Exhibit 10.1

 

PURCHASE AGREEMENT

 

 

THIS PURCHASE AGREEMENT (“Agreement”) is made as of the 20th day of December,
2018 by and among PLx Pharma Inc., a Delaware corporation (the “Company”), and
the Investors set forth on the signature pages affixed hereto (each an
“Investor” and collectively the “Investors”).

 

Recitals

 

A. The Company and the Investors are executing and delivering this Agreement in
reliance upon the exemption from securities registration afforded by the
provisions of Regulation D (“Regulation D”), as promulgated by the U.S.
Securities and Exchange Commission (the “SEC”) under the Act (as defined below);
and

 

B. The Company proposes to sell and issue to one or more investors, upon the
terms and conditions stated in this Agreement, up to an aggregate of 15,000
shares (the “Shares”) of the Company’s Series A Convertible Preferred Stock, par
value $0.001 per share (the “Preferred Stock”), such shares of Preferred Stock
to have the relative rights, preferences and designations set forth in the
Certificate of Designations, Preferences and Rights set forth in Exhibit A
attached hereto (the “Certificate of Designation”) at a purchase price of $1,000
per Share; and

 

C. Contemporaneous with the sale of the Shares, the parties hereto will execute
and deliver a Registration Rights Agreement, in the form attached hereto as
Exhibit C (the “Registration Rights Agreement”), pursuant to which the Company
will agree to provide certain registration rights under the Act, and the rules
and regulations promulgated thereunder, and applicable state securities laws;
and

 

D. Contemporaneous with the execution of this Agreement, the Company is issuing
and delivering the Commitment Warrants (as defined below) to Park West (as
defined below), in the denominations and registered in such names as Park West
or its designees have requested prior to the date hereof.

 

In consideration of the mutual promises made herein and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto 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 set forth below:

 

“Affiliate” means, with respect to any Person, any other Person which directly
or indirectly through one or more intermediaries Controls, is controlled by, or
is under common control with, such Person.

 

 

 

“Business Day” means a day, other than a Saturday or Sunday, on which banks in
New York City are open for the general transaction of business.

 

“Commitment Warrants” means warrants to purchase an aggregate of 500,000 shares
of Common Stock at an exercise price of $3.50 per share (subject to adjustment),
in the form attached hereto as Exhibit B.

 

“Common Stock” means the Company’s common stock, par value $0.001 per share,
together with any securities into which such shares may be reclassified, whether
by merger, charter amendment or otherwise.

 

“Common Stock Equivalents” means any securities of the Company or the
Subsidiaries which would entitle the holder thereof to acquire at any time
Common Stock, including without limitation, any debt, preferred stock, rights,
options, warrants or other instrument that is at any time convertible into,
exercisable or exchangeable for, or otherwise entitles the holder thereof to
receive, Common Stock.

 

“Company’s Knowledge” means the actual knowledge of the executive officers (as
defined in Rule 405 under the 1933 Act) of the Company, except for the Company’s
Chief Medical Officer, after due inquiry.

 

“Confidential Information” means trade secrets, confidential information and
know-how (including but not limited to ideas, formulae, compositions, processes,
procedures and techniques, research and development information, computer
program code, performance specifications, support documentation, drawings,
specifications, designs, business and marketing plans, and customer and supplier
lists and related information).

 

“Control” (including the terms “controlling”, “controlled by” or “under common
control with”) means the possession, direct or indirect, of the power to direct
or cause the direction of the management and policies of a Person, whether
through the ownership of voting securities, by contract or otherwise.

 

“Conversion Shares” means the shares of Common Stock issuable upon the
conversion of the Shares.

 

“Effective Date” means the date on which the initial Registration Statement is
declared effective by the SEC.

 

“Effectiveness Deadline” means the date on which the initial Registration
Statement is required to be declared effective by the SEC under the terms of the
Registration Rights Agreement.

 

“Insider” means each director or executive officer of the Company, any other
officer of the Company participating in the offering, any beneficial owner of
20% or more of the Company’s outstanding voting equity securities, calculated on
the basis of voting power, and any promoter connected with the Company in any
capacity on the date hereof.

 

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“Intellectual Property” means all of the following: (i) patents, patent
applications, patent disclosures and inventions (whether or not patentable and
whether or not reduced to practice); (ii) trademarks, service marks, trade
dress, trade names, corporate names, logos, slogans and Internet domain names,
together with all goodwill associated with each of the foregoing; (iii)
copyrights and copyrightable works; (iv) registrations, applications for
registration and renewals of registration for any of the foregoing; and (v)
proprietary computer software (including but not limited to data, databases and
documentation).

 

“Material Adverse Effect” means a material adverse effect on (i) the assets,
liabilities, results of operations, condition (financial or otherwise), business
or prospects of the Company and its Subsidiaries taken as a whole, or (ii) the
ability of the Company to perform its obligations under the Transaction
Documents.

 

“Material Contract” means any contract, instrument or other agreement to which
the Company or any Subsidiary is a party or by which it is bound which has been
filed as an exhibit to the SEC Filings pursuant to Item 601(b)(4) or Item
601(b)(10) of Regulation S-K.

 

“Nasdaq” means The Nasdaq Capital Market.

 

“Person” means an individual, corporation, partnership, limited liability
company, trust, business trust, association, joint stock company, joint venture,
sole proprietorship, unincorporated organization, governmental authority or any
other form of entity not specifically listed herein.

 

“Park West” means Park West Asset Management LLC and its Affiliates.

 

“Proposals” has the meaning set forth in Section 7.9.

 

“Purchase Price” means one thousand Dollars ($1,000) per Share.

 

“Registration Statement” has the meaning set forth in the Registration Rights
Agreement.

 

“Required Investors” has the meaning set forth in the Registration Rights
Agreement.

 

“SEC Filings” has the meaning set forth in Section 4.6.

 

“Securities” means the Shares, the Conversion Shares, the Warrants and the
Warrant Shares.

 

“Shares” means the shares of Preferred Stock to be purchased by the Investors
hereunder.

 

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“Stockholder Approval” means the approval of the Proposals by the stockholders
of the Company in accordance with applicable law, the Company’s Certificate of
Incorporation and Bylaws and the applicable requirements of Nasdaq.

 

“Subsidiary” of any Person means another Person, an amount of the voting
securities, other voting ownership or voting partnership interests of which is
sufficient to elect at least a majority of its Board of Directors or other
governing body (or, if there are no such voting interests, 50% or more of the
equity interests of which) is owned directly or indirectly by such first Person.

 

“Transaction Documents” means this Agreement, the Certificate of Designation,
the Warrants and the Registration Rights Agreement.

 

“Warrants” means the Commitment Warrants.

 

“Warrant Shares” means the shares of Common Stock issuable upon the exercise of
the Warrants.

 

“1933 Act” means the Securities Act of 1933, as amended, or any successor
statute, and the rules and regulations promulgated thereunder.

 

“1934 Act” means the Securities Exchange Act of 1934, as amended, or any
successor statute, and the rules and regulations promulgated thereunder.

 

2.       Purchase and Sale of the Shares: Issuance of Commitment Warrants.

 

(a)       Subject to the terms and conditions of this Agreement, on the Closing
Date (as defined below), each of the Investors shall severally, and not jointly,
purchase, and the Company shall sell and issue to the Investors, the Shares in
the respective amounts set forth opposite the Investors’ names on the signature
pages attached hereto in exchange for such Investor’s pro rata portion of the
Purchase Price as specified in Section 3 below.

 

(b)       On the date hereof, and contemporaneous with the execution of this
Agreement, the Company shall issue and deliver the Commitment Warrants to Park
West, in the denominations and registered in such names as Park West or its
designees have requested on or prior to the date hereof.

 

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3.       Closing. Upon confirmation that the other conditions to closing
specified herein have been satisfied or duly waived by the Investors, the
Company shall file the Certificate of Designation with the Secretary of State of
Delaware. Unless other arrangements have been made with a particular Investor,
upon confirmation that the Certificate of Designation has been filed and has
become effective, the Company shall deliver to Lowenstein Sandler LLP, in trust,
a certificate or certificates, registered in such name or names as the Investors
may designate, representing the Shares, with instructions that such certificates
are to be held for release to the Investors only upon payment in full of the
Purchase Price to the Company by all the Investors. Unless other arrangements
have been made with a particular Investor, upon such receipt by Lowenstein
Sandler LLC of the certificates, each Investor shall promptly, but no more than
one Business Day thereafter, cause a wire transfer in same day funds to be sent
to the account of the Company as instructed in writing by the Company, in an
amount representing such Investor’s pro rata portion of the Purchase Price as
set forth on the signature pages to this Agreement. On the date (the “Closing
Date”) the Company receives the Purchase Price, the certificates evidencing the
Shares shall be released to the Investors (the “Closing”). The Closing of the
purchase and sale of the Shares shall take place at the offices of Lowenstein
Sandler LLP, 1251 Avenue of the Americas, 18th Floor, New York, New York 10020,
or at such other location and on such other date as the Company and the
Investors shall mutually agree.

 

4.       Representations and Warranties of the Company. The Company hereby
represents and warrants to the Investors, except as set forth on the Disclosure
Schedule attached as Exhibit D to this Agreement, which exceptions shall be
deemed to be part of the representations and warranties made hereunder, that:

 

4. 1       Organization, Good Standing and Qualification. Each of the Company
and its Subsidiaries is a corporation duly organized, validly existing and in
good standing under the laws of the jurisdiction of its incorporation and has
all requisite corporate power and authority to carry on its business as now
conducted and to own or lease its properties, in each case as described in the
SEC Filings. Each of the Company and its Subsidiaries is duly qualified to do
business as a foreign corporation and is in good standing in each jurisdiction
in which the conduct of its business or its ownership or leasing of property
makes such qualification or leasing necessary unless the failure to so qualify
or to be in good standing has not had and could not reasonably be expected to
have a Material Adverse Effect.

 

4.2       Authorization. The Company has the corporate power and authority to
enter into this Agreement and, except for approval of the Proposals by its
stockholders as contemplated in Section 7.9, has taken all requisite action on
its part, its officers, directors and stockholders necessary for (i) the
authorization, execution and delivery of the Transaction Documents, (ii) the
authorization of the performance of all obligations of the Company hereunder or
thereunder, and (iii) the authorization, issuance (or reservation for issuance)
and delivery of the Securities The Transaction Documents constitute the legal,
valid and binding obligations of the Company, enforceable against the Company in
accordance with their terms, subject to bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium and similar laws of general applicability,
relating to or affecting creditors’ rights generally and to general equitable
principles.

 

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4.3       Capitalization. Except as set forth on Schedule 4.3, the Company has
duly and validly authorized capital stock as set forth in the SEC Filings and in
the Amended and Restated Certificate of Incorporation of the Company, as amended
and as in effect as of the Closing Date (the “Certificate of Incorporation”).
All of the issued and outstanding shares of the Company’s capital stock have
been duly authorized and validly issued and are fully paid, nonassessable and
free of pre-emptive rights and were issued in full compliance with applicable
state and federal securities law and any rights of third parties. Except as
described in the SEC Filings, all of the issued and outstanding shares of
capital stock of each Subsidiary have been duly authorized and validly issued
and are fully paid, nonassessable and free of pre-emptive rights, were issued in
full compliance with applicable state and federal securities law and any rights
of third parties and are owned by the Company, beneficially and of record,
subject to no lien, encumbrance or other adverse claim. Except as described in
the SEC Filings, no Person is entitled to pre-emptive or similar statutory or
contractual rights with respect to any securities of the Company. Except as
described in the SEC Filings, there are no outstanding warrants, options,
convertible securities or other rights, agreements or arrangements of any
character under which the Company or any of its Subsidiaries is or may be
obligated to issue any equity securities of any kind and except as contemplated
by this Agreement, neither the Company nor any of its Subsidiaries is currently
in negotiations for the issuance of any equity securities of any kind. Except as
described in the SEC Filings and except for the Registration Rights Agreement,
there are no voting agreements, buy-sell agreements, option or right of first
purchase agreements or other agreements of any kind among the Company and any of
the securityholders of the Company relating to the securities of the Company
held by them. Except as described in the SEC Filings and except as provided in
the Registration Rights Agreement, no Person has the right to require the
Company to register any securities of the Company under the 1933 Act, whether on
a demand basis or in connection with the registration of securities of the
Company for its own account or for the account of any other Person.

 

Except as described in the SEC Filings, the issuance and sale of the Securities
hereunder will not obligate the Company to issue shares of Common Stock or other
securities to any other Person (other than the Investors) and will not result in
the adjustment of the exercise, conversion, exchange or reset price of any
outstanding security.

 

Except as described in the SEC Filings, the Company does not have outstanding
stockholder purchase rights or “poison pill” or any similar arrangement in
effect giving any Person the right to purchase any equity interest in the
Company upon the occurrence of certain events.

 

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4.4       Valid Issuance. Subject to approval of the Proposals by the Company’s
stockholders as contemplated in Section 7.9, the Shares will be duly and validly
authorized and, when issued and paid for pursuant to this Agreement, will be
validly issued, fully paid and nonassessable, and shall be free and clear of all
encumbrances and restrictions, except for restrictions on transfer set forth in
the Transaction Documents or imposed by applicable securities laws and will have
the relative rights, powers and preferences set forth in the Certificate of
Designation. Upon the due conversion of the Shares in accordance with the
Certificate of Designation, the Conversion Shares will be validly issued, fully
paid and nonassessable, and shall be free and clear of all encumbrances and
restrictions, except for restrictions on transfer set forth in the Transaction
Documents or imposed by applicable securities laws. The Warrants have been duly
and validly authorized. Upon the due exercise of the Warrants and full payment
for the exercise price thereof, the Warrant Shares will be validly issued, fully
paid and non-assessable, and shall be free and clear of all encumbrances and
restrictions, except for restrictions on transfer set forth in the Transaction
Documents or imposed by applicable securities laws. The Company has reserved a
sufficient number of shares of Common Stock for issuance upon the conversion of
the Shares and the exercise of the Warrants, free and clear of all encumbrances
and restrictions, except for restrictions on transfer set forth in the
Transaction Documents or imposed by applicable securities laws.

 

4.5       Consents. Except for approval of the Proposals by its stockholders as
contemplated in Section 7.9, the execution, delivery and performance by the
Company of the Transaction Documents and the offer, issuance and sale of the
Securities require no consent of, action by or in respect of, or filing with,
any Person, governmental body, agency, or official other than filings that have
been made pursuant to applicable state securities laws and post-sale filings
pursuant to applicable state and federal securities laws which the Company
undertakes to file within the applicable time periods. Subject to the accuracy
of the representations and warranties of each Investor set forth in Section 5
hereof, the Company has taken all action necessary to exempt (i) the issuance
and sale of the Securities, (ii) the issuance of the Conversion Shares upon the
due conversion of the Shares, (iii) the issuance of the Warrant Shares upon due
exercise of the Warrants, and (iv) the other transactions contemplated by the
Transaction Documents from the provisions of any stockholder rights plan or
other “poison pill” arrangement, any anti-takeover, business combination or
control share law or statute binding on the Company or to which the Company or
any of its assets and properties may be subject and any provision of the
Certificate of Incorporation or the Company’s Amended and Restated Bylaws, as
amended and as in effect as of the closing date (the “Bylaws”), that is or could
reasonably be expected to become applicable to the Investors as a result of the
transactions contemplated hereby, including, without limitation, the issuance of
the Securities and the ownership, disposition or voting of the Securities by the
Investors or the exercise of any right granted to the Investors pursuant to this
Agreement or the other Transaction Documents.

 

4.6       Delivery of SEC Filings; Business. The Company has made available to
the Investors through the EDGAR system, true and complete copies of the
Company’s most recent Annual Report on Form 10-K for the fiscal year ended
December 31, 2017 (as amended prior to the date hereof, the “10-K”), and all
other reports filed by the Company pursuant to Sections 13(a), 13(e), 14 and
15(d) of the 1934 Act since the filing of the 10-K and during the twelve (12)
months preceding the date hereof (collectively, the “SEC Filings”). The SEC
Filings are the only filings required of the Company pursuant to the 1934 Act
for such period. The Company and its Subsidiaries are engaged in all material
respects only in the business described in the SEC Filings and the SEC Filings
contain a complete and accurate description in all material respects of the
business of the Company and its Subsidiaries, taken as a whole. Since the filing
of each of the SEC Filings, no event has occurred that would require an
amendment or supplement to any such SEC Filing and as to which such an amendment
or supplement has not been filed prior to the date hereof.

 

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4.7       Use of Proceeds. The net proceeds of the sale of the Shares hereunder
shall be used by the Company for working capital and general corporate purposes.

 

4.8       No Material Adverse Change. Since December 31, 2017, except as
described in the SEC Filings, there has not been:

 

(i)       any change in the consolidated assets, liabilities, financial
condition or operating results of the Company from that reflected in the
financial statements included in the Company’s Quarterly Report on Form 10-Q for
the quarter ended September 30, 2018, except for changes in the ordinary course
of business which have not had and could not reasonably be expected to have a
Material Adverse Effect, individually or in the aggregate;

 

(ii)       any declaration or payment of any dividend, or any authorization or
payment of any distribution, on any of the capital stock of the Company, or any
redemption or repurchase of any securities of the Company;

 

(iii)       any material damage, destruction or loss, whether or not covered by
insurance to any assets or properties of the Company or its Subsidiaries;

 

(iv)       any waiver, not in the ordinary course of business, by the Company or
any Subsidiary of a material right or of a material debt owed to it;

 

(v)       any satisfaction or discharge of any lien, claim or encumbrance or
payment of any obligation by the Company or a Subsidiary, except in the ordinary
course of business and which is not material to the assets, properties,
financial condition, operating results or business of the Company and its
Subsidiaries taken as a whole (as such business is presently conducted and as it
is proposed to be conducted);

 

(vi)       any change or amendment to the Certificate of Incorporation (other
than in connection with the transactions contemplated hereby) or Bylaws, or
material change to any material contract or arrangement by which the Company or
any Subsidiary is bound or to which any of their respective assets or properties
is subject;

 

(vii)       any material labor difficulties or labor union organizing activities
with respect to employees of the Company or any Subsidiary;

 

(viii)       any material transaction entered into by the Company or a
Subsidiary other than in the ordinary course of business;

 

(ix)       the loss of the services of any key employee, or material change in
the composition or duties of the senior management of the Company or any
Subsidiary;

 

(x)       the loss or, to the Company’s Knowledge, threatened loss of any
customer which has had or could reasonably be expected to have a Material
Adverse Effect; or

 

(xi)       any other event or condition of any character that has had or could
reasonably be expected to have a Material Adverse Effect.

 

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4.9       SEC Filings; S-3 Eligibility.

 

(a)       At the time of filing thereof, the SEC Filings complied as to form in
all material respects with the requirements of the 1934 Act and did not contain
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements made
therein, in the light of the circumstances under which they were made, not
misleading.

 

(b)       Each registration statement and any amendment thereto filed by the
Company since January 1, 2016 pursuant to the 1933 Act and the rules and
regulations thereunder, as of the date such statement or amendment became
effective, complied as to form in all material respects with the 1933 Act and
did not contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements made therein not misleading; and each prospectus filed pursuant to
Rule 424(b) under the 1933 Act, as of its issue date and as of the closing of
any sale of securities pursuant thereto did not contain any untrue statement of
a material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements made therein, in the light of the
circumstances under which they were made, not misleading.

 

(c)       The Company is eligible to use Form S-3 to register the Registrable
Securities (as such term is defined in the Registration Rights Agreement) for
sale by the Investors as contemplated by the Registration Rights Agreement.

 

4.10       No Conflict, Breach, Violation or Default. Subject to the approval of
the Proposals by its stockholders as contemplated in Section 7.9, the execution,
delivery and performance of the Transaction Documents by the Company and the
issuance and sale of the Securities will not (i) conflict with or result in a
breach or violation of (a) any of the terms and provisions of, or constitute a
default under the Certificate of Incorporation or the Bylaws (true and complete
copies of which have been made available to the Investors through the EDGAR
system), or (b) any statute, rule, regulation or order of any governmental
agency or body or any court, domestic or foreign, having jurisdiction over the
Company, any Subsidiary or any of their respective assets or properties, or (ii)
conflict with, or constitute a default (or an event that with notice or lapse of
time or both would become a default) under, result in the creation of any lien,
encumbrance or other adverse claim upon any of the properties or assets of the
Company or any Subsidiary or give to others any rights of termination,
amendment, acceleration or cancellation (with or without notice, lapse of time
or both) of, any Material Contract, except in the case of clauses (i)(b) and
(ii) above, such as could not reasonably be expected to have a Material Adverse
Effect, individually or in the aggregate.

 

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4.11       Tax Matters. The Company and each Subsidiary has prepared and filed
(or filed applicable extensions therefore) all tax returns required to have been
filed by the Company or such Subsidiary with all appropriate governmental
agencies and paid all taxes shown thereon or otherwise owed by it, other than
any such taxes which the Company or any Subsidiary are contesting in good faith
and for which adequate reserves have been provided and reflected in the
Company’s financial statements included in the SEC Filings. The charges,
accruals and reserves on the books of the Company in respect of taxes for all
fiscal periods are adequate in all material respects, and there are no material
unpaid assessments against the Company or any Subsidiary nor, to the Company’s
Knowledge, any basis for the assessment of any additional taxes, penalties or
interest for any fiscal period or audits by any federal, state or local taxing
authority except for any assessment which is not material to the Company and its
Subsidiaries, taken as a whole. All taxes and other assessments and levies that
the Company or any Subsidiary is required to withhold or to collect for payment
have been duly withheld and collected and paid to the proper governmental entity
or third party when due, other than any such taxes which the Company or any
Subsidiary are contesting in good faith and for which adequate reserves have
been provided and reflected in the Company’s financial statements included in
the SEC Filings. There are no tax liens or claims pending or, to the Company’s
Knowledge, threatened in writing against the Company or any Subsidiary or any of
their respective assets or property. Except as described in the SEC Filings,
there are no outstanding tax sharing agreements or other such arrangements
between the Company and any Subsidiary or other corporation or entity.

 

4.12       Title to Properties. Except as disclosed in the SEC Filings, the
Company and each Subsidiary has good and marketable title to all real properties
and all other properties and assets (excluding Intellectual Property assets
which are the subject of Section 4.15 hereof) owned by it, in each case free
from liens, encumbrances and defects that would materially affect the value
thereof or materially interfere with the use made or currently planned to be
made thereof by them; and except as disclosed in the SEC Filings, the Company
and each Subsidiary holds any leased real or personal property under valid and
enforceable leases with no exceptions that would materially interfere with the
use made thereof by them.

 

4.13       Certificates, Authorities and Permits. The Company and each
Subsidiary possess adequate certificates, authorities or permits issued by
appropriate governmental agencies or bodies necessary to conduct the business
now operated by it, except to the extent failure to possess such certificates,
authorities or permits could not reasonably be expected to have a Material
Adverse Effect, individually or in the aggregate, and neither the Company nor
any Subsidiary has received any notice of proceedings relating to the revocation
or modification of any such certificate, authority or permit that, if determined
adversely to the Company or such Subsidiary, could reasonably be expected to
have a Material Adverse Effect, individually or in the aggregate.

 

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4.14       Labor Matters.

 

(a)       Except as set forth in the SEC Filings, the Company is not a party to
or bound by any collective bargaining agreements or other agreements with labor
organizations. The Company has not violated in any material respect any laws,
regulations, orders or contract terms, affecting the collective bargaining
rights of employees, labor organizations or any laws, regulations or orders
affecting employment discrimination, equal opportunity employment, or employees’
health, safety, welfare, wages and hours.

 

(b)       (i) There are no labor disputes existing, or to the Company’s
Knowledge, threatened, involving strikes, slow-downs, work stoppages, job
actions, disputes, lockouts or any other disruptions of or by the Company's
employees, (ii) there are no unfair labor practices or petitions for election
pending or, to the Company's Knowledge, threatened before the National Labor
Relations Board or any other federal, state or local labor commission relating
to the Company's employees, (iii) no demand for recognition or certification
heretofore made by any labor organization or group of employees is pending with
respect to the Company and (iv) to the Company's Knowledge, the Company enjoys
good labor and employee relations with its employees and labor organizations.

 

(c)       The Company is, and at all times has been, in compliance with all
applicable laws respecting employment (including laws relating to classification
of employees and independent contractors) and employment practices, terms and
conditions of employment, wages and hours, and immigration and naturalization,
except where the failure to so comply could not reasonably be expected to have a
Material Adverse Effect, individually or in the aggregate. There are no claims
pending against the Company before the Equal Employment Opportunity Commission
or any other administrative body or in any court asserting any violation of
Title VII of the Civil Rights Act of 1964, the Age Discrimination Act of 1967,
42 U.S.C. §§ 1981 or 1983 or any other federal, state or local Law, statute or
ordinance barring discrimination in employment.

 

(d)       Except as disclosed in the SEC Filings and as set forth on Schedule
4.14(d), the Company is not a party to, or bound by, any employment or other
contract or agreement that contains any severance, termination pay or change of
control liability or obligation, including, without limitation, any “excess
parachute payment,” as defined in Section 280G(b) of the Internal Revenue Code.

 

(e)       To the Company’s Knowledge, the Company has no liability for the
improper classification by the Company of its employees as independent
contractors or leased employees prior to the Closing.

 

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4.15       Intellectual Property.

 

(a)       To the Company’s Knowledge, all Intellectual Property of the Company
and its Subsidiaries, which is listed on Schedule 4.15(a), is currently in
compliance in all material respects with all legal requirements (including, for
registered Intellectual Property or pending applications for registration of
Intellectual Property, timely filings, proofs and payments of fees) and is valid
and enforceable. No Intellectual Property of the Company or its Subsidiaries
which is necessary for the conduct of Company’s and each of its Subsidiaries’
respective businesses as currently conducted or as currently proposed to be
conducted has been or is now involved in any cancellation, dispute or
litigation, and, to the Company’s Knowledge, no such action is threatened. No
patent of the Company or its Subsidiaries has been or is now involved in any
interference, reissue, re-examination or opposition proceeding.

 

(b)       To the Company’s Knowledge, all of the licenses and sublicenses and
consent, royalty or other agreements concerning Intellectual Property which are
necessary for the conduct of the Company’s and each of its Subsidiaries’
respective businesses as currently conducted or as currently proposed to be
conducted to which the Company or any Subsidiary is a party or by which any of
their assets are bound (other than  generally commercially available,
non-custom, off-the-shelf software application programs having a retail
acquisition price of less than $10,000 per license) (collectively, “License
Agreements”): (i) are valid and binding obligations of the Company or its
Subsidiaries that are parties thereto and, to the Company’s Knowledge, the other
parties thereto; (ii) are enforceable in accordance with their terms, except to
the extent that enforcement thereof may be limited by bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance or other similar laws
affecting the enforcement of creditors’ rights generally; and (iii) except as
set forth on Schedule 4.15(b), to the Company’s Knowledge, there exists no event
or condition which will result in a violation or breach of or constitute (with
or without due notice or lapse of time or both) a default by the Company or any
of its Subsidiaries under any such License Agreement, except for such
violations, breaches and defaults as have not had and could not reasonably be
expected to have a Material Adverse Effect, individually or in the aggregate.

 

12

 

(c)       To the Company’s Knowledge, the Company and its Subsidiaries own or
have the valid right to use all of the Intellectual Property that is necessary
for the conduct of the Company’s and each of its Subsidiaries’ respective
businesses as currently conducted or as currently proposed to be conducted and
for the ownership, maintenance and operation of the Company’s and its
Subsidiaries’ properties and assets, free and clear of all liens, encumbrances,
adverse claims or obligations to license all such owned Intellectual Property
and Confidential Information, other than licenses entered into in the ordinary
course of the Company’s and its Subsidiaries’ businesses. To the Company’s
Knowledge, the Company and its Subsidiaries have a valid and enforceable right
to use all third party Intellectual Property and Confidential Information used
or held for use in the respective businesses of the Company and its
Subsidiaries.

 

(d)       To the Company’s Knowledge, the conduct of the Company’s and its
Subsidiaries’ businesses as currently conducted does not infringe or otherwise
impair or conflict with (collectively, “Infringe”) any Intellectual Property
rights of any third party or any confidentiality obligation owed to a third
party. To the Company’s Knowledge, the Intellectual Property and Confidential
Information of the Company and its Subsidiaries which are necessary for the
conduct of Company’s and each of its Subsidiaries’ respective businesses as
currently conducted or as currently proposed to be conducted, are not being
Infringed by any third party. There is no litigation or legal challenge pending
or outstanding or, to the Company’s Knowledge, threatened or imminent, that
seeks to limit or challenge, or that concerns the ownership, use, validity or
enforceability of any Intellectual Property or Confidential Information of the
Company and its Subsidiaries and the Company’s and its Subsidiaries’ use of any
Intellectual Property or Confidential Information owned by a third party, and,
to the Company’s Knowledge, there is no valid basis for the same.

 

(e)       To the Company’s Knowledge, the consummation of the transactions
contemplated hereby and by the other Transaction Documents will not result in
the alteration, loss, impairment of or restriction on the Company’s or any of
its Subsidiaries’ ownership or right to use any of the Intellectual Property or
Confidential Information which is necessary for the conduct of Company’s and
each of its Subsidiaries’ respective businesses as currently conducted or as
currently proposed to be conducted.

 

(f)       To the Company’s Knowledge, the Company and its Subsidiaries have
taken reasonable steps to protect the Company’s and its Subsidiaries’ rights in
their Intellectual Property and Confidential Information. To the Company’s
Knowledge, except under confidentiality obligations, there has been no material
disclosure of any of the Company’s or its Subsidiaries’ Confidential Information
to any third party.

 

13

 

4.16       Environmental Matters. To the Company’s Knowledge, neither the
Company nor any Subsidiary, is in violation of any statute, rule, regulation,
decision or order of any governmental agency or body or any court, domestic or
foreign, relating to the use, disposal or release of hazardous or toxic
substances or relating to the protection or restoration of the environment or
human exposure to hazardous or toxic substances (collectively, “Environmental
Laws”), owns or operates any real property contaminated with any substance that
is subject to any Environmental Laws, is liable for any off-site disposal or
contamination pursuant to any Environmental Laws, or is subject to any claim
relating to any Environmental Laws, which violation, contamination, liability or
claim has had or could reasonably be expected to have a Material Adverse Effect,
individually or in the aggregate; and to the Company’s Knowledge, there is no
pending or threatened investigation that might lead to such a claim.

 

4.17       Litigation. There are no pending actions, suits or proceedings
against or affecting the Company, its Subsidiaries or any of its or their
properties; and to the Company’s Knowledge, no such actions, suits or
proceedings are threatened, except (i) as described in the SEC Filings or
(ii) any such proceeding, which if resolved adversely to the Company or any
Subsidiary, could not reasonably be expected to have a Material Adverse Effect,
individually or in the aggregate. To the Company’s Knowledge, neither the
Company nor any Subsidiary, nor any director or officer thereof, is or since
January 1, 2014 has been the subject of any action involving a claim of
violation of or liability under federal or state securities laws or a claim of
breach of fiduciary duty. There has not been, and to the Company’s Knowledge,
there is not pending or contemplated, any investigation by the SEC involving the
Company or any current or former director or officer of the Company. The SEC has
not issued any stop order or other order suspending the effectiveness of any
registration statement filed by the Company or any Subsidiary under the 1933 Act
or the 1934 Act.

 

4.18       Financial Statements. The financial statements included in each SEC
Filing 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 to the extent corrected by a subsequent restatement) and
present fairly, in all material respects, the consolidated financial position of
the Company as of the dates shown and its consolidated results of operations and
cash flows for the periods shown, and such financial statements have been
prepared in conformity with United States generally accepted accounting
principles applied on a consistent basis (“GAAP”) (except as may be disclosed
therein or in the notes thereto, and, in the case of quarterly financial
statements, as permitted by Form 10-Q under the 1934 Act). Except as set forth
in the SEC Filings filed prior to the date hereof, neither the Company nor any
of its Subsidiaries has incurred any liabilities, contingent or otherwise,
except those incurred in the ordinary course of business, consistent (as to
amount and nature) with past practices since the date of such financial
statements, none of which, individually or in the aggregate, have had or could
reasonably be expected to have a Material Adverse Effect.

 

4.19       Insurance Coverage. The Company and each Subsidiary maintains in full
force and effect insurance coverage that is customary for comparably situated
companies for the business being conducted and properties owned or leased by the
Company and each Subsidiary, and the Company reasonably believes such insurance
coverage to be adequate against all liabilities, claims and risks against which
it is customary for comparably situated companies to insure.

 

14

 

4.20       Compliance with Nasdaq Continued Listing Requirements. Except as
disclosed in the SEC Filings, (a) the Company is in compliance with applicable
Nasdaq continued listing requirements, (b) there are no proceedings pending or,
to the Company’s Knowledge, threatened against the Company relating to the
continued listing of the Common Stock on Nasdaq, and (c) the Company has not
received any currently pending notice of the delisting of the Common Stock from
Nasdaq.

 

4.21       Brokers and Finders. Except as set forth on Schedule 4.21, no Person
will have, as a result of the transactions contemplated by the Transaction
Documents, any valid right, interest or claim against or upon the Company, any
Subsidiary or an Investor for any commission, fee or other compensation pursuant
to any agreement, arrangement or understanding entered into by or on behalf of
the Company.

 

4.22       No Directed Selling Efforts or General Solicitation. Neither the
Company nor any Person acting on its behalf has conducted any general
solicitation or general advertising (as those terms are used in Regulation D) in
connection with the offer or sale of any of the Securities.

 

4.23       No Integrated Offering. Assuming the accuracy of the Investors’
representations and warranties set forth in Section 5 hereof, neither the
Company nor any of its Affiliates, nor any Person acting on its or their behalf
has, directly or indirectly, made any offers or sales of any Company security or
solicited any offers to buy any security, which are or will be integrated with
this offering of the Securities hereunder in a manner that would adversely
affect reliance by the Company on Section 4(a)(2) for the exemption from
registration for the transactions contemplated hereby or would require
registration of the Securities under the 1933 Act.

 

4.24       Rule 506 Compliance. To the Company’s Knowledge, neither the Company
nor any Insider is subject to any of the “Bad Actor” disqualifications described
in Rule 506(d)(1)(i) to (viii) under the 1933 Act (a “Disqualification Event”),
except for a Disqualification Event covered by Rule 506(d)(2)(i) or (d)(3) of
the 1933 Act. The Company is not disqualified from relying on Rule 506 of
Regulation D under the 1933 Act (“Rule 506”) for any of the reasons stated in
Rule 506(d) in connection with the issuance and sale of the Securities to the
Investors pursuant to this Agreement. The Company has exercised reasonable care,
including without limitation, conducting a factual inquiry that is appropriate
in light of the circumstances, into whether any such disqualification under Rule
506(d) exists. The Company has furnished to each Investor, a reasonable time
prior to the date hereof, a description in writing of any matters relating to
the Company and the Insiders that would have triggered disqualification under
Rule 506(d) but which occurred before September 23, 2013, in each case, in
compliance with the disclosure requirements of Rule 506(e). The Company has
exercised reasonable care, including without limitation, conducting a factual
inquiry that is appropriate in light of the circumstances, into whether any such
disqualification under Rule 506(d) would have existed and whether any disclosure
is required to be made to Investor under Rule 506(e). To the Company’s
Knowledge, any outstanding securities of the Company (of any kind or nature)
that were issued in reliance on Rule 506 at any time on or after September 23,
2013 have been issued in compliance with Rule 506(d) and (e).

 

15

 

4.25       Private Placement. Assuming the accuracy of the Investors’
representations and warranties set forth in Section 5 hereof, the offer and sale
of the Securities to the Investors as contemplated hereby is exempt from the
registration requirements of the 1933 Act.

 

4.26       Shell Company Status. The Company is not, and has never been, an
issuer identified in Rule 144(i)(1).

 

4.27       Questionable Payments. Neither the Company nor any of its
Subsidiaries nor, to the Company’s Knowledge, any of their respective current or
former stockholders, directors, officers, employees, agents or other Persons
acting on behalf of the Company or any Subsidiary, has on behalf of the Company
or any Subsidiary or in connection with their respective businesses: (a) used
any corporate funds for unlawful contributions, gifts, entertainment or other
unlawful expenses relating to political activity; (b) made any direct or
indirect unlawful payments to any governmental officials or employees from
corporate funds; (c) established or maintained any unlawful or unrecorded fund
of corporate monies or other assets; (d) made any false or fictitious entries on
the books and records of the Company or any Subsidiary; or (e) made any unlawful
bribe, rebate, payoff, influence payment, kickback or other unlawful payment of
any nature.

 

4.28       Transactions with Affiliates. Except as disclosed in the SEC Filings
and except as would not be required to be disclosed in the SEC Filings, none of
the officers or directors of the Company and, to the Company’s Knowledge, none
of the employees of the Company is presently a party to any transaction with the
Company or any Subsidiary (other than as holders of stock options and/or
warrants, and 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 Company’s Knowledge, any entity in which any officer,
director, or any such employee has a substantial interest or is an officer,
director, trustee or partner.

 

16

 

4.29       Internal Controls. The Company is in material compliance with the
provisions of the Sarbanes-Oxley Act of 2002 currently applicable to the
Company. The Company and the Subsidiaries maintain a system of internal
accounting controls sufficient to provide reasonable assurance that (i)
transactions are executed in accordance with management's general or specific
authorizations, (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with GAAP and to maintain
asset accountability, (iii) access to assets is permitted only in accordance
with management's general or specific authorization, and (iv) the recorded
accountability for assets and liabilities is compared with the existing assets
and liabilities at reasonable intervals and appropriate action is taken with
respect to any differences. The Company has established disclosure controls and
procedures (as defined in 1934 Act Rules 13a-15(e) and 15d-15(e)) for the
Company and designed such disclosure controls and procedures to ensure that
material information relating to the Company, including the Subsidiaries, is
made known to the certifying officers by others within those entities,
particularly during the period in which the Company’s most recently filed
periodic report under the 1934 Act, as the case may be, is being prepared. The
Company has established internal control over financial reporting (as defined in
1934 Act Rules 13a-15(f) and 15d-15(f)) to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of
financial statements for external purposes in accordance with GAAP. The
Company's certifying officers have evaluated the effectiveness of the Company's
disclosure controls and procedures and the Company’s internal control over
financial reporting (collectively, “internal controls”) as of the end of the
period covered by the most recently filed periodic report under the 1934 Act
(such date, the “Evaluation Date”). The Company presented in its most recently
filed periodic report under the 1934 Act the conclusions of the certifying
officers about the effectiveness of such internal controls based on their
evaluations as of the Evaluation Date. Since the Evaluation Date, there have
been no significant changes in the Company's internal controls or, to the
Company's Knowledge, in other factors that could significantly affect the
Company's internal controls. The Company maintains and will continue to maintain
a standard system of accounting established and administered in accordance with
GAAP and the applicable requirements of the 1934 Act.

 

17

 

4.30       Disclosures. Neither the Company nor any Person acting on the
Company’s behalf has provided the Investors or their agents or counsel with any
information that constitutes or might constitute material, non-public
information, other than the terms of the transactions contemplated hereby and
information provided to the Investors pursuant to confidentiality agreements.
The written materials delivered to the Investors in connection with the
transactions contemplated by the Transaction Documents do not contain any untrue
statement of a material fact or omit to state a material fact necessary in order
to make the statements contained therein, in light of the circumstances under
which they were made, not misleading.

 

4.31       Investment Company. The Company is not required to be registered as,
and is not an Affiliate of, and immediately following the Closing will not be
required to register as, an “investment company” within the meaning of the
Investment Company Act of 1940, as amended.

 

4.32       FDA. The Company and each of its Subsidiaries have operated and
currently are in compliance with all applicable rules and regulations of the FDA
or any other federal, state, local or foreign governmental body exercising
comparable authority, except where the failure to so operate or be in compliance
would not have a Material Adverse Effect. All preclinical and clinical studies
conducted by or, to the Company’s Knowledge, on behalf of the Company to support
approval for commercialization of the Company’s products have been conducted by
the Company, or to the Company’s Knowledge by third parties, in compliance with
all applicable federal, state or foreign laws, rules, orders and regulations,
except for such failure or failures to be in compliance which could not
reasonably be expected to have, singly or in the aggregate, a Material Adverse
Effect. The descriptions of the tests and preclinical and clinical studies, and
results thereof, conducted by or, to the Company’s Knowledge, on behalf of the
Company contained in the SEC Filings are accurate and complete in all material
respects; and the Company has not received any oral or written notice or
correspondence from the FDA or any foreign, state or local governmental body
exercising comparable authority requiring the termination, suspension, or
clinical hold of any tests or preclinical or clinical studies, or such written
notice or correspondence from any Institutional Review Board or comparable
authority requiring the termination or suspension of a clinical study, conducted
by or on behalf of the Company, which termination, suspension, or clinical hold
would reasonably be expected to have a Material Adverse Effect.

 

18

 

4.33.       No Fiduciary. The Company acknowledges that none of the Investors is
acting as a financial advisor or fiduciary of the Company (or in any similar
capacity) with respect to this Agreement, the other Transaction Documents and
the transactions contemplated hereby and thereby, and any advice or other
guidance provided by any Investor or any of its representatives and agents with
respect to this Agreement, the other Transaction Documents and the transactions
contemplated hereby and thereby is merely incidental to such Investor’s entry
into such transactions. The Company’s decision to enter into this Agreement and
the other Transaction Documents has been based solely on the independent
evaluation by the Company and its representatives and agents.

 

Each of the Investors acknowledges and agrees that the Company has not made any
representations or warranties with respect to the transactions contemplated
hereby other than those specifically set forth in this Section 4.

 

5.       Representations and Warranties of the Investors. Each of the Investors
hereby severally, and not jointly, represents and warrants to the Company that:

 

5.1       Organization and Existence. Such Investor is a corporation, limited
partnership or limited liability company duly organized, validly existing and in
good standing under the laws of the jurisdiction of its incorporation or
organization and has all requisite corporate, partnership or limited liability
company power and authority to enter into and to consummate the transactions
contemplated by the Transaction Documents and otherwise to carry out its
obligations hereunder and thereunder.

 

5.2       Authorization. The execution, delivery and performance by such
Investor of the Transaction Documents to which such Investor is a party have
been duly authorized and each will constitute the legal, valid and binding
obligation of such Investor, enforceable against such Investor in accordance
with their respective terms, subject to bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium and similar laws of general applicability,
relating to or affecting creditors’ rights generally.

 

5.3       Consents. All consents, approvals, orders and authorizations required
on the part of such Investor in connection with the execution, delivery or
performance of each Transaction Document and the consummation of the
transactions contemplated hereby and thereby have been obtained and are
effective as of the date hereof.

 

19

 

5.4       Purchase Entirely for Own Account. The Securities to be received by
such Investor hereunder will be acquired for such Investor’s own account, not as
nominee or agent, and not with a view to the resale or distribution of any part
thereof in violation of the 1933 Act, and such Investor has no present intention
of selling, granting any participation in, or otherwise distributing the same
and has no arrangement or understanding with any other Persons regarding the
distribution of such Securities in violation of the 1933 Act or any applicable
state securities law without prejudice, however, to such Investor’s right at all
times to sell or otherwise dispose of all or any part of such Securities in
compliance with applicable federal and state securities laws. Such Investor is
acquiring the Securities hereunder in the ordinary course of its business.
Nothing contained herein shall be deemed a representation or warranty by such
Investor to hold the Securities for any period of time. Such Investor is not a
broker-dealer registered with the SEC under the 1934 Act or an entity engaged in
a business that would require it to be so registered.

 

5.5       Investment Experience. Such Investor acknowledges that it can bear the
economic risk and complete loss of its investment in the Securities and has such
knowledge and experience in financial or business matters that it is capable of
evaluating the merits and risks of the investment contemplated hereby.

 

5.6       Disclosure of Information. Such Investor has had an opportunity to
receive all information related to the Company requested by it and to ask
questions of and receive answers from the Company regarding the Company, its
business and the terms and conditions of the offering of the Securities. Such
Investor acknowledges receipt of copies of the SEC Filings. Neither such
inquiries nor any other due diligence investigation conducted by such Investor
shall modify, limit or otherwise affect such Investor’s right to rely on the
Company’s representations and warranties contained in this Agreement.

 

5.7       Restricted Securities. Such Investor understands that the Securities
are characterized as “restricted securities” under the U.S. federal securities
laws inasmuch as they are being acquired from the Company in a transaction not
involving a public offering and that under such laws and applicable regulations
such securities may be resold without registration under the 1933 Act only in
certain limited circumstances.

 

5.8       Legends. It is understood that, except as provided below, certificates
evidencing the Securities may bear the following or any similar legend:

 

(a)       “THE SECURITIES REPRESENTED HEREBY 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, AND, ACCORDINGLY, MAY NOT BE TRANSFERRED UNLESS (I) SUCH SECURITIES
HAVE BEEN REGISTERED FOR SALE PURSUANT TO THE SECURITIES ACT OF 1933, AS
AMENDED, (II) SUCH SECURITIES MAY BE SOLD PURSUANT TO RULE 144, OR (III) THE
COMPANY HAS RECEIVED AN OPINION OF COUNSEL TO THE TRANSFEROR, THE SUBSTANCE OF
WHICH OPINION SHALL BE REASONABLY SATISFACTORY TO THE COMPANY, THAT SUCH
TRANSFER MAY LAWFULLY BE MADE WITHOUT REGISTRATION UNDER THE SECURITIES ACT OF
1933.”

 

20

 

(b)       If required by the authorities of any state in connection with the
issuance of sale of the Securities, the legend required by such state authority.

 

5.9       Accredited Investor. Such Investor is an accredited investor as
defined in Rule 501(a) of Regulation D, as amended, under the 1933 Act. Such
Purchaser was not organized for the purpose of acquiring the Securities and is
not required to be registered as a broker-dealer under Section 15 of the 1934
Act.

 

5.10       No General Solicitation. Such Investor did not learn of the
investment in the Securities as a result of any general solicitation or general
advertising.

 

5.11       Brokers and Finders. No Person will have, as a result of the
transactions contemplated by the Transaction Documents, any valid right,
interest or claim against or upon the Company, any Subsidiary or an Investor for
any commission, fee or other compensation pursuant to any agreement, arrangement
or understanding entered into by or on behalf of such Investor.

 

5.12       Prohibited Transactions. Since the earlier of (a) such time as such
Investor was first contacted by the Company or any other Person acting on behalf
of the Company regarding the transactions contemplated hereby or (b) thirty (30)
days prior to the date hereof, neither such Investor nor any Affiliate of such
Investor which (x) had knowledge of the transactions contemplated hereby, (y)
has or shares discretion relating to such Investor’s investments or trading or
information concerning such Investor’s investments, including in respect of the
Securities, or (z) is subject to such Investor’s review or input concerning such
Affiliate’s investments or trading (collectively, “Trading Affiliates”) has,
directly or indirectly, effected or agreed to effect any short sale, whether or
not against the box, established any “put equivalent position” (as defined in
Rule 16a-1(h) under the 1934 Act) with respect to the Common Stock, granted any
other right (including, without limitation, any put or call option) with respect
to the Common Stock or with respect to any security that includes, relates to or
derived any significant part of its value from the Common Stock or otherwise
sought to hedge its position in the Securities (each, a “Prohibited
Transaction”). Prior to the earliest to occur of (i) the termination of this
Agreement, (ii) the Effective Date or (iii) the Effectiveness Deadline, such
Investor shall not, and shall cause its Trading Affiliates not to, engage,
directly or indirectly, in a Prohibited Transaction. Such Investor acknowledges
that the representations, warranties and covenants contained in this Section
5.12 are being made for the benefit of the Investors as well as the Company and
that each of the other Investors shall have an independent right to assert any
claims against such Investor arising out of any breach or violation of the
provisions of this Section 5.12.

 

The Company acknowledges and agrees that each Investor has not made any
representations or warranties with respect to the transactions contemplated by
the Transaction Documents other than those specifically set forth in this
Section 5.

 

21

 

6. Conditions to Closing.

 

6.1       Conditions to the Investors’ Obligations. The obligation of each
Investor to purchase the Shares at the Closing is subject to the fulfillment to
such Investor’s satisfaction, on or prior to the Closing Date, of the following
conditions, any of which may be waived by such Investor (as to itself only):

 

(a)       The representations and warranties made by the Company in Section 4
hereof qualified as to materiality shall be true and correct at all times prior
to and on the Closing Date as so qualified, except to the extent any such
representation or warranty expressly speaks as of an earlier date, in which case
such representation or warranty shall be true and correct as of such earlier
date as so qualified, and, the representations and warranties made by the
Company in Section 4 hereof not qualified as to materiality shall be true and
correct in all material respects at all times prior to and on the Closing Date,
except to the extent any such representation or warranty expressly speaks as of
an earlier date, in which case such representation or warranty shall be true and
correct in all material respects as of such earlier date. The Company shall have
performed in all material respects all obligations and covenants herein required
to be performed by it on or prior to the Closing Date.

 

(b)       The Company shall have obtained any and all consents, permits,
approvals, registrations and waivers (other than the approval of the Proposals
by its stockholders in accordance with applicable law and the applicable
requirements of Nasdaq) necessary or appropriate for consummation of the
purchase and sale of the Securities and the consummation of the other
transactions contemplated by the Transaction Documents, all of which shall be in
full force and effect.

 

(c)       The Company shall have executed and delivered the Registration Rights
Agreement.

 

(d)       The Company shall have filed with Nasdaq a Notification Form: Listing
of Additional Shares for the listing of the Conversion Shares and the Warrant
Shares on the Nasdaq Capital Market, a copy of which shall have been provided to
the Investors.

 

(e)       The Company shall have received gross proceeds from the sale of the
Shares as contemplated hereby of at least fifteen million Dollars ($15,000,000).

 

(f)       The Certificate of Designation shall have been filed with the
Secretary of State of Delaware and shall be effective; a filed copy of the
Certificate of Designation shall have been provided to the Investors.

 

(g)       No judgment, writ, order, injunction, award or decree of or by any
court, or judge, justice or magistrate, including any bankruptcy court or judge,
or any order of or by any governmental authority, shall have been issued, and no
action or proceeding shall have been instituted by any governmental authority,
enjoining or preventing the consummation of the transactions contemplated hereby
or in the other Transaction Documents.

 

22

 

(h)       The Company shall have delivered a Certificate, executed on behalf of
the Company by its Chief Executive Officer or its Chief Financial Officer, dated
as of the Closing Date, certifying to the fulfillment of the conditions
specified in subsections (a), (b), (g), (k) and (l) of this Section 6.1.

 

(i)       The Company shall have delivered a Certificate, executed on behalf of
the Company by its Secretary, dated as of the Closing Date, certifying the
resolutions adopted by the Board of Directors of the Company or any duly
authorized committee thereof approving the transactions contemplated by this
Agreement and the other Transaction Documents and the issuance of the
Securities, certifying the current versions of the Certificate of Incorporation
and Bylaws and certifying as to the signatures and authority of persons signing
the Transaction Documents and related documents on behalf of the Company.

 

(j)       The Investors shall have received an opinion with respect to corporate
matters from Olshan Frome Wolosky LLP, special counsel to the Company, dated as
of the Closing Date, in form and substance reasonably acceptable to the
Investors and addressing such legal matters as the Investors may reasonably
request.

 

(k)       No stop order or suspension of trading shall have been imposed by
Nasdaq, the SEC or any other governmental or regulatory body with respect to
public trading in the Common Stock.

 

(l)       The Company shall have obtained Stockholder Approval.

 

6.2       Conditions to Obligations of the Company. The Company’s obligation to
sell and issue the Shares and the Warrants at the Closing is subject to the
fulfillment to the satisfaction of the Company on or prior to the Closing Date
of the following conditions, any of which may be waived by the Company:

 

(a)       The representations and warranties made by the Investors in Section 5
hereof, other than the representations and warranties contained in Sections 5.4,
5.5, 5.6, 5.7, 5.8, 5.9 and 5.10 (the “Investment Representations”), shall be
true and correct in all material respects when made, and shall be true and
correct in all material respects on the Closing Date with the same force and
effect as if they had been made on and as of said date. The Investment
Representations shall be true and correct in all respects when made, and shall
be true and correct in all respects on the Closing Date with the same force and
effect as if they had been made on and as of said date. The Investors shall have
performed in all material respects all obligations and covenants herein required
to be performed by them on or prior to the Closing Date.

 

(b)       The Investors shall have executed and delivered the Registration
Rights Agreement.

 

(c)       The Investors shall have delivered the Purchase Price to the Company.

 

(d)       The Company shall have obtained Stockholder Approval.

 

23

 

6.3       Termination of Obligations to Effect Closing; Effects.

 

(a)       The obligations of the Company, on the one hand, and the Investors, on
the other hand, to effect the Closing shall terminate as follows:

 

(i)       Upon the mutual written consent of the Company and the Investors;

 

(ii)       By the Company if any of the conditions set forth in Section 6.2
shall have become incapable of fulfillment, and shall not have been waived by
the Company;

 

(iii)       By an Investor (with respect to itself only) if any of the
conditions set forth in Section 6.1 shall have become incapable of fulfillment,
and shall not have been waived by the Investor; or

 

(iv)       By either the Company or any Investor (with respect to itself only)
if the Closing has not occurred on or prior to April 15, 2019;

 

provided, however, that, except in the case of clause (i) above, the party
seeking to terminate its obligation to effect the Closing shall not then be in
breach of any of its representations, warranties, covenants or agreements
contained in this Agreement or the other Transaction Documents if such breach
has resulted in the circumstances giving rise to such party’s seeking to
terminate its obligation to effect the Closing.

 

(b)       In the event of termination by the Company or any Investor of its
obligations to effect the Closing pursuant to this Section 6.3, written notice
thereof shall forthwith be given to the other Investors by the Company and the
other Investors shall have the right to terminate their obligations to effect
the Closing upon written notice to the Company and the other Investors. Nothing
in this Section 6.3 shall be deemed to release any party from any liability for
any breach by such party of the terms and provisions of this Agreement or the
other Transaction Documents or to impair the right of any party to compel
specific performance by any other party of its obligations under this Agreement
or the other Transaction Documents.

 

7.       Covenants and Agreements.

 

7.1       Reservation of Common Stock. The Company shall at all times reserve
and keep available out of its authorized but unissued shares of Common Stock,
solely for the purpose of providing for the conversion of the Shares and the
exercise of the Warrants, such number of shares of Common Stock as shall from
time to time equal the Conversion Shares and the Warrant Shares issuable from
time to time.

 

24

 

7.2       Reports. The Company will furnish to the Investors and/or their
assignees such information relating to the Company and its Subsidiaries as from
time to time may reasonably be requested by the Investors and/or their
assignees; provided, however, that the Company shall not disclose material
nonpublic information to the Investors, or to advisors to or representatives of
the Investors, unless prior to disclosure of such information the Company
identifies such information as being material nonpublic information and provides
the Investors, such advisors and representatives with the opportunity to accept
or refuse to accept such material nonpublic information for review and any
Investor wishing to obtain such information enters into an appropriate
confidentiality agreement with the Company with respect thereto.

 

7.3       No Conflicting Agreements. The Company will not take any action, enter
into any agreement or make any commitment that would conflict or interfere in
any material respect with the Company’s obligations to the Investors under the
Transaction Documents.

 

7.4       Insurance. The Company shall not materially reduce the insurance
coverages described in Section 4.19.

 

7.5       Compliance with Laws. The Company will comply in all material respects
with all applicable laws, rules, regulations, orders and decrees of all
governmental authorities.

 

7.6       Listing of Underlying Shares and Related Matters. Promptly following
the date hereof, the Company shall take all necessary action to cause the
Conversion Shares and the Warrant Shares to be listed on the Nasdaq Capital
Market no later than the Closing Date. Further, 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 Conversion Shares
and the Warrant Shares and will take such other action as is necessary to cause
such Common Stock to be so listed. The Company will use commercially reasonable
efforts to continue the listing and trading of its Common Stock on the Nasdaq
Capital Market and, in accordance, therewith, will use commercially reasonable
efforts to comply in all respects with the Company’s reporting, filing and other
obligations under the bylaws or rules of such market or exchange, as applicable.

 

7.7       Termination of Covenants. The provisions of Sections 7.2 through 7.5
shall terminate and be of no further force and effect on the date on which the
Company’s obligations under the Registration Rights Agreement to register or
maintain the effectiveness of any registration covering the Registrable
Securities (as such term is defined in the Registration Rights Agreement) shall
terminate.

 

25

 

7.8       Removal of Legends. Upon the earlier of (i) the sale or disposition of
any Securities by an Investor pursuant to Rule 144 or pursuant to any other
exemption under the 1933 Act such that the purchaser acquires freely tradable
securities or (ii) any Securities of the Investor becoming eligible to be sold
without restriction pursuant to Rule 144, upon the written request of such
Investor, the Company shall or, in the case of Common Stock, shall cause the
transfer agent for the Common Stock (the “Transfer Agent”) to issue replacement
certificates representing such Securities. From and after the earlier of such
dates, upon an Investor’s written request, the Company shall promptly cause
certificates evidencing the Investor’s Securities to be replaced with
certificates which do not bear such restrictive legends, and Conversion Shares
subsequently issued upon due conversion of the Shares and Warrant Shares
subsequently issued upon due exercise of the Warrants shall not bear such
restrictive legends provided the provisions of either clause (i) or clause (ii)
above, as applicable, are satisfied with respect thereto. In addition, upon the
earlier of (i) registration of the Conversion Shares and the Warrant Shares for
resale pursuant to the Registration Rights Agreement or (ii) the Conversion
Shares and/or the Warrant Shares becoming eligible to be sold without
restriction pursuant to Rule 144, the Company shall (A) deliver to the Transfer
Agent irrevocable instructions that the Transfer Agent shall reissue a
certificate representing shares of Common Stock without legends upon receipt by
such Transfer Agent of the legended certificates for such shares, together with
either (1) a customary representation by the Investor that Rule 144 applies to
the shares of Common Stock represented thereby or (2) a statement by the
Investor that such Investor has sold the shares of Common Stock represented
thereby in accordance with the Plan of Distribution contained in the
Registration Statement, and (B) cause its counsel to deliver to the Transfer
Agent one or more blanket opinions to the effect that the removal of such
legends in such circumstances may be effected under the 1933 Act. When the
Company is required to cause an unlegended certificate to replace a previously
issued legended certificate, if: (1) the unlegended certificate is not delivered
to an Investor within three (3) Business Days of submission by that Investor of
a legended certificate and supporting documentation to the Transfer Agent as
provided above and (2) prior to the time such unlegended certificate is received
by the Investor after such three (3) Business Day period, the Investor, or any
third party on behalf of such Investor or for the Investor’s account, purchases
(in an open market transaction or otherwise) shares of Common Stock to deliver
in satisfaction of a sale by the Investor of shares represented by such
certificate (a “Buy-In”), then the Company shall pay in cash to the Investor
(for costs incurred either directly by such Investor or on behalf of a third
party) the amount by which the total purchase price paid for Common Stock as a
result of the Buy-In (including brokerage commissions, if any) exceeds the
proceeds received by such Investor as a result of the sale to which such Buy-In
relates. The Investor shall provide the Company written notice together with a
reasonably detailed summary indicating the amounts payable to the Investor in
respect of the Buy-In.

 

26

 

7.9       Proxy Statement; Stockholders Meeting. (a) Promptly following the
execution and delivery of this Agreement, the Company shall take all action
necessary to call a meeting of its stockholders (the “Stockholders Meeting”),
which shall occur not later than April 15, 2019 (the “Stockholders Meeting
Deadline”), for the purpose of seeking approval of the Company’s stockholders
for (i) the authorization of 1,000,000 shares of “blank check” preferred stock
and (ii) the issuance and sale to the Investors of the Securities (including all
of the Conversion Shares issuable upon the full conversion of the Shares and all
of the Warrant Shares issuable upon the full exercise of the Warrants) (the
“Proposals”). In connection therewith, the Company will promptly prepare and
file with the SEC proxy materials (including a proxy statement and form of
proxy) for use at the Stockholders Meeting and, after receiving and promptly
responding to any comments of the SEC thereon, shall promptly mail such proxy
materials to the stockholders of the Company. Each Investor shall promptly
furnish in writing to the Company such information relating to such Investor and
its investment in the Company as the Company may reasonably request for
inclusion in the Proxy Statement. The Company will comply with Section 14(a) of
the 1934 Act and the rules promulgated thereunder in relation to any proxy
statement (as amended or supplemented, the "Proxy Statement") and any form of
proxy to be sent to the stockholders of the Company in connection with the
Stockholders Meeting, and the Proxy Statement shall not, on the date that the
Proxy Statement (or any amendment thereof or supplement thereto) is first mailed
to stockholders or at the time of the Stockholders Meeting, contain any untrue
statement of a material fact or omit to state any material fact necessary in
order to make the statements made therein not false or misleading, or omit to
state any material fact necessary to correct any statement in any earlier
communication with respect to the solicitation of proxies or the Stockholders
Meeting which has become false or misleading. If the Company should discover at
any time prior to the Stockholders Meeting, any event relating to the Company or
any of its Subsidiaries or any of their respective Affiliates, officers or
directors that is required to be set forth in a supplement or amendment to the
Proxy Statement, in addition to the Company's obligations under the 1934 Act,
the Company will promptly inform the Investors thereof.

 

(b)       Subject to their fiduciary obligations under applicable law (as
determined in good faith by the Company’s Board of Directors after consultation
with the Company’s outside counsel), the Company's Board of Directors shall
recommend to the Company's stockholders that the stockholders vote in favor of
the Proposals (the “Company Board Recommendation”) and take all commercially
reasonable action (including, without limitation, the hiring of a proxy
solicitation firm of nationally recognized standing) to solicit the approval of
the stockholders for the Proposals unless the Board of Directors shall have
modified, amended or withdrawn the Company Board Recommendation pursuant to the
provisions of the immediately succeeding sentence. The Company covenants that
the Board of Directors of the Company shall not modify, amend or withdraw the
Company Board Recommendation unless the Board of Directors (after consultation
with the Company’s outside counsel) shall determine in the good faith exercise
of its business judgment that maintaining the Company Board Recommendation would
violate its fiduciary duty to the Company’s stockholders. Whether or not the
Company's Board of Directors modifies, amends or withdraws the Company Board
Recommendation pursuant to the immediately preceding sentence, the Company shall
in accordance with applicable law and the provisions of its Certificate of
Incorporation and Bylaws, (i) take all action necessary to convene the
Stockholders Meeting as promptly as practicable, but no later than the
Stockholders Meeting Deadline, to consider and vote upon the approval of the
Proposals and (ii) submit the Proposals at the Stockholders Meeting to the
stockholders of the Company for their approval.

 

(c)       Each Investor agrees to vote all shares of capital stock of the
Company that it beneficially owns in favor of the approval of the Proposals at
the Stockholders Meeting, and at any adjournment or postponement thereof.

 

27

 

7.10       Pre-emptive Right for Future Financings. From the date hereof until
one year after the Closing Date, each Investor shall have the right to
participate in any subsequent offering by the Company of its Common Stock or
Common Stock Equivalents (other than with respect to public “at-the-market”
offerings of its Common Stock or Common Stock Equivalents not to exceed an
aggregate of $10,000,000 in gross proceeds from the date hereof) (a “Subsequent
Financing”) as provided herein. At least five (5) Business Days prior to the
execution of definitive documentation for a Subsequent Financing, the Company
shall deliver to each Investor a written notice (“Pre-Notice”), which Pre-Notice
shall notify the Investor that the Company would like to share with the Investor
certain information which may constitute material non-public information with
regard to the Company and which shall ask the Investor if it wants to review
such information. An Investor shall have the right, exercisable at any time
within two (2) Business Days after its receipt of the Pre-Notice, to notify the
Company whether it wishes to review such information. Upon the written request
of an Investor, and only upon a request by such Investor, the Company shall
promptly, but no later than one Business Day after receipt of such request,
deliver a subsequent notice to such Investor (a “Subsequent Financing Notice”).
The Subsequent Financing Notice shall describe in reasonable detail the proposed
terms of such Subsequent Financing, the amount of proceeds intended to be raised
thereunder, the Person with whom such Subsequent Financing is proposed to be
effected, and attached to which shall be a term sheet or similar document
relating thereto. Each Investor shall notify the Company by 6:30 p.m. (New York
City time) on the third (3rd) Business Day after its receipt of the Subsequent
Financing Notice of its willingness to participate in the Subsequent Financing
on the terms described in the Subsequent Financing Notice, subject to completion
of mutually acceptable documentation, based on such Investor’s Pro-Rata Share
(as defined below) of such Subsequent Financing. The Company must provide the
Investors with a second Subsequent Financing Notice, and the Investors will
again have the pre-emptive right set forth above in this Section 7.10, if the
Subsequent Financing subject to the initial Subsequent Financing Notice is not
consummated for any reason on the terms set forth in such Subsequent Financing
Notice within 60 Business Days after the date of the initial Subsequent
Financing Notice with the Person identified in the Subsequent Financing Notice.
“Pro-Rata Share” means, with respect to an Investor, the number of Common Stock
or Common Stock Equivalents to be issued in a Subsequent Financing equal to the
product of (i) the aggregate amount of Common Stock or Common Stock Equivalents
to be issued in such Subsequent Financing and (ii) the fraction determined by
dividing (x) the number of shares of Common Stock into which the shares of
Series A Preferred Stock held by such Investor immediately prior to such
issuance are then convertible, in accordance with Section 4 of the Certificate
of Designation (without regard to the limitations set forth in Section 7 of the
Certificate of Designation, and after giving effect to an adjustment under
Section 4G of the Certificate of Designation, by (y) the total amount of Common
Stock and Common Stock Equivalents (including, without limitation, the Preferred
Stock) on an as-converted-to-Common Stock basis (with respect to any Preferred
Stock, without regard to the limitations set forth in Section 7 of the
Certificate of Designation, and after giving effect to an adjustment under
Section 4G of the Certificate of Designation with respect to such Preferred
Stock, as applicable), held by all stockholders of the Company on such date
immediately prior to such issuance. All of the transaction documentation related
to a Subsequent Financing to which the pre-emptive right in this Section 7.10
applies shall provide for beneficial ownership limitations that are
substantially similar to the limitations set forth in Section 7 of the
Certificate of Designation (including, for the avoidance of doubt, the issuance
of pre-funded warrants or similar securities in lieu of shares of Common Stock).
Notwithstanding the foregoing, this Section 7.10 shall not apply in respect of
the issuance of (a) shares of Common Stock or options to employees, consultants,
officers or directors of the Company pursuant to any stock or option plan duly
adopted by a majority of the non-employee members of the Board of Directors of
the Company or a majority of the members of a committee of non-employee
directors established for such purpose and (b) securities upon the exercise of
or conversion of any convertible securities, options or warrants issued and
outstanding on the date of this Agreement, provided that such securities have
not been amended since the date of this Agreement to increase the number of
shares of Common Stock issuable thereunder or to lower the exercise or
conversion price thereof.

 

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7.11       Subsequent Equity Sales.

 

(a)       From the date hereof until ninety (90) days after the Closing Date,
without the consent of the Required Investors, neither the Company nor any
Subsidiary shall issue shares of Common Stock or Common Stock Equivalents.
Notwithstanding the foregoing, the provisions of this Section 7.11(a) shall not
apply to (i) the issuance of the Securities, (ii) the issuance of Common Stock
or Common Stock Equivalents upon the conversion or exercise of any securities of
the Company or a Subsidiary outstanding on the date hereof, provided that the
terms of such security are not amended after the date hereof to decrease the
exercise price or increase the Common Stock or Common Stock Equivalents
receivable upon the exercise, conversion or exchange thereof or (iii) the
issuance of any Common Stock or Common Stock Equivalents pursuant to any Company
equity incentive plan approved by the Company’s stockholders and in place as of
the date hereof.

 

(b)       From the date hereof until the earlier of (i) two (2) years from the
Closing Date or (ii) such time as no Investor holds any of the Securities, the
Company shall be prohibited from effecting or entering into an agreement to
effect any “Variable Rate Transaction”. The term “Variable Rate Transaction”
shall mean a transaction in which the Company issues or sells (x) any debt or
equity securities that are convertible into, exchangeable or exercisable for, or
include the right to receive additional shares of Common Stock either (A) at a
conversion, exercise or exchange rate or other price that is based upon and/or
varies with the trading prices of or quotations for the shares of Common Stock
at any time after the initial issuance of such debt or equity securities, or (B)
with a conversion, exercise or exchange price that is subject to being reset at
some future date after the initial issuance of such debt or equity security or
upon the occurrence of specified or contingent events directly or indirectly
related to the business of the Company or the market for the Common Stock or (y)
enters into any agreement, including, but not limited to, an equity line of
credit, whereby the Company may sell securities at a future determined price.
For the avoidance of doubt, the issuance of a security which is subject to
customary anti-dilution protections, including where the conversion, exercise or
exchange price is subject to adjustment as a result of stock splits, reverse
stock splits and other similar recapitalization or reclassification events,
shall not be deemed to be a “Variable Rate Transaction.” Notwithstanding
anything to the contrary contained herein, an at-the-market offering shall not
be deemed to be a “Variable Rate Transaction.”

 

(c)       The Company shall not, and shall use its commercially reasonable
efforts to ensure that no Affiliate of the Company shall, sell, offer for sale
or solicit offers to buy or otherwise negotiate in respect of any security (as
defined in Section 2 of the 1933 Act) that will be integrated with the offer or
sale of the Securities in a manner that would require the registration under the
1933 Act of the sale of the Securities to the Investors, or that will be
integrated with the offer or sale of the Securities for purposes of the rules
and regulations of any trading market such that it would require stockholder
approval prior to the closing of such other transaction unless stockholder
approval is obtained before the closing of such subsequent transaction.

 

29

 

(d)       The Company shall not, from the date hereof until ninety (90) days
after the Closing Date, prepare and file with the SEC a registration statement
relating to an offering for its own account or the account of others under the
1933 Act of any of its equity securities, other than (i) a Registration
Statement pursuant to the Registration Rights Agreement or (ii) any registration
statement or post-effective amendment to a registration statement (or supplement
thereto) relating to the Company’s employee benefit plans registered on Form S-8
or, in connection with an acquisition, on Form S-4.

 

7.12       Equal Treatment of Investors. No consideration shall be offered or
paid to any Person to amend or consent to a waiver or modification of any
provision of any of the Transaction Documents unless the same consideration is
also offered to all of the parties to the Transaction Documents. For
clarification purposes, this provision constitutes a separate right granted to
each Investor by the Company and negotiated separately by each Investor, and is
intended for the Company to treat the Investors as a class and shall not in any
way be construed as the Investors acting in concert or as a group with respect
to the purchase, disposition or voting of Securities or otherwise.

 

8.       Survival and Indemnification.

 

8.1       Survival. The representations, warranties, covenants and agreements
contained in this Agreement shall survive the Closing of the transactions
contemplated by this Agreement until the expiration of the applicable statute of
limitations.

 

8.2       Indemnification. The Company agrees to indemnify and hold harmless
each Investor and its Affiliates and their respective directors, officers,
trustees, members, managers, employees and agents, and their respective
successors and assigns, from and against any and all losses, claims, damages,
liabilities and expenses (including without limitation reasonable attorney fees
and disbursements (subject to Section 8.3 below) and other expenses incurred in
connection with investigating, preparing or defending any action, claim or
proceeding, pending or threatened and the costs of enforcement thereof)
(collectively, “Losses”) to which such Person may become subject as a result of
any breach of any representation, warranty, covenant or agreement made by or to
be performed on the part of the Company under the Transaction Documents, and
will reimburse any such Person for all such amounts as they are incurred by such
Person.

 

30

 

8.3       Conduct of Indemnification Proceedings. Any person entitled to
indemnification hereunder shall (i) give prompt notice to the indemnifying party
of any claim with respect to which it seeks indemnification and (ii) permit such
indemnifying party to assume the defense of such claim with counsel reasonably
satisfactory to the indemnified party; provided that any person entitled to
indemnification hereunder shall have the right to employ separate counsel and to
participate in the defense of such claim, but the fees and expenses of such
counsel shall be at the expense of such person unless (a) the indemnifying party
has agreed to pay such fees or expenses, (b) the indemnifying party shall have
failed to assume the defense of such claim and employ counsel reasonably
satisfactory to such person or (c) in the reasonable judgment of any such
person, based upon written advice of its counsel, a conflict of interest exists
between such person and the indemnifying party with respect to such claims (in
which case, if the person notifies the indemnifying party in writing that such
person elects to employ separate counsel at the expense of the indemnifying
party, the indemnifying party shall not have the right to assume the defense of
such claim on behalf of such person); and provided, further, that the failure of
any indemnified party to give notice as provided herein shall not relieve the
indemnifying party of its obligations hereunder, except to the extent that such
failure to give notice shall materially adversely affect the indemnifying party
in the defense of any such claim or litigation. It is understood that the
indemnifying party shall not, in connection with any proceeding in the same
jurisdiction, be liable for fees or expenses of more than one separate firm of
attorneys at any time for all such indemnified parties. No indemnifying party
will, except with the consent of the indemnified party, consent to entry of any
judgment or enter into any settlement that does not include as an unconditional
term thereof the giving by the claimant or plaintiff to such indemnified party
of a release from all liability in respect of such claim or litigation. The
Company will not be liable to any indemnified party under this Agreement (i) for
any settlement by such indemnified party effected without the Company’s prior
written consent, which shall not be unreasonably withheld, conditioned or
delayed, or (ii) for any Losses incurred by such indemnified party which a court
of competent jurisdiction determines in a final judgment which is not subject to
further appeal are solely attributable to (A) a breach of any of the
representations, warranties, covenants or agreements made by such indemnified
party under this Agreement or in any other Transaction Document or (B) the
fraud, gross negligence or willful misconduct of such indemnified party.

 

31

 

9.       Miscellaneous.

 

9.1       Successors and Assigns. This Agreement may not be assigned by a party
hereto without the prior written consent of the Company or the Investors, as
applicable, provided, however, that an Investor may assign its rights and
delegate its duties hereunder in whole or in part to an Affiliate or to a third
party acquiring some or all of its Securities in a transaction complying with
applicable securities laws without the prior written consent of the Company or
the other Investors, provided that such Investor provides written notice of
assignment to the Company promptly after such assignment is effected. The
provisions of this Agreement shall inure to the benefit of and be binding upon
the respective permitted successors and assigns of the parties. Without limiting
the generality of the foregoing, in the event that the Company is a party to a
merger, consolidation, share exchange or similar business combination
transaction in which the Common Stock is converted into the equity securities of
another Person, from and after the effective time of such transaction, such
Person shall, by virtue of such transaction, be deemed to have assumed the
obligations of the Company hereunder, the term “Company” shall be deemed to
refer to such Person and the term “Common Stock” shall be deemed to refer to the
securities received by the Investors in connection with such transaction.
Nothing in this Agreement, express or implied, is intended to confer upon any
party other than the parties hereto or their respective successors and assigns
any rights, remedies, obligations, or liabilities under or by reason of this
Agreement, except as expressly provided in this Agreement.

 

9.2       Counterparts; Faxes. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument. This Agreement may be
delivered by facsimile or other form of electronic transmission, which shall be
deemed an original.

 

32

 

9.3       Titles and Subtitles. The titles and subtitles used in this Agreement
are used for convenience only and are not to be considered in construing or
interpreting this Agreement.

 

9.4       Notices. Unless otherwise provided, any notice required or permitted
under this Agreement shall be given in writing and shall be deemed effectively
given as hereinafter described (i) if given by personal delivery, then such
notice shall be deemed given upon such delivery, (ii) if given by telex or
telecopier, then such notice shall be deemed given upon receipt of confirmation
of complete transmittal, (iii) if given by mail, then such notice shall be
deemed given upon the earlier of (A) receipt of such notice by the recipient or
(B) three days after such notice is deposited in first class mail, postage
prepaid, and (iv) if given by an internationally recognized overnight air
courier, then such notice shall be deemed given one Business Day after delivery
to such carrier. All notices shall be addressed to the party to be notified at
the address as follows, or at such other address as such party may designate by
ten days’ advance written notice to the other party:

 

If to the Company:

 

PLx Pharma Inc.

9 Fishers Lane, Unit E

Sparta, NJ 07871

Attention: Rita O’Connor, Chief Financial Officer

Telephone: (973) 409-6543

Facsimile: (713) 842-3052

 

With a copy to:

 

Olshan Frome Wolosky LLP

1325 Avenue of the Americas

New York, NY 10019

Attention: Robert H. Friedman

Telephone: (212) 451-2300

Facsimile: (212) 451-2222

 

If to the Investors:

 

to the addresses set forth on the signature pages hereto.

 

33

 

9.5       Expenses. The parties hereto shall pay their own costs and expenses in
connection herewith, except that the Company shall pay the reasonable fees and
expenses of Lowenstein Sandler LLP not to exceed $100,000, regardless of whether
the transactions contemplated hereby are consummated; it being understood that
Lowenstein Sandler LLP has only rendered legal advice to Park West and not to
the Company or any other Investor in connection with the transactions
contemplated hereby, and that each of the Company and each Investor has relied
for such matters on the advice of its own respective counsel. Such expenses
shall be paid upon demand upon presentation of invoice(s) for such expenses. The
Company shall reimburse the Investors upon demand for all reasonable
out-of-pocket expenses incurred by the Investors, including without limitation
reimbursement of reasonable attorneys’ fees and disbursements, in connection
with any amendment, modification or waiver of this Agreement or the other
Transaction Documents. Such expenses shall be paid upon demand upon presentation
of invoice(s) for such expenses. In the event that legal proceedings are
commenced by any party to this Agreement against another party to this Agreement
in connection with this Agreement or the other Transaction Documents, the party
or parties which do not prevail in such proceedings shall severally, but not
jointly, pay their pro rata share of the reasonable attorneys’ fees and other
reasonable out-of-pocket costs and expenses incurred by the prevailing party in
such proceedings.

 

9.6       Amendments and Waivers. Any term of this Agreement may be amended and
the observance of any term of this Agreement may be waived (either generally or
in a particular instance and either retroactively or prospectively), only with
the written consent of the Company and the Investors. Any amendment or waiver
effected in accordance with this paragraph shall be binding upon each holder of
any Securities purchased under this Agreement at the time outstanding, each
future holder of all such Securities, and the Company.

 

9.7       Publicity. Except as set forth below, no public release or
announcement concerning the transactions contemplated hereby shall be issued by
the Company or the Investors without the prior consent of the Company (in the
case of a release or announcement by the Investors) or the Investors (in the
case of a release or announcement by the Company) (which consents shall not be
unreasonably withheld), except as such release or announcement may be required
by law or the applicable rules or regulations of any securities exchange or
securities market, in which case the Company or the Investors, as the case may
be, shall allow the Investors or the Company, as applicable, to the extent
reasonably practicable in the circumstances, reasonable time to comment on such
release or announcement in advance of such issuance. By 8:30 a.m. (New York City
time) on the trading day immediately following the execution and delivery of
this Agreement, or as soon as reasonably practicable thereafter in compliance
with the 1934 Act, the Company shall (i) issue a press release disclosing the
execution of this Agreement and describing the transactions contemplated hereby
and by the other Transaction Documents and (ii) file a Current Report on Form
8-K attaching the press release described in the foregoing sentence as well as
copies of the Transaction Documents. In addition, the Company will make such
other filings and notices in the manner and time required by the SEC or Nasdaq.

 

34

 

9.8       Severability. Any provision of this Agreement that is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof but shall be interpreted as if it were written so as
to be enforceable to the maximum extent permitted by applicable law, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction. To the extent
permitted by applicable law, the parties hereby waive any provision of law which
renders any provision hereof prohibited or unenforceable in any respect.

 

9.9       Entire Agreement. This Agreement, including any Exhibits and the
Disclosure Schedules, and the other Transaction Documents constitute the entire
agreement among the parties hereof with respect to the subject matter hereof and
thereof and supersede all prior agreements and understandings, both oral and
written, between the parties with respect to the subject matter hereof and
thereof.

 

9.10       Further Assurances. The parties shall execute and deliver all such
further instruments and documents and take all such other actions as may
reasonably be required to carry out the transactions contemplated hereby and to
evidence the fulfillment of the agreements herein contained.

 

9.11       Governing Law; Consent to Jurisdiction; Waiver of Jury Trial. This
Agreement shall be governed by, and construed in accordance with, the internal
laws of the State of New York applicable to agreements made and to be performed
entirely within the State of New York (except to the extent the provisions of
the Delaware General Corporations Law would be mandatorily applicable to the
issuance of the Shares, the Conversion Shares, the Warrants or the Warrant
Shares). Each of the parties hereto irrevocably submits to the exclusive
jurisdiction of the courts of the State of New York located in New York County
and the United States District Court for the Southern District of New York for
the purpose of any suit, action, proceeding or judgment relating to or arising
out of this Agreement and the transactions contemplated hereby. Service of
process in connection with any such suit, action or proceeding may be served on
each party hereto anywhere in the world by the same methods as are specified for
the giving of notices under this Agreement. Each of the parties hereto
irrevocably consents to the jurisdiction of any such court in any such suit,
action or proceeding and to the laying of venue in such court. Each party hereto
irrevocably waives any objection to the laying of venue of any such suit, action
or proceeding brought in such courts and irrevocably waives any claim that any
such suit, action or proceeding brought in any such court has been brought in an
inconvenient forum. TO THE EXTENT ALLOWABLE UNDER APPLICABLE LAW, EACH OF THE
PARTIES HERETO WAIVES ANY RIGHT TO REQUEST A TRIAL BY JURY IN ANY LITIGATION
WITH RESPECT TO THIS AGREEMENT AND REPRESENTS THAT COUNSEL HAS BEEN CONSULTED
SPECIFICALLY AS TO THIS WAIVER.

 

35

 

9.12       Independent Nature of Investors' Obligations and Rights. The
obligations of each Investor under any Transaction Document are several and not
joint with the obligations of any other Investor, and no Investor shall be
responsible in any way for the performance of the obligations of any other
Investor under any Transaction Document. The decision of each Investor to
purchase Securities pursuant to the Transaction Documents has been made by such
Investor independently of any other Investor. Nothing contained herein or in any
Transaction Document, and no action taken by any Investor pursuant thereto,
shall be deemed to constitute the Investors as a partnership, an association, a
joint venture or any other kind of entity, or create a presumption that the
Investors are in any way acting in concert or as a group with respect to such
obligations or the transactions contemplated by the Transaction Documents. Each
Investor acknowledges that no other Investor has acted as agent for such
Investor in connection with making its investment hereunder and that no Investor
will be acting as agent of such Investor in connection with monitoring its
investment in the Securities or enforcing its rights under the Transaction
Documents. Each Investor shall be entitled to independently protect and enforce
its rights, including, without limitation, the rights arising out of this
Agreement or out of the other Transaction Documents, and it shall not be
necessary for any other Investor to be joined as an additional party in any
proceeding for such purpose. The Company acknowledges that each of the Investors
has been provided with the same Transaction Documents for the purpose of closing
a transaction with multiple Investors and not because it was required or
requested to do so by any Investor.

 

[signature page follows]

 

36

 

IN WITNESS WHEREOF, the parties have executed this Agreement or caused their
duly authorized officers to execute this Agreement as of the date first above
written.

  

The Company: PLX PHARMA INC.       By: /s/ Natasha Giordano
 
    Name: Natasha Giordano     Title: President & CEO

 

 

[Signature Page to Purchase Agreement]

 

 

The Investors: PARK WEST INVESTORS MASTER FUND, LIMITED               By:

/s/ Grace Jimenez

  Name:  Grace Jimenez   Title:  Chief Financial officer

 

Aggregate Purchase Price: $ 13,565,000

Number of Shares: 13,565

Number of Commitment Warrants: 452,135

 

Address For Notices:    

c/o Park West Asset Management LLC

900 Larkspur Landing Circle, Suite 165

Larkspur, CA 94939

Telephone Number: (415) 524-2900

Attention: Grace Jimenez

Email: operations@ parkwestllc.com

      with a copy to:      

Lowenstein Sandler LLP

1251 Avenue of the Americas

New York, NY 10020

Attention James O’Grady

Telephone Number: (646) 414-6849

Fax: (973) 422-6821

 

[Signature Page to Purchase Agreement]

 

 

The Investors: PARK WEST PARTNERS INTERNATIONAL, LIMITED               By:

/s/ Grace Jimenez

  Name:  Grace Jimenez   Title:  Chief Financial officer

 

Aggregate Purchase Price: $ 1,435,000

Number of Shares: 1,435

Number of Commitment Warrants: 47,865

 

Address For Notices:    

c/o Park West Asset Management LLC

900 Larkspur Landing Circle, Suite 165

Larkspur, CA 94939

Telephone Number: (415) 524-2900

Attention: Grace Jimenez

Email: operations@ parkwestllc.com

      with a copy to:      

Lowenstein Sandler LLP

1251 Avenue of the Americas

New York, NY 10020

Attention James O’Grady

Telephone Number: (646) 414-6849

Fax: (973) 422-6821

 

[Signature Page to Purchase Agreement]

 

 

 

 

Exhibit A

 

Form of Certificate of Designations

 

 

Exhibit B

 

Form of Warrant

 

 

 

Exhibit C

 

Form of Registration Rights Agreement