Exhibit 10.51

 

  

ALLIQUA, INC.

 

Securities Purchase Agreement

 

NOVEMBER 18, 2013

 

 

 

 

TABLE OF CONTENTS

 

    PAGE       ARTICLE 1  DEFINITIONS 1       ARTICLE 2  PURCHASE AND SALE 3    
  2.1 Purchase and Sale of Stock and Warrants; Closing 3 2.2 Adjustments in
Share Numbers and Prices 4 2.3 Reserve Shares 4 2.4 Closing Deliveries 4      
ARTICLE 3  REPRESENTATIONS AND WARRANTIES 4       3.1 Representations and
Warranties of the Company 4 3.2 Representations and Warranties of the Investors
11       ARTICLE 4  OTHER AGREEMENTS OF THE PARTIES 13       4.1 Filing of
Reports 13 4.2 Listing of Shares 13 4.3 Use of Proceeds 14 4.4 Lock-Up 14      
ARTICLE 5  CONDITIONS 14       5.1 Conditions Precedent to the Obligations of
the Investors 14 5.2 Conditions Precedent to the Obligations of the Company 15  
    ARTICLE 6  GENERAL PROVISIONS 15       6.1 Termination 15 6.2 Fees and
Expenses 15 6.3 Entire Agreement 15 6.4 Notices 16 6.5 Amendments; Waivers 16
6.6 Construction 16 6.7 Successors and Assigns 16 6.8 No Third-Party
Beneficiaries 16 6.9 Governing Law; Venue; Waiver of Jury Trial 17 6.10 Survival
17 6.11 Execution 17 6.12 Severability 17 6.13 Replacement of Certificates 17
6.14 Remedies 18

 

Exhibit A: Form of Warrants

 

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SECURITIES PURCHASE AGREEMENT

 

THIS SECURITIES PURCHASE AGREEMENT (this “Agreement”), dated as of November 18,
2013, by and among Alliqua, Inc., a Florida corporation (the “Company”), and
each of the investors identified on the signature pages hereto (each, an
“Investor” and together, the “Investors”).

 

The parties hereto agree as follows:

 

ARTICLE 1
DEFINITIONS

 

In addition to the terms defined elsewhere in this Agreement, the following
terms have the meanings indicated:

 

“Affiliate” means, with respect to a Person, any Person that controls, is
controlled by or is under common control with such first Person. For purposes of
this definition only, “control” means (a) to possess, directly or indirectly,
the power to direct the management or policies of a Person, whether through
ownership of voting securities, by contract relating to voting rights or
corporate governance or otherwise, or (b) to own, directly or indirectly, fifty
percent (50%) or more of the outstanding securities or other ownership interest
of such Person.

 

“Agreement” has the meaning set forth in the Preamble.

 

“Business Day” means any day (other than a Saturday, Sunday or a legal holiday)
on which banks are open for general business in New York, New York.

 

“Celgene Transaction Documents” means that certain (a) Stock Purchase Agreement,
dated as of November 14, 2103, by and between the Company and Celgene
Corporation (the “Celgene SPA”), (b) License, Marketing and Development
Agreement, dated as of November 14, 2013, by and between the Company and
Anthrogenesis Corporation d/b/a CCT, and (c) Supply Agreement, dated as of
November 14, 2013, by and between the Company and Anthrogenesis Corporation
d/b/a CCT.

 

“Closing” means the closing of the purchase and sale of the Common Shares and
Warrants pursuant to Section 2.1.

 

“Closing Date” means the date and time of the Closing and shall take place at
4:00 p.m. EST on November 18, 2013, or on such other date and time as is
mutually agreed to by the Company and the Majority-in-Interest.

 

“Company” has the meaning set forth in the Preamble.

 

“Common Shares” has the meaning set forth in Section 2.1(a).

 

“Common Stock” has the meaning set forth in Section 2.1(a).

 

“Convertible Securities” means any stock or securities (other than Options)
convertible into or exercisable or exchangeable for Common Stock.

 

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“Disclosure Materials” has the meaning set forth in Section 3.1(g).

 

“Exchange Act” means the Securities Exchange Act of 1934, as amended.

 

“GAAP” has the meaning set forth in Section 3.1(g).

 

“Intellectual Property Rights” has the meaning set forth in Section 3.1(q).

 

“Investor” or “Investors” has the meaning set forth in the Preamble.

 

“knowledge” of the Company means with respect to any statement made to the
knowledge of the Company, that the statement is based upon the actual knowledge,
after reasonable due inquiry, of any executive officer of the Company as of the
date of this Agreement.

 

“Lien” means any lien, charge, claim, security interest, encumbrance, right of
first refusal or other restriction.

 

“Majority-in-Interest” means Investors holding at least a majority of the Common
Shares then outstanding.

 

“Material Adverse Effect” means (a) 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 (b) a material and
adverse effect on the legality, validity or enforceability of this Agreement,
provided, that none of the following alone shall be deemed, in and of itself, to
constitute a Material Adverse Effect: (x) a change in the market price or
trading volume of the Common Stock, (y) 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 the Subsidiaries taken as a whole, or
(z) effects resulting from or relating to the announcement or disclosure of the
sale of the Common Shares or other transactions contemplated by, or being taken
in connection with, this Agreement or the Celgene Transaction Documents.

 

“Material Permits” has the meaning set forth in Section 3.1(r).

 

“Options” means any outstanding rights, warrants or options to subscribe for or
purchase Common Stock or Convertible Securities.

 

“Per Share Purchase Price” has the meaning set forth in Section 2.1(a).

 

“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 and any other legal entity.

 

“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.

 

“Purchase Price” has the meaning set forth in Section 2.1(a).

 

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“SEC” means the United States Securities and Exchange Commission.

 

“SEC Reports” has the meaning set forth in Section 3.1(g).

 

“Securities Act” means the Securities Act of 1933, as amended.

 

“Short Sales” means 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, swaps, derivatives and
similar arrangements.

 

“Subsidiary” means any entity in which the Company, directly or indirectly, owns
capital stock or holds an equity or similar interest.

 

“Trading Day” means a day on which the Common Stock is traded on a Trading
Market; provided, that in the event that the Common Stock is not listed or
quoted on a Trading Market, then Trading Day shall mean a Business Day.

 

“Trading Market” means whichever of the New York Stock Exchange, the NYSE MKT,
the NASDAQ Global Select Market, the NASDAQ Global Market, the NASDAQ Capital
Market, the OTC Bulletin Board or any over the counter market operated by OTC
Markets Group Inc. (or any similar organization or agency succeeding to its
functions of reporting prices) 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(h).

 

“Transaction Documents” means this Agreement, the Warrants and the schedules and
exhibits referred to herein.

 

“Transfer Agent” means Action Stock Transfer Corp., or any successor transfer
agent for the Company.

 

“Warrant Shares” has the meaning set forth in Section 2.3.

 

“Warrants” has the meaning set forth in Section 2.1(b).

 

ARTICLE 2
PURCHASE AND SALE

 

2.1        Purchase and Sale of Stock and Warrants; Closing.

 

(a)          Upon the following terms and conditions, on the Closing Date the
Company shall issue and sell to each Investor, and each Investor shall,
severally and not jointly, purchase from the Company, that number of shares of
the Company’s common stock, par value $0.001 per share (the “Common Stock”), as
is set forth on each such Investor’s signature page hereto (collectively, the
“Common Shares”), at a price per share equal to $0.082 (the “Per Share Purchase
Price,” and such amounts in the aggregate, the “Purchase Price”).

 

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(b)          The Company further agrees to issue to each Investor on the Closing
Date, in consideration for the Purchase Price, a Warrant in substantially the
form attached hereto as Exhibit A (each a “Warrant” and collectively, the
“Warrants”), to purchase that number of shares of Common Stock as is equal to
fifty percent (50%) of the number of Common Shares purchased by each such
Investor hereunder. The Warrants shall have an initial term of five (5) years
from their issuance date and shall have an initial exercise price per share
equal to $0.13.

 

(c)          The Closing shall take place by the electronic exchange of executed
Transaction Documents.

 

2.2        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 the number of Common Shares and the Per Share
Purchase Price shall be amended to appropriately account for such event.

 

2.3        Reserve Shares. The Company has authorized and has reserved and
covenants to continue to reserve, free of preemptive rights and other similar
contractual rights of shareholders, a number of shares of Common Stock equal to
the number of shares of Common Stock issuable upon the exercise of the Warrants
(the “Warrant Shares”).

 

2.4        Closing Deliveries.

 

(a)          At the Closing, the Company shall deliver or cause to be delivered
to each Investor (i) a copy of the Company’s irrevocable instructions to the
Transfer Agent instructing the Transfer Agent to promptly deliver one or more
stock certificates, free and clear of all restrictive and other legends (except
for a customary legend to the effect that the Common Shares have not been
registered under the Securities Act), evidencing the Common Shares purchased by
such Investor hereunder, registered in the name of such Investor and (ii) a
Warrant to purchase that number of Warrant Shares equal to fifty percent (50%)
of the number of Common Shares purchased by such Investor hereunder.

 

(b)          At the Closing, each Investor shall deliver or cause to be
delivered to the Company the Purchase Price for such Investor’s Common Shares
and Warrants in United States dollars by wire transfer to an account designated
in writing to such Investor by the Company for such purpose.

 

ARTICLE 3
REPRESENTATIONS AND WARRANTIES

 

3.1        Representations and Warranties of the Company. The Company hereby
represents and warrants to the Investors that, except as set forth in the SEC
Reports or in the Schedules delivered concurrently herewith:

 

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(a)          Organization and Qualification. The Company is an entity duly
organized, validly existing and in good standing under the laws of the State of
Florida, with the requisite legal authority to own and use its properties and
assets and to carry on its business as currently conducted. Each Subsidiary is
an entity duly organized, validly existing and in good standing under the laws
of the jurisdiction of its incorporation or formation. Neither the Company nor
any Subsidiary is in violation of any of the provisions of its respective
certificate or articles of incorporation, formation, bylaws or other
organizational or charter documents. The Company and each Subsidiary is duly
qualified to do business and is in good standing as a foreign corporation or
other entity 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 result in a Material
Adverse Effect.

 

(b)          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; and the Company
has no Subsidiaries other than the following corporations: (i) AquaMed
Technologies, Inc., a Delaware corporation, (ii) Alliqua Biomedical, Inc. a
Delaware corporation, and (iii) Hepalife Biosystems, Inc. a Nevada corporation.

 

(c)          Authorization; Enforcement. The Company has the requisite corporate
authority to enter into and to consummate the transactions contemplated by this
Agreement and each of the other Transaction Documents to which it is a party and
otherwise to carry out its obligations hereunder and thereunder including the
issuance and sale of the Common Shares and Warrants. The execution and delivery
by the Company of this Agreement and each of the other Transaction Documents to
which it is party and the consummation by it of the transactions contemplated
hereby and thereby have been duly authorized by all necessary corporate action
on the part of the Company and no further consent or action is required by the
Company, its Board of Directors or its shareholders. Each of the Transaction
Documents to which to Company is party to has been duly executed by the Company
and is 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, and (ii) as limited by laws relating to the availability of specific
performance, injunctive relief or other equitable remedies.

 

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(d)          No Conflicts. The execution, delivery and performance by the
Company of this Agreement and the other Transaction Documents it is party to and
the consummation by the Company of the transactions contemplated hereby and
thereby do not, and will not, (i) conflict with or violate any provision of the
Company’s articles of incorporation, bylaws or other organizational or charter
documents, (ii) in any material respect, 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 debt or
otherwise) or other understanding to which the Company is a party or by which
any property or asset of the Company is bound, or affected, or (iii) in any
material respect, 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 is subject (including, assuming the accuracy of
the representations and warranties of the Investors set forth in Section 3.2
hereof, federal and state securities laws and regulations and the rules and
regulations of any self-regulatory organization to which the Company or its
securities are subject, including all applicable Trading Markets), or by which
any property or asset of the Company is bound or affected, except in the case of
clauses (ii) and (iii) such as would not, individually or in the aggregate, have
a Material Adverse Effect. Neither the Company nor any Subsidiary is as of the
date hereof, nor after giving effect to the transactions contemplated hereby to
occur at the Closing, will be Insolvent (as defined below). For purposes of this
Section 3.1(d), “Insolvent” means, with respect to the Company or any Subsidiary
(i) the present fair saleable value of such Person’s assets is less than the
amount required to pay such Person’s debts and liabilities, (ii) such Person is
unable to pay its debts and liabilities, subordinated, contingent or otherwise,
as such debts and liabilities become absolute and matured, (iii) such Person
intends to incur or believes that it will incur debts that would be beyond its
ability to pay as such debts mature or (iv) such Person has unreasonably small
capital with which to conduct the business in which it is engaged, as such
business is now conducted and is proposed to be conducted.

 

(e)          The Common Shares and Warrant Shares. The Common Shares 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 (other than restrictions on transfer set forth in this Agreement or
imposed by applicable securities laws) and will not be subject to preemptive or
similar rights of shareholders. When the Warrant Shares are issued in accordance
with the terms of the Warrants, such shares will be duly authorized, validly
issued, fully paid and nonassessable, free and clear of all Liens (other than
restrictions on transfer set forth in this Agreement or imposed by applicable
securities laws) and will not be subject to preemptive or similar rights of
shareholders.

 

(f)          Capitalization. The aggregate number of shares and type of all
authorized, issued and outstanding classes of 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) as of
the date hereof is set forth on Schedule 3.1(f). 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 set forth on Schedule 3.1(f), the Company does not
have outstanding any Options, script rights to subscribe to, calls or
commitments of any character whatsoever relating to, or securities, rights or
obligations convertible into or exercisable or exchangeable for, nor has it
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 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 Common Shares 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 securities to
adjust the exercise, conversion, exchange or reset price under such securities.

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(g)          SEC Reports; Financial Statements. The Company (i) has filed all
reports required to be filed by it under the Exchange Act, including pursuant to
Section 13(a) or 15(d) thereof, for the 12 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 SEC Reports prior to the expiration of any such extension, and
(ii) has filed all reports required to be filed by it under the Exchange Act,
including pursuant to Section 13(a) or 15(d) thereof, for the two years
preceding the date hereof. Such reports required to be filed by the Company
under the Exchange Act, including pursuant to Section 13(a) or 15(d) thereof,
together with the exhibits thereto and the documents incorporated by reference
therein, being collectively referred to herein as the “SEC Reports” and,
together with this Agreement and the Schedules to 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 date hereof,
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 the 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 the 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. All material agreements to which the Company or any
Subsidiary is a party or to which the property or assets of the Company or any
Subsidiary are subject are included as part of or identified in the SEC Reports,
to the extent such agreements are required to be included or identified pursuant
to the rules and regulations of the SEC.

 

(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 specifically disclosed in the SEC Reports or
as set forth in Schedule 3.1(h), (i) there has been no event, occurrence or
development that, individually or in the aggregate, has had or would reasonably
be expected to result in a Material Adverse Effect, (ii) neither the Company nor
any Subsidiary has 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
materially 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 shareholders, in their capacities as such, or purchased, redeemed or made
any agreements to purchase or redeem any shares of its capital stock (other than
in connection with repurchases of unvested stock issued to employees of the
Company), and (v) the Company has not issued any equity securities to any
officer, director or Affiliate, except pursuant to existing Company stock-based
plans. Neither the Company nor any Subsidiary has 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.

 

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(i)          Absence of Litigation. 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 or
affecting the Company or any Subsidiary that would, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect.

 

(j)          Compliance. Except as would not, individually or in the aggregate,
reasonably be expected to 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, and
(iii) neither the Company nor any Subsidiary is or has been in violation of any
statute, rule or regulation of any governmental authority. The Company has not
taken, in violation of applicable law, any action designed to or that would have
reasonably expected to cause or result in stabilization or manipulation of the
price of the Common Stock to facilitate the sale of the Common Shares and
Warrants.

 

(k)          Placement Agent’s Fees. 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 Affiliates)
relating to or arising out of the issuance of the Common Shares and Warrants to
the Investors pursuant to this Agreement. The Company shall pay, and hold the
Investors harmless against, any liability, loss or expense (including, without
limitation, reasonable attorney’s fees and out-of-pocket expenses) arising in
connection with any such claim for fees arising out of the issuance of the
Common Shares and Warrants pursuant to this Agreement. Except for Summer Street
Research Partners (“Summer Street”), as placement agent in connection with the
offer and sale of Common Shares and Warrants pursuant this Agreement, which the
Company has agreed to pay a cash fee of 7% of the Purchase Price and issue a
warrant, in the form of the Warrant, to purchase such number of shares of Common
Stock equal to 7% of the number of Common Shares sold pursuant to this
Agreement, the Company does not intend to pay any placement agent’s fees,
financial advisory fees, or brokers’ commissions in connection with the sale of
the Common Shares and Warrants.

 

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(l)          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
Common Shares and Warrants as contemplated hereby or (ii) cause the offering of
the Common Shares and Warrants pursuant hereto to be integrated with prior
offerings by the Company for purposes of any applicable law, regulation or
shareholder approval provisions, including, without limitation, under the rules
and regulations of any Trading Market. Assuming the accuracy of the
representations and warranties of the Investors set forth in Section 3.2, no
registration under the Securities Act is required for the offer and sale of the
Common Shares and Warrants by the Company to the Investor as contemplated
hereby. The Company is not required to be registered as, and is not an Affiliate
of, 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.

 

(m)         Registration Rights. 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.

 

(n)          Application of Takeover Protections. The Company and its Board of
Directors have taken all necessary action, if any, including under the Florida
Business Corporation Act, 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 Investors or their Affiliates as a result of the Investors and
the Company fulfilling their obligations or exercising their rights under the
Transaction Documents, including, without limitation, as a result of the
Company’s issuance of the Common Shares and Warrants to the Investors and the
Investors’ ownership thereof.

 

(o)          Disclosure. All written disclosure provided by the Company to the
Investors regarding the Company, its business and the transactions contemplated
hereby are true and correct in all material respects and do not contain any
untrue statement of a material fact or omit to state any material fact necessary
in order to make the statements made therein, in the light of the circumstances
under which they were made, not misleading. To the Company’s knowledge, no event
or circumstance has occurred or information exists with respect to the Company
or any Subsidiary or their respective business, properties, operations or
financial condition, 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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(p)          Transactions With Affiliates and Employees. Except as set forth on
Schedule 3.1(p), none of the officers, directors or employees of the Company is
presently a party to any transaction with the Company that would be required to
be reported on Form 10-K by Item 13 thereof pursuant to Regulation S-K Item
404(a) (other than for ordinary course services as employees, officers or
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 such
officer, director or employee or, to the Company’s knowledge, any corporation,
partnership, trust or other entity in which any such officer, director, or
employee has a substantial interest or is an officer, director, trustee or
partner.

 

(q)          Patents and Trademarks. The Company and each Subsidiary owns, or
possesses adequate rights or licenses to use, all trademarks, trade names,
service marks, service mark 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. The Company does not have any knowledge of any
infringement by the Company or any Subsidiary of Intellectual Property Rights of
others and 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.

 

(r)          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, reasonably be expected to result in a
Material Adverse Effect, and neither the Company nor any Subsidiary has received
any written notice of proceedings relating to the revocation or modification of
any Material Permit.

 

(s)          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 is as disclosed in
the SEC Reports. During the period covered by the SEC Reports, no executive
officer or key employee of the Company or any Subsidiary has notified the
Company or any Subsidiary that such officer or key employee intends to leave the
Company or a Subsidiary, as applicable, or otherwise terminate such officer’s or
key employee’s employment with the Company or a Subsidiary, as applicable. To
the knowledge of the Company, no executive officer or key employee 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 or key
employee does not subject the Company or any Subsidiary to any liability with
respect to any of the foregoing matters.

 

10

 

 

(t)          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.

 

(u)          Listing and Maintenance Requirements. The Common Stock is
registered pursuant to Section 12(b) or 12(g) of the Exchange Act, and the
Company has taken no action designed to terminate the registration of the Common
Stock under the Exchange Act nor has the Company received any notification that
the SEC is contemplating terminating such registration. The Company is in
compliance with applicable OTCQB trading qualification requirements. There are
no proceedings pending or, to the Company’s knowledge, threatened against the
Company relating to the Common Stock’s continued qualification for trading on
the OTCQB market.

 

3.2        Representations and Warranties of the Investors. Each Investor,
severally and not jointly, hereby represents and warrants to the Company as
follows:

 

(a)          Organization; Authority. Such Investor has full power and authority
to enter into and to consummate the transactions contemplated by this Agreement
and otherwise to carry out its obligations hereunder. The purchase by such
Investor of the Common Shares and Warrants hereunder has been duly authorized by
all necessary corporate action on the part of such Investor. This Agreement has
been duly executed and delivered by such Investor and constitutes the valid and
binding obligation of such Investor, enforceable against it in accordance with
its terms, except (i) as limited by general equitable principles and applicable
bankruptcy, insolvency, reorganization, moratorium and other laws of general
application affecting enforcement of creditors’ rights generally, and (ii) as
limited by laws relating to the availability of specific performance, injunctive
relief or other equitable remedies.

 

(b)          No Public Sale or Distribution. Such Investor is acquiring the
Common Shares and Warrants for its own account and not with a view towards, or
for resale in connection with, the public sale or distribution thereof, except
pursuant to sales registered under the Securities Act or under an exemption from
such registration and in compliance with applicable federal and state securities
laws, and such Investor does not have a present arrangement to effect any
distribution of the Common Shares or Warrants to or through any person or
entity; provided, however, that by making the representations herein, such
Investor does not agree to hold any of the Common Shares or Warrant Shares for
any minimum or other specific term and reserves the right to dispose of the
Common Shares or Warrant Shares at any time in accordance with or pursuant to a
registration statement or an exemption under the Securities Act.

 

(c)          Investor Status. At the time such Investor was offered the Common
Shares and Warrants, it was, and at the date hereof it is an “accredited
investor” as defined in Rule 501(a) under the Securities Act and as indicated by
such Investor’s response to the investor questionnaire attached hereto as
Schedule A. Such Investor is not a registered broker dealer registered under
Section 15(a) of the Exchange Act, or a member of the Financial Industry
Regulatory Authority, Inc. or an entity engaged in the business of being a
broker dealer.

 

11

 

 

(d)          Experience of Such Investor. Such Investor, either alone or
together with its representatives, has such knowledge, sophistication and
experience in business and financial matters so as to be capable of evaluating
the merits and risks of the prospective investment in the Common Shares and
Warrants, and has so evaluated the merits and risks of such investment. Such
Investor understands that it must bear the economic risk of this investment in
the Common Shares and Warrants indefinitely, and is able to bear such risk and
is able to afford a complete loss of such investment.

 

(e)          Access to Information. Such Investor acknowledges that it has
reviewed the Disclosure Materials and has been afforded: (i) the opportunity to
ask such questions as it has deemed necessary of, and to receive answers from,
representatives of the Company concerning the terms and conditions of the
offering of the Common Shares and Warrants and the merits and risks of investing
in the Common Shares and Warrants; (ii) access to information (other than
material non-public information) about the Company and its financial condition,
results of operations, business, properties, management and prospects sufficient
to enable it to evaluate its investment; and (iii) the opportunity to obtain
such additional information that the Company possesses or can acquire without
unreasonable effort or expense that is necessary to make an informed investment
decision with respect to the investment. Neither such inquiries nor any other
investigation conducted by or on behalf of such Investor or its representatives
or counsel shall modify, amend or affect such Investor’s right to rely on the
truth, accuracy and completeness of the Disclosure Materials and the Company’s
representations and warranties contained in the Transaction Documents.

 

(f)          No Conflicts. The execution, delivery and performance by such
Investor of this Agreement and the consummation by such Investor of the
transactions contemplated hereby will not (i) to the extent such Investor is not
a natural person, result in a violation of the organizational documents of such
Investor or (ii) conflict with, or constitute a default (or an event which with
notice or lapse of time or both would become a default) under, or give to others
any rights of termination, amendment, acceleration or cancellation of, any
agreement, indenture or instrument to which such Investor is a party, or
(iii) result in a violation of any law, rule, regulation, order, judgment or
decree (including federal and state securities laws) applicable to such
Investor, except in the case of clauses (ii) and (iii) above, for such that are
not material and do not otherwise affect the ability of such Investor to
consummate the transactions contemplated hereby.

 

(g)          Restricted Securities. Such Investor understands that the Common
Shares, Warrants and Warrant Shares (upon issuance) 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. Such Investor further understands that the certificates
evidencing the Common Shares, Warrants and Warrant Shares purchased by it will
contain the following legend:

 

12

 

 

THESE SECURITIES HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE
COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN
EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
“SECURITIES ACT”), OR ANY APPLICABLE STATE SECURITIES LAWS AND, ACCORDINGLY, MAY
NOT BE OFFERED OR SOLD 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.

 

(h)          Prohibited Transactions. Such Investor has not, directly or
indirectly, and no Person acting on behalf of or pursuant to any understanding
with such Investor has, engaged in any purchases or sales in the securities,
including derivatives, of the Company (including, without limitation, any Short
Sales (a “Transaction”) involving any of the Company’s securities) since the
time that such Investor was first contacted by the Company or any other Person
regarding an investment in the Company. Such Investor covenants that neither it
nor any Person acting on its behalf or pursuant to any understanding with such
Investor will engage, directly or indirectly, in any Transactions in the
securities of the Company (including Short Sales) prior to the time the
transactions contemplated by this Agreement are publicly disclosed.

 

ARTICLE 4
OTHER AGREEMENTS OF THE PARTIES

 

4.1        Filing of Reports. Until the date that all Investors (or any
transferee that is an Affiliate of such Investor) cease to own any Common Shares
or Warrant Shares, the Company covenants to use its commercially reasonable
efforts to (a) 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 Securities Act and the Exchange
Act, (b) comply with the requirements of Rule 144(c) under the Securities Act
with respect to current public information about the Company, and (c) furnish to
each Investor promptly upon request therefor (i) a written statement by the
Company as to its compliance with the requirements of Rule 144(c) under the
Securities Act, and the reporting requirements under the Securities Act and the
Exchange Act, and (ii) such reports and documents of the Company as such
Investor may reasonably request to avail itself (or its Affiliates) of any
similar rule or regulation of the SEC allowing it (or its Affiliates) to sell
any such securities without registration.

 

4.2        Listing of Shares. Promptly following the date hereof, the Company
shall take all necessary action to cause the Common Shares and Warrant Shares to
be qualified for trading on the OTCQB. If the Company applies to have its Common
Stock or other securities traded on any other principal stock exchange or
market, it shall include in such application the Common Shares and Warrant
Shares and will take such other action as is necessary to cause such Common
Shares and Warrant Shares to be so listed.

 

13

 

 

4.3        Use of Proceeds. The Company will use the net proceeds from the sale
of the Common Shares and Warrants for working capital and general corporate
purposes.

 

4.4        Lock-Up. During the six (6) month period following the Closing, each
Investor shall not, without the consent of the Company, issue, sell, offer or
agree to sell, grant any option for the sale of, pledge, enter into any swap,
derivative transaction or other arrangement that transfers to another, in whole
or in part, any of the economic consequences of ownership of any of the Common
Shares or Warrant Shares (whether any such transaction is to be settled by
delivery of Common Shares or Warrant Shares, other securities, cash or other
consideration) or otherwise dispose (or publicly announce the undersigned’s
intention to do any of the foregoing) of, directly or indirectly, any Common
Shares or Warrant Shares. Notwithstanding anything in this Agreement to the
contrary, subject to the requirements of Section 6.7, no Investor shall be
restricted from transferring any of the Common Shares or Warrant Shares to any
Affiliate of such Investor.

 

ARTICLE 5
CONDITIONS

 

5.1        Conditions Precedent to the Obligations of the Investors. The
obligation of the Investors to purchase the Common Shares and Warrants at the
Closing is subject to the satisfaction or waiver by the Majority-in-Interest, 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 as of such specific date);

 

(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 Suspensions of Trading in Common Stock. Trading in the Common
Stock shall not have been suspended by the SEC or any other applicable authority
at any time since the date of execution of this Agreement;

 

(d)          Absence of Litigation. No action, suit or proceeding by or before
any court or any governmental body or authority, against the Company 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; and

 

(e)          No Injunction. No preliminary or permanent injunction or other
order issued by a court of competent jurisdiction which prevents the
consummation of the transactions contemplated by any of the Transaction
Documents shall have been issued and remain in effect, provided, however, that
the parties shall use their respective commercially reasonable efforts to have
any such order or injunction lifted.

 

14

 

 

5.2        Conditions Precedent to the Obligations of the Company. The
obligation of the Company to sell the Common Shares and Warrants 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 each 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 as of such specific date);

 

(b)          Performance. Each Investor shall have performed, satisfied and
complied in all material respects with all covenants, agreements and conditions
required by the Transaction Documents to be performed, satisfied or complied
with by such Investor at or prior to the Closing; and

 

(c)          No Injunction. No preliminary or permanent injunction or other
order issued by a court of competent jurisdiction which prevents the
consummation of the transactions contemplated hereby shall have been issued and
remain in effect, provided, however, that the parties shall use their respective
commercially reasonable efforts to have any such order or injunction lifted.

 

ARTICLE 6
GENERAL PROVISIONS

 

6.1        Termination. This Agreement may be terminated by the Company or the
Majority-in-Interest, by written notice to the other parties, if the Closing has
not been consummated by November 29, 2013; provided that no such termination
will affect the right of any party to sue for any breach by the other party (or
parties) occurring prior to such termination.

 

6.2        Fees and Expenses. Except as expressly set forth in the Transaction
Documents to the contrary, each party shall pay the fees and expenses of its
advisers, counsel, accountants and other experts, if any, and all other expenses
incurred by such party incident to the negotiation, preparation, execution,
delivery and performance of this Agreement. The Company shall pay all Transfer
Agent fees, stamp taxes and other taxes and duties levied in connection with the
sale and issuance of the Common Shares.

 

6.3        Entire Agreement. This Agreement, together with the Exhibits and
Schedules hereto, contains the entire understanding of the parties with respect
to the subject matter hereof and supersedes 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 each Investor such further documents as may be reasonably
requested in order to give practical effect to the intention of the parties
under this Agreement.

 

15

 

 

6.4        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  prior to 6:30 p.m.
(New York City 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 on a
day that is not a Trading Day or later than 6:30 p.m. (New York City 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.

 

6.5        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 Majority-in-Interest or, in the case of a waiver, by the
party against whom enforcement of any such waiver is sought. No waiver of any
default with respect to any provision, condition or requirement of this
Agreement shall be deemed to be a continuing waiver in the future or a waiver of
any subsequent default or a waiver of any other provision, condition or
requirement hereof, nor shall any delay or omission of any party to exercise any
right hereunder in any manner impair the exercise of any such right.

 

6.6        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.

 

6.7        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 Majority-in-Interest. Each Investor may
assign its rights under this Agreement to any Person to whom such Investor
assigns or transfers any of such Investor’s Common Shares, provided (i) such
Investor 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 the name and
address of such transferee or assignee, (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 Common Shares, by the provisions hereof that apply to the “Investor”
and such transferee is not a competitor of, or Affiliated with a competitor of,
the Company and (v) such transfer shall have been made in accordance with the
applicable requirements of this Agreement and with all laws applicable thereto.

 

6.8        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.

 

16

 

 

6.9        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 IN ACCORDANCE WITH THE LAWS OF THE STATE OF
NEW YORK. THE COMPANY AND THE INVESTORS HEREBY IRREVOCABLY SUBMIT TO THE
EXCLUSIVE JURISDICTION OF THE STATE AND FEDERAL COURTS SITTING IN THE CITY OF
NEW YORK, BOROUGH OF MANHATTAN 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, AND HEREBY IRREVOCABLY
WAIVE, AND AGREE NOT TO ASSERT IN ANY SUIT, ACTION OR PROCEEDING BROUGHT BY THE
COMPANY OR ANY INVESTOR, ANY CLAIM THAT IT IS NOT PERSONALLY SUBJECT TO THE
JURISDICTION OF ANY SUCH COURT, OR THAT SUCH SUIT, ACTION OR PROCEEDING IS
IMPROPER. EACH PARTY HEREBY IRREVOCABLY WAIVES PERSONAL SERVICE OF PROCESS AND
CONSENTS TO PROCESS BEING SERVED IN ANY SUCH SUIT, ACTION OR PROCEEDING BY
MAILING A COPY THEREOF VIA REGISTERED OR CERTIFIED MAIL OR OVERNIGHT DELIVERY
(WITH EVIDENCE OF DELIVERY) TO SUCH PARTY AT THE ADDRESS IN EFFECT FOR NOTICES
TO IT UNDER THIS AGREEMENT AND AGREES THAT SUCH SERVICE SHALL CONSTITUTE GOOD
AND SUFFICIENT SERVICE OF PROCESS AND NOTICE THEREOF. NOTHING CONTAINED HEREIN
SHALL BE DEEMED TO LIMIT IN ANY WAY ANY RIGHT TO SERVE PROCESS IN ANY MANNER
PERMITTED BY LAW. THE COMPANY AND THE INVESTORS HEREBY WAIVE ALL RIGHTS TO A
TRIAL BY JURY.

 

6.10      Survival. The representations and warranties, agreements and covenants
contained herein shall survive the Closing.

 

6.11      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.

 

6.12      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.

 

6.13      Replacement of Certificates. If any certificate or instrument
evidencing any Common Shares 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.

 

17

 

 

6.14      Remedies. In addition to being entitled to exercise all rights
provided herein or granted by law, including recovery of damages, each of the
Investors and the Company will be entitled to seek specific performance under
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.

 

[SIGNATURE PAGES TO FOLLOW]

 

18

 

 

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed by their respective authorized signatories as of the date first
indicated above.

 

  Alliqua, INC.         By: /s/ Brian Posner     Name:  Brian Posner     Title:
Chief Financial Officer         Address for Notice:       2150 Cabot Boulevard
West   Langhorne, PA  19047   Attn: Chief Executive Officer   Facsimile
No.:  (215) 702-8535   Telephone No.: _____________       With a copy (which
shall not constitute notice) to:       Haynes and Boone, LLP   30 Rockefeller
Plaza   26th Floor   New York, New York 10112   Attn: Rick Werner, Esq.  
Facsimile No.: (212) 884-8234   Telephone No.: (212) 659-4974

  

Signature Page to Securities Purchase Agreement

 

 

 

 

  Investors:       [_____________________]         By:     Name:   Title:      
Address for Notice:   ___________________________________  
___________________________________   ___________________________________  
Attention: ___________________________   Facsimile: (___)______________________
  Telephone: (___)______________________

 

  Number of Common Shares: _________________________         Number of Warrant
Shares: _________________________         Purchase Price:
$________________________         Tax ID Number: _________________________

 

Delivery Instructions (if different from above):

___________________________________

___________________________________

___________________________________

Attention: ___________________________

Facsimile: (___)______________________

Telephone: (___)______________________

 

Other Special Instructions:    ___________________________________________

 

Signature Page to Securities Purchase Agreement

 

 

 

 

Exhibit A

 

FORM OF WARRANT

 

 

 

 

Schedule A

 

ACCREDITED INVESTOR QUESTIONNAIRE

 

For Individual Investors Only

 

(All individual investors must INITIAL where appropriate. Where there are joint
investors both parties must INITIAL):

 

Initial _______ I certify that I have a “net worth” of at least $1 million
either individually or through aggregating my individual holdings and those in
which I have a joint, community property or other similar shared ownership
interest with my spouse. For purposes of calculating net worth under this
paragraph, (i) the primary residence shall not be included as an asset, (ii) to
the extent that the indebtedness that is secured by the primary residence is in
excess of the fair market value of the primary residence, the excess amount
shall be included as a liability, and (iii) if the amount of outstanding
indebtedness that is secured by the primary residence exceeds the amount
outstanding 60 days prior to investing in this Offering, other than as a result
of the acquisition of the primary residence, the amount of such excess shall be
included as a liability.

 

Initial _______ I certify that I have had an annual gross income for the past
two years of at least $200,000 (or $300,000 jointly with my spouse) and expect
my income (or joint income, as appropriate) to reach the same level in the
current year.

 

For Non-Individual Investors

 

(all Non-Individual Investors must INITIAL where appropriate):

 

Initial _______ The undersigned certifies that it is a partnership, corporation,
limited liability company or business trust that is 100% owned by persons who
meet either of the criteria for Individual Investors, above.

 

Initial _______ The undersigned certifies that it is a partnership, corporation,
limited liability company or business trust that has total assets of at least $5
million and was not formed for the purpose of investing in the Company.

 

Initial _______ The undersigned certifies that it is an employee benefit plan
whose investment decision is made by a plan fiduciary (as defined in ERISA
§3(21)) that is a bank, savings and loan association, insurance company or
registered investment adviser.

 

Initial _______ The undersigned certifies that it is an employee benefit plan
whose total assets exceed $5,000,000 as of the date of the Purchase Agreement.

 

Initial _______ The undersigned certifies that it is a self-directed employee
benefit plan whose investment decisions are made solely by persons who meet
either of the criteria for Individual Investors, above.

 

 

 

 

Initial _______ The undersigned certifies that it is a U.S. bank, U.S. savings
and loan association or other similar U.S. institution acting in its individual
or fiduciary capacity.

 

Initial _______ The undersigned certifies that it is a broker-dealer registered
pursuant to §15 of the Securities Exchange Act of 1934, as amended.

 

Initial _______ The undersigned certifies that it is an organization described
in §501(c)(3) of the Internal Revenue Code with total assets exceeding
$5,000,000 and not formed for the specific purpose of investing in the Company.

 

Initial _______ The undersigned certifies that it is a trust with total assets
of at least $5,000,000, not formed for the specific purpose of investing in the
Company, and whose purchase is directed by a person with such knowledge and
experience in financial and business matters that he is capable of evaluating
the merits and risks of the prospective investment.

 

Initial _______ The undersigned certifies that it is a plan established and
maintained by a state or its political subdivisions, or any agency or
instrumentality thereof, for the benefit of its employees, and which has total
assets in excess of $5,000,000.

 

Initial _______ The undersigned certifies that it is an insurance company as
defined in §2(a)(13) of the Securities Act of 1933, as amended, or a registered
investment company.