of the employees of the Company is presently a party
to any
transaction with the Company or any Subsidiary (other than for services as
employees, officers and directors), including any contract, agreement or
other
arrangement providing for the furnishing of services to or by, providing
for
rental of real or personal property to or from, or otherwise requiring payments
to or from any officer, director or such employee or, to the knowledge of
the
Company, any entity in which any officer, director, or any such employee
has a
substantial interest or is an officer, director, trustee or
partner.
3.12 Title
to Assets. The Company and its Subsidiaries have valid title to
or leasehold rights for all real property that is material to the business
of
the Company and the Subsidiaries and good and marketable title in all personal
property owned by them that is material to the business of the Company and
the
Subsidiaries, in each case free and clear of all Liens, except for Liens
disclosed in Schedule 3.12 or as do not, individually or in the
aggregate, materially interfere with the use made and proposed to be made
of
such property by the Company and the Subsidiaries. Any real property
and facilities held under lease by the Company and its Subsidiaries are held
by
them under valid, subsisting and enforceable leases of which the Company
and the
Subsidiaries are in compliance; except as would not, individually or in the
aggregate, reasonably be expected to have or result in a Material Adverse
Effect.
3.13 Registration
Rights. Except as described in Schedule 3.13, 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
been
satisfied or waived.
3.14 Form
SB-2 Eligibility. The Company is eligible to register the resale
of its Common Stock for resale by the Purchasers under Form SB-2 promulgated
under the 0000 Xxx.
3.15 Disclosure. All
disclosure provided to the Purchaser regarding the Company, its business
and the
transactions contemplated hereby, including the Schedules to this Agreement,
furnished by or on behalf of the Company are true and correct in all material
respects and do not contain any untrue statement of a material fact to the
extent of 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 of its Subsidiaries
or its
or their business, properties, prospects, 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.
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4.
REPRESENTATIONS AND WARRANTIES OF THE
PURCHASER. The Purchaser hereby represents and warrants to the
Company as follows:
4.1
Organization; Authority. The Purchaser is an
entity duly organized, validly existing and in good standing under the laws
of
the Republic of Korea. The Purchaser has the requisite corporate
power and authority to enter into and to consummate the transactions
contemplated by the Transaction Documents to which it is a party and otherwise
to carry out its obligations hereunder and thereunder. The execution,
delivery and performance by the Purchaser of the Transaction Documents to
which
it is a party have been duly authorized by all necessary action on the part
of
the Purchaser. Each Transaction Document to which the Purchaser is a
party has been (or upon delivery will have been) duly executed by the Purchaser
and, when delivered by the Purchaser in accordance with terms hereof, will
constitute the valid and legally binding obligations of the Purchaser,
enforceable against it in accordance with its terms.
4.2
The Purchaser’s Status. At
the time the Purchaser was offered the Securities, it was, and at the date
hereof it is, an “accredited investor” as defined in Rule 501(a) under the 0000
Xxx. The Purchaser is not a broker-dealer, or required to be
registered as a broker-dealer, under Section 15 of the 0000 Xxx.
4.3
Experience of the Purchaser. The Purchaser,
either alone or together with its representatives, has such knowledge,
sophistication and experience in business and financial matters so as to
be
capable of evaluating the merits and risks of the prospective investment
in the
Securities, and has so evaluated the merits and risks of such investment,
and
the Purchaser has had available such information with respect to the Company
as
the Purchaser deems necessary or appropriate to make such evaluation and
an
informed investment decision with respect thereto. The Purchaser is able
to bear
the economic risk of an investment in the Securities and, at the present
time,
is able to afford a complete loss of such investment.
4.4
General
Solicitation. The Purchaser is not purchasing the Securities as a
result of any advertisement, article, notice or other communication regarding
the Securities published in any newspaper, magazine or similar media or
broadcast over television or radio or presented at any seminar or any other
general solicitation or general advertisement.
4.5
No Public Sale or Distribution;
Investment Intent. The Purchaser is acquiring the Securities in
the ordinary course of business for its own account for investment purposes
only
and not with a view towards, or for resale in connection with, the public
sale
or distribution thereof, and the Purchaser does not have a present intention
nor
a present arrangement to effect any distribution of the Securities to or
through
any person or entity; provided, however, that by making the
representations herein, the Purchaser 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 an
effective registration statement or an exemption under the 1933
Act.
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4.6
Information Regarding the Company. The
Purchaser has been furnished with or has had access to documents and records
of
the Company so as to allow the Purchaser to understand and evaluate such
records
and documents fully. In addition, the Purchaser has received from the
Company such other information concerning its operations, financial condition
and other matters as the Purchaser has requested and considered all factors
the
Purchaser deems material in deciding on the advisability of investing in
the
Securities. The Purchaser acknowledges that any business plans prepared by
the
Company have been, and continue to be, subject to change and that any
projections included in such business plans or otherwise are necessarily
speculative in nature, and that some or all of the assumptions underlying
the
projections will not materialize or will vary significantly from actual
results.
4.7
No Distribution. The Purchaser has not
distributed the records and documents the Company provided to the Purchaser
under this Agreement to any other Person.
4.8
Information Regarding the
Purchaser. All information which the Purchaser has provided to
the Company concerning itself, its financial position, and the knowledge
of
financial and business matters of the person making the investment decision
on
behalf of the Purchaser, including all information contained herein,
is true and complete as of the date of this Agreement and will be true and
complete as of the Closing Date, and if there should be any adverse change
in
such information prior to the Closing, the Purchaser will immediately provide
the Company, in writing, with accurate and complete information concerning
any
such change. The representations and warranties contained herein and all
other
information that the Purchaser has provided to the Company are true and accurate
as of their date and shall be true and accurate as of the date of the
Purchaser’s admission to the Company as a stockholder. If in any
respect such representations, warranties or information shall not be true
and
accurate at any time prior to the Purchaser’s admission as a stockholder, the
Purchaser agrees to give prompt written notice of such fact to the Company,
specifying which representations, warranties or information are not true
and
accurate and the reasons therefore.
5.
COVENANTS AND AGREEMENTS.
5.1
Transfer Restrictions.
(a) The
Purchaser covenants that the Securities may only be disposed of pursuant
to an
effective registration statement under the 1933 Act or pursuant to an available
exemption from the registration requirements of the 1933 Act, and in compliance
with any applicable state securities laws. In connection with any
transfer of Securities other than pursuant to an effective registration
statement or to the Company or pursuant to Rule 144(k) under the 1933 Act,
the
Company may require the transferor to provide to the Company an opinion of
counsel selected by the transferor and reasonably acceptable to the Company,
the
form and substance of which opinion shall be reasonably satisfactory to the
Company, to the effect that such transfer does not require registration under
the 1933 Act. Notwithstanding the foregoing, the Company hereby
consents to and agrees to register on the books of the Company without any
such
legal opinion, any transfer of Securities by the Purchaser to an Affiliate
of
the Purchaser, provided that the transferee certifies to the Company
that it is an “accredited investor” as defined in Rule 501(a) promulgated under
the 1933 Act.
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(b) The
Purchaser agrees to the imprinting, except as otherwise permitted by Section
5.1(c), of a legend in substantially the following form on any certificate
evidencing Securities:
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THESE
SECURITIES [AND THE SECURITIES ISSUABLE UPON EXERCISE HEREOF] HAVE
NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
“SECURITIES ACT”) OR ANY STATE SECURITIES LAWS IN RELIANCE UPON AN
EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT, AND, ACCORDINGLY,
MAY NOT BE OFFERED, SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF
UNLESS
REGISTERED UNDER THE SECURITIES ACT AND UNDER APPLICABLE STATE
SECURITIES
LAWS 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 OR BLUE SKY
LAWS. THE COMPANY MAY REQUIRE AN OPINION OF COUNSEL REASONABLY
SATISFACTORY TO THE COMPANY TO THE EFFECT THAT ANY PROPOSED OFFER,
SALE,
TRANSFER OR OTHER DISPOSITION IS IN COMPLIANCE WITH THE SECURITIES
ACT AND
ANY APPLICABLE STATE SECURITIES LAWS.
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(c) Certificates
evidencing Securities shall not be required to contain the legend set forth
in
Section 5.1(b) or any other legend if such Securities are eligible for
sale under Rule 144(k) under the 1933 Act or if such legend is not required
under applicable requirements of the 1933 Act (including judicial
interpretations and pronouncements issued by the Staff of the
SEC). Following such time as a legend is no longer required for
certain Securities, the Company will, no later than ten Trading Days following
the delivery by the Purchaser to the Company of a legended certificate
representing such Securities, deliver or cause to be delivered to the Purchaser
a certificate representing such Securities that is free from all restrictive
and
other legends.
5.2
Reservation and Listing of Securities.
(a) The Company
shall maintain a reserve from its duly authorized shares of Common Stock
for
issuance pursuant to the Transaction Documents in such amount as may be required
to fulfill its obligations in full under the Transaction Documents.
(b) The Company
shall (i) in the time and manner required by each Trading Market, prepare
and
file with such Trading Market an additional shares listing application covering
all of the shares of Common Stock issued or issuable under the Transaction
Documents, (ii) take all steps necessary to cause such shares of Common Stock
to
be approved for listing on each Trading Market as soon as possible thereafter,
(iii) provide to the Purchasers evidence of such listing, and (iv) maintain
the
listing of such Common Stock on each such Trading Market.
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5.3
Reports and Filing. Upon execution of this
Agreement, the Company shall fully cooperate with the Purchaser in preparing,
drafting and filing the reports the Purchaser must file with the relevant
government authorities, agencies, offices and other institutions in connection
with the acquisition of foreign securities by the Purchaser. The Purchaser
shall
fully cooperate with the Company in preparing, drafting and filing any reports
and documents pursuant to the relevant securities laws and
regulations.
5.4
General Indemnity. The Company agrees to
indemnify and hold harmless the Purchaser and its directors, officers,
affiliates, agents, successors and assigns from an against any and all losses,
liabilities, deficiencies, costs, damages and expenses (including, without
limitation, reasonable attorneys’ fees, charges and disbursements) incurred by
the Purchaser as a result of any inaccuracy in or breach of the representations,
warranties or covenants made by the Company herein. The Purchaser
agrees to indemnify and hold harmless the Company and its directors, officers,
affiliates, agents, successors and assigns from and against any and all losses,
liabilities, deficiencies, costs, damages and expenses (including, without
limitation, reasonable attorneys’ fees, charges and disbursements) incurred by
the Company as a result of any inaccuracy in or breach of the representations,
warranties or covenants made by such the Purchaser herein.
5.5
Compliance with Laws. So long as
the Purchaser beneficially owns any Securities, the Company will use reasonable
efforts to comply with all applicable laws, rules, regulations, orders and
decrees of all governmental authorities, except to the extent non-compliance
(in
one instance or in the aggregate) would not have a Material Adverse
Effect.
5.6
Disbursement of Funds. At the Closing,
the Purchaser shall transfer the Purchase Price to a separate account of
the
Company in the manner specified in Section 2.3(b).
5.7
Antidilution.
(a) If, at any
time prior to the second anniversary of the Closing Date, the Company issues
Additional Shares of Stock at an effective net price to the Company (the
“Diluted Price”) that is less than the Adjusted Purchase Price, then
within ten Business Days of such issuance, the Company shall issue to the
Purchaser an additional number of shares of Common Stock equal to the Make-Whole
Number. No shares shall be issued pursuant to this Section 5.8
upon the issuance by the Company of warrants or options to purchase Common
Stock
or preferred stock, and any adjustment in connection with such options or
warrants shall be made at the time such options or warrants are exercised
and
the Company issues Common Stock or preferred stock, as applicable, to the
holder
thereof (provided that such exercise occurs prior to the second
anniversary of the Closing Date).
(b) For
purposes of this Section 5.7, the following defined terms shall have the
following meanings:
11
“Additional
Shares of Stock” shall mean all shares of Common Stock and/or preferred
stock issued by the Company, other than: (1) shares of Common Stock issued
upon
conversion of any shares of preferred stock of the Company; (2) shares of
Common
Stock and/or preferred stock and/or warrants and/or options (and the Common
Stock or preferred stock issued upon the exercise of such warrants and/or
options) issued before or after the Closing Date to directors, officers,
employees, consultants and other advisors of the Company and which are approved
by at least a majority of the Board of Directors of the Company; and (3)
shares
of Common Stock or preferred stock or other rights issued in connection with
any
stock dividends, combinations, splits, recapitalizations and the
like.
“Adjusted
Initial Shares” means 714,286 shares of Common Stock, as adjusted by the
Company for any stock dividend, combination, split, recapitalization and
the
like with respect to the Initial Shares occurring after the Closing
Date.
“Adjusted
Purchase Price” means $1.40 per share of Common Stock, as
adjusted by the Company for any stock dividend, combination, split,
recapitalization and the like with respect to the Initial Shares occurring
after
the Closing Date.
“Aggregate
Consideration” shall mean: (1) to the extent it consists of cash, the net
amount of cash received by the Company after deduction of any underwriting
or
similar commissions, compensation or concessions paid or allowed by the Company
in connection with such issue or sale; (2) to the extent it consists of property
other than cash, the fair value of such property as determined by the Board
of
Directors of the Company; and (3) if shares of Common Stock or preferred
stock
are issued or sold together with other stock or securities or other assets
of
the Company for a consideration that covers both, the portion of the
consideration so received that may be determined by the Board of Directors
of
the Company to be allocable to such shares of Common Stock or preferred
stock.
“Make-Whole
Number” means (1) the quotient of $1,000,000.40 divided by the Diluted
Purchase Price minus (2) the Adjusted Initial Shares.
5.8
AMEX Listing. Following the Closing, the
Company shall take commercially reasonable efforts to cause the Common Stock
to
be listed for trading on the American Stock Exchange within three years from
the
Closing Date.
6.
CONDITIONS.
6.1
Conditions Precedent to the Obligations of the
Purchaser. The obligation of the Purchaser to acquire Securities
at the Closing is subject to the satisfaction or waiver by the Purchaser,
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;
12
(b) Performance. The
Company shall have performed, satisfied and complied in all material respects
with all covenants, agreements and conditions required by the Transaction
Documents to be performed, satisfied or complied with by it at or prior to
the
Closing;
(c) No
Injunction. No statute, rule, regulation, executive order,
decree, ruling or injunction shall have been enacted, entered, promulgated
or
endorsed by any court or governmental authority of competent jurisdiction
that
prohibits the consummation of any of the transactions contemplated by the
Transaction Documents;
(d) Material
Adverse Changes. Since the date of execution of this Agreement,
no event or series of events shall have occurred that reasonably would
reasonably be expected to have or result in a Material Adverse
Effect;
(e) KT&G
Closing. The Company shall have consummated the sale of its
securities to KT&G Corporation, a Korean corporation, under that certain
Securities Purchase Agreement between the Company and KT&G Corporation of
even date herewith; provided, however, that this condition shall be
deemed to be satisfied if such closing occurs contemporaneously with the
Closing
under this Agreement; and
(f) Stockholder
Approval. The issuance of the Initial Shares and the Warrant
shall have been approved by the holders of a majority of the shares of the
outstanding Common Stock in accordance with all applicable requirements of
the
Delaware General Corporation Law and the 0000 Xxx.
6.2
Conditions Precedent to the Obligations
of the Company. The obligation of the Company to sell 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
Purchaser 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;
(b) Performance. The
Purchaser shall have performed, satisfied and complied in all material respects
with all covenants, agreements and conditions required by the Transaction
Documents to be performed, satisfied or complied with by the Purchaser at
or
prior to the Closing;
(c) No
Injunction. No statute, rule, regulation, executive order,
decree, ruling or injunction shall have been enacted, entered, promulgated
or
endorsed by any court or governmental authority of competent jurisdiction
that
prohibits the consummation of any of the transactions contemplated by the
Transaction Documents; and
(d) No
Material Adverse Effect. Since the date of execution of this
Agreement, no event or series of events shall have occurred that reasonably
would reasonably be expected to have or result in a Material Adverse
Effect.
13
(e) Stockholder
Approval. The issuance of the Initial Shares and the Warrant
shall have been approved by the holders of a majority of the shares of the
outstanding Common Stock in accordance with all applicable requirements of
the
Delaware General Corporation Law and the 1934 Act.
7.
MISCELLANEOUS.
7.1
Entire Agreement. The Transaction Documents,
together with the Exhibits and Schedules thereto, contain the entire
understanding of the parties with respect to the subject matter hereof and
supersede all prior agreements and understandings, oral or written, with
respect
to such matters, which the parties acknowledge have been merged into such
documents, exhibits and schedules.
7.2
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 e-mail at the facsimile number or e-mail address
specified in this Section 7.2 prior to 18:30 (New York City time) on a
Trading Day, (b) the Trading Day after the date of transmission, if such
notice
or communication is delivered via facsimile at the facsimile number specified
in
this Agreement later than 18:30 (New York City time) on any date and earlier
than 24:00 (New York City time) on such date, (c) the Trading Day following
the
date of mailing, if sent by nationally recognized overnight courier service,
or
(d) upon actual receipt by the party to whom such notice is required to be
given. The address for such notices and communications shall be as
follows:
|
If
to the Company:
|
||
|
0000
Xxxxxxx Xxxxxx Xxxxx
|
||
|
Xxxxxxxxx,
XX 00000
|
||
|
Attn: Tae
Heum Jeong
|
||
|
Fax
No.: (000) 000-0000
|
||
|
E-Mail: xxx@xxxxxx.xxx
|
||
|
With
a copy to:
|
Xxxxxxxxxx
& Xxxxx LLP
|
|
|
0000
Xxx Xxxxxxxxx Xxxxxx, X.X.
|
||
|
Xxxxxxxxxx,
X.X. 00000
|
||
|
Attn: Xxxx
Xxx
|
||
|
Fax
No.: (000) 000-0000
|
||
|
E-Mail: xxxx@xxxxxxxxxx.xxx
|
||
|
If
to the Purchasers
|
Rexgene
Biotech Co., Ltd.
|
|
|
0000-00
Xxxxxx-Xxxx
|
||
|
Xxxxxx-Xx,
Xxxxx, Xxxxx
|
||
|
Fax
No.: 00-0-000-0000
|
||
|
Email: xxxxxx@xxxxxxxxxx.xx.xx
|
||
|
Attn: Suk
Xxxxx Xxxx, CEO
|
14
or
such
other address as may be designated in writing hereafter, in the same manner,
by
such Person.
7.3
Amendments; Waivers. No provision of
this Agreement may be waived or amended except in a written instrument signed
by
the Company. No waiver of any default with respect to any provision,
condition or requirement of this Agreement shall be deemed to be a continuing
waiver in the future or a waiver of any subsequent default or a waiver of
any
other provision, condition or requirement hereof, nor shall any delay or
omission of either party to exercise any right hereunder in any manner impair
the exercise of any such right.
7.4
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.
7.5
Successors and Assigns. Except
as otherwise expressly provided herein, the provisions hereof shall be binding
upon and inure to the benefit of the parties and their successors and permitted
assigns.
7.6
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 Indemnitee is an intended third-party beneficiary
of
Section 6.4.
7.7
GOVERNING LAW; VENUE; WAIVER OF JURY TRIAL. ALL
QUESTIONS CONCERNING THE CONSTRUCTION, VALIDITY, ENFORCEMENT AND INTERPRETATION
OF THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN ACCORDANCE
WITH THE LAWS OF THE REPUBLIC OF KOREA WITHOUT REGARD TO CONFLICTS OF LAWS
PRINCIPLES. EACH PARTY HEREBY IRREVOCABLY SUBMITS TO
THE EXCLUSIVE JURISDICTION OF THE SEOUL CENTRAL DISTRICT COURT OF THE
REPUBLIC OF KOREA, FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN
CONNECTION HEREWITH OR WITH ANY TRANSACTION CONTEMPLATED HEREBY OR DISCUSSED
HEREIN (INCLUDING WITH RESPECT TO THE ENFORCEMENT OF ANY OF THE TRANSACTION
DOCUMENTS), AND HEREBY IRREVOCABLY WAIVES, AND AGREES NOT TO ASSERT IN ANY
SUIT,
ACTION OR PROCEEDING, ANY CLAIM THAT IT IS NOT PERSONALLY SUBJECT TO THE
JURISDICTION OF ANY SUCH COURT, OR THAT SUCH SUIT, ACTION OR PROCEEDING IS
IMPROPER. EACH PARTY HEREBY IRREVOCABLY WAIVES PERSONAL SERVICE OF
PROCESS AND CONSENTS TO PROCESS BEING SERVED IN ANY SUCH SUIT, ACTION OR
PROCEEDING BY MAILING A COPY THEREOF VIA REGISTERED OR CERTIFIED MAIL OR
OVERNIGHT DELIVERY (WITH EVIDENCE OF DELIVERY) TO SUCH PARTY AT THE ADDRESS
IN
EFFECT FOR NOTICES TO IT UNDER THIS WARRANT 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 THE PURCHASER HEREBY
WAIVE ALL RIGHTS TO A TRIAL BY JURY.
15
7.8
Survival. The representations, warranties,
agreements and covenants contained herein shall survive the Closing and the
delivery and/or exercise of the Securities for a period of one year;
provided, however, that if the Purchaser sells or transfers 50% or more
the Initial Shares to any third party, such representations, warranties and
covenants made by the parties under this Agreement immediately shall cease
to be
effective.
7.9
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, such signature shall
create a valid and binding obligation of the party executing (or on whose
behalf
such signature is executed) with the same force and effect as if such facsimile
signature page were an original thereof.
7.10 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.
7.11
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
customary and reasonable indemnity, if requested. The applicants for
a new certificate or instrument under such circumstances shall also pay any
reasonable third-party costs associated with the issuance of such replacement
Securities.
7.12
Remedies. In addition to being entitled to
exercise all rights provided herein or granted by law, including recovery
of
damages, the Purchaser and the Company will be entitled to specific performance
under the Transaction Documents. The parties agree that monetary
damages may not be adequate compensation for any loss incurred by reason
of any
breach of obligations described in the foregoing sentence and hereby agrees
to
waive in any action for specific performance of any such obligation the defense
that a remedy at law would be adequate.
7.13
Adjustments in Share Numbers and
Prices. In the event of any stock split, subdivision, dividend or
distribution payable in shares of Common Stock (or other securities or rights
convertible into, or entitling the holder thereof to receive directly or
indirectly shares of Common Stock), combination or other similar
recapitalization or event occurring after the date hereof, each reference
in any
Transaction Document to a number of shares or a price per share shall be
amended
to appropriately account for such event.
16
IN
WITNESS WHEREOF, the parties have executed this Agreement as of the date
first
above written.
|
The
Company
|
||
|
By:
|
/s/
Xxxxx X. Xxx
|
|
|
Name:
|
Xxxxx
X. Xxx
|
|
|
Title:
|
CEO
|
|
|
The
Purchaser
|
||
|
REXGENE
BIOTECH CO., LTD.
|
||
|
By:
|
/s/ X.X.
Xxxx
|
|
|
Name:
|
Suk
Xxxxx Xxxx
|
|
|
Title:
|
President
|
|
[Signature
page to Securities Purchase Agreement]
17
