Exhibit 10.1

 

SECURITIES PURCHASE AGREEMENT

 

SECURITIES PURCHASE AGREEMENT (the “Agreement”), dated as of August 17, 2015, by
and among Celsus Therapeutics Plc, a company incorporated in England and Wales
(registered number 05252842) (the “Company”), with a registered office at 42-50
Hersham Road, Walton-on-Thames, Surrey, KT12 1RZ and corporate office located at
24 West 40th Street, 8th Floor, New York, New York, 10018, and the investors
listed on the Schedule of Buyers attached hereto (individually, a “Buyer” and
collectively, the “Buyers”).

 

WHEREAS:

 

A.          The Company and Buyers are executing and delivering this Agreement
in reliance upon the exemption from securities registration afforded by Rule 506
of Regulation D (“Regulation D”) as promulgated by the United States Securities
and Exchange Commission (the “SEC”) under the Securities Act of 1933, as amended
(the “1933 Act”);

 

B.          Buyers, severally, and not jointly, wish to purchase from the
Company and the Company wishes to sell to Buyers, upon the terms and conditions
stated in this Agreement, a number of American Depositary Shares of the Company
(each American Depositary Share, an “ADS”) as determined in accordance with this
Agreement (the ADSs being purchased by Buyers pursuant to this Agreement,
including, for the avoidance of doubt, any ADSs issued and issuable pursuant to
Section 1.b hereof, being referred to as the “Purchased ADSs”);

 

C.          Each ADS represents ten (10) ordinary shares of the Company, par
value £0.01 per share (“Ordinary Shares”), as of the date of this Agreement and
will represent one hundred (100) Ordinary Shares immediately prior to the
Closing giving effect to the ADS Ratio Change (as defined below) (the Ordinary
Shares underlying the Purchased ADSs which may be exchanged therefor upon
surrender of the Purchased ADSs to the Depositary (as defined below) being
referred to as the “Purchased Ordinary Shares”);

 

D.          The Purchased ADSs may be evidenced by American Depositary Receipts
(“ADRs”) to be issued pursuant to the Deposit Agreement, dated as of December 7,
2012, among the Company, Deutsche Bank Trust Company Americas, as depositary
(the “Depositary”), and all owners and holders from time to time of American
Depositary Shares issued thereunder (as amended by that certain Amendment
thereto, dated as of December 24, 2013, and as may hereafter be amended or
otherwise modified in accordance with its terms, the “Deposit Agreement”);

 

E.          On July 10, 2015, the Company entered into that certain Share
Exchange Agreement (the “Share Exchange Agreement”) with RPC Pharma Limited
(“RPC”), pursuant to which the Company agreed, subject to the terms and
conditions of the Share Exchange Agreement, to acquire all of the capital stock
of Volution Immuno Pharmaceuticals SA (“Volution”) from RPC, the sole
shareholder of Volution, in exchange for Ordinary Shares (the “Acquisition”);

 

 

 

 

F.          The Board of Directors of the Company (the “Company Board”) has
(i) determined that it is in the best interests of the Company and its
shareholders, and declared it advisable, to enter into each of the Share
Exchange Agreement and this Agreement, and approved the execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated hereby and thereby, including the issuance of the Ordinary Shares
pursuant to the Share Exchange Agreement and the issuance of the Purchased ADSs
hereunder (such matters referred to in this clause (i), collectively, as the
“Proposals”); and (ii) resolved to recommend the approval and adoption of the
Proposals by the shareholders of the Company (the “Company Board
Recommendation”); and

 

G.          Contemporaneously with the execution and delivery of this Agreement,
the parties hereto are executing and delivering a Registration Rights Agreement,
substantially in the form attached as Exhibit A (as the same may be amended,
restated, modified or supplemented and in effect from time to time, the
“Registration Rights Agreement”), pursuant to which the Company has agreed to
provide certain registration rights under the 1933 Act and the rules and
regulations promulgated thereunder.

 

NOW THEREFORE, the Company and Buyers hereby agree as follows:

 

1.           PURCHASE AND SALE OF PURCHASED ADSs.

 

a.          Purchase of Purchased ADSs. Subject to the satisfaction (or waiver)
of the conditions set forth in Sections 6 and 7 below, on the Closing Date (as
defined in Section 1.c), the Company shall issue and sell to each Buyer, and
each Buyer severally agrees to purchase from the Company, a number of Purchased
ADSs equal to the quotient of (i) such Buyer’s Purchase Price, divided by (ii)
the Per Share Purchase Price (the “Closing”). The aggregate purchase price (such
Buyer’s “Purchase Price”) for the Purchased ADSs to be purchased by each Buyer
at the Closing shall be the amount set forth opposite such Buyer’s name on the
Schedule of Buyers.

 

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b.          For purposes of this Agreement, (i) “Per Share Purchase Price” means
the product of (A) one hundred (100) multiplied by (B) the quotient of (x) One
Hundred Fifty Million Dollars ($150,000,000), divided by (y) the Fully-Diluted
Shares; and (ii) “Fully-Diluted Shares” means, as of the Closing Date, the sum
of (1) the number of Ordinary Shares in issue (including Ordinary Shares
represented by outstanding ADSs), giving effect to the issuance of any Ordinary
Shares, ADSs or other securities of the Company pursuant to, or otherwise in
connection with, the Acquisition, plus (2) the number of Ordinary Shares
directly or indirectly issuable upon exercise, conversion or exchange of
outstanding Options and Convertible Securities (including, for the avoidance of
doubt, the warrants to purchase Ordinary Shares outstanding at Closing (the
“Company Warrants”)), including any Options or Convertible Securities issuable
pursuant to, or otherwise in connection with, the Acquisition (without giving
effect to any limitations on exercise, conversion or exchange thereof as of such
date) and giving effect to the Company’s good faith determination prior to the
Closing of any adjustments to the number of Ordinary Shares directly or
indirectly issuable pursuant to, and in accordance with, their terms resulting
from the consummation of the transactions contemplated hereby, the Acquisition
and the issuance of any securities pursuant to the Share Exchange Agreement or
otherwise in connection therewith (in the case of the Company Warrants, taking
into account any agreements or understandings with respect to such adjustments
reached with the holders of the Company Warrants prior to the Closing (such good
faith determination of the Company prior to the Closing with respect to the
Company Warrants being referred to as the “Company Warrant Determination”)). For
purposes of the definition of Fully-Diluted Shares, (X) if the number of
Ordinary Shares issuable upon exercise of the Company Warrants is increased (the
“Increased Warrant Shares”) following the Closing (because of a challenge by the
holders of the Company Warrants or otherwise) as a result of any increase in the
number of Ordinary Shares issuable upon exercise thereof over the number set
forth in the Company Warrant Determination due to any adjustment to the Company
Warrants to give effect to the Acquisition and the issuance of any securities
pursuant to the Share Exchange Agreement or otherwise in connection therewith,
and (Y) if, as a result of any such adjustment, any additional Ordinary Shares
are issued or issuable pursuant to the Share Exchange Agreement (any such
additional Ordinary Shares, the “Additional Acquisition Shares”), then the
Company shall promptly issue to each Buyer an additional number of restricted
ADSs representing Ordinary Shares that such Buyer would have been entitled to if
the Fully-Diluted Shares included the Increased Warrant Shares and the
Additional Acquisition Shares. Notwithstanding the foregoing, to the extent that
any issuance of Purchased ADSs to any Buyer (at the Closing or thereafter) would
result in such Buyer (together with such Buyer’s affiliates and any other
Persons whose beneficial ownership of the ADSs and/or Ordinary Shares would be
aggregated with that of such holder for purposes of Section 13(d) of the 1934
Act (as defined below), including ADSs and/or Ordinary Shares held by a Person
acting as a group together with such Buyer) owning (beneficially or otherwise)
ADSs and/or Ordinary Shares representing in the aggregate in excess of 9.9% of
the Ordinary Shares outstanding immediately after giving effect to such
issuance, such Buyer shall be issued, in lieu of the ADSs representing such
excess number of Ordinary Shares (the “Excess Shares”), a cashless exercisable
warrant, in form reasonably acceptable to such Buyer, to purchase the ADSs
representing such Excess Shares (subject to proportionate adjustment for stock
splits, stock dividends, stock combinations and similar events) at a price of
$0.01 per ADS, which warrant shall provide that the holder thereof shall not
have the right to exercise such warrant, to the extent that after giving effect
to such exercise, such holder (together with such holder’s affiliates and any
other Persons whose beneficial ownership of the ADSs and/or Ordinary Shares
would be aggregated with that of such holder for purposes of Section 13(d) of
the 1934 Act, including ADSs and/or Ordinary Shares held by a Person acting as a
group together with such holder) would own (beneficially or otherwise) ADSs
and/or Ordinary Shares representing in the aggregate in excess of 9.9% of the
Ordinary Shares outstanding immediately after giving effect to such exercise
(the ADSs issuable upon exercise of any such warrants constituting Purchased
ADSs hereunder). The Company covenants, acknowledges and agrees to keep Buyers
informed on a reasonably current basis of any challenges by the holders of the
Company Warrants with respect to the Company’s determination of the adjustment
to the exercise price thereof and the number of Ordinary Shares issuable upon
exercise thereof and as to any other adjustments to the Company Warrants and to
the shares issuable pursuant to the Share Exchange Agreement. At least one
Business Day prior to Closing, the Company shall deliver to each of the Buyers a
certificate, signed by a Director, certifying as to (I) the pro forma
capitalization of the Company after giving effect to the Acquisition, the
issuance of the Purchased ADSs and the Purchased Ordinary Shares and any
adjustments to any Options or Convertible Securities resulting therefrom, and
(II) the Company’s determination of any adjustments to the number of Ordinary
Shares directly or indirectly issuable pursuant to, and in accordance with, the
terms of any Convertible Securities and Options resulting from the consummation
of the transactions contemplated hereby, the Acquisition and the issuance of any
securities pursuant to the Share Exchange Agreement or otherwise in connection
therewith (including the Company Warrant Determination). For purposes of this
Agreement, “Convertible Securities” means any stock or securities (other than
Options and ADSs) directly or indirectly convertible into or exchangeable or
exercisable for ADSs or Ordinary Shares; and “Options” means any rights,
warrants or options to subscribe for or purchase ADSs or Ordinary Shares or
Convertible Securities.

 

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c.          Closing Date. The date and time of the Closing (the “Closing Date”)
shall be 10:00 a.m., New York City time, on the first Business Day following the
satisfaction (or waiver) of all of the conditions set forth in Sections 6 and 7
(or such later or earlier date as is mutually agreed to in writing by the
Company and Buyers). The Closing shall occur on the Closing Date at the offices
of Katten Muchin Rosenman LLP, 525 West Monroe Street, Chicago, Illinois
60661-3693 or at such other place as the Company and Buyers may collectively
designate in writing. “Business Day” means any day other than Saturday, Sunday
or any other day on which commercial banks in the City of New York are
authorized or required by law to remain closed.

 

d.          Form of Payment. On the Closing Date, (i) each Buyer shall pay such
Buyer’s Purchase Price to the Company for the Purchased ADSs to be issued and
sold to such Buyer on the Closing Date, by wire transfer of immediately
available funds in accordance with the Company’s written wire instructions, less
any amount withheld pursuant to Section 5.h, and (ii) the Company shall deliver
to each Buyer an ADR (or ADRs representing such numbers of Purchased ADSs as
such Buyer shall request) representing (in the aggregate) the number of
Purchased ADSs that such Buyer is purchasing hereunder, in each case duly
executed by the Depositary and registered in the name of such Buyer and/or its
designee(s).

 

2.           BUYER’S REPRESENTATIONS AND WARRANTIES.

 

Each Buyer represents and warrants, severally and not jointly, as of the date of
this Agreement and the Closing Date, with respect to only itself, that:

 

a.          Investment Purpose. Such Buyer is acquiring (i) the Purchased ADSs
purchased by such Buyer hereunder, and (ii) the underlying Purchased Ordinary
Shares (the Purchased ADSs and the Purchased Ordinary Shares being collectively
referred to herein as the “Securities”) for its own account and not with a view
towards, or for resale in connection with, the public sale or distribution
thereof, except pursuant to sales registered under, or exempted from, the
registration requirements of, the 1933 Act; provided, however, that by making
the representations herein, such Buyer does not agree to hold any of the
Securities for any minimum or other specific term and reserves the right to
dispose of the Securities at any time in accordance with or pursuant to an
effective registration statement or an exemption from registration under the
1933 Act.

 

b.          Accredited Investor Status. Such Buyer is an “accredited investor”
as that term is defined in Rule 501(a) of Regulation D.

 

c.          Reliance on Exemptions. Such Buyer understands that the Securities
are being offered and sold to it in reliance on specific exemptions from the
registration requirements of the United States federal and state securities laws
and that the Company is relying in part upon the truth and accuracy of, and such
Buyer’s compliance with, the representations, warranties, agreements,
acknowledgments and understandings of such Buyer set forth herein in order to
determine the availability of such exemptions.

 

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d.          Information. Such Buyer and its advisors, if any, have been
furnished with all materials relating to the business, finances and operations
of the Company and the Subsidiaries and materials relating to the offer and sale
of the Securities that have been requested by such Buyer. Such Buyer and its
advisors, if any, have been afforded the opportunity to ask questions of the
Company. Neither such inquiries nor any other due diligence investigations
conducted by such Buyer or its advisors, if any, or its representatives shall
modify, amend or affect such Buyer’s right to rely on the Company’s
representations and warranties contained in Section 3 below. Such Buyer
understands that its investment in the Securities involves a high degree of
risk. Such Buyer has sought such accounting, legal and tax advice as it has
considered necessary to make an informed investment decision with respect to its
acquisition of the Securities.

 

e.          No Governmental Review. Such Buyer understands that no United States
federal or state agency or any other government or governmental agency has
passed on or made any recommendation or endorsement of the Securities or the
fairness or suitability of the investment in the Securities nor have such
authorities passed upon or endorsed the merits of the offering of the
Securities.

 

f.          Transfer or Resale. Such Buyer understands that, except as provided
in the Registration Rights Agreement, (i) the Securities have not been and are
not being registered under the 1933 Act or any state securities laws, and may
not be offered for sale, sold, assigned or transferred unless (A) subsequently
registered thereunder, (B) such Buyer shall have delivered to the Company an
opinion of counsel, in a generally acceptable form, to the effect that such
Securities to be sold, assigned or transferred may be sold, assigned or
transferred pursuant to an exemption from such registration, or (C) such Buyer
provides the Company with reasonable assurance that such Securities can be sold,
assigned or transferred pursuant to Rule 144 promulgated under the 1933 Act, as
amended (or a successor rule thereto) (“Rule 144”); (ii) any sale of the
Securities made in reliance on Rule 144 may be made only in accordance with the
terms of Rule 144; and (iii) neither the Company nor any other Person is under
any obligation to register the Securities under the 1933 Act or any state
securities laws or to comply with the terms and conditions of any exemption
thereunder. Notwithstanding the foregoing, the Securities may be pledged in
connection with a bona fide margin account or other loan or financing
arrangement secured by the Securities.

 

g.          Legends. Such Buyer understands that the certificates or other
instruments representing the Securities and, until such time as the sale of the
Purchased ADSs and the Purchased Ordinary Shares have been registered under the
1933 Act as contemplated by the Registration Rights Agreement, the ADRs or
certificates representing the Purchased ADSs and the Purchased Ordinary Shares,
except as set forth below, shall bear a restrictive legend in the following form
(the “1933 Act Legend”) (and a stop-transfer order may be placed against
transfer of such certificates or other instruments):

 

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THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE
SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE
ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS OR
(B) AN OPINION OF COUNSEL, IN A GENERALLY ACCEPTABLE FORM, THAT REGISTRATION IS
NOT REQUIRED UNDER SAID ACT OR APPLICABLE STATE SECURITIES LAWS OR (II) UNLESS
SOLD PURSUANT TO RULE 144 UNDER SAID ACT. NOTWITHSTANDING THE FOREGOING, THE
SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER
LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES.

 

Upon the written request to the Company of a holder of an ADR or a certificate
or other instrument representing any Securities, the 1933 Act Legend shall be
removed and the Company shall cause a certificate without the 1933 Act Legend to
be delivered to the holder of the Securities upon which it is stamped (or, in
the case of any Purchased Ordinary Shares being acquired upon surrender of the
Purchased ADSs to the Depositary, the Company shall cause the Purchased Ordinary
Shares to be delivered without being subject to the 1933 Act Legend), if (i)
such Securities are registered for resale under the 1933 Act (provided that, if
the holder is selling pursuant to the effective registration statement
registering the Securities for resale, the holder agrees to only sell such
Securities during such time that such registration statement is effective and
such holder is not aware or has not been notified by the Company that such
registration statement has been withdrawn or suspended, and only as permitted by
such registration statement), (ii) in connection with a sale transaction, such
holder provides the Company with an opinion of counsel, in a generally
acceptable form, to the effect that a public sale, assignment or transfer of the
Securities may be made without registration under the 1933 Act, (iii) such
holder provides the Company with reasonable assurances that the Securities can
be sold pursuant to Rule 144 without compliance with Rule 144(e) or Rule 144(f)
(or successors thereto), (iv) such holder provides the Company reasonable
assurances that the Securities have been or are being sold pursuant to Rule 144,
or (v) such holder certifies, on or after the date that is six months after the
date on which such holder acquired the Securities (or is deemed to have acquired
the Securities under Rule 144, which in the case of the Purchased Ordinary
Shares shall be the Closing Date), that such holder is not an “affiliate” of the
Company (as defined in Rule 144). The Company shall be responsible for the fees
of its transfer agent and all fees of The Depository Trust Company (the “DTC”)
associated with such issuance. The Company acknowledges that a breach by it of
its obligations hereunder will cause irreparable harm to the holders of the
Securities. Accordingly, the Company acknowledges that the remedy at law for a
breach of its obligations under this Section 2.g will be inadequate and agrees
that, in the event of a breach or threatened breach of this Section 2.g, such
holder shall be entitled, in addition to all other available remedies, to an
injunctive order and/or injunction restraining any breach and requiring
immediate issuance and transfer, without the necessity of showing economic loss
and without any bond or other security being required.

 

h.          Authorization; Enforcement; Validity. Such Buyer is a validly
existing corporation, partnership, limited liability company or other entity and
has the requisite corporate, partnership, limited liability or other
organizational power and authority to purchase the Securities pursuant to this
Agreement. This Agreement has been duly and validly authorized, executed and
delivered on behalf of such Buyer and is the valid and binding agreement of such
Buyer enforceable against such Buyer in accordance with its terms. Each of the
Registration Rights Agreement and the other documents entered into by such Buyer
in connection with the transactions contemplated hereby and thereby as of the
Closing will have been duly and validly authorized, executed and delivered on
behalf of such Buyer as of the Closing and will be valid and binding agreements
of such Buyer enforceable against such Buyer in accordance with their respective
terms, except as may be limited by bankruptcy, insolvency, fraudulent conveyance
or similar laws affecting creditors’ rights generally and general principles of
equity.

 

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i.          Residency. Such Buyer is a resident of that jurisdiction specified
below its address on the Schedule of Buyers.

 

3.           REPRESENTATIONS AND WARRANTIES OF THE COMPANY.

 

The Company represents and warrants, as of the date of this Agreement and the
Closing Date to each of Buyers that:

 

a.          Organization and Qualification. Set forth in Schedule 3.a is a true
and correct list of the entities in which the Company, directly or indirectly,
owns capital stock or holds an equity or similar interest, together with their
respective jurisdictions of organization or incorporation and the percentage of
the issued/and/or outstanding shares, capital stock or other equity interests of
each such entity that is held by the Company or any of the Subsidiaries. Other
than with respect to the entities listed on Schedule 3.a, the Company does not
directly or indirectly own any security or beneficial ownership interest, in any
other Person (including through joint venture or partnership agreements) or have
any interest in any other Person. Each of the Company and the Subsidiaries is a
corporation, limited liability company, partnership or other entity and is duly
incorporated, organized or formed and validly existing in good standing under
the laws of the jurisdiction in which it is incorporated or organized and has
the requisite corporate, partnership, limited liability company or other
organizational power and authority to own its properties, and to carry on its
business as now being conducted. Each of the Company and the Subsidiaries is
duly qualified to do business and is in good standing in every jurisdiction in
which its ownership of property, or the nature of the business conducted by the
Company makes such qualification necessary, except to the extent that the
failure to be so qualified or be in good standing would not have, and would not
be reasonably expected to have, a Material Adverse Effect. As used in this
Agreement, “Material Adverse Effect” means any material adverse effect on (i)
the business, properties, assets, operations, results of operations, condition
(financial or otherwise) or prospects of the Company or of any of the
Subsidiaries, individually or taken as a whole, or on the transactions
contemplated hereby or on the agreements and instruments to be entered into in
connection herewith (including the legality, validity or enforceability
thereof), or on the authority or ability of the Company to perform its
obligations under the Transaction Documents (as defined in Section 3.b) or (ii)
the rights and remedies of any Buyers under the Transaction Documents. Except as
set forth in Schedule 3.a, the Company holds all right, title and interest in
and to 100% of the capital stock, equity or similar interests of each of the
Subsidiaries, in each case, free and clear of any Liens (as defined below),
including any restriction on the use, voting, transfer, receipt of income or
other exercise of any attributes of free and clear ownership by a current
holder, and no such Subsidiary owns capital stock or holds an equity or similar
interest in any other Person. “Person” means an individual, a limited liability
company, a partnership, a joint venture, a corporation, a trust, an
unincorporated organization or a government or any department or agency thereof
or any other legal entity. “Lien” means, with respect to any asset, any
mortgage, lien, pledge, hypothecation, charge, security interest, encumbrance or
adverse claim of any kind or any restrictive covenant, condition, restriction or
exception of any kind that has the practical effect of creating a mortgage,
lien, pledge, hypothecation, charge, security interest, encumbrance or adverse
claim of any kind. “Subsidiary” means any entity in which the Company, directly
or indirectly, owns any of the outstanding capital stock, equity or similar
interests or voting power of such entity at the time of this Agreement or at any
time hereafter, and for purposes hereof shall include Volution and any entity in
which Volution, directly or indirectly, owns any of the outstanding capital
stock, equity or similar interests or voting power of such entity at the time of
this Agreement or at any time hereafter.

 

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b.          Authorization; Enforcement; Validity.

 

(i)          Subject to the receipt of the Shareholder Approval (as defined
below), the Company has the requisite corporate, partnership, limited liability
company or other organizational power and authority to enter into and perform
its obligations under each of this Agreement, the Registration Rights Agreement
and each of the other agreements to which it is a party or by which it is bound
and which is entered into by the parties hereto in connection with the
transactions contemplated hereby and thereby (collectively, the “Transaction
Documents”), and the Share Exchange Agreement, and to issue the Securities in
accordance with the terms hereof and to consummate the Acquisition pursuant to
the terms of the Share Exchange Agreement. The execution and delivery of the
Transaction Documents and the Share Exchange Agreement by the Company and the
consummation by the Company of the transactions contemplated hereby and thereby,
including the issuance of the Purchased ADSs and the underlying Purchased
Ordinary Shares and the consummation of the Acquisition, have been duly
authorized by the Company Board and no further consent or authorization is
required by the Company, the Company Board or the Company’s shareholders or
equityholders, except for the Shareholder Approval. Without limiting the
foregoing, the Company Board has (A) determined that it is in the best interests
of the Company and its shareholders, and declared it advisable, to enter into
each of the Share Exchange Agreement and this Agreement, and approved the
execution, delivery and performance of this Agreement and the consummation of
the transactions contemplated hereby and thereby, including the issuance of the
Ordinary Shares pursuant to the Share Exchange Agreement and the issuance of the
Purchased ADSs hereunder, and (B) resolved to recommend the approval and
adoption of the Proposals by the shareholders of the Company. The only votes of
the Company’s shareholders required to approve and adopt the Share Exchange
Agreement, this Agreement and the transactions contemplated hereby and thereby
are, in the case of each of the Proposals, the affirmative vote of the holders
of a majority of the shares present at the meeting in person or by proxy and
voting on the Proposal (the receipt of sufficient votes required to approve all
such Proposals is referred to herein as the “Shareholder Approval”).

 

(ii)          This Agreement, the other Transaction Documents dated of even date
herewith and the Share Exchange Agreement have been duly executed and delivered
by the Company and constitute the valid and binding obligations of the Company,
enforceable against it in accordance with their terms. As of the Closing, the
Transaction Documents dated after the date of this Agreement and on or prior to
the date of the Closing shall have been duly executed and delivered by the
Company, and shall constitute the valid and binding obligations of the Company,
enforceable against such parties in accordance with their terms.

 

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c.          Capitalization.

 

(i)          The issued share capital of the Company is £557,396.16, which
consists of (i) 55,636,283 Ordinary Shares of 1 pence each; (ii) 633,333
Deferred B Shares of 0.1 pence each, all of which, and the right to convert into
Ordinary Shares under which, have expired in accordance with the terms of the
Articles of Association; and (iii) 400,000 Deferred C Shares of 0.1 pence each,
all of which, and the right to convert into Ordinary Shares under which, have
expired in accordance with the terms of the Articles of Association. No Deferred
B Shares or Deferred C Shares entitle any holder thereof to any economic, voting
or other rights with respect to the Company. Pursuant to a shareholder
resolution dated June 28, 2012, the Company was authorized to allot shares (and
subscription rights / warrants) with an aggregate nominal value of £50,000,000
which authority expires on the fifth anniversary of it being passed of which at
least £49,400,000 remains unused and available for the issuance of up to
4,940,000,000 Ordinary Shares of 1 pence each. The Company has agreed to issue:
(A) up to 5,865,000 ordinary shares which are reserved for issuance pursuant to
the Company’s stock option, restricted stock and stock purchase plans, including
2,791,690 shares issuable pursuant to outstanding awards under such plans; and
(B) up to 3,712,070 shares issuable and reserved for issuance pursuant to the
Company Warrants. Schedule 3.c sets forth the pro forma capitalization of the
Company after giving effect to the Acquisition, the issuance of the Purchased
ADSs and the Purchased Ordinary Shares and any adjustments to any Options or
Convertible Securities resulting therefrom. All of such issued or issuable
shares have been, or upon issuance will be, validly allotted and issued and are,
or upon issuance will be, fully paid and nonassessable. Except as disclosed in
Schedule 3.c, (A) no shares in the capital of the Company or any of the
Subsidiaries are subject to preemptive rights or any other similar rights or any
Liens suffered or permitted by the Company; (B) there are no outstanding Options
or Convertible Securities, or contracts, commitments, understandings or
arrangements by which the Company or any of the Subsidiaries is or may become
bound to issue additional shares in the Company or any of the Subsidiaries, or
any Options or Convertible Securities; (C) there are no agreements or
arrangements under which the Company or any of the Subsidiaries is obligated to
register the sale of any of their securities under the 1933 Act (except the
Registration Rights Agreement); (D) there are no outstanding securities or
instruments of the Company or any of the Subsidiaries that contain any
redemption or similar provisions, and there are no contracts, commitments,
understandings or arrangements by which the Company or any of the Subsidiaries
is or may become bound to redeem a security of the Company and no other
shareholder or similar agreement to which the Company or any of the Subsidiaries
is a party; (E) there are no securities or instruments containing anti-dilution
or similar provisions that will or may be triggered by the issuance of the
Securities; and (F) the Company does not have any stock appreciation rights or
“phantom share” plans or agreements or any similar plan or agreement. The
Company has furnished to each Buyer true and correct copies of the Company’s
Memorandum of Association (the “Memorandum of Association”), and the Company’s
Articles of Association (the “Articles of Association”), and all documents and
instruments containing the terms of all securities convertible into, or
exercisable or exchangeable for, Ordinary Shares or ADSs, and the material
rights of the holders thereof in respect thereto.

 

 9 

 

 

(ii)          The Per Share Purchase Price will not be less than the product of
(A) ten (10), multiplied by $0.46, which represents 75% of the closing bid price
per ADS on August 17, 2015 as reported by the NASDAQ Capital Market.

 

(iii)         The issuance of the Securities hereunder will constitute the
“Offering” for purposes of the Share Exchange Agreement and the Securities
issued or issuable pursuant to this Agreement will not be taken into account in
determining the Company’s “Fully Diluted Share Capital” for purposes of the
Share Exchange Agreement.

 

d.          Issuance of Securities. The Purchased ADSs are duly authorized and,
upon issuance in accordance with the terms hereof, will be (i) properly and
validly allotted and issued, fully paid and nonassessable, (ii) free from all
taxes and Liens with respect to the issuance thereof and (iii) entitled to the
rights set forth in the Deposit Agreement and the ADRs evidencing the Purchased
ADSs. The Purchased Ordinary Shares are duly authorized and, upon issuance of
the Purchased ADSs in accordance with the terms hereof, will be (A) duly
deposited with the Depositary in accordance with the Deposit Agreement, with the
Depositary being entered in the register of members of the Company in respect of
the Purchased Ordinary Shares, (B) properly and validly allotted and issued,
fully paid and nonassessable and (C) free from all taxes and Liens with respect
to the issue thereof. The holders of the Purchased Ordinary Shares, upon
issuance upon surrender of the Purchased ADSs to the Depositary, will be
entitled to all rights accorded to a holder of Ordinary Shares. Assuming the
accuracy of the representations and warranties of Buyers set forth in Sections
2.a, 2.b, 2.d and 2.i, the issuance by the Company of the Securities is exempt
from registration under the 1933 Act and applicable state securities laws.

 

e.          No Conflicts.

 

(i)          The execution and delivery of the Transaction Documents and the
Share Exchange Agreement by the Company, the performance by the Company of its
obligations thereunder and the consummation by it of the transactions
contemplated thereby (including the issuance of the Purchased ADSs and the
Purchased Ordinary Shares and the consummation of the Acquisition pursuant to
the Share Exchange Agreement) will not (i) result in a violation of the
Memorandum of Association or the Articles of Association or the organizational
documents of any Subsidiary; (ii) conflict with, or constitute a breach or
default (or an event which, with the giving of notice or lapse of time or both,
constitutes or would constitute a breach or default) under, or give to others
any right of termination, amendment, acceleration or cancellation of, or other
remedy with respect to, any agreement, indenture or instrument to which the
Company is a party; (iii) result in a violation of any law, rule, regulation,
order, judgment or decree (including U.S. federal and state securities laws and
regulations) applicable to the Company or by which any property or asset of the
Company is bound or affected. Except for the filings and listings contemplated
by the Registration Rights Agreement and filings to be made pursuant to Sections
4.b, 5.b and 5.g, none of the Company or any of the Subsidiaries is required to
obtain any consent, authorization or order of, or make any filing or
registration with, any court or governmental agency or any regulatory or
self-regulatory agency in order for it to execute, deliver or perform any of its
obligations under, or otherwise consummate any of the transactions contemplated
by, this Agreement or any of the other Transaction Documents in accordance with
the terms hereof or thereof. All consents, authorizations, orders, filings and
registrations that the Company or any of the Subsidiaries is or has been
required to obtain as described in the preceding sentence have been obtained or
effected on or prior to the date of this Agreement or shall be obtained or
effected prior to the applicable due date thereafter, as provided by applicable
law, this Agreement or otherwise.

 

 10 

 

 

(ii)          The Company is not in violation of any term of the Articles of
Association. Neither the Company nor any of the Subsidiaries is in violation of
any term of or in default under (or with the giving of notice or lapse of time
or both would be in violation of or default under) any contract, agreement,
mortgage, indebtedness, indenture, instrument, judgment, decree or order or any
statute, rule or regulation applicable to the Company or any of the
Subsidiaries, including the Share Exchange Agreement, which violation or default
would or would reasonably be expected to have a Material Adverse Effect. The
business of the Company and the Subsidiaries is not being conducted in violation
of any law, ordinance or regulation of any governmental entity, which violation
would or would reasonably be expected to have a Material Adverse Effect.

 

f.          SEC Documents; Financial Statements; Sarbanes-Oxley.

 

(i)          Since January 1, 2014, the Company has filed all reports,
schedules, forms, statements and other documents required to be filed by it with
the SEC pursuant to the reporting requirements of the Securities Exchange Act of
1934 Act, as amended (the “1934 Act”) (all of the foregoing filed prior to the
date this representation is made (including all exhibits included therein and
financial statements and schedules thereto and documents incorporated by
reference therein) being hereinafter referred to as the “SEC Documents”). The
Company has made available to Buyers or their respective representatives, or
filed and made publicly available on the SEC’s Electronic Data Gathering,
Analysis, and Retrieval system (or the successor thereto) (“EDGAR”) no less than
five days prior to the date this representation is made, true and complete
copies of the SEC Documents. Each of the SEC Documents was filed with the SEC
within the time frames prescribed by the SEC for the filing of such SEC
Documents (including any extensions of such time frames permitted by Rule 12b-25
under the 1934 Act pursuant to timely filed Forms 12b-25) such that each filing
was timely filed (or deemed timely filed pursuant to Rule 12b-25 under the 1934
Act) with the SEC. As of their respective dates, the SEC Documents complied in
all material respects with the requirements of the 1934 Act and the rules and
regulations of the SEC promulgated thereunder applicable to the SEC Documents.
None of the SEC Documents, at the time they were filed with the SEC, contained
any untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. Since the filing of the SEC Documents, no event has occurred that
would require an amendment or supplement to any of the SEC Documents and as to
which such an amendment has not been filed and made publicly available on the
SEC’s EDGAR system no less than five days prior to the date this representation
is made. The Company has not received any written comments from the SEC staff
that have not been resolved to the satisfaction of the SEC staff.

 

 11 

 

 

(ii)          As of their respective dates, each of (A) the consolidated
financial statements of the Company and the Subsidiaries included in the SEC
Documents, and (B) the consolidated financial statements of Volution and
Affiliate included in the Proxy Statement complied as to form in all material
respects with applicable accounting requirements and the published rules and
regulations of the SEC with respect thereto. Such financial statements have been
prepared in accordance with United States generally accepted accounting
principles (“GAAP”), consistently applied, during the periods involved (except
(I) as may be otherwise indicated in such financial statements or the notes
thereto, or (II) in the case of unaudited interim statements, to the extent they
may exclude footnotes or may be condensed or summary statements) and fairly
present in all material respects the financial position of the Company and its
subsidiaries, in the case of the financial statements referred to in clause (A)
hereof, and Volution and Affiliate, in the case of the financial statements
referred to in clause (B) hereof, as of the dates thereof and the results of
their operations and cash flows for the periods then ended (subject, in the case
of unaudited statements for periods subsequent to December 31, 2014, to normal
year-end audit adjustments that are not material individually or in the
aggregate). None of the Company, the Subsidiaries and their respective officers,
directors and Affiliates or, to the Company’s Knowledge, any shareholder of the
Company has made any filing with the SEC (other than the SEC Documents), issued
any press release or made, distributed, paid for or approved (or engaged any
other Person to make or distribute) any other public statement, report,
advertisement or communication on behalf of the Company or any of the
Subsidiaries or otherwise relating to the Company or any of the Subsidiaries
that contains any untrue statement of a material fact or omits any statement of
material fact necessary in order to make the statements therein, in the light of
the circumstances under which they are or were made, not misleading or has
provided any other information to Buyers, including information referred to in
Section 2.d, that contains any untrue statement of a material fact or, with
respect to written information, omits to state any material fact necessary in
order to make the statements therein, in the light of the circumstances under
which they are or were made, not misleading. The accounting firm that expressed
its opinion with respect to the consolidated financial statements of the Company
and the Subsidiaries included in the Company’s most recently filed annual report
on Form 10-K, and reviewed the consolidated financial statements included in the
Company’s most recently filed quarterly report on Form 10-Q, was independent of
the Company, and the accounting firm that expressed its opinion with respect to
the consolidated financial statements of Volution and Affiliate included in the
Proxy Statement was independent of Volution and Affiliate, in each case pursuant
to the standards set forth in Rule 2-01 of Regulation S-X promulgated by the SEC
and as required by the applicable rules and guidance from the Public Company
Accounting Oversight Board (United States), and each such firm was otherwise
qualified to render such opinion under applicable law and the rules and
regulations of the SEC. There is no transaction, arrangement or other
relationship between the Company or the Subsidiaries and an unconsolidated or
other off-balance-sheet entity that is required to be disclosed by the Company
in its reports pursuant to the 1934 Act that has not been so disclosed in the
SEC Documents that were filed with the SEC prior to the date of this Agreement.
For purposes of this Agreement, “Affiliate” means, with respect to any Person,
another Person that, directly or indirectly, (V) has an equity interest in that
Person, (W) has a common ownership with that Person, (X) controls that Person,
(Y) is controlled by that Person or (Z) shares common control with that Person.
“Control” or “controls” for purposes hereof means that a person or entity has
the power, direct or indirect, to conduct or govern the policies of another
Person.

 

(iii)          The pro forma financial information and the related notes
included in the Proxy Statement have been properly compiled and prepared in
accordance with the applicable requirements of the 1933 Act and the rules and
regulations thereunder and present fairly the information shown therein, and the
assumptions used in the preparation thereof are reasonable and the adjustments
used therein are appropriate to give effect to the transactions and
circumstances referred to therein.

 

 12 

 

 

(iv)         The Company and the Subsidiaries are in all material respects in
compliance with applicable provisions of the Sarbanes-Oxley Act of 2002, as
amended, and the rules and regulations thereunder (collectively,
“Sarbanes-Oxley”).

 

(v)          Since January 1, 2014, neither the Company nor any of the
Subsidiaries nor, to the Company’s Knowledge, any director, officer or employee,
of the Company or any of the Subsidiaries, has received or otherwise obtained
any material complaint, allegation, assertion or claim, whether written or oral,
regarding the accounting or auditing practices, procedures, methodologies or
methods of the Company or any of the Subsidiaries or their respective internal
accounting controls, including any complaint, allegation, assertion or claim
that the Company or any of the Subsidiaries has engaged in questionable
accounting or auditing practices. No attorney representing the Company or any of
the Subsidiaries, whether or not employed by the Company or any of the
Subsidiaries, has reported evidence of a material violation of securities laws,
breach of fiduciary duty or similar violation by the Company or any of the
Subsidiaries or any of their respective officers, directors, employees or agents
to the Company Board or any committee thereof or to any director or officer of
the Company. Since January 1, 2014, there have been no internal or SEC or other
regulatory authority investigations regarding accounting or revenue recognition
discussed with, reviewed by or initiated at the direction of the chief executive
officer or principal financial officer of the Company or any Subsidiary, the
Company Board or any board of directors (or similar governing body) of any of
the Subsidiaries or any committee thereof. The Company is not, and never has
been, a “shell company” (as defined in Rule 12b-2 under the 1934 Act). The
Company is eligible to register the Purchased ADSs for resale by Buyers on a
registration statement on Form S-3 under the 1933 Act.

 

(vi)         As used in this Agreement, the “Company’s Knowledge” of the Company
and similar language means, unless otherwise specified, the actual knowledge of
any “officer” (as such term is defined in Rule 16a-1 under the 1934 Act) of the
Company or of any Subsidiary and the knowledge any such Person would be expected
to have after reasonable due diligence inquiry.

 

g.          Internal Accounting Controls; Disclosure Controls and Procedures.
Each of the Company and Volution maintains a system of internal accounting
controls sufficient to provide reasonable assurance that (i) transactions are
executed in accordance with management’s general or specific authorizations,
(ii) transactions are recorded as necessary to permit preparation of financial
statements in conformity with GAAP and to maintain asset and liability
accountability, (iii) access to assets or incurrence of liability 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 timely filed and made
publicly available on the SEC’s EDGAR system no less than five days prior to the
date this representation is made, and all certifications and statements required
by (A) Rule 13a-14 or Rule 15d-14 under the 1934 Act and (B) Section 906 of
Sarbanes Oxley with respect to any Company SEC Documents. The Company maintains
disclosure controls and procedures required by Rule 13a-15 or Rule 15d-15 under
the 1934 Act; such controls and procedures are effective to ensure that the
information required to be disclosed by the Company in the reports that it files
with or submits to the SEC (X) is recorded, processed, summarized and reported
accurately within the time periods specified in the SEC’s rules and forms and
(Y) is accumulated and communicated to the Company’s management, including its
principal executive officer and principal financial officer, as appropriate to
allow timely decisions regarding required disclosure. The Company maintains
internal control over financial reporting required by Rule 13a-15 or Rule 15d-15
under the 1934 Act; such internal control over financial reporting is effective
and does not contain any material weaknesses.

 

 13 

 

 

h.          Absence of Certain Changes. Except as disclosed in any SEC Documents
that were filed with the SEC prior to the date of this Agreement, since January
1, 2014, there has been no Material Adverse Effect and no circumstances exist
that could reasonably be expected to be, cause or have a Material Adverse
Effect. Neither the Company nor any of the Subsidiaries has taken any steps, and
the Company currently does not expect to take any steps, to seek protection
pursuant to any bankruptcy law nor, to the Company’s Knowledge, do any creditors
of the Company or any of the Subsidiaries intend to initiate involuntary
bankruptcy proceedings nor, to the Company’s Knowledge, is there any fact that
would reasonably lead a creditor to do so. The Company and the Subsidiaries are
not as of the date this representation is made, nor after giving effect to the
transactions contemplated hereby and by the Share Exchange Agreement (including
any issuance of Purchased ADSs and the Purchased Ordinary Shares on the
applicable Closing Date) will they be, Insolvent (as defined below). For
purposes of this Section 3.h, “Insolvent” means (i) the present fair saleable
value of the assets of the Company and the Subsidiaries is less than the amount
required to pay the Company’s and the Subsidiaries’ total indebtedness,
contingent or otherwise, (ii) the Company and the Subsidiaries are unable to pay
their debts and liabilities, subordinated, contingent or otherwise, as such
debts and liabilities become absolute and matured, (iii) the Company or the
Subsidiaries intend to incur, prior to the second anniversary of the date this
representation is made, or believes that such Person or Persons will incur,
prior to the second anniversary of the date this representation is made, debts
that would be beyond its or their ability to pay as such debts mature or
(iv) the Company and the Subsidiaries have unreasonably small capital with which
to conduct the business in which it is engaged as such business is now conducted
and is proposed to be conducted.

 

i.          Absence of Litigation. There is no, nor since January 1, 2014 has
there been any, action, suit or proceeding, or, to the Company’s Knowledge, any
inquiry or investigation before or by any court, public board, government
agency, self-regulatory organization or body pending or, to the Company’s
Knowledge, threatened against or affecting the Company, the ADSs, the Ordinary
Shares or any of the Subsidiaries or any of the Company’s or the Subsidiaries’
officers or directors in their capacities as such. To the Company’s Knowledge,
none of the directors or officers of the Company or of any of the Subsidiaries
has been involved (as a plaintiff, defendant, witness or otherwise) in
securities-related litigation during the past five years.

 

j.          Acknowledgment Regarding Buyer’s Purchase of Securities. The Company
acknowledges and agrees that each Buyer is acting solely in the capacity of an
arm’s length purchaser with respect to the Company in connection with the
Transaction Documents and the transactions contemplated hereby and thereby. The
Company further acknowledges that each Buyer is not acting as a financial
advisor or fiduciary of the Company (or in any similar capacity) with respect to
the Transaction Documents and the transactions contemplated hereby and thereby,
and any advice given by any Buyers or any of their respective representatives or
agents in connection with the Transaction Documents and the transactions
contemplated hereby and thereby is merely incidental to such Buyer’s purchase of
the Securities. The Company further represents to each Buyer that the Company’s
decision to enter into the Transaction Documents has been based solely on the
independent evaluation by the Company and its representatives.

 

 14 

 

 

k.          No Material Adverse Effect; No Undisclosed Liabilities. Other than
(i) the liabilities assumed or created pursuant to this Agreement, the other
Transaction Documents and the Share Exchange Agreement, (ii) liabilities accrued
for in the latest balance sheet for the Company included in the Company’s Form
10-Q for the quarter ended June 30, 2015, (iii) liabilities accrued for in the
balance sheet as of December 31, 2014 of Volution and Affiliate included in the
Proxy Statement, in the form on file with the SEC prior to the date of this
Agreement, and (iv) liabilities incurred by Volution and its Subsidiaries in the
ordinary course of business consistent with past practices since December 31,
2014 and (iv) the liability incurred from a working capital advance to Volution
as described in the Proxy Statement, in the form on file with the SEC prior to
the date of this Agreement, the Company and the Subsidiaries do not have any
other liabilities (whether fixed or unfixed, known or unknown, absolute or
contingent, asserted or unasserted, choate or inchoate, liquidated or
unliquidated, or secured or unsecured, and regardless of when any action, claim,
suit or proceeding with respect thereto is instituted).

 

l.          Employee Relations. None of the Company or any of the Subsidiaries
is involved in any labor union dispute nor, to the Company’s Knowledge, is any
such dispute threatened. None of the employees of the Company or any of the
Subsidiaries is a member of a union that relates to such employee’s relationship
with the Company or any of the Subsidiaries, none of the Company or any of the
Subsidiaries is a party to a collective bargaining agreement, and the Company
and the Subsidiaries believe that their relations with their respective
employees are good. No “executive officer” (as defined in Rule 3b-7 under the
1934 Act) of the Company or any of the Subsidiaries, nor any other Person whose
termination would be required to be disclosed pursuant to Item 5.02 of Form 8-K,
has notified the Company or any of the Subsidiaries that such Person intends to
leave the Company or any of the Subsidiaries or otherwise terminate such
Person’s employment with the Company or any of the Subsidiaries. No such
executive officer, to the Company’s Knowledge, is, or is now expected to be, in
violation of any material term of any employment contract, confidentiality,
disclosure or proprietary information agreement, non-competition agreement, or
any other contract or agreement or any restrictive covenant, and the continued
employment of each such executive officer does not subject the Company to any
liability with respect to any of the foregoing matters. The Company and the
Subsidiaries are in compliance with all English, U.S. federal, state and local
and foreign laws and regulations relating to employment and employment
practices, terms and conditions of employment and wages and hours, except where
the failure to be in compliance would not and would not be reasonably expected
to result, individually or in the aggregate, in a Material Adverse Effect.

 

 15 

 

 

m.          Employee Benefit Plans.

 

(i)          With respect to each Employee Benefit Plan: (a) all employer and
employee contributions to each Employee Benefit Plan required by applicable law
or by the terms of such Employee Benefit Plan have been made, or, if applicable,
accrued in accordance with past practice; (b) the fair market value of the
assets of each funded Employee Benefit Plan, the liability of each insurer for
any Employee Benefit Plan funded through insurance or the book reserve
established for any Employee Benefit Plan, together with any accrued
contributions, is sufficient to procure or provide for the accrued benefit
obligations, as of the date this representation is made, with respect to all
current and former participants in such plan according to the actuarial
assumptions and valuations most recently used to determine employer
contributions to such Employee Benefit Plan and no transaction contemplated by
this Agreement or the Share Exchange Agreement shall cause such assets or
insurance obligations to be less than such benefit obligations; and (c) each
Employee Benefit Plan required to be registered has been registered and has been
maintained, in all material respects, (x) in good standing with applicable
regulatory authorities and (y) in accordance with all applicable laws, and if
intended to qualify for special tax treatment, meets all requirements for such
treatment.

 

(ii)          For purposes of this Agreement, “Employee Benefit Plan” means each
plan, fund, policy, program, arrangement or agreement, including any fringe
benefit plan or program, health, medical, dental and life insurance benefits,
disability benefits, bonus or incentive plan, stock option, restricted stock,
equity or stock based award, stock bonus, vacation pay, bonus program, service
award, relocation or moving expense, deferred bonus plan, severance plan, salary
continuation plan, salary reduction agreement, retirement or pension plan,
deferred compensation plan, change-of-control agreement, employment agreement or
consulting agreement, which in each case, is sponsored, maintained or
contributed to (or is required to be sponsored, maintained or contributed to) by
the Company or any of the Subsidiaries for the benefit of any of its or their
current or former directors, officers, employees, consultants, independent
contractors or other individual service providers.

 

(iii)         No claim, lawsuit, arbitration or other action has been
threatened, asserted, instituted, or anticipated against any Employee Benefit
Plan (other than routine claims for benefits and appeals of such claims), any
trustee or fiduciaries thereof, the Company, any of the Subsidiaries or any of
their respective directors, officers or employees (whether current, former or
retired) with respect to the Employee Benefit Plans, or any of the assets of any
Employee Benefit Plans; and no Employee Benefit Plan is, currently under audit
or investigation by any governmental authority, and, to the Company’s Knowledge,
no such audit or investigation has been threatened, and no such completed audit,
if any, has resulted in the imposition of any tax, penalty or other liability
that has not been satisfied in full.

 

(iv)        Neither the execution and delivery of this Agreement or any of the
other Transaction Documents nor the consummation of the transactions
contemplated hereby of thereby, alone or in combination with any other event or
circumstance, will (a) give rise to any liability under any Employee Benefit
Plan, including for severance pay, unemployment compensation, termination pay,
or withdrawal liability, or (b) increase the amount of compensation or benefits
due to any Person or result in the acceleration of the time of payment, funding
or vesting of any benefits under any Employee Benefit Plan due to any Person.

 

 16 

 

 

(v)          No Employee Benefit Plan provides post-retirement health and
welfare benefits to any Person, except as required under any applicable laws.

 

(vi)         None of the Company, any of the Subsidiaries or any of their
respective officers or employees has made any promises or commitments, whether
legally binding or not, to create any additional Employee Benefit Plan, or to
modify or change any existing Employee Benefit Plan.

 

n.          Intellectual Property Rights.

 

(i)          The Company and the Subsidiaries own or have a valid right to use
in the manner currently used in their respective businesses, free and clear of
all Liens, all Intellectual Property used in or necessary to conduct their
respective businesses as now conducted as described in the Proxy Statement, in
the form on file with the SEC prior to the date of this Agreement.  Schedule 3.n
contains a complete and accurate list of all patented and registered
Intellectual Property owned by the Company and the Subsidiaries and all pending
patent applications and applications for the registration of other Intellectual
Property owned or filed by the Company or any of the Subsidiaries, and for each
such item specifies the owner thereof and, to the extent applicable, the
registration, application, serial or patent number thereof, the date of
registration and/or filing thereof, and the jurisdiction in which such item is
filed or registered that is directed to Volution’s complement inhibitor product
candidate, Coversin, as described in the Proxy Statement, in the form on file
with the SEC prior to the date of this Agreement (the “Product”).  All such
items are currently in the name of the Company or one of the Subsidiaries, and,
to the extent applicable, all maintenance fees and other fees have been duly
paid, and all such items are in good standing and in full force and effect. The
Company, the Subsidiaries and, to the Company’s Knowledge, the Company’s and the
Subsidiaries’ licensors, have complied with the duty of candor and disclosure
set forth in 37 C.F.R. § 1.56 with respect to each of the patents and patent
applications comprising the Intellectual Property owned or licensed by the
Company or any Subsidiary. Schedule 3.n also contains a complete and accurate
list of (i) all licenses and other rights granted by the Company or any of the
Subsidiaries to any third party with respect to Intellectual Property and (ii)
all licenses and other rights with respect to Intellectual Property granted by
any third party to the Company or any of the Subsidiaries that is directed or
otherwise relates to the Product.  Except as set forth on Schedule 3.n, none of
the rights of the Company or any of the Subsidiaries in any Intellectual
Property that cover or otherwise relate to the Product are expected to expire or
terminate within five years from the date of this Agreement.  Except as set
forth on Schedule 3.n, there are no third parties that have rights, title or
interest in or to any of the Intellectual Property owned by the Company or any
of the Subsidiaries or licensed from a third party by the Company or any of the
Subsidiaries, except for the rights retained by the owners of any Intellectual
Property that is licensed to the Company or any of the Subsidiaries.  Neither
the Company nor any of the Subsidiaries is infringing or otherwise violating,
and to the Company’s Knowledge, none of the Company’s or the Subsidiaries’
licensors or licensees is infringing or otherwise violating, any Intellectual
Property of any Person.  To the Company’s Knowledge, no third party is
infringing or otherwise violating any Intellectual Property owned or licensed
from a third party by the Company or any of the Subsidiaries.  There is no
claim, action or proceeding being made or brought against, or to the Company’s
Knowledge, being threatened against, the Company, any of the Subsidiaries or any
of their respective licensors, regarding any Intellectual Property owned or used
by the Company or any of the Subsidiaries, including any such claim, action or
proceeding asserting the invalidity, misuse or unenforceability thereof,
contesting the ownership or registrability thereof or other rights of the
Company or any of the Subsidiaries therein, or alleging that any such
Intellectual Property infringes or otherwise violates any Intellectual Property
of any Person.  To the Company’s Knowledge, there are no facts or circumstances
that could reasonably be expected to give rise to any of the foregoing. None of
the technology employed by the Company or any of the Subsidiaries has been
obtained or is being used by the Company or any of the Subsidiaries in violation
of any contractual obligation binding on the Company or any of the Subsidiaries
or, to the Company’s Knowledge, is being used by any of the officers, directors
or employees of the Company or any of the Subsidiaries, or any other Person, on
behalf of the Company or any of the Subsidiaries in violation of the rights of
any Persons.  The Company and the Subsidiaries have taken reasonable measures to
safeguard and maintain the secrecy, confidentiality and value of all trade
secrets and confidential processes, procedures, strategies, models, business
methods, know-how, data and other confidential data, information and materials
owned by or licensed to the Company or any of the Subsidiaries or otherwise
disclosed or used in the respective business thereof.  Except as provided in
Schedule 3.n, no government funding or facilities, or any funding or facilities
of any university, college or other institution of higher education, were used
in the development of any Intellectual Property purportedly owned by the Company
or any of the Subsidiaries.

 17 

 

 

(ii)          For purposes of this Agreement, the term “Intellectual
Property” means all intellectual property and industrial property rights and
assets, and all rights, interests and protections that are associated with,
similar to, or required for the exercise of, any of the foregoing, however
arising, pursuant to the laws of any jurisdiction throughout the world, whether
registered or unregistered, including any and all: (a) trademarks, service
marks, trade names, brand names, logos, trade dress, design rights and other
similar designations of source, sponsorship, association or origin, together
with all goodwill connected with the use of and symbolized by, and all
registrations, registration applications and renewals in respect of, any of the
foregoing; (b) Internet domain names, whether or not trademarks or service
marks, registered in any top-level domain by any authorized private registrar or
governmental authority, web addresses, web pages, websites and related content
and URLs; (c) works of authorship, expressions, designs and design
registrations, whether or not copyrightable, including copyrights and moral
rights, and all registrations, applications for registration and renewals with
respect thereto; (d) trade secrets, discoveries, business and technical
information, know-how, methodologies, strategies, processes, databases, data
collections and other confidential and/or proprietary information and all rights
therein; (e) inventions (whether or not patentable, and whether or not reduced
to practice), all improvements thereto, and all patents (including all
reissuances, divisionals, provisionals, continuations and continuations-in-part,
re-examinations, renewals, substitutions and extensions thereof), patent
applications, and other patent rights and any other governmental
authority-issued indicia of invention ownership (including inventor’s
certificates, petty patents and patent utility models); (f) other intellectual
property rights; and (g) copies and tangible embodiments (in whatever form or
medium) of the foregoing.

 

o.          Environmental Laws. Each of the Company and the Subsidiaries (i) is
in compliance with any and all Environmental Laws (as defined below), (ii) has
received all permits, licenses or other approvals required of it under
applicable Environmental Laws to conduct its business, (iii) is in compliance
with all terms and conditions of any such permit, license or approval, and to
the Company’s Knowledge, there are no events, conditions, or circumstances
reasonably likely to result in liability of the Company or any of the
Subsidiaries pursuant to Environmental Laws that would or would reasonably be
expected to have a Material Adverse Effect. The term “Environmental Laws” means
all English, U.S. federal, state and local or foreign laws relating to any
matter arising out of or relating to public health and safety, or pollution or
protection of the environment (including ambient air, surface water,
groundwater, land surface or subsurface strata) or workplace, including any of
the foregoing relating to the presence, use, production, generation, handling,
transport, treatment, storage, disposal, distribution, discharge, emission,
release, threatened release, control or cleanup of any Hazardous Materials;
“Hazardous Materials” means any hazardous, toxic or dangerous substance,
materials and wastes, including hydrocarbons (including naturally occurring or
man-made petroleum and hydrocarbons), flammable explosives, asbestos, urea
formaldehyde insulation, radioactive materials, biological substances,
polychlorinated biphenyls, pesticides, herbicides and any other kind and/or type
of pollutants or contaminants (including materials which include hazardous
constituents), sewage, sludge, industrial slag, solvents and/or any other
similar substances, materials, or wastes and including any other substances,
materials or wastes that are or become regulated under any Environmental Law
(including any that are or become classified as hazardous or toxic under any
Environmental Law.

 

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p.          Personal Property. The Company and the Subsidiaries have good and
valid title to all personal property owned by them that is material to the
respective businesses of the Company and the Subsidiaries.

 

q.          Real Property. None of the Company or any of the Subsidiaries owns
in fee any real property. All of the Real Property Leases (as defined below) are
valid and in full force and effect and are enforceable against all parties
thereto. Neither the Company nor any of the Subsidiaries nor, to the Company’s
Knowledge, any other party thereto is in default in any material respect under
any of such Real Property Leases and no event has occurred which with the giving
of notice or the passage of time or both could constitute a default under, or
otherwise give any party the right to terminate, any of such Real Property
Leases, or could adversely affect the Company’s or any of the Subsidiaries’
interest in and title to the Real Property subject to any of such Real Property
Leases. No Real Property Lease is subject to termination, modification or
acceleration as a result of the transactions contemplated hereby, by the other
Transaction Documents or by the Share Exchange Agreement. For purposes hereof,
“Real Property Lease” means each lease and other agreement with respect to which
the Company or any of the Subsidiaries is a party or otherwise bound or affected
with respect to the Real Property, except easements, rights of way, access
agreements, surface damage agreements, surface use agreements or similar
agreements that pertain to Real Property that is contained wholly within the
boundaries of any leased Real Property; and “Real Property” means all the real
property, facilities and fixtures that (i) are leased or, in the case of
fixtures, otherwise owned or possessed by the Company or any of the
Subsidiaries, (ii) in connection with which the Company or any of the
Subsidiaries has entered into an option agreement, participation agreement or
acquisition agreement or (iii) the Company or any of the Subsidiaries has agreed
to lease or otherwise acquire or may be obligated to lease or otherwise acquire
in connection with the conduct of its business.

 

 19 

 

 

r.          Insurance. Each of the Company and the Subsidiaries is insured by
insurers of recognized financial responsibility against such losses and risks
and in such amounts as management of the Company or the Subsidiaries, as
applicable, believes to be prudent and customary in the respective businesses in
which the Company and the Subsidiaries are engaged. None of the Company or any
of the Subsidiaries has been refused any insurance coverage sought or applied
for, and, to the Company’s Knowledge, the Company and the Subsidiaries will be
able to renew their existing insurance coverage as and when such coverage
expires or to obtain similar coverage from similar insurers as may be necessary
to continue its business at a cost that would not have, and would not reasonably
expected to have, a Material Adverse Effect.

 

s.          Regulatory Permits. Each of the Company and the Subsidiaries possess
all certificates, authorizations, approvals, licenses and permits issued by the
appropriate English, U.S. federal or state or foreign regulatory authorities
necessary to conduct their respective businesses as presently conducted
(“Permits”), including all Permits required by any applicable Regulatory Agency,
and none of the Company or any of the Subsidiaries has received any notice of
proceedings relating to the revocation or modification of any such Permit. To
the Company’s Knowledge, there are no facts or circumstances that could
reasonably lead to any of them not being able to obtain necessary Permits as and
when necessary to enable the Company or the Subsidiaries to conduct their
respective businesses. For purposes of this Agreement, “Regulatory Agency” means
any English or U.S. federal, state or local regulatory agency, department,
bureau or other governmental authority in the United States, the European Union
or any other jurisdiction, as applicable, including the United States Food and
Drug Administration, the U.S. Pharmacopeial Convention and the European
Medicines Agency, in each case that is responsible for registrations necessary
for, or otherwise governs, the manufacture, handling, use, storage, import,
transport, distribution or sale of any Pharmaceutical Product (as defined
below).

 

t.          Regulatory Matters. As to each product of the Company or any
Subsidiary subject to the jurisdiction of any Regulatory Agency that is
manufactured, packaged, labeled, tested, distributed, sold, and/or marketed by
the Company or any of the Subsidiaries (each such product, together with any
such product under development, a “Pharmaceutical Product”), such Pharmaceutical
Product is being manufactured, packaged, labeled, tested, distributed, sold
and/or marketed by the Company in compliance with all applicable requirements
under the Federal Food, Drug and Cosmetic Act, as amended, and the regulations
thereunder, and similar applicable English, U.S. federal, state or local or
foreign laws, rules and regulations relating to registration, investigational
use, premarket clearance, licensure, or application approval, good manufacturing
practices, good laboratory practices, good clinical practices, product listing,
quotas, labeling, advertising, record keeping and filing of reports, except
where the failure to be in compliance would not have or reasonably be expected
to result in a Material Adverse Effect. There is no pending, completed or, to
the Company’s Knowledge, threatened, action (including any lawsuit, arbitration,
or legal or administrative or regulatory proceeding, charge, complaint, or
investigation) against the Company or any of the Subsidiaries, and none of the
Company or any of the Subsidiaries has received any notice, warning letter or
other communication from any Regulatory Agency, which (i) contests the premarket
clearance, licensure, registration, or approval of, the uses of, the
distribution of, the manufacturing or packaging of, the testing of, the sale of,
or the labeling and promotion of any Pharmaceutical Product, (ii) withdraws its
approval of, requests the recall, suspension, or seizure of, or withdraws or
orders the withdrawal of advertising or sales promotional materials relating to,
any Pharmaceutical Product, (iii) imposes a clinical hold on any clinical
investigation by the Company or any of the Subsidiaries, (iv) enjoins production
at any facility of the Company or any of the Subsidiaries, (v) enters or
proposes to enter into a consent decree of permanent injunction with the Company
or any of the Subsidiaries, or (vi) otherwise alleges any violation of any laws,
rules or regulations by the Company or any of the Subsidiaries. The respective
properties, business and operations of the Company and the Subsidiaries have
been and are being conducted in all material respects in accordance with all
applicable laws, rules and regulations of applicable Regulatory Agencies,
including the FDA. The Company has not been informed by any Regulatory Agency
that it will prohibit the marketing, sale, license or use in the United States
or any other jurisdiction of any product proposed to be developed, produced or
marketed by the Company nor has the any Regulatory Agency expressed any concern
as to approving or clearing for marketing any product being developed or
proposed to be developed by the Company or any Subsidiary.

 

 20 

 

 

u.          Listing. Except as set forth on Schedule 3.u, the Company is not in
violation of any of the rules, regulations or requirements of the NASDAQ Capital
Market (the “Principal Market”), and, to the Company’s Knowledge, there are no
facts or circumstances that could reasonably lead to delisting, suspension or
termination of trading of the ADSs on the Principal Market. Since January 31,
2014, (i) the ADSs have been listed on the Principal Market, (ii) trading in the
ADSs has not been suspended or deregistered by the SEC or the Principal Market
and (iii) except as set forth on Schedule 3.u, the Company has received no
communication, written or oral, from the SEC or the Principal Market regarding
the delisting, suspension or termination of trading of the ADSs on the Principal
Market. After giving effect to the closing of the Acquisition, the sale of the
Securities hereunder and the ADS Ratio Change (as defined below), the Company
will satisfy the quantitative and qualitative (including corporate governance)
standards for continued listing of the ADSs on the NASDAQ Capital Market, as set
forth in the NASDAQ Listing Rules. The Company has not received any
communication from The NASDAQ Stock Market regarding the resignation of any
director or executive officer as a condition to the continued listing of the
ADSs on the NASDAQ Capital Market.

 

v.          Tax Status. Each of the Company and the Subsidiaries (i) has made or
filed all foreign, English and U.S. federal and state income and all other tax
returns, reports and declarations required by any jurisdiction to which it is
subject, (ii) has paid all taxes and other governmental assessments and charges
that are material in amount shown or determined to be due on such returns,
reports and declarations, except those being contested in good faith and for
which the Company or the applicable Subsidiary has made appropriate reserves on
its books, and (iii) has set aside on its books provisions reasonably adequate
for the payment of all taxes for periods subsequent to the periods to which such
returns, reports or declarations (referred to in clause (i) above) apply. There
are no unpaid taxes in any material amount claimed in writing to be due by the
taxing authority of any jurisdiction, and to the Company’s Knowledge, there is
no basis for any such claim. The Company was not a passive foreign investment
company (“PFIC”) under the United States Internal Revenue Code of 1986, as
amended (the “Code”), for the Company’s taxable year ended December 31, 2014.

 

 21 

 

 

w.          Transactions With Affiliates. Except as disclosed in any SEC
Documents that were filed with the SEC prior to the date of this Agreement, no
Related Party of the Company or any of the Subsidiaries, nor any of their
respective Affiliates (as defined in Section 3.f(ii)), is presently, or has been
within the past two years, a party to any transaction, contract, agreement,
instrument, commitment, understanding or other arrangement or relationship with
the Company or any of the Subsidiaries (other than directly for services as an
employee, officer and/or director) that would be required to be disclosed in the
SEC Documents filed with the SEC prior to the date of this Agreement, whether
for the furnishing of services to or by, providing for rental of real or
personal property to or from, or otherwise requiring payments or consideration
to or from any such Related Party. Except as disclosed in any SEC Documents that
were filed with the SEC prior to the date of this Agreement, no Related Party of
the Company or any of the Subsidiaries or any of their respective Affiliates,
has any direct or indirect ownership interest in any Person (other than
ownership of less than 1% of the outstanding common stock of a publicly traded
corporation) in which the Company or any of the Subsidiaries has any direct or
indirect ownership interest or has a business relationship or with which the
Company or any of the Subsidiaries competes. “Related Party” for purposes hereof
means, with respect to any Person, the officers and directors of such Person or
such Person’s subsidiaries, Persons who were officers or directors of such
Person or such Person’s subsidiaries at any time during the previous two years,
shareholders, or affiliates of such Person or any of such Person’s subsidiaries,
or any individual related by blood, marriage or adoption to any such Person or
any entity in which any such Person owns a beneficial interest.

 

x.          Application of Takeover Protections. Each of the Company, the
Subsidiaries, the Company Board and the boards of directors (or similar
governing bodies) of the Subsidiaries has taken all necessary action, if any, in
order to render inapplicable any control share acquisition, business combination
or other similar anti-takeover provision under the Articles of Association, the
organizational documents of the Subsidiaries or the laws of the jurisdictions of
incorporation, formation or organization of the Company or any of the
Subsidiaries that is or could become applicable to Buyers as a result of the
transactions contemplated by this Agreement, including the Company’s issuance of
the Securities and Buyers’ ownership of the Securities.

 

y.          Rights Agreement. The Company has not adopted a shareholder rights
plan (or “poison pill”) or similar arrangement relating to accumulations of
beneficial ownership of ADSs or Ordinary Shares or a change in control of the
Company.

 

z.          Foreign Corrupt Practices. Neither the Company nor any of the
Subsidiaries, nor to the Company’s Knowledge, any director, officer, agent,
employee or other Person acting on behalf of the Company or any of the
Subsidiaries has, in the course of its actions for, or on behalf of, the Company
or any of the Subsidiaries, used any corporate funds for any unlawful
contribution, gift, entertainment or other unlawful expenses relating to
political activity; made any direct or indirect unlawful payment to any foreign
or domestic government official or employee from corporate funds; violated or is
in violation of any provision of the U.S. Foreign Corrupt Practices Act of 1977,
as amended, the Bribery Act 2010 or any similar law or legislation; or made any
unlawful bribe, rebate, payoff, influence payment, kickback or other unlawful
payment to any foreign or domestic government official or employee.

 

aa.        No Other Agreements. The Company has not, directly or indirectly,
made any agreements with any Buyer relating to the terms or conditions of the
transactions contemplated by the Transaction Documents except as set forth in
the Transaction Documents.

 

 22 

 

 

bb.        Investment Company. The Company is not, and upon the Closing will not
be, an “investment company,” a company controlled by an “investment company,” or
an “affiliated person” of, or “promoter” or “principal underwriter” for, an
“investment company,” as such terms are defined in the Investment Company Act of
1940, as amended.

 

cc.        General Solicitation. None of the Company or any of the Subsidiaries,
nor any of their respective Affiliates, nor any Person acting on its or their
behalf, has engaged or will engage in any form of general solicitation or
general advertising (within the meaning of Regulation D under the 1933 Act) in
connection with the offer or sale of the Securities.

 

dd.        No Integrated Offering. None of the Company or any of the
Subsidiaries, or any of their respective Affiliates, or any Person acting on its
or their behalf has, directly or indirectly, made any offers or sales of any
security or solicited any offers to buy any security, under circumstances that
would require registration of any of the Securities under the 1933 Act or cause
this offering of the Securities to be integrated with prior offerings by the
Company for purposes of the 1933 Act or any applicable shareholder approval
provisions of any authority, nor will the Company take any action or steps that
would require registration of the issuance of any of the Securities under the
1933 Act or cause the offering of the Securities to be integrated with other
offerings for purposes of the 1933 Act or any applicable shareholder approval
provision of any authority.

 

ee.        No Disqualification Events. None of the Company or any of the
Subsidiaries, any of their respective predecessors, any director, executive
officer, other officer of the Company or any Subsidiary participating in the
offering contemplated hereby, any beneficial owner (as that term is defined in
Rule 13d-3 under the 1934 Act) of 20% or more of the Company’s outstanding
voting equity securities, calculated on the basis of voting power, any
“promoter” (as that term is defined in Rule 405 under the 1933 Act) connected
with the Company or any of the Subsidiaries in any capacity at the time of the
Closing, any placement agent or dealer participating in the offering of the
Securities, any of such agents’ or dealer’s directors, executive officers, other
officers participating in the offering of the Securities, and RPC (each, a
“Covered Person” and, together, “Covered Persons”) 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”). Each of the Company and the Subsidiaries has
exercised reasonable care to determine (i) the identity of each person that is
an Covered Person; and (ii) whether any Covered Person is subject to a
Disqualification Event. The Company has complied, to the extent applicable, with
its disclosure obligations under Rule 506(e). With respect to each Covered
Person, each of the Company and the Subsidiaries has established procedures
reasonably designed to ensure that the Company or the applicable Subsidiary
receives notice from each such Covered Person of (i) any Disqualification Event
relating to that Covered Person, and (ii) any event that would, with the passage
of time, become a Disqualification Event relating to that Covered Person; in
each case occurring up to and including the Closing Date. None of the Company or
any of the Subsidiaries is for any other reason disqualified from reliance upon
Rule 506 of Regulation D under the 1933 Act for purposes of the offer and sale
of the Securities.

 

ff.        Disclosure. The Company understands and confirms that each Buyer will
rely on the foregoing representations in effecting transactions in securities of
the Company. Taken as a whole, all disclosure provided to Buyers regarding the
Company, the Subsidiaries, their respective businesses and the transactions
contemplated hereby and by the Share Exchange Agreement, including the Schedules
to this Agreement, furnished by or on behalf of the Company are true and correct
and do not contain any untrue statement of a material fact or with respect to
written information omit to state any material fact necessary in order to make
the statements made therein, in the light of the circumstances under which they
were made, not misleading.

 

 23 

 

 

4.           PRE-CLOSING COVENANTS.

 

a.          Shareholders Meeting. The Company shall take all action necessary to
duly call, give notice of, convene and hold a meeting of shareholders (the
“Company Shareholders Meeting”) for the purpose of obtaining the Shareholder
Approval as promptly as reasonably practicable. The Company shall use its
reasonable best efforts to obtain the Shareholder Approval at the Company
Shareholders Meeting.

 

b.          Proxy Statement.

 

(i)          The Company filed with the SEC on August 3, 2015, and commenced
mailing to its shareholders on or about August 5, 2015, a proxy statement (as it
may be amended or supplemented from time to time, including by the Proxy
Supplement (as defined below) the “Proxy Statement”) related to, among others,
the consideration of the Proposals. In connection with the Company Shareholders
Meeting, the Company will (A) as promptly as reasonably practicable after the
date of this Agreement prepare and file with the SEC a supplement to the Proxy
Statement reflecting this Agreement and the Transaction Documents (the “Proxy
Supplement”), (B) respond as promptly as reasonably practicable to any comments
received from the SEC with respect to the Proxy Statement on or after the date
of this Agreement and provide copies of such comments to Buyers promptly upon
receipt and provide copies of proposed responses to Buyers a reasonable time
prior to filing to allow Buyers the opportunity to provide meaningful comment,
(C) as promptly as reasonably practicable prepare and file any other amendments
or supplements necessary to be filed in response to any SEC comments or as
otherwise required by applicable law, (D) to the extent not done prior to the
date of this Agreement, mail to its shareholders as promptly as reasonably
practicable the Proxy Statement (including the Proxy Supplement) and all other
customary proxy or other materials for meetings such as the Company Shareholders
Meeting, (E) to the extent required by applicable law, as promptly as reasonably
practicable prepare, file and distribute to the Company’s shareholders any
supplement (other than the Proxy Supplement) or amendment to the Proxy Statement
if any event shall occur which requires such action at any time prior to the
Company Shareholders Meeting, and (F) otherwise comply with all requirements of
law applicable to the Company Shareholders Meeting. Each Buyer shall cooperate
with the Company in connection with the preparation of the Proxy Supplement and
any other amendments or supplements to the Proxy Statement, including promptly
furnishing the Company, upon request, with any and all information as may be
required to be set forth in the Proxy Statement with respect to such Buyer under
applicable law. The Company will provide Buyers a reasonable opportunity to
review and comment upon the Proxy Supplement and any other amendments or
supplements to the Proxy Statement, and shall give reasonable consideration to
any such comments proposed, prior to mailing the Proxy Supplement and any such
other amendments or supplements to the Proxy Statement to the Company’s
shareholders. The Proxy Statement shall include the Company Board
Recommendation.

 

 24 

 

 

(ii)          If, at any time prior to the Company Shareholders Meeting, any
information relating to the Company, any of the Subsidiaries or any Buyers or
any of their respective Affiliates should be discovered by the Company, any of
the Subsidiaries or any Buyers which should be set forth in an amendment or
supplement to the Proxy Statement so that the Proxy Statement shall 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
therein, in light of the circumstances under which they are made, not
misleading, the party that discovers such information shall promptly notify the
other parties and, to the extent required by applicable law, the Company shall
disseminate an appropriate amendment thereof or supplement thereto describing
such information to the Company’s shareholders.

 

(iii)        The Company represents, warrants, covenants and agrees that
(A) none of the information included or incorporated by reference in the Proxy
Statement or any other document filed with the SEC in connection with the
transactions contemplated by this Agreement, the other Transaction Documents,
the Share Exchange Agreement or the Acquisition (all such other documents, the
“Other Filings”), in the case of the Proxy Statement, at the date it was first
mailed to the Company’s shareholders or at the time of the Company Shareholders
Meeting or at the time of any amendment or supplement thereof, or, in the case
of any Other Filing, at the date it is first mailed to the Company’s
shareholders or at the date it is first filed with the SEC, contained or shall
contain, as applicable, any untrue statement of a material fact or omitted or
shall omit, as applicable, to state any material fact required to be stated
therein or necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading, except that no covenant
is made by the Company with respect to statements made or incorporated by
reference therein in reliance on, and conformity with, information supplied in
writing by or on behalf of any Buyer in connection with the preparation of the
Proxy Statement or the Other Filings expressly for inclusion therein, and (B)
the Proxy Statement and the Other Filings that are or were filed by the Company
shall comply as to form in all material respects with the requirements of the
1934 Act and shall comply with the applicable requirements of The NASDAQ Stock
Market.

 

(iv)        Each Buyer, severally and not jointly, represents, warrants,
covenants and agrees that none of the information supplied in writing by or on
behalf of such Buyer expressly for inclusion in the Proxy Statement or the Other
Filings will, in the case of the Proxy Statement, at the time of the Company
Shareholders Meeting or at the time of any amendment of or supplement to the
Proxy Statement, or, in the case of any Other Filing, at the date it is first
mailed to the Company’s shareholders or at the date it is first filed with the
SEC, 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 therein, in light of the circumstances under which they are made, not
misleading.

 

(v)         The Company Board shall, within 10 Business Days after the Requisite
Buyers request in writing, reaffirm (publicly, if so requested) its
recommendation in favor of the adoption and approval of the transactions
contemplated hereby and by the Share Exchange Agreement, including the issuance
of the Purchased ADSs to Buyers and the consummation of the Acquisition. If a
tender or exchange offer relating to the Company’s securities shall have been
commenced by a Person unaffiliated with any Buyers, the Company shall, within 10
Business Days after such tender or exchange offer is first published, sent or
given, send to its shareholders pursuant to Rule 14e-2 promulgated under the
1933 Act a statement disclosing that the Company Board recommends rejection of
such tender or exchange offer.

 

 25 

 

 

c.          Conduct of Business of the Company.

 

Except as expressly required or expressly contemplated by this Agreement or the
Share Exchange Agreement or as disclosed in the Proxy Statement, in the form on
file with the SEC prior to the date of this Agreement, the Company will conduct
its operations only in the ordinary course of business as it exists on the date
of this Agreement. Without limiting the generality of the foregoing, except as
expressly contemplated by this Agreement or the Share Exchange Agreement or as
set forth on Schedule 4.c, the Company shall not, and shall cause each of the
Subsidiaries not to, take any of the following actions:

 

(i)         directly or indirectly, withdraw, change, amend, modify or qualify,
or resolve, propose or agree to withdraw, change, amend, modify or qualify
(whether publicly or otherwise), in a manner adverse to any Buyer, or otherwise
take any action, fail to take any action or make any statement or proposal
inconsistent with, the Company Board Recommendation;

 

(ii)        propose or adopt any changes to the Articles of Association or any
of the organizational documents of the Subsidiaries;

 

(iii)       make, declare, set aside, or pay any dividend or distribution on any
ADSs, Ordinary Shares or shares in the Company;

 

(iv)       (A) except for the change in the ADS ratio of ADSs to Ordinary Shares
from 1-to-10 to 1-to-100 as contemplated by Section 4.f hereof (the “ADS Ratio
Change”), adjust, split, combine or reclassify or otherwise amend the terms of
the ADSs, Ordinary Shares or other shares in the Company, (B) repurchase,
redeem, purchase, acquire, encumber, pledge, dispose of or otherwise transfer,
directly or indirectly, any ADSs, Ordinary Shares or other shares in the Company
or any securities or other rights convertible or exchangeable into or
exercisable for any such shares in the Company or such securities or other
rights, or offer to do the same, (C) issue, grant, deliver or sell any ADSs,
Ordinary Shares or other shares in the Company or any securities or other rights
convertible or exchangeable into or exercisable for any such shares in the
Company or such securities or rights (which term, for purposes of this
Agreement, will be deemed to include share appreciation rights, “phantom stock”
or other commitments that provide any right to receive value or benefits similar
to such shares, securities or other rights), other than pursuant to the exercise
of Options of the Company outstanding as of the date of this Agreement, in all
cases in accordance with the terms of the applicable award or plan as in effect
on the date of this Agreement, (D) enter into any agreement, understanding or
arrangement with respect to the sale, voting, pledge, encumbrance, disposition,
acquisition, transfer, registration or repurchase of any ADSs, Ordinary Shares
or other shares in the Company or such securities or other rights, or (E)
register for sale, resale or other transfer any ADSs, Ordinary Shares or other
shares in the Company under the 1933 Act on behalf of the Company or any other
Person;

 

 26 

 

 

(v)        terminate, waive, amend or modify any provision of, or grant
permission or request under, any standstill or confidentiality agreement to
which the Company or any Subsidiary is a party;

 

(vi)       merge or consolidate (or initiate, solicit or encourage (including by
way of providing information) the submission of any inquiries, proposals or
offers or any other efforts or attempts that constitute, or may reasonably be
expected to lead to, a merger or consolidation of) the Company or any of the
Subsidiaries with any Person, other than the Acquisition;

 

(vii)      sell, lease or otherwise dispose of any assets or securities,
including by merger, consolidation, asset sale or other business combination
(including formation of a joint venture ) or by property transfer;

 

(viii)     make any acquisitions (or initiate, solicit or encourage (including
by way of providing information) the submission of any inquiries, proposals or
offers or any other efforts or attempts that constitute, or may reasonably be
expected to lead to, an acquisition), by purchase or other acquisition of stock
or other equity interests, or by merger, consolidation or other business
combination (including formation of a joint venture)) or make any purchases of
any property or assets from any Person, in all such cases other than the
Acquisition;

 

(ix)       enter into, renew, extend, amend or terminate any contract, agreement
or arrangement, whether written or oral, that, individually or in the aggregate
with other such entered, renewed, extended, amended or terminated contracts,
agreements or arrangements, would reasonably be expected to have a Company
Material Adverse Effect;

 

(x)        incur, assume, guarantee or prepay any indebtedness for borrowed
money or offer, place or arrange any issue of debt securities or commercial bank
or other credit facilities;

 

(xi)       make any loans, advances or capital contributions to, or investments
in, any other Person;

 

(xii)      change its financial accounting policies or procedures, other than as
required by law or GAAP, or write up, write down or write off the book value of
any assets of the Company and the Subsidiaries, including writing down the value
of inventory in any material manner, other than as may be required by law or
GAAP;

 

(xiii)     waive, release, assign, settle or compromise any action, suit or
proceeding, except without the imposition of any restrictions on the business
and operations of the Company or any of the Subsidiaries;

 

 27 

 

 

(xiv)     adopt a plan of complete or partial liquidation or resolutions
providing for a complete or partial liquidation, dissolution, restructuring,
recapitalization or other reorganization of the Company or any of the
Subsidiaries;

 

(xv)      enter into, amend, waive or terminate (other than terminations in
accordance with their terms) any Affiliate or Related Party transactions; and

 

(xvi)     agree or commit to do any of the foregoing.

 

d.          Pre-Closing Access. The Company will, and will cause each of the
Subsidiaries and their respective directors, officers, employees, accountants,
consultants, legal counsel, advisors, agents and other representatives to,
during normal business hours and upon reasonable advance notice, (i) provide to
Buyers full access to the officers, employees, offices, properties, agreements,
commitments, books and records and other information (including tax returns) of
the Company and the Subsidiaries (so long as such access does not unreasonably
interfere with the operations of the Company or the Subsidiaries) as Buyers
reasonably request, (ii) promptly upon request therefor, provide to Buyers all
documents that any Buyers reasonably request, including any and all available
financial, technical and operating data and other information pertaining to the
Company and the Subsidiaries and (iii) otherwise cooperate with Buyers in its
investigation of the Company and the Subsidiaries.

 

e.          Acquisition.

 

(i)          The Company shall use its reasonable best efforts, and shall cause
its Affiliates to use their reasonable best efforts, to, take, or cause to be
taken, all actions, and to do, or cause to be done, all things necessary to
consummate the Acquisition as promptly as possible following the date of this
Agreement, including satisfying (or obtaining waivers of) on a timely basis all
the conditions set forth in the Share Exchange Agreement that are within its or
their control. In the event that all conditions to the Share Exchange Agreement
have been satisfied or waived (other than the consummation of the transactions
contemplated by this Agreement), the Company and its Affiliates shall use its
reasonable best efforts to cause the other parties to the Share Exchange
Agreement to consummate the Acquisition as promptly as practicable. Upon
request, the Company shall keep Buyers informed on a reasonably current basis of
the status of its efforts to consummate the transactions contemplated by the
Share Exchange Agreement.

 

(ii)          None of the Company or its Affiliates shall amend, modify,
terminate, assign or agree to any waiver of the Share Exchange Agreement without
the prior written approval of the Requisite Buyers.

 

(iii)         The Company shall comply with its covenants and agreements set
forth in Section 8.10 of the Share Exchange Agreement (provided that the Company
shall not take any action that would otherwise be permitted by Section 8.10.1.6
or 8.10.1.7 of the Share Exchange Agreement, and without limiting the foregoing,
the Company Board shall not accept any Third Party Offer (as defined in the
Share Exchange Agreement) for the Company).

 

f.          ADS Ratio Change. The Company will, prior to the Closing, take all
actions reasonably necessary or appropriate, and use its reasonable best
efforts, to effect the ADS Ratio Change in accordance with the terms of the
Deposit Agreement, including entering into (and causing the Depositary to enter
into) an amendment to the Deposit Agreement to effect the foregoing (the
“Deposit Agreement Amendment”), which, for the avoidance of doubt, constitutes a
Transaction Document.

 

 28 

 

 

5.           OTHER COVENANTS.

 

a.          Best Efforts. Each party shall use its best efforts to timely
satisfy each of the conditions to be satisfied by it as provided in Sections 6
and 7 of this Agreement.

 

b.          Form D and Blue Sky. The Company agrees to timely file a Form D with
respect to the Securities as required under Regulation D and to provide a copy
thereof to each Buyer promptly after such filing. The Company shall, on or
before the Closing Date, take such action as the Company shall reasonably
determine is necessary in order to obtain an exemption for, or to qualify the
Securities for, sale to Buyers at the Closing occurring on the Closing Date
pursuant to this Agreement under applicable securities or “Blue Sky” laws of the
states of the United States, and shall provide evidence of any such action so
taken to Buyers on or prior to the Closing Date. The Company shall make all
filings and reports relating to the offer and sale of the Securities required
under applicable securities or “Blue Sky” laws of the states of the United
States following the Closing Date.

 

c.          Reporting Status. From the date of this Agreement until the first
date on which Buyers no longer own any Securities (the “Reporting Period”), the
Company shall use its reasonable best efforts to timely file all reports
required to be filed with the SEC pursuant to the 1934 Act, and the Company
shall not terminate the registration of the ADSs under the 1934 Act or otherwise
terminate its status as an issuer required to file reports under the 1934 Act,
even if the securities laws would otherwise permit any such termination.

 

d.          Use of Proceeds. The Company will use the proceeds from the sale of
the Securities as set forth on Schedule 5.d.

 

e.          Financial Information. The Company agrees to send the following to
each Buyer during the Reporting Period: (i) within one (1) Business Day after
the filing thereof with the SEC, a copy of its annual reports on Form 10-K, its
quarterly reports on Form 10-Q, any current reports on Form 8-K and any
registration statements (other than on Form S-8) and amendments and supplements
to each of the foregoing, unless the foregoing are filed with the SEC through
EDGAR and are immediately available to the public through EDGAR; (ii) on the
same day as the release thereof, facsimile copies of all press releases issued
by the Company or any of the Subsidiaries, except to the extent such release is
available through Bloomberg Financial Markets (or any successor thereto)
contemporaneously with such issuance; and (iii) copies of any notices and other
information made available or given to the shareholders of the Company
generally, contemporaneously with the making available or giving thereof to the
shareholders, unless the foregoing are filed with the SEC through EDGAR and are
immediately available to the public through EDGAR.

 

 29 

 

 

f.          Internal Accounting Controls. During the Reporting Period, the
Company shall, and shall cause each of the Subsidiaries to (i) at all times keep
books, records and accounts with respect to all of such Person’s business
activities, in accordance with sound accounting practices and GAAP consistently
applied, (ii) maintain a system of internal accounting controls sufficient to
provide reasonable assurance that (A) transactions are executed in accordance
with management’s general or specific authorizations, (B) transactions are
recorded as necessary to permit preparation of financial statements in
conformity with GAAP and to maintain asset and liability accountability, (C)
access to assets or incurrence of liability is permitted only in accordance with
management’s general or specific authorization and (D) 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, (iii) timely file and make publicly available on
EDGAR, all certifications and statements required by (x) Rule 13a-14 or Rule
15d-14 under the 1934 Act and (y) Section 906 of Sarbanes Oxley with respect to
any Company SEC Documents, (iv) maintain disclosure controls and procedures
required by Rule 13a-15 or Rule 15d-15 under the 1934 Act, and (v) maintain
internal control over financial reporting required by Rule 13a-14 or Rule 15d-14
under the 1934 Act.

 

g.          Listing. The Company shall take all actions necessary to remain
eligible for quotation of its securities on the NASDAQ Capital Market, the
NASDAQ Global Market, the NASDAQ Global Select Market or The New York Stock
Exchange and to cause all of the Registrable Securities covered by a
Registration Statement (as such terms are defined in the Registration Rights
Agreement) to be quoted thereon. The Company shall promptly secure the listing
of all of the Registrable Securities upon each national securities exchange and
automated quotation system, if any, upon which ADSs are then listed (subject to
official notice of issuance) and shall maintain, so long as any other ADSs shall
be so listed, such listing of all Registrable Securities from time to time
issuable under the terms of the Transaction Documents. The Company shall not,
and shall cause each of the Subsidiaries not to, take any action which would be
reasonably expected to result in the delisting, suspension or termination of
trading of the ADSs on the Principal Market. The Company shall pay all fees and
expenses in connection with satisfying its obligations under this Section 5.g.

 

h.          Expenses.

 

(i)          At the Closing, the Company shall pay to each Buyer that is
affiliated with Deerfield Management Company, L.P. a reimbursement amount, up to
an aggregate of $75,000 for all such Buyers, equal to such Buyer’s legal, due
diligence and other expenses, including fees and expenses of attorneys,
investigative and other consultants and travel costs and all other expenses,
relating to negotiating and preparing the Transaction Documents and consummating
the transactions contemplated hereby and thereby (collectively, “Expenses”).
Subject to the limitation in the preceding sentence that the Company shall not
be obligated to pay Expenses in excess of $75,000 in the aggregate, the
aggregate amount payable to any Buyer pursuant to the preceding sentence at the
Closing may be withheld as an off-set by such Buyer from its Purchase Price to
be paid by it at the Closing. Additionally, at the Closing, each of the Company
and the Subsidiaries shall pay all of its own Expenses. In addition to the
obligations of the Company set forth in this Section 5.h, and not in limitation
thereof, following the Closing, the Company shall promptly reimburse each Buyer
and each holder of Securities for all of the respective out-of-pocket fees,
costs and expenses incurred thereby in connection with any amendment,
modification or waiver of any of the Transaction Documents and the enforcement
of such Person’s rights and remedies under any of the Transaction Documents.

 

 30 

 

 

(ii)         Notwithstanding any termination of this Agreement pursuant to
Section 8, the Company shall pay to each Buyer that is affiliated with Deerfield
Management Company, L.P., within 30 days following delivery of an invoice to the
Company by any such Buyer, a reimbursement amount, up to an aggregate of $75,000
for all such Buyers, equal to such Buyer’s Expenses in the event this Agreement
is terminated pursuant to (A) Section 8.b(i), (B) Section 8.b(ii), (C) Section
8.c(i), (D) Section 8.c(ii) or (E) Section 8.c(iii); provided, that the Company
shall not be obligated to pay any reimbursement amount pursuant to this Section
5.h(ii) for a Buyer’s Expenses if this Agreement is terminated pursuant to
clauses (A), (B) or (E) and (X) as of the date of such termination, the
representations and warranties of the Company and the Subsidiaries shall be true
and correct as though made at that time (except for representations and
warranties that speak as of a specific date, which shall be true and correct as
of such date) and the Company and the Subsidiaries shall have performed,
satisfied and complied with the covenants, agreements and conditions required by
the Transaction Documents to be performed, satisfied or complied with by the
Company and the Subsidiaries at or prior to such date, or (Y) the bad faith
actions by such Buyer have been a principal cause of, or resulted in, the
failure of the conditions giving rise to the payment of such Buyer’s Expenses
pursuant to this Section 5.h(ii).

 

i.          Disclosure of Transactions and Other Material Information. Not later
than 8:00 a.m. (New York City time) on the second (2nd) Business Day following
the execution and delivery of this Agreement, the Company shall file a Form 8-K
with the SEC describing the terms of the transactions contemplated by the
Transaction Documents and including as exhibits to such Form 8-K this Agreement
and the Registration Rights Agreement (such Form 8-K, the “Announcing
Form 8-K”). No later than 8:00 a.m. (New York City time) on the second (2nd)
Business Day following the Closing Date, the Company shall file a Form 8-K with
the SEC describing the terms of the transactions consummated pursuant to this
Agreement on the Closing Date (such Form 8-K, the “Closing Form 8-K”). The
Company represents and warrants that, from and after the filing of the Closing
Form 8-K with the SEC, no Buyer shall be in possession of any material nonpublic
information received from the Company, any of the Subsidiaries or any of their
respective officers, directors, employees or agents. The Company shall not, and
shall cause each of the Subsidiaries and its and each of their respective
officers, directors, employees and agents to, provide any Buyer with any
material nonpublic information regarding the Company or any of the Subsidiaries
from and after the filing of the Closing Form 8-K with the SEC without the
express prior written consent of such Buyer. In the event of a breach of the
foregoing covenant by the Company, any of the Subsidiaries, or any of its or
their respective officers, directors, employees and agents, in addition to any
other remedy provided herein or in the Transaction Documents, a Buyer shall have
the right to make a public disclosure, in the form of a press release, public
advertisement or otherwise, of such material nonpublic information without the
prior approval by the Company, the Subsidiaries, or any of its or their
respective officers, directors, employees or agents. No Buyer shall have any
liability to the Company, the Subsidiaries, or any of its or their respective
officers, directors, employees, equityholders or agents for any such disclosure.
Subject to the foregoing, none of the Company or the Subsidiaries nor any Buyer
shall issue any press releases or any other public statements with respect to
the transactions contemplated hereby or disclosing the name of any Buyer;
provided, however, that the Company shall be entitled, without the prior
approval of any Buyer, to make any press release or other public disclosure with
respect to such transactions (i) in substantial conformity with the Announcing
Form 8-K or the Closing Form 8-K, and in each case contemporaneously therewith
and (ii) as is required by applicable law and regulations (provided that each
Buyer shall be consulted by the Company in connection with any such press
release or other public disclosure prior to its release and shall be provided
with a copy thereof). Notwithstanding anything to the contrary herein, in the
event that the Company believes that a notice or communication to any Buyer
contains material, nonpublic information relating to the Company or any of the
Subsidiaries, the Company shall so indicate to Buyers contemporaneously with
delivery of such notice or communication, and such indication shall provide
Buyers the means to refuse to receive such notice or communication; and in the
absence of any such indication, the holders of the Securities shall be allowed
to presume that all matters relating to such notice or communication do not
constitute material, nonpublic information relating to the Company or any of the
Subsidiaries. Upon receipt or delivery by the Company or any of the Subsidiaries
of any notice in accordance with the terms of the Transaction Documents, unless
the Company has in good faith determined that the matters relating to such
notice do not constitute material, nonpublic information relating to the Company
or the Subsidiaries, the Company shall within one Business Day after any such
receipt or delivery publicly disclose such material, nonpublic information.

 

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j.          Patriot Act, Investor Secrecy Act and Office of Foreign Assets
Control. As required by U.S. federal law and each Buyer’s policies and
practices, each Buyer may need to obtain, verify and record certain customer
identification information and documentation in connection with opening or
maintaining accounts, or establishing or continuing to provide services, and,
from the date of this Agreement until the end of the Reporting Period, the
Company agrees to, and shall cause each of the Subsidiaries to, provide such
information to each Buyer.

 

k.         Pledge of Securities. The Company acknowledges and agrees that the
Securities may be pledged by a holder thereof in connection with a bona fide
margin agreement or other loan secured by the Securities. The pledge of
Securities shall not be deemed to be a transfer, sale or assignment of the
Securities hereunder, and no such holder effecting any such pledge of Securities
shall be required to provide the Company with any notice thereof or otherwise
make any delivery to the Company pursuant to this Agreement or any other
Transaction Document, including Section 2.f of this Agreement; provided that
such holder and its pledgee shall be required to comply with the provisions of
Section 2.f in order to effect a sale, transfer or assignment of Securities to
such pledgee. The Company hereby agrees to execute and deliver such
documentation as a pledgee of the Securities may reasonably request in
connection with a pledge of the Securities to such pledgee by an Investor.

 

l.          PFIC Status. For so long as any Buyer or other holder owns any
Securities, upon the request of such holder the Company shall furnish any
information reasonably requested by such holder (and not generally available by
reference to the Company’s publicly available filings with the SEC) to confirm
whether or not the Company is a PFIC; provided, however, that the Company shall
not be obligated to furnish any information that it has not already publicly
disclosed. In addition, for each taxable year of the Company during any portion
of which any holder holds any Securities, the Company shall make due inquiry of
its tax advisors on an annual basis regarding its status as a PFIC and, if the
Company’s tax advisors determine that the Company became a PFIC for any such
taxable year, shall notify each holder of Securities, in writing, of the
determination that the Company has become a PFIC for such taxable year by no
later than 75 days following the close of such taxable year. With respect to (i)
any taxable year in respect of which the Company was determined to be a PFIC and
(ii) each subsequent taxable year during any part of which any holder holds any
Securities, the Company shall promptly provide each holder with all information
that is required by a United States person holding Securities in order to make a
valid election to treat the Company as a “qualified electing fund” for the
purposes of the Code, including a “PFIC Annual Information Statement” as
described in Treasury Regulation section 1.1295-(1)(g)(1) (or any successor
Treasury Regulation) and all representations and statements required by such
statement, and will take any other steps necessary to facilitate such election
by each holder. The Company understands and agrees that time is of the essence
in complying with the foregoing deadlines, and that any failure by the Company
to so comply will be materially adverse to each holder.

 

 32 

 

 

m.         No Avoidance of Obligations. During the Reporting Period, the Company
shall not, and shall cause each of the Subsidiaries not to, enter into any
agreement which would limit or restrict the Company’s or any of the
Subsidiaries’ ability to perform under, or take any other voluntary action to
avoid or seek to avoid the observance or performance of any of the terms to be
observed or performed by it under, this Agreement and the other Transaction
Documents.

 

n.          Regulation M. Neither the Company, nor the Subsidiaries nor any
Affiliates of the foregoing shall take any action prohibited by Regulation M
under the 1934 Act, in connection with the offer, sale and delivery of the
Securities contemplated hereby.

 

o.          Further Instruments and Acts. From the date of this Agreement until
the end of the Reporting Period, upon request of any Buyer or holder of
Securities, the Company will, and will cause each of the Subsidiaries to,
execute and deliver such further instruments and do such further acts as may be
reasonably necessary or proper to carry out more effectively the purposes of
this Agreement and the other Transaction Documents.

  

6.           CONDITIONS TO THE COMPANY’S OBLIGATION TO SELL.

 

The obligation of the Company to issue and sell the Purchased ADSs to each Buyer
at the Closing is subject to the satisfaction, at or before the Closing Date, of
each of the following conditions; provided that these conditions are for the
Company’s sole benefit and may be waived by the Company at any time in its sole
discretion by providing each Buyer with prior written notice thereof:

 

a.          The Shareholder Approval shall have been obtained.

 

b.          The Acquisition shall have been consummated in accordance with the
terms of the Share Exchange Agreement.

 

c.          The ADS Ratio Change shall have been effected.

 

d.          Such Buyer shall have executed each of the Transaction Documents to
which it is a party and delivered the same to the Company.

 

 33 

 

 

e.          Such Buyer shall have delivered to the Company such Buyer’s Purchase
Price for the Purchased ADSs being purchased by such Buyer at the Closing by
wire transfer of immediately available funds pursuant to the wire instructions
provided by the Company.

 

f.          The representations and warranties of such Buyer shall be true and
correct as of the date when made and as of the Closing Date as though made at
that time (except for representations and warranties that speak as of a specific
date, which shall be true and correct as of such date), and such Buyer shall
have performed, satisfied and complied with the covenants, agreements and
conditions required by the Transaction Documents to be performed, satisfied or
complied with by such Buyer at or prior to the Closing Date.

 

7.           CONDITIONS TO EACH BUYER’S OBLIGATION TO PURCHASE.

 

The obligation of each Buyer hereunder to purchase the Purchased ADSs from the
Company at the Closing is subject to the satisfaction, at or before the Closing
Date, of each of the following conditions, provided that these conditions are
for each Buyer’s sole benefit and may be waived only by such Buyer at any time
in its sole discretion by providing the Company with prior written notice
thereof:

 

a.          The Shareholder Approval shall have been obtained.

 

b.          The Acquisition shall have been consummated in accordance with the
terms of the Share Exchange Agreement (without any amendment, modification or
waiver of any of the provisions thereof).

 

c.          The ADS Ratio Change shall have been effected.

 

d.          Each of the Company and the Subsidiaries shall have executed each of
the Transaction Documents to which it is a party and delivered the same to such
Buyer.

 

e.          The representations and warranties of the Company and the
Subsidiaries shall be true and correct as of the date when made and as of the
Closing Date as though made at that time (except for representations and
warranties that speak as of a specific date, which shall be true and correct as
of such date) and the Company and the Subsidiaries shall have performed,
satisfied and complied with the covenants, agreements and conditions required by
the Transaction Documents to be performed, satisfied or complied with by the
Company and the Subsidiaries at or prior to the Closing Date. Such Buyer shall
have received a certificate, executed by a director of the Company, dated as of
the Closing Date, to the foregoing effect and as to such other matters as may be
reasonably requested by such Buyer.

 

f.          Such Buyer shall have received the opinions of Mintz Levin Cohn
Ferris Glovsky and Popeo PC and DLA Piper UK LLP, each dated as of the Closing
Date, which opinions will address, among other things, laws of England and New
York and U.S. federal law applicable to the transactions contemplated hereby, in
form, scope and substance reasonably satisfactory to such Buyer and covering the
matters set forth on Exhibit B-1 and Exhibit B-2 attached hereto.

 

 34 

 

 

g.          The Company shall have executed and delivered to such Buyer the ADRs
representing the Purchased ADSs being purchased by such Buyer at the Closing.

 

h.          The Company Board shall have adopted, and not rescinded or otherwise
amended or modified, resolutions consistent with Section 3.b and in a form
reasonably acceptable to such Buyer (the “Resolutions”).

 

i.           The Company shall have delivered to such Buyer a certificate
evidencing the incorporation or organization and good standing of the Company
and Volution in such entity’s state or other jurisdiction of incorporation or
organization issued by the Secretary of State (or other applicable authority) of
such state or jurisdiction of incorporation or organization as of a date within
five Business Days of the Closing Date.

 

j.           The Company shall have delivered to such Buyer a director’s
certificate, dated as of the Closing Date, certifying as to (A) the Resolutions,
(B) the Memorandum of Association, as amended, certified as of a date within
five Business Days of the Closing Date, by the Company Secretary, (C) the
Articles of Association, certified as of a date within five Business Days of the
Closing Date, by the Company Secretary, and (D) the Deposit Agreement, as
amended and in effect as of the Closing.

 

k.          The Company shall have made all filings under all applicable U.S.
federal and state securities laws necessary to consummate the issuance of the
Securities pursuant to this Agreement in compliance with such laws.

 

l.           The Company shall have delivered to such Buyer a letter from each
of the Depositary and the Company’s transfer agent certifying the number of ADSs
and Ordinary Shares, respectively, outstanding as of a date within two (2)
Business Days of the Closing Date.

 

m.          The Company and the Subsidiaries shall have delivered to such Buyer
such other documents relating to the transactions contemplated by this Agreement
as such Buyer or its counsel may reasonably request.

 

8.           TERMINATION.

 

a.          Termination by Mutual Consent. This Agreement may be terminated,
whether before or after satisfaction of the condition set forth in Sections 6.a
and 7.a, at any time prior to the Closing, by mutual written consent of the
Requisite Buyers and the Company. For purposes of this Agreement, “Requisite
Buyers” means Buyers that purchased at least two-thirds (2/3) of the aggregate
number of Purchased ADSs on the Closing Date, or if prior to the Closing, Buyers
listed on the Schedule of Buyers as being obligated to purchase at least
two-thirds (2/3) of the aggregate number of Purchased ADSs.

 

b.          Termination by Either the Requisite Buyers or the Company. This
Agreement may be terminated by either the Requisite Buyers or the Company at any
time prior to the Closing:

 

(i)          whether before or after satisfaction of the conditions set forth in
Sections 6.a and 7.a, if the Closing has not occurred by October 31, 2015 (the
“Outside Date”), except that the right to terminate this Agreement under this
clause will not be available to any party to this Agreement whose breach of, or
failure to fulfill any of its obligations under, this Agreement has been a cause
of, or resulted in, the failure to consummate the Closing by such date;

 

 35 

 

 

(ii)         if the Proposals have been submitted to the shareholders of the
Company for adoption at a duly convened Company Shareholders Meeting and the
Shareholder Approval shall not have been obtained at such Company Shareholders
Meeting (including any adjournment or postponement thereof) prior to the Outside
Date; or

 

(iii)        whether before or after satisfaction of the conditions set forth in
Sections 6.a and 7.a, if any law or governmental authority prohibits
consummation of the Closing or if any order, judgment, injunction, award, decree
or writ handed down, adopted or imposed by, any court of competent jurisdiction
or governmental authority restrains, enjoins or otherwise prohibits consummation
of the Closing, and such order, judgment, injunction, award, decree or writ has
become final and nonappealable.

 

c.          Termination by the Requisite Buyers. This Agreement may be
terminated by the Requisite Buyers at any time prior to the Closing:

 

(i)          if the Company materially breaches its obligations under Sections
4.a, 4.b or 4.c, or the Company Board or any committee thereof shall resolve to
do any of the foregoing;

 

(ii)         provided that no Buyer who is a party to such termination action is
in material breach of its respective obligations under this Agreement, if a
breach or failure of any representation, warranty or covenant of the Company
contained in this Agreement shall have occurred and shall not have been cured
within 10 Business Days after a Buyer’s written notice asserting such breach or
failure from the Company, and which breach (A) would reasonably be expected to
give rise to the failure of a condition set forth in Section 7, and (B) as a
result of such breach, such condition would not reasonably be expected to be
satisfied prior to the Outside Date;

 

(iii)        if the Share Exchange Agreement terminates for any reason.

 

d.          Termination by the Company. This Agreement may be terminated by the
Company at any time prior to the Closing; provided that the Company is not in
material breach of its obligations under this Agreement, if a breach or failure
of any representation, warranty or covenant of Buyers contained in this
Agreement shall have occurred and shall not have been cured within 10 Business
Days after the Company’s written notice asserting such breach or failure from
Buyers, and which breach (A) would reasonably be expected to give rise to the
failure of a condition set forth in Section 6 and (B) as a result of such
breach, such condition would not reasonably be expected to be satisfied prior to
the Outside Date.

 

e.          Effect of Termination. If this Agreement is terminated pursuant to
this Section 8, it will become void and of no further force and effect, with no
liability on the part of any party to this Agreement (or any of their respective
former, current, or future general or limited partners, shareholders, managers,
members, directors, officers, Affiliates or agents), except that the provisions
of Section 5.h, this Section 8.e, Section 9 and Section 10 will survive any
termination of this Agreement; provided, however, that nothing herein shall
relieve the Company from liabilities for damages incurred or suffered by any
Buyer as a result of any knowing or intentional breach by the Company of any of
its representations, warranties, covenants or other agreements set forth in this
Agreement.

 

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f.          Extension; Waiver. At any time, whether prior to, on or after the
Closing, the Requisite Buyers, on the one hand, and the Company, on the other
hand, may, as applicable (i) extend the time for the performance of any of the
obligations of the other party or parties, as applicable, (ii) waive any
inaccuracies in the representations and warranties of the other party or
parties, as applicable, contained in this Agreement or in any Transaction
Document, or (iii) unless prohibited by applicable law, waive compliance with
any of the covenants or conditions contained in this Agreement. Any agreement on
the part of a party to any extension or waiver will be valid only if set forth
in an instrument in writing signed by such party. The failure of any party to
assert any of its rights under this Agreement or otherwise will not constitute a
waiver of such rights.

 

9.           INDEMNIFICATION.

 

a.          Company Indemnification Obligation. In consideration of each Buyer’s
execution and delivery of the Transaction Documents and acquiring the Securities
thereunder and in addition to all of the Company’s and the Subsidiaries’ other
obligations under the Transaction Documents, the Company shall defend, protect,
indemnify and hold harmless each Buyer and each other holder of the Securities
and all of their shareholders, partners, officers, directors, members, managers,
employees and direct or indirect investors and any of the foregoing Persons’
agents or other representatives (including those retained in connection with the
transactions contemplated by this Agreement) (collectively, the “Indemnitees”)
from and against any and all actions, causes of action, suits, claims, losses,
costs, penalties, fees, liabilities and damages, and expenses in connection
therewith (irrespective of whether any such Indemnitees is a party to the action
for which indemnification hereunder is sought), and including reasonable
attorneys’ fees and disbursements (the “Indemnified Liabilities”), incurred by
any Indemnitees as a result of, or arising out of, or relating to (i) any
misrepresentation or breach of any representation or warranty made by the
Company or any of the Subsidiaries in the Transaction Documents or any other
certificate, instrument or document contemplated hereby or thereby, (ii) any
breach of any covenant, agreement or obligation of the Company or any of the
Subsidiaries contained in the Transaction Documents or any other certificate,
instrument or document contemplated hereby or thereby, (iii) any cause of
action, suit or claim brought or made against such Indemnitees and arising out
of or resulting from the execution, delivery, performance or enforcement of the
Transaction Documents in accordance with the terms thereof or any other
certificate, instrument or document contemplated hereby or thereby in accordance
with the terms thereof (other than a cause of action, suit or claim brought or
made against an Indemnitee by such Indemnitee’s owners, investors or
affiliates), (iv) any transaction financed or to be financed in whole or in
part, directly or indirectly, with the proceeds of the issuance of the
Securities or (v) the status of such Buyer or holder of the Securities as an
investor in the Company. To the extent that the foregoing undertaking by the
Company may be unenforceable for any reason, the Company shall make the maximum
contribution to the payment and satisfaction of each of the Indemnified
Liabilities that is permissible under applicable law.

 

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b.          Indemnification Procedures. Each Indemnitee shall (i) give prompt
written notice to the Company of any claim with respect to which it seeks
indemnification or contribution pursuant to this Agreement (provided, however,
that the failure of the Indemnitee to promptly deliver such notice shall not
relieve the Company of any liability, except to the extent that the Company is
actually prejudiced in its ability to defend such claim) and (ii) permit the
Company to assume the defense of such claim with counsel selected by the Company
and reasonably satisfactory to the Indemnitee; provided, however, that any
Indemnitee 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 the Indemnitee unless
(A) the Company has agreed in writing to pay such fees and expenses, (B) the
Company shall have failed to assume the defense of such claim within five days
of delivery of the written notice of the Indemnitee with respect to such claim
or failed to employ counsel selected by the Company and reasonably satisfactory
to the Indemnitee, or (C) in the reasonable judgment of the Indemnitee, based
upon advice of its counsel, a conflict of interest may exist between the
Indemnitee and the Company with respect to such claims (in which case, if the
Indemnitee notifies the Company in writing that it elects to employ separate
counsel at the expense of the Company, the Company shall not have the right to
assume the defense of such claim on behalf of the Indemnitee). If the Company
assumes the defense of the claim, it shall not be subject to any liability for
any settlement or compromise made by the Indemnitee without its consent (but
such consent shall not be unreasonably withheld, conditioned or delayed). In
connection with any settlement negotiated by the Company, the Company shall not,
and no Indemnitee shall be required by the Company to, (I) enter into any
settlement which does not include as an unconditional term thereof the giving by
the claimant or plaintiff to the Indemnitee of a release from all liability in
respect to such claim or litigation, (II) enter into any settlement that
attributes by its terms any liability, culpability or fault to the Indemnitee,
or (III) consent to the entry of any judgment that does not include as a term
thereof a full dismissal of the litigation or proceeding with prejudice. In
addition, without the consent of the Indemnitee, the Company shall not consent
to entry of any judgment or enter into any settlement which provides for any
obligation or restriction on the part of the Indemnitee other than the payment
of money damages which are to be paid in full by the Company. If the Company
fails or elects not to assume the defense of a claim pursuant to clause (B)
above, or is not entitled to assume or continue the defense of such claim
pursuant to clause (C) above, the Indemnitee shall have the right without
prejudice to its right of indemnification hereunder to, in its discretion
exercised in good faith and upon advice of counsel, to contest, defend and
litigate such claim and may settle such claim, either before or after the
initiation of litigation, at such time and upon such terms as the Indemnitee
deems fair and reasonable; provided that, at least five days prior to any
settlement, written notice of such Indemnitee’s intention to settle is given to
the Company. If requested by the Company, the Indemnitee agrees (at no expense
to the Indemnitee) to reasonably cooperate with the Company and its counsel in
contesting any claim that the Company elects to contest.

 

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10.         GOVERNING LAW; MISCELLANEOUS.

 

a.          Governing Law; Jurisdiction; Jury Trial. All questions concerning
the construction, validity, enforcement and interpretation of this Agreement
shall be governed by the internal laws of the State of New York, without giving
effect to any choice of law or conflict of law provision or rule (whether of the
State of New York or any other jurisdictions) that would cause the application
of the laws of any jurisdictions other than the State of New York. Each party
hereby irrevocably submits to the exclusive jurisdiction of the state and
federal courts sitting in the City of New York, borough of Manhattan, for the
adjudication of any dispute hereunder or in connection herewith or with any
transaction contemplated hereby or discussed herein, and hereby irrevocably
waives, and agrees not to assert in any suit, action or proceeding, any claim
that it is not personally subject to the jurisdiction of any such court, that
such suit, action or proceeding is brought in an inconvenient forum or that the
venue of such suit, action or proceeding is improper. Each party hereby
irrevocably waives personal service of process and consents to process being
served in any such suit, action or proceeding by mailing a copy thereof to such
party at the address for notices to it under this Agreement and agrees that such
service shall constitute good and sufficient service of process and notice
thereof. By the execution and delivery of this Agreement, the Company hereby
agrees to, as promptly as practicable but in no event later than the Closing
Date, appoint Pearl Cohen Zedek Latzer, LLP, which currently maintains a New
York City office at 1500 Broadway, 12th Floor, New York, New York 10036, United
States of America, as its agent upon which process may be served in any legal
action or proceeding which may be instituted in any federal or state court in
the City of New York, borough of Manhattan, for the adjudication of any dispute
hereunder or in connection herewith or with any transaction contemplated hereby
or discussed herein, but for that purpose only. Notwithstanding anything to the
contrary contained herein, service of process upon such agent at the office of
such agent at Pearl Cohen Zedek Latzer, LLP, which currently maintains a New
York City office at 1500 Broadway, 12th Floor, New York, New York 10036, United
States of America, and written notice of said service by the Person servicing
the same to the Company at the address for notices to it set forth in Section
10.f, shall be deemed in every respect effective service of process upon the
Company in any such legal action or proceeding. Such appointment shall be
irrevocable so long as any Investor shall have any rights pursuant to the terms
hereof until the appointment of a successor by the Company with the consent of
the Investors and such successor’s acceptance of such appointment. The Company
further agrees to take any and all actions, including the execution and filing
of any and all such documents and instruments, as may be necessary to continue
such designation and appointment of such agent or successor. Nothing contained
herein shall be deemed to limit in any way any right to serve process in any
manner permitted by law. If any provision of this Agreement shall be invalid or
unenforceable in any jurisdiction, such invalidity or unenforceability shall not
affect the validity or enforceability of the remainder of this Agreement in that
jurisdiction or the validity or enforceability of any provision of this
Agreement in any other jurisdiction. Each of the parties hereto hereby expressly
and irrevocably waives all rights of jurisdiction in any jurisdiction other than
the state and federal courts sitting in the City of New York, borough of
Manhattan, in any such suit, action or proceeding which it may now or hereafter
be afforded by law in any other forum other than the state and federal courts
sitting in the City of New York, borough of Manhattan. EACH PARTY HEREBY
IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A JURY
TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION HEREWITH OR
ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.

 

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b.          Counterparts; Execution. This Agreement and any amendments hereto
may be executed in two or more identical counterparts, all of which shall be
considered one and the same agreement and shall become effective when
counterparts have been signed by each party and delivered to each other party,
it being understood that all parties need not sign the same counterpart. A
facsimile, PDF or other reproduction of this Agreement may be executed by one or
more parties hereto, and an executed copy of this Agreement may be delivered by
one or more parties hereto by facsimile, e-mail or other electronic transmission
device pursuant to which the signature of or on behalf of such party can be
seen, and such execution and delivery shall be considered valid, binding and
effective for all purposes. At the request of any party hereto, all parties
agree to execute an original of this Agreement as well as any facsimile or
reproduction thereof. The parties hereto hereby agree that neither shall raise
the execution of facsimile, PDF or other reproduction of this Agreement, or the
fact that any signature or document was transmitted or communicated by
facsimile, e-mail or other electronic transmission device, as a defense to the
formation of this Agreement.

 

c.          Headings. The headings of this Agreement are for convenience of
reference and shall not form part of, or affect the interpretation of, this
Agreement.

 

d.          Severability. If any provision of this Agreement shall be invalid or
unenforceable in any jurisdiction, such invalidity or unenforceability shall not
affect the validity or enforceability of the remainder of this Agreement in that
jurisdiction or the validity or enforceability of any provision of this
Agreement in any other jurisdiction.

 

e.          Entire Agreement; Amendments; Waivers. This Agreement, together with
the other Transaction Documents, supersedes all other prior oral or written
agreements among each Buyer, the Company and the Subsidiaries, their respective
affiliates and Persons acting on their behalf with respect to the matters
discussed herein, and this Agreement, together with the other Transaction
Documents, and the other instruments referenced herein and therein contain the
entire understanding of the parties hereto with respect to the matters covered
herein and therein. No provision of this Agreement may be waived, modified,
supplemented or amended other than by an instrument in writing signed by the
Company and the Requisite Buyers. Any such amendment shall bind all holders of
the Purchased ADSs. No such amendment shall be effective to the extent that it
applies to less than all of the holders of the Purchased ADSs then outstanding.
No failure or delay on the part of a party in either exercising or enforcing any
right under this Agreement shall operate as a waiver of, or impair, any such
right. No single or partial exercise or enforcement of any such right shall
preclude any other or further exercise or enforcement thereof or the exercise or
enforcement of any other right. No waiver of any such right shall be deemed a
waiver of any other right. No consideration shall be offered or paid to any
Buyer or holder of Purchased ADSs to amend or consent to a waiver or
modification or supplement of any provision of any of the Transaction Documents
unless the same consideration also is offered to all of Buyers or holders of
Purchased ADSs, as the case may be. For clarification purposes, this provision
constitutes a separate right granted to each Buyer and is not intended for the
Company to treat Buyers as a class and shall not be construed in any way as
Buyers acting in concert or otherwise as a group with respect to the purchase,
disposition or voting of securities or otherwise.

 

f.          Notices. Any notices, consents, waivers or other communications
required or permitted to be given under the terms of this Agreement must be in
writing and will be deemed to have been delivered: (i) upon receipt, when
delivered personally; (ii) upon receipt, when sent by facsimile or e-mail
(provided confirmation of transmission is mechanically or electronically
generated and, in the case of an e-mail, a read receipt is received, and in each
case kept on file by the sending party); or (iii) one Business Day after deposit
with a nationally recognized overnight delivery service, in each case properly
addressed to the party to receive the same. The addresses and facsimile numbers
for such communications shall be:

 

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If to the Company:

If prior to the Closing Date:

Celsus Therapeutics Plc
24 West 40th Street, 8th Floor,

New York, New York, 10018

Facsimile:(646) 843-9352

E-mail:gr@celsustx.com

Attention:Gur Roshwalb, Chief Executive Officer

 

If on or following the Closing Date:

 

Akari Therapeutics, Plc

24 West 40th Street, 8th Floor,

New York, New York, 10018

Facsimile:(646) 843-9352

E-mail:Gr@akaritx.com

Attention:Gur Roshwalb, Chief Executive Officer

 

With copy to:

Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C.
666 Third Avenue

New York, NY 10017

Facsimile:(212) 983-3115

E-mail:JSchultz@mintz.com

Attention:Jeffrey Schultz

 

and a copy to:

 

McDermott Will & Emery LLP
340 Madison Avenue
New York, NY 10173
Facsimile: (212) 547-5444

Email:tfinger@mwe.com, jrubinstein@mwe.com

Attention:Todd Finger and Joel Rubinstein

 

If to a Buyer, to it at the address and facsimile number set forth on the
Schedule of Buyers, with copies to such Buyer’s representatives as set forth on
the Schedule of Buyers, or, in the case of a Buyer or any other party named
above, to such other address and/or facsimile number and/or to the attention of
such other Person as the recipient party has specified by written notice given
to each other party at least five days prior to the effectiveness of such
change. Written confirmation of receipt (A) given by the recipient of such
notice, consent, waiver or other communication, (B) mechanically or
electronically generated by the sender’s facsimile machine containing the time,
date, recipient facsimile number and an image of the first page of such
transmission or (C) provided by a courier or overnight courier service shall be
rebuttable evidence of personal service, receipt by facsimile or deposit with a
nationally recognized overnight delivery service in accordance with clause (i),
(ii) or (iii) above, respectively.

 

 41 

 

 

g.          Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
permitted assigns, including any purchasers of the Securities. The Company shall
not assign this Agreement or any rights or obligations hereunder without the
prior written consent of the holders of at least two-thirds (2/3) of the
aggregate number of Purchased ADSs then outstanding, including by merger or
consolidation. A Buyer may assign some or all of its rights hereunder without
the consent of the Company; provided, however, that any such assignment shall
not release such Buyer from its obligations hereunder unless such obligations
are assumed by such assignee and the Company has consented to such assignment
and assumption, which consent shall not be unreasonably withheld, conditioned or
delayed. Notwithstanding anything to the contrary contained in the Transaction
Documents, Buyers shall be entitled to pledge the Securities in connection with
a bona fide margin account or other loan or financing arrangement secured by the
Securities.

 

h.          No Third Party Beneficiaries. This Agreement is intended for the
benefit of the parties hereto and their respective permitted successors and
assigns and, to the extent provided in Section 9, each Indemnitee, and is not
for the benefit of, nor may any provision hereof be enforced by, any other
Person.

 

i.           Survival. Unless this Agreement is terminated under Section 8, the
representations and warranties of the Company and Buyers contained herein shall
survive the Closing and shall remain in full force and effect until the date
that is thirty (30) days following the date on which the Company files with the
SEC its Annual Report on Form 10-K for the year ended December 31, 2016;
provided, that the representations and warranties set forth in Sections 2.h,
3.a, 3.b, 3.c, 3.d, 3.e and 10.k shall survive the Closing indefinitely.
Notwithstanding the foregoing, any claims asserted in good faith with reasonable
specificity (to the extent known at such time) and in writing by notice from the
non-breaching party to the breaching party prior to the expiration date of the
applicable survival period shall not thereafter be barred by the expiration of
such survival and such claims shall survive until finally resolved. Each Buyer
shall be responsible only for its own representations, warranties, agreements
and covenants hereunder.

 

j.           Further Assurances. Each party shall do and perform, or cause to be
done and performed, all such further acts and things, and shall execute and
deliver all such other agreements, certificates, instruments and documents, as
the other parties may reasonably request in order to carry out the intent and
accomplish the purposes of this Agreement and the consummation of the
transactions contemplated hereby.

 

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k.           Financial Advisors; Placement Agents. The Company acknowledges that
it has engaged each of Citigroup Global Markets Inc. and MTS Securities, LLC as
financial advisors or placement agents in connection with the sale of the
Securities, pursuant to letter agreements, true, correct and complete copies of
which have been provided to each Buyer prior to the date hereof (the “Placement
Agent Letters”). The Company shall be responsible for the payment of any
placement agent’s fees or broker’s commissions relating to or arising out of the
transactions contemplated hereby. The Company shall pay, and hold each Buyer
harmless against, any liability, loss or expense (including attorneys’ fees and
out-of-pocket expenses) arising in connection with any claim for any such
payment. The Company represents and warrants to each Buyer that (i) it has not
engaged a placement agent, broker or financial advisor (other than Citigroup
Global Markets Inc. and MTS Securities, LLC) in connection with the transactions
contemplated hereby and (ii) other than as set forth in the Placement Agent
Letters, there are no fees, commissions or expenses payable to any broker,
finder or agent relating to or arising out of the transactions contemplated
hereby.

 

l.           No Strict Construction. The language used in this Agreement will be
deemed to be the language chosen by the parties thereto express their mutual
intent, and no rules of strict construction will be applied against any party.

 

m.         Remedies. The parties hereto agree that (i) irreparable harm would
occur in the event that any of the provisions of this Agreement were not
performed in accordance with their specific terms or were otherwise breached,
and (ii) money damages or other legal remedies would not be an adequate remedy
for any such harm. Each Buyer and each holder of the Securities shall have all
rights and remedies set forth in the Transaction Documents and all rights and
remedies that such Buyers and holders have been granted at any time under any
other agreement or contract and all of the rights that such Buyers and holders
have under any law. Any Person having any rights under any provision of this
Agreement shall be entitled to enforce such rights specifically (without posting
a bond or other security or proving actual damages), to recover damages by
reason of any breach of any provision of this Agreement and to exercise all
other rights granted by law.

 

n.          Independent Nature of Buyers. The obligations of each Buyer
hereunder are several and not joint with the obligations of any other Buyer, and
no Buyer shall be responsible in any way for the performance of the obligations
of any other Buyer hereunder. Each Buyer shall be responsible only for its own
representations, warranties, agreements and covenants hereunder. The decision of
each Buyer to purchase the Securities pursuant to this Agreement has been made
by such Buyer independently of any other Buyer and independently of any
information, materials, statements or opinions as to the business, affairs,
operations, assets, properties, liabilities, results of operations, condition
(financial or otherwise) or prospects of the Company or any of the Subsidiaries
which may have been made or given by any other Buyer or by any agent or employee
of any other Buyer, and no Buyer or any of its agents or employees shall have
any liability to any other Buyer (or any other Person or entity) relating to or
arising from any such information, materials, statements or opinions. Each Buyer
is represented by its own legal representative and is not relying upon the legal
representative of any other Buyer. Nothing contained herein, and no action taken
by any Buyer pursuant hereto or thereto, shall be deemed to constitute Buyers as
a partnership, an association, a joint venture or any other kind of entity, or
create a presumption that Buyers are in any way acting in concert or as a group
with respect to such obligations or the transactions contemplated hereby. Each
Buyer shall be entitled to independently protect and enforce its rights,
including the rights arising out of this Agreement and the other Transaction
Documents, and it shall not be necessary for any other Buyer to be joined as an
additional party in any proceeding for such purpose.

 

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o.          Interpretative Matters. Unless the context otherwise requires,
(i) all references to Sections, Schedules or Exhibits are to Sections, Schedules
or Exhibits contained in or attached to this Agreement, (ii) each accounting
term not otherwise defined in this Agreement has the meaning assigned to it in
accordance with GAAP, (iii) words in the singular or plural include the singular
and plural and pronouns stated in either the masculine, the feminine or neuter
gender shall include the masculine, feminine and neuter, (iv) the use of the
word “including” in this Agreement shall be by way of example rather than
limitation and (v) the word “or” shall not be exclusive.

 

* * * * * *

 44 

 

 

IN WITNESS WHEREOF, Buyers and the Company have caused this Securities Purchase
Agreement to be duly executed as of the date first written above.

 

COMPANY:

 

CELSUS THERAPEUTICS PLC

 

 

By:    Name:  Gur Roshwalb   Title:  Chief Executive Officer  

 

 

 [Signature page to Securities Purchase Agreement] 

 

 

BUYERS:

 

 

By:    Name:    Title: