Exhibit 10.64

 

FORM OF

SECURITIES PURCHASE AGREEMENT

 

This SECURITIES PURCHASE AGREEMENT (this “Agreement”) is made as of the last
date set forth on the signature page hereof by and among CORONADO BIOSCIENCES,
INC., a Delaware corporation having its principal place of business at 24 New
England Executive Park, Burlington, MA 01803 (“Coronado”), [ _____ ], a [ _____
] having its principal place of business at [ _____ ] (the “Company”), and the
undersigned (the “Subscriber”).

 

WITNESSETH:

 

WHEREAS, the Subscriber and Coronado are party to that certain Note Purchase
Agreement, dated [ _____ ] (the “NPA”), pursuant to which Coronado issued the
Subscriber a promissory note in the aggregate principal amount of $[ _____ ]
(the “Original Note”);

 

WHEREAS, the Company is a subsidiary of Coronado and was the beneficiary of the
proceeds of the Original Note, and, pursuant to Section 5.1 of the NPA and
Section 3 of the Original Note, the Company desires to issue the Subscriber [a
promissory note, in substantially the form attached hereto as Exhibit A (the
“Replacement Note” or the “Securities”), in exchange for, and as a replacement
of, the Original Note]/[a Warrant, in substantially the form attached hereto as
Exhibit A to purchase shares of the Company’s common stock, par value $[ _____ ]
per share (the “Warrant” or the “Securities”)]; and

 

WHEREAS, the undersigned parties desire to [exchange the Original Note for the
Replacement Note]/[purchase the Securities], on the terms and conditions set
forth herein.

 

NOW, THEREFORE, in consideration of the promises and the mutual representations
and covenants hereinafter set forth, the parties hereto do hereby agree as
follows:

 

I.           [EXCHANGE]/[SUBSCRIPTION].

 

1.1           [Exchange of the Original Note]/[Purchase of the Securities].
Effective as of the date hereof (the “Closing”), [the Subscriber hereby agrees
to exchange and convert all outstanding principal and all accrued but unpaid
interest under the Original Note for and into a Replacement Note in the
principal amount set forth on the signature page hereto]/[the Subscriber hereby
agrees to purchase, and the Company hereby agrees to issue and sell, a Warrant
to purchase shares of the Company’s common stock, for an aggregate purchase
price of $1.00]. [Coronado, the Company and the Subscriber agree that, as of the
date hereof, the Original Note shall cease to be outstanding and shall represent
the right to receive, upon surrender of the Original Note to Coronado at its
principal office, a Replacement Note, as set forth above. Upon surrender of the
Original Note to Coronado, Coronado will direct the Company to, and the Company
will, issue the Replacement Note into which the Original Note was converted. The
parties hereto agree that the Replacement Note shall be deemed to be an
extension or renewal of the Original Note for purposes of the NPA.]/[Upon
receipt of the purchase price for the Securities, the Company will issue the
Subscriber the Warrant.]

 

1.2           [Release of Obligations under the Original Note. The Subscriber
hereby agrees and acknowledges that the issuance of the Replacement Note by the
Company as set forth herein shall and does fully satisfy and extinguish any and
all obligations or liabilities of Coronado under, or arising in connection with,
the Original Note.]

 

 

 

 

2REPRESENTATIONS AND WARRANTIES OF THE SUBSCRIBER.

 

2.1           The Subscriber recognizes that the purchase of the Securities
involves a high degree of risk including, but not limited to, the following: (a)
the Company remains a development stage business and requires substantial
additional funds; (b) an investment in the Company is highly speculative, and
only investors who can afford the loss of their entire investment should
consider investing in the Company and the Securities; (c) the Subscriber may not
be able to liquidate its investment; (d) transferability of the Securities is
extremely limited; and (e) in the event of a disposition of the Securities, the
Subscriber could sustain the loss of its entire investment.

 

2.2           The Subscriber represents that the Subscriber is an “accredited
investor” as such term is defined in Rule 501 of Regulation D (“Regulation D”)
promulgated under the Securities Act of 1933, as amended (the “Securities Act”),
as indicated by the Subscriber’s responses to the questions contained in
[Article VII] hereof, and that the Subscriber is able to bear the economic risk
of an investment in the Securities. If the Subscriber is a natural person, the
Subscriber has reached the age of majority in the state or other jurisdiction in
which the Subscriber resides, has adequate means of providing for the
Subscriber’s current financial needs and contingencies, is able to bear the
substantial economic risks of an investment in the Securities for an indefinite
period of time, has no need for liquidity in such investment and, at the present
time, could afford a complete loss of such investment.

 

2.3           The Subscriber hereby acknowledges and represents that (a) the
Subscriber has sufficient knowledge and experience in business and financial
matters, prior investment experience, including investment in securities that
are non-listed, unregistered and/or not traded on a national securities
exchange, or the Subscriber has employed the services of a “purchaser
representative” (as defined in Rule 501 of Regulation D), attorney and/or
accountant to read all of the documents furnished or made available by the
Company both to the Subscriber and to all other prospective investors in the
Securities in order to evaluate the merits and risks of such an investment on
the Subscriber’s behalf; (b) the Subscriber recognizes the highly speculative
nature of this investment; and (c) the Subscriber is able to bear the economic
risk that the Subscriber hereby assumes.

 

2.4           The Subscriber hereby acknowledges receipt and careful review of
this Agreement and the Replacement Note, and hereby represents that the
Subscriber has been furnished by the Company with all information regarding the
Company, the terms and conditions of the proposed transaction and any additional
information that the Subscriber, its purchaser representative, attorney and/or
accountant has requested or desired to know, and has been afforded the
opportunity to ask questions of and receive answers from duly authorized
officers or other representatives of the Company concerning the Company and the
terms and conditions of the proposed transaction.

 

2.5           (a)          To the extent necessary, the Subscriber has retained,
at its own expense, and relied upon appropriate professional advice regarding
the investment, tax and legal merits and consequences of this Agreement and the
purchase of the Securities hereunder. The Subscriber disclaims reliance on any
statements made or information provided by any person or entity in the course of
Subscriber’s consideration of an investment in the Securities.

 

(b)          The Subscriber represents that (i) the Subscriber was contacted
regarding the sale of the Securities by the Company (or an authorized agent or
representative of the Company) with whom the Subscriber had a prior substantial
pre-existing relationship and (ii) no Securities were offered or sold to it by
means of any form of general solicitation or general advertising, and in
connection therewith, the Subscriber did not (A) receive or review any
advertisement, article, notice or other communication published in a newspaper
or magazine or similar media or broadcast over television or radio, whether
closed circuit, or generally available; or (B) attend any seminar meeting or
industry investor conference whose attendees were invited by any general
solicitation or general advertising.

 

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2.6           The Subscriber hereby represents that the Subscriber, either by
reason of the Subscriber’s business or financial experience or the business or
financial experience of the Subscriber’s professional advisors (who are
unaffiliated with and not compensated by the Company, Coronado or any affiliate
or selling agent of the Company or Coronado, directly or indirectly), has the
capacity to protect the Subscriber’s own interests in connection with the
transaction contemplated hereby.

 

2.7           The Subscriber hereby acknowledges that the transactions proposed
herein have not been reviewed by the United States Securities and Exchange
Commission (the “SEC”) nor any state regulatory authority since such
transactions are intended to be exempt from the registration requirements of
Section 5 of the Securities Act pursuant to Regulation D promulgated thereunder.
The Subscriber understands that the Securities have not been registered under
the Securities Act or under any state securities or “blue sky” laws and agrees
not to sell, pledge, assign or otherwise transfer or dispose of the Securities
unless they are registered under the Securities Act and under any applicable
state securities or “blue sky” laws or unless an exemption from such
registration is available.

 

2.8           The Subscriber understands that the Securities have not been
registered under the Securities Act or any state securities laws by reason of a
claimed exemption under the provisions of the Securities Act and such state
securities laws that depends, in part, upon the Subscriber’s investment
intention.

 

2.9           The Subscriber understands that there is no public market for the
Securities and that no market may develop for any of such Securities. The
Subscriber understands that even if a public market develops for such
Securities, Rule 144 (“Rule 144”) promulgated under the Securities Act requires
for non-affiliates, among other conditions, a one-year holding period prior to
the resale (in limited amounts) of securities acquired in a non-public offering
without having to satisfy the registration requirements under the Securities
Act. The Subscriber understands and hereby acknowledges that[, except as set
forth in Article V below,] the Company is under no obligation to register any of
the Securities under the Securities Act or any state securities or “blue sky”
laws.

 

2.10         The Subscriber consents to the placement of a legend on any
certificate or other document evidencing the Securities that such Securities
have not been registered under the Securities Act or any state securities or
“blue sky” laws and setting forth or referring to the restrictions on
transferability and sale thereof contained in this Agreement. The Subscriber is
aware that the Company will make a notation in its appropriate records with
respect to the restrictions on the transferability of such Securities. The
legend to be placed on each certificate shall be in form substantially similar
to the following:

 

“THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE UNITED
STATES SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”) OR ANY STATE SECURITIES OR
“BLUE SKY LAWS”, AND MAY NOT BE OFFERED, SOLD, TRANSFERRED, ASSIGNED, PLEDGED OR
HYPOTHECATED ABSENT AN EFFECTIVE REGISTRATION THEREOF UNDER SUCH ACT, OR UNLESS
THE COMPANY HAS RECEIVED AN OPINION OF COUNSEL, REASONABLY SATISFACTORY TO THE
COMPANY AND ITS COUNSEL, THAT SUCH REGISTRATION IS NOT REQUIRED.”

 

2.11         The Subscriber hereby represents that the address of the Subscriber
furnished by Subscriber on the signature page hereof is the Subscriber’s
principal residence if Subscriber is an individual or its principal business
address if it is a corporation or other entity.

 

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2.12         The Subscriber represents that the Subscriber has full power and
authority (corporate, statutory and otherwise) to execute and deliver this
Agreement and to purchase the Securities. This Agreement constitutes the legal,
valid and binding obligation of the Subscriber, enforceable against the
Subscriber in accordance with its terms.

 

2.13         If the Subscriber is a corporation, partnership, limited liability
company, trust, employee benefit plan, individual retirement account, Keogh
Plan, or other tax-exempt entity, (a) it is authorized and qualified to invest
in the Company and the person signing this Agreement on behalf of such entity
has been duly authorized by such entity to do so and (b) it is duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
organization.

 

2.14         The Subscriber acknowledges that if he or she is a Registered
Representative of a Financial Industry Regulatory Authority (“FINRA”) member
firm, he or she must give such firm the notice required by NASD Rule 3050,
receipt of which must be acknowledged by such firm in [Section 7.3] below.

 

2.15         (a)          The Subscriber agrees not to issue any public
statement with respect to the Subscriber’s investment or proposed investment in
the Company or the terms of any agreement or covenant between them and the
Company without the Company’s prior written consent, except such disclosures as
may be required under applicable law or under any applicable order, rule or
regulation.

 

(b)          The Company agrees not to disclose the names, addresses or any
other information about the Subscriber, except as required by law.

 

2.16         The Subscriber represents and warrants that it has not engaged,
consented to or authorized any broker, finder or intermediary to act on its
behalf, directly or indirectly, as a broker, finder or intermediary in
connection with the transactions contemplated by this Agreement. The Subscriber
hereby agrees to indemnify and hold harmless the Company from and against all
fees, commissions or other payments owing to any such person or firm acting on
behalf of such Subscriber hereunder.

 

2.17         The Subscriber agrees to hold the Company and its directors,
officers, employees, affiliates, controlling persons and agents and their
respective heirs, representatives, successors and assigns harmless and to
indemnify them against all liabilities, costs and expenses incurred by them as a
result of (a) any sale or distribution of the Securities by the Subscriber in
violation of the Securities Act or any applicable state or foreign securities or
“blue sky” laws; or (b) any false representation or warranty or any breach or
failure by the Subscriber to comply with any covenant made by the Subscriber in
this Agreement (including the Confidential Investor Questionnaire contained in
[Article VII] herein) or any other document furnished by the Subscriber to any
of the foregoing in connection with this transaction; provided, however, that in
no event shall any indemnity under this Section 2.17 exceed the aggregate
principal amount of the [Replacement Note subscribed for by the Subscriber
pursuant to this Agreement]/[purchase price for the Securities hereunder],
except in the case of willful fraud by the Subscriber.

 

2.18         The Subscriber acknowledges that the information made available to
the Subscriber is confidential and non-public and agrees that all such
information shall be kept in confidence by the Subscriber and neither used by
the Subscriber for the Subscriber’s personal benefit (other than in connection
with this subscription) nor disclosed to any third party for any reason;
provided, however, that (a) the Subscriber may disclose such information to its
attorneys and advisors who may have a need for such information in connection
with providing advice to the Subscriber with respect to its investment in the
Company, so long as such affiliates and advisors have an obligation of
confidentiality, and (b) this obligation shall not apply to any such information
that (i) is part of the public knowledge or literature and readily accessible at
the date hereof, (ii) becomes part of the public knowledge or literature and
readily accessible by publication (except as a result of a breach of this
provision), or (iii) is received from third parties without an obligation of
confidentiality (except third parties who disclose such information in violation
of any confidentiality agreements or obligations, including, without limitation,
any subscription or other similar agreement entered into with the Company).

 

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2.19         The Subscriber represents that no authorization, approval, consent
or license of any person is required to be obtained for the purchase of the
Securities by the Subscriber, other than as have been obtained and are in full
force and effect.

 

2.20         The Subscriber represents that the representations, warranties and
agreements of the Subscriber contained herein and in any other writing delivered
in connection with the transactions contemplated hereby shall be true and
correct in all respects on the date hereof as if made on and as of such date and
shall survive the execution and delivery of this Agreement and the purchase of
the Securities. The Subscriber agrees that the Company and Coronado shall be
entitled to rely on the representations, warranties and agreements of the
Subscriber contained herein.

 

2.21        The Subscriber understands, acknowledges and agrees with the Company
that, except as otherwise set forth herein, the subscription hereunder is
irrevocable by the Subscriber, that, except as required by law, the Subscriber
is not entitled to cancel, terminate or revoke this Agreement or any agreements
of the Subscriber hereunder and that this Agreement and such other agreements
shall survive the death or disability of the Subscriber and shall be binding
upon and inure to the benefit of the parties and their heirs, executors,
administrators, successors, legal representatives and permitted assigns. If the
Subscriber is more than one person, the obligations of the Subscriber hereunder
shall be joint and several and the agreements, representations, warranties and
acknowledgments herein contained shall be deemed to be made by and be binding
upon each such person and his/her heirs, executors, administrators, successors,
legal representatives and permitted assigns.

 

2.22         The Subscriber understands, acknowledges and agrees with the
Company that the transactions proposed hereby are intended to be exempt from
registration under the Securities Act by virtue of the provisions of Regulation
D thereunder, which is in part dependent upon the truth, completeness and
accuracy of the representations and covenants made by the Subscriber in this
Agreement.

 

2.23        (a)          Any Subscriber subject to jurisdiction in the European
Economic Area (“EEA”) either (i) is a qualified investor for the purposes of
Directive 2003/71/EC of the European Parliament and the Council (a “Qualified
Investor”); that is, a person falling within Article 2.1(e)(i), (ii) or (iii) of
such directive or a person authorized by any such jurisdiction to be considered
as a qualified investor for the purposes of such directive, or (ii) it has
notified the Company in writing that it is not a Qualified Investor;

 

(b)          Any EEA Subscriber entering into this Agreement and acquiring
Securities is either (i) acting on its own account and not for the account of or
otherwise on behalf any other person or persons or (ii) if a Qualified Investor
in the United Kingdom, it is acting as an agent in the circumstances
contemplated in section 86(2) of the United Kingdom Financial Services and
Markets Act 2000;

 

(c)          Any Subscriber, if in the United Kingdom, is (a) a person falling
within Article 19(5) of the United Kingdom Financial Services and Markets Act
2000 (Financial Promotion) Order 2005 (“FPO”) or (b) a person falling within
Article 49(2)(a) to (d) of the FPO;

 

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(d)          Each Subscriber acknowledges that neither the Placement Agent (as
defined in the NPA) nor any person acting on its behalf is making any
recommendations to it or advising it regarding the suitability or merits of
purchasing the Securities or any transaction it may enter into in connection
with the offering of the Securities, and acknowledges that its participation in
the offering of Securities is on the basis that it is not and will not be a
client or customer of the Placement Agent and that neither the Placement Agent
nor any person acting on its behalf has any duties or responsibilities to it for
providing the protections afforded to their clients or customers or for
providing advice in relation to the offering of the Securities.

 

III.         REPRESENTATIONS BY AND COVENANTS OF THE COMPANY

 

The Company hereby represents and warrants to the Subscriber that:

 

3.1           Organization, Good Standing and Qualification. The Company is a
corporation duly organized, validly existing and in good standing under the laws
of the State of [ ____ ] and has full corporate power and authority to conduct
its business as currently conducted. The Company is duly qualified as a foreign
corporation to do business and is in good standing in every jurisdiction in
which the property owned or leased by it or the nature of the business conducted
by it makes such qualification necessary, except to the extent that the failure
to be so qualified or in good standing would not reasonably be expected to have,
individually or in the aggregate, a material adverse effect on the business,
operations, conditions (financial or otherwise), properties, assets or results
of operations of the Company (a “Material Adverse Effect”).

 

3.2           Capitalization and Voting Rights. The authorized, issued and
outstanding shares of the capital stock of the Company are as set forth in
Schedule [ ___ ] hereto, and all issued and outstanding shares of the Company
are validly issued, fully paid and nonassessable. Except as set forth on
Schedule [ __ ] hereto, there are no outstanding options, warrants, agreements,
convertible securities, preemptive rights or other rights to subscribe for or to
purchase any shares of capital stock of the Company. Except as set forth on
Schedule [ ____ ] hereto and as otherwise required by law, there are no
restrictions upon the voting or transfer of any of the shares of capital stock
of the Company pursuant to the Company’s [ _____ ] (the “Certificate of
Incorporation”), By-Laws or other governing documents or any agreement or other
instruments to which the Company is a party or by which the Company is bound.

 

3.3           Authorization; Enforceability. The Company has all corporate
right, power and authority to enter into this Agreement and to consummate the
transactions contemplated hereby. All corporate action on the part of the
Company, its directors and stockholders necessary for the (i) authorization,
execution, delivery and performance of this Agreement by the Company; and (ii)
authorization, sale, issuance and delivery of the Securities contemplated hereby
and the performance of the Company’s obligations hereunder has been taken. This
Agreement has been duly executed and delivered by the Company and constitutes a
legal, valid and binding obligation of the Company, enforceable against the
Company in accordance with its terms, subject to laws of general application
relating to bankruptcy, insolvency and the relief of debtors and rules of law
governing specific performance, injunctive relief or other equitable remedies,
and to limitations of public policy. The Securities, when issued and fully paid
for in accordance with the terms of this Agreement, will be validly issued. The
issuance and sale of the Securities contemplated hereby will not give rise to
any preemptive rights or rights of first refusal on behalf of any person which
have not been waived in connection with the transactions contemplated hereby.

 

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3.4           No Conflict; Governmental Consents.

 

(a)          Except as would not reasonably be expected to have a Material
Adverse Effect or have been waived, the execution and delivery by the Company of
this Agreement and the consummation of the transactions contemplated hereby will
not result in the violation of any law, statute, rule, regulation, order, writ,
injunction, judgment or decree of any court or governmental authority to or by
which the Company is bound, or of any provision of the Certificate of
Incorporation or By-Laws of the Company, and will not conflict with, or result
in a breach or violation of, any of the terms or provisions of, or constitute
(with due notice or lapse of time or both) a default under, any lease, loan
agreement, mortgage, security agreement, trust indenture or other agreement or
instrument to which the Company is a party or by which it is bound or to which
any of its properties or assets is subject, nor result in the creation or
imposition of any lien upon any of the properties or assets of the Company.

 

(b)          No consent, approval, authorization or other order of any
governmental authority or other third party is required to be obtained by the
Company in connection with the authorization, execution and delivery of this
Agreement or with the authorization, issue and sale of the Securities, except as
have been obtained or such filings as may be required to be made with the SEC
and with any state or foreign blue sky or securities regulatory authority
relating to an exemption from registration thereunder.

 

3.5           Licenses. Except as would not reasonably be expected to have a
Material Adverse Effect, the Company has sufficient licenses, permits and other
governmental authorizations currently required for the conduct of its business
or ownership of properties and is in all material respects complying therewith.

 

3.6           Litigation. The Company knows of no pending or threatened legal or
governmental proceedings against the Company which (i) adversely questions the
validity of this Agreement or any agreements related to the transactions
contemplated hereby or the right of the Company to enter into any of such
agreements, or to consummate the transactions contemplated hereby or thereby or
(ii) could, if there were an unfavorable decision, have a Material Adverse
Effect. There is no action, suit, proceeding or investigation by the Company
currently pending in any court or before any arbitrator or that the Company
intends to initiate.

 

3.7           Investment Company. The Company is not an “investment company”
within the meaning of such term under the Investment Company Act of 1940, as
amended, and the rules and regulations of the SEC thereunder.

 

3.8           Financial Statements. The financial statements of the Company
provided to the Subscriber (the “Financial Statements”) fairly present in all
material respects the financial condition and results of operations of the
Company at the dates and for the periods indicated and have been prepared in
conformity with generally accepted accounting principles in the United States
(“GAAP”) consistently applied throughout the periods covered thereby, except as
may be otherwise specified in such Financial Statements or the notes thereto,
and except that unaudited financial statements do not contain all footnotes and
do not contain the cash flow statement required by GAAP, and fairly present in
all material respects the financial condition of the Company as of the dates
thereof and the results of operations and cash flows for the periods then ended,
subject, in the case of unaudited statements, to normal year-end audit
adjustments. Since the date of the most recent balance sheet included as part of
the Financial Statements, there has not been to the Company’s knowledge: (i) any
change in the assets, liabilities, financial condition or operations of the
Company from that reflected in the Financial Statements, other than changes in
the ordinary course of business, none of which individually or in the aggregate
would reasonably be expected to have a Material Adverse Effect; or (ii) any
other event or condition of any character that, either individually or
cumulatively, would reasonably be expected to have a Material Adverse Effect,
except for the expenses incurred in connection with the transactions
contemplated by this Agreement.

 

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3.9           Title to Properties and Assets; Liens, Etc. The Company has good
and marketable title to its properties and assets, including the properties and
assets reflected in the most recent balance sheet included in the Financial
Statements, and good title to its leasehold estates, in each case subject to no
mortgage, pledge, lien, lease, encumbrance or charge, other than (a) those
resulting from taxes which have not yet become delinquent; (b) liens and
encumbrances which do not materially detract from the value of the property
subject thereto or materially impair the operations of the Company; (c) those
that have otherwise arisen in the ordinary course of business; and (d) those
that would not reasonably be expected to have a Material Adverse Effect. The
Company is in compliance with all material terms of each lease to which it is a
party or is otherwise bound.

 

3.10         Patents and Trademarks. Except as would not reasonably be expected
to have a Material Adverse Effect or as disclosed in Schedule [ ___ ] hereto, to
the Company’s knowledge, (i) the Company owns or possesses adequate licenses or
other rights to use all patents, patent applications, trademarks, trademark
applications, service marks, service mark applications, trade names, copyrights,
manufacturing processes, formulae, trade secrets, licenses, customer lists and
know how (collectively, “Intellectual Property”), (ii) the Company has not
received any communications alleging that the Company has violated or, by
conducting its business as conducted, would violate any of the patents,
trademarks, service marks, trade names, copyrights or trade secrets or other
proprietary rights or processes of any other person or entity, nor is the
Company aware of any basis therefor and (iii) no claim is pending or, to the
Company’s knowledge after due inquiry, threatened to the effect that any
Intellectual Property owned or licensed by the Company, or which the Company
otherwise has the right to use, is invalid or unenforceable by the Company.

 

3.11         Obligations to Related Parties. Except as disclosed in Schedule [
___ ] hereto or as would not reasonably be expected to have a Material Adverse
Effect, there are no obligations of the Company to officers, directors,
stockholders, or employees of the Company other than (a) for payment of salary
or other compensation for services rendered, (b) reimbursement for reasonable
expenses incurred on behalf of the Company, (c) standard indemnification
provisions in the Certificate of Incorporation and By-laws, and (d) for other
standard employee benefits made generally available to all employees (including
stock option agreements outstanding under any stock option plan approved by the
Board of Directors of the Company). Except as may be disclosed in the Financial
Statements, the Company is not a guarantor or indemnitor of any indebtedness of
any other person, firm or corporation other than its wholly owned subsidiaries,
if any.

 

3.12         Employee Relations; Employee Benefit Plans. The Company is not a
party to any collective bargaining agreement or a union contract. The Company
believes that its relations with its employees are good. No executive officer
(as defined in Rule 501(f) of the Securities Act) of the Company has notified
the Company that such officer intends to leave the Company or otherwise
terminate such officer’s employment with the Company. The Company is in
compliance with all federal, state, local and foreign laws and regulations
respecting employment and employment practices, terms and conditions of
employment and wages and hours, except where failure to be in compliance would
not, either individually or in the aggregate, reasonably be expected to result
in a Material Adverse Effect. Except as disclosed in Schedule [ ___ ] hereto,
the Company does not maintain any compensation or benefit plan, agreement,
arrangement or commitment (including, but not limited to, “employee benefit
plans”, as defined in Section 3(3) of the Employee Retirement Income Security
Act of 1974, as amended (“ERISA”)) for any present or former employees, officers
or directors of the Company or with respect to which the Company has liability
or makes or has an obligation to make contributions, other than any such plans,
agreements, arrangements or commitments made generally available to the
Company’s employees.

 

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3.13         Environmental Laws. To its knowledge, the Company (i) is in
compliance with any and all Environmental Laws (as hereinafter defined), (ii)
has received all permits, licenses or other approvals required of it under
applicable Environmental Laws to conduct its business and (iii) is in compliance
with all terms and conditions of any such permit, license or approval where, in
each of the foregoing clauses (i), (ii) and (iii), the failure to so comply
would reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect. The term “Environmental Laws” means all federal, state,
local or foreign laws relating to pollution or protection of human health or the
environment (including, without limitation, ambient air, surface water,
groundwater, land surface or subsurface strata), including, without limitation,
laws relating to emissions, discharges, releases or threatened releases of
chemicals, pollutants, contaminants, or toxic or hazardous substances or wastes
(collectively, “Hazardous Materials”) into the environment, or otherwise
relating to the manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling of Hazardous Materials, as well as all
authorizations, codes, decrees, demands or demand letters, injunctions,
judgments, licenses, notices or notice letters, orders, permits, plans or
regulations issued, entered, promulgated or approved thereunder.

 

3.14         Tax Status. To the best of the Company’s knowledge, the Company (i)
has made or filed all federal and state income and all other tax returns,
reports and declarations required by any jurisdiction to which it is subject,
(ii) has paid all taxes and other governmental assessments and charges that are
material in amount, shown or determined to be due on such returns, reports and
declarations, except those being contested in good faith and (iii) has set aside
on its books provision reasonably adequate for the payment of all taxes for
periods subsequent to the periods to which such returns, reports or declarations
apply. There are no unpaid taxes in any material amount claimed to be due by the
taxing authority of any jurisdiction, and the Company knows of no basis for any
such claim.

 

3.15         Absence of Certain Changes. Since [ _____ ], there has been no
change in the business, operations, conditions (financial or otherwise),
prospects, assets or results of operations of the Company or any of its
subsidiaries that could reasonably be expected to have a Material Adverse
Effect.

 

3.16         Disclosure. The information set forth herein as of the date hereof
contains no untrue statement of a material fact nor omits to state a material
fact necessary in order to make the statements contained therein, in light of
the circumstances under which they were made, not misleading.

 

3.17         Indemnification. The Company agrees to hold the Subscriber and its
directors, officers, employees, affiliates, controlling persons and agents and
their respective heirs, representatives, successors and assigns harmless and to
indemnify them against all liabilities, costs and expenses incurred by them as a
result of (a) any sale or distribution of the Securities by the Company in
violation of the Securities Act or any applicable state or foreign securities or
“blue sky” laws; or (b) any false representation or warranty or any breach or
failure by the Company to comply with any covenant made by the Company in this
Agreement or any other document furnished by the Company to any of the foregoing
in connection with this transaction; provided, however, that in no event shall
any indemnity under this Subsection 3.18 exceed the aggregate principal amount
of the Replacement Note, except in the case of willful fraud by the Subscriber.

 

3.18         Fund Investors. In the event Subscriber is a Fund, the Fund
investors shall be permitted to rely on the representations and warranties of
the Company set forth in this Section 3 in connection with such investors’
investment in the Fund. “Fund” means an entity whose sole business is the
purchase of the Securities.

 

9

 

 

3.19         Solvency. Based on the financial condition of the Subscriber as of
the Closing Date, after giving effect to the receipt by the Subscriber of the
proceeds from the sale of the Securities hereunder: (i) the fair saleable value
of the Subscriber’s assets exceeds the amount that will be required to be paid
on or in respect of the Subscriber’s existing debts and other liabilities
(including known contingent liabilities) as they mature, (ii) the Subscriber’s
assets do not constitute unreasonably small capital to carry on its business as
now conducted and as proposed to be conducted including its capital needs taking
into account the particular capital requirements of the business conducted by
the Subscriber, and projected capital requirements and capital availability
thereof, and (iii) the current cash flow of the Subscriber, together with the
proceeds the Subscriber would receive, were it to liquidate all of its assets,
after taking into account all anticipated uses of the cash, would be sufficient
to pay all amounts on or in respect of its liabilities when such amounts are
required to be paid. The Subscriber does not intend to incur debts beyond its
ability to pay such debts as they mature (taking into account the timing and
amounts of cash to be payable on or in respect of its debt). The Subscriber has
no knowledge of any facts or circumstances which lead it to believe that it will
file for reorganization or liquidation under the bankruptcy or reorganization
laws of any jurisdiction within one year from the Closing Date. For the purposes
of this Agreement, “Indebtedness” means (x) any liabilities for borrowed money
or amounts owed in excess of $50,000 (other than trade accounts payable incurred
in the ordinary course of business), (y) all guaranties, endorsements and other
contingent obligations in respect of indebtedness of others, whether or not the
same are or should be reflected in the Subscriber’s balance sheet (or the notes
thereto), except guaranties by endorsement of negotiable instruments for deposit
or collection or similar transactions in the ordinary course of business; and
(z) the present value of any lease payments in excess of $50,000 due under
leases required to be capitalized in accordance with GAAP. The Subscriber is not
in default with respect to any Indebtedness.

 

3.20         Compliance with Laws. The Subscriber has complied and remains in
compliance with all applicable statutes, laws, rules, regulations and orders of
all governmental authorities relating to drug development and commercialization,
with respect to the conduct of the Subscriber’s biopharmaceutical business,
including those enforced by the United States Food and Drug Administration and
comparable state regulatory authorities and regulatory authorities outside the
United States, except where the failure to so comply would not have a Material
Adverse Effect.

 

IV.          CONDITIONS TO OBLIGATIONS OF THE PARTIES

 

4.1         The Company’s obligation to issue the Securities at the Closing to
the Subscriber is subject to the fulfillment on or prior to the Closing of the
following conditions, which conditions may be waived at the option of the
Company to the extent permitted by law:

 

(a)          The representations and warranties made by the Subscriber in
[Article II] hereof shall be true and correct in all material respects.

 

(b)          All covenants, agreements and conditions contained in this
Agreement to be performed by such Subscriber on or prior to the date of the
Closing shall have been performed or complied with in all material respects.

 

(c)          There shall not then be in effect any legal or other order
enjoining or restraining the transactions contemplated by this Agreement.

 

10

 

 

(d)          There shall not be in effect any law, rule or regulation
prohibiting or restricting such sale or requiring any consent or approval of any
person, which shall not have been obtained, to issue the Securities (except as
otherwise provided in this Agreement).

 

4.2           The Subscriber’s obligation to purchase the Securities at the
Closing is subject to the fulfillment on or prior to the Closing of the
following conditions, which conditions may be waived at the option of the
Subscriber to the extent permitted by law:

 

(a)          The representations and warranties made by the Company in [Article
III] hereof shall be true and correct in all material respects.

 

(b)          All covenants, agreements and conditions contained in this
Agreement to be performed by the Company on or prior to the date of the Closing
shall have been performed or complied with in all material respects.

 

(c)          There shall not then be in effect any legal or other order
enjoining or restraining the transactions contemplated by this Agreement.

 

(d)          There shall not be in effect any law, rule or regulation
prohibiting or restricting such sale or requiring any consent or approval of any
person, which shall not have been obtained, to issue the Securities (except as
otherwise provided in this Agreement).

 

(e)          The Placement Agent shall have received an Officer’s Certificate
addressed to the Subscriber, signed by the authorized officer of the Company and
dated as of the Closing. The certificate shall state, among other things, that
the representations and warranties contained herein are true and accurate in all
material respects as of the date hereof and the Placement Agent shall be
entitled to rely on such representations of the Company as if they were made
directly to the Placement Agent.

 

V.           [REGISTRATION RIGHTS1

 

5.1           Definitions. As used in this Agreement, the following terms shall
have the following meanings:

 

(a)           The term “Holder” shall mean any holder of Registrable Securities.

 

(b)           The terms “register”, “registered” and “registration” refer to a
registration effected by preparing and filing a registration statement or
similar document in compliance with the Securities Act, and the declaration or
order of effectiveness of such registration statement or document.

 

(c)           The term “Registrable Securities” shall mean (i) the common stock
underlying the Warrant (the “Shares”); and (ii) any shares of equity securities
issuable (or issuable upon the conversion or exercise of any warrant, right or
other security that is issued) pursuant to a dividend or other distribution with
respect to or in replacement of any Shares; provided, however, that securities
shall only be treated as Registrable Securities if and only for so long as they
(A) have not been disposed of pursuant to a registration statement declared
effective by the SEC; (B) have not been sold in a transaction exempt from the
registration and prospectus delivery requirements of the Securities Act so that
all transfer restrictions and restrictive legends with respect thereto are
removed upon the consummation of such sale; (C) are held by a Holder or a
permitted transferee of a Holder pursuant to Section 5.11; or (D) may not be
disposed of under Rule 144 under the Securities Act without restriction.

 

 

1 Registration rights available only in the event this Agreement is for the sale
of a warrant to purchase shares of the Company’s equity securities.

 

11

 

 

(d)           The term “Trading Event” means the first date on which the
Company’s Common Stock trades on a national securities exchange or the
Over-the-Counter Bulletin Board.         

 

5.2         Piggyback Registration.

 

(a)          The Company agrees that if, at any time, and from time to time,
after the earlier to occur of (i) an initial public offering of the Company’s
equity securities pursuant to a registration statement declared effective by the
SEC (“IPO”) and (ii) a Trading Event, the Board of Directors of the Company (the
“Board”) authorizes the filing of a registration statement under the Securities
Act (other than the filing of a registration statement pursuant to the IPO or a
registration statement on Form S-8, Form S-4 or any other form that does not
include substantially the same information as would be required in a form for
the general registration of securities) in connection with the proposed offer of
any of its securities by it or any of its stockholders, the Company shall:
(A) promptly notify each Holder that such registration statement will be filed
and that the Registrable Securities then held by such Holder will be included in
such registration statement at such Holder’s request; (B) subject to
Section 5.7, cause such registration statement to cover all of such Registrable
Securities issued to such Holder for which such Holder requests inclusion;
(C) use reasonable best efforts to cause such registration statement to become
effective as soon as practicable; and (D) take all other reasonable action
necessary under any Federal or state law or regulation of any governmental
authority to permit all such Registrable Securities that have been issued to
such Holder to be sold or otherwise disposed of, and will maintain such
compliance with each such Federal and state law and regulation of any
governmental authority for the period necessary for such Holder to promptly
effect the proposed sale or other disposition.

 

(b)          Notwithstanding any other provision of this Section 5.2, the
Company may at any time, abandon or delay any registration commenced by the
Company. In the event of such an abandonment by the Company, the Company shall
not be required to continue registration of shares requested by the Holder for
inclusion and the Holder shall retain the right to request inclusion of shares
as set forth above.

 

5.3           Demand Registration.

 

(a)          Registration on Request.

 

(i)          The Company agrees that, at any time, and from time to time, but at
least 30 days after the earlier to occur of (A) an IPO and (B) a Trading Event,
Holders of a majority of the Registrable Securities may make a written request
that the Company effect the registration under the Securities Act of outstanding
Registrable Securities; provided that such requested registration would cover at
least 51% of the Registrable Securities owned by all the Holders at such time;
and provided, further, that the Holders shall be entitled to no more than one
such demand registration; and provided, further, that the Company agrees to
register the Registrable Securities within 60 days of the request, and that the
registration is declared effective by the SEC within 120 after the request.

 

(ii)         The Company further agrees that if, at any time, and from time to
time, after the Company has qualified for the use of Form S-3 or any successor
form, one or more of the Holders desire to effect the registration under the
Securities Act on Form S-3 or any successor form (“Short-Form Registration”) of
outstanding Registrable Securities, such Holder(s) may make a written request
that the Company effect a Short-Form Registration; provided, that the Company
shall not be required to effect more than one Short Form Registration in any
12-month period.

 

12

 

 

(iii)        Each request made by one or more of the Holders pursuant to
subsection (i) or (ii) above (the “Initiating Holders”) will specify the number
of shares of Registrable Securities proposed to be sold and will also specify
the intended method of disposition thereof. Following receipt of any such
request, the Company shall promptly notify all Holders other than the Initiating
Holders of receipt of such request and the Company shall use its best efforts to
file, within 60 days of such request, a registration statement under the
Securities Act with respect to the Registrable Securities that the Company has
been so requested to register in the request by the Initiating Holders (and in
all notices received by the Company from such other Holders within 30 days after
the giving of such notice by the Company), to the extent necessary to permit the
disposition (in accordance with the intended methods thereof as aforesaid) of
the Registrable Securities to be registered. If such method of disposition shall
be an underwritten public offering, the Holders of a majority of the shares of
Registrable Securities to be sold in such offering may designate the managing
underwriter of such offering, subject to the approval of the Company, which
approval shall not be unreasonably withheld or delayed. The Holders will be
permitted to withdraw Registrable Securities from a registration at any time
prior to the effective date of such registration; provided the remaining number
of shares of Registrable Securities subject to a requested registration is not
less than the minimum amount required pursuant to this Section 5.3.

 

(b)          Limitations on Demand Registration. Notwithstanding Section 5.3(a),
the Company shall not be obligated to file a registration statement relating to
a registration request pursuant to this Section 5.3 at any time during the
180-day period immediately following the effective date of any registration
statement filed by the Company (other than on Form S-8 or S-4 or any other form
that does not include substantially the same information as would be required in
a form for the general registration of securities); and if the Board determines,
in its good faith judgment, that the Company (i) should not file any
registration statement otherwise required to be filed pursuant to Section 5.3 or
(ii) should withdraw any such previously filed registration statement because
the Board determines, in its good faith judgment, that the Company is in the
possession of material nonpublic information required to be disclosed in such
registration statement or an amendment or supplement thereto, the disclosure of
which in such registration statement would be materially disadvantageous to the
Company (a “Disadvantageous Condition”), the Company shall be entitled to
postpone for the shortest reasonable period of time (but not exceeding 90 days
from the date of the determination), the filing of such registration statement
or, if such registration statement has already been filed, may suspend or
withdraw such registration statement and shall promptly give the Holders written
notice of such determination and an approximation of the anticipated delay. Upon
the receipt of any such notice, such Holders shall forthwith discontinue use of
the prospectus contained in such registration statement and, if so directed by
the Company, shall deliver to the Company all copies of the prospectus then
covering such Registrable Securities current at the time of receipt of such
notice (or, if no registration statement has yet been filed, all drafts of the
prospectus covering such Registrable Securities). If any Disadvantageous
Condition shall cease to exist, the Company shall promptly notify the Holders to
such effect. If any registration statement shall have been withdrawn, the
Company shall, at such time as it is possible or, if earlier, at the end of the
90-day period following such withdrawal, file a new registration statement
covering the Registrable Securities that were covered by such withdrawn
registration statement. The Company’s right to delay a request for registration
or to withdraw a registration statement pursuant to this Section 5.3 may not be
exercised more than once in any one-year period.

 

13

 

 

(c)          Effect of Failure to File and Obtain and Maintain Effectiveness of
any Registration Statement. If (i) a registration statement covering the resale
of all of the Registrable Securities required to be covered thereby and required
to be filed by the Company pursuant to Section 5.3(a)(i) of this Agreement (a
“Demand Registration Statement”) is (A) not filed with the SEC on or before the
deadline set forth in Section 5.3(a)(i) for such Demand Registration Statement
(a “Filing Failure”) or (B) not declared effective by the SEC on or before the
deadline set forth in Section 5.3(a)(i) (an “Effectiveness Failure”), (ii) on
any day after the effective date of a Demand Registration Statement sales of all
of the Registrable Securities required to be included on such Demand
Registration Statement cannot be made pursuant to such Demand Registration
Statement (including, without limitation, because of a failure to keep such
Demand Registration Statement effective, a failure to disclose such information
as is necessary for sales to be made pursuant to such Demand Registration
Statement, a suspension or delisting of (or a failure to timely list) the shares
of common stock on the stock’s public market, or a failure to register a
sufficient number of shares of common stock or by reason of a stop order) or the
prospectus contained therein is not available for use for any reason (a
“Maintenance Failure”), or (iii) if a Demand Registration Statement is not
effective for any reason or the prospectus contained therein is not available
for use for any reason, the Company fails to file with the SEC any required
reports under Section 13 or 15(d) of the Exchange Act such that it is not in
compliance with Rule 144(c)(1) (a “Current Public Information Failure”) as a
result of which any of the Holders are unable to sell Registrable Securities
without restriction under Rule 144 (including, without limitation, volume
restrictions), then, as partial relief for the damages to any Holder by reason
of any such delay in, or reduction of, its ability to sell the underlying shares
of common stock (which remedy shall not be exclusive of any other remedies
available at law or in equity), the Company shall pay to each holder of
Registrable Securities relating to such Demand Registration Statement an amount
in cash equal to one percent (1%) of such Holder’s original purchase price
pursuant to the Warrant (1) on the date of such Filing Failure, Effectiveness
Failure, Maintenance Failure or Current Public Information Failure, as
applicable, and (2) on every thirty (30) day anniversary of (I) a Filing Failure
until such Filing Failure is cured; (II) an Effectiveness Failure until such
Effectiveness Failure is cured; (III) a Maintenance Failure until such
Maintenance Failure is cured; and (IV) a Current Public Information Failure
until the earlier of (i) the date such Current Public Information Failure is
cured and (ii) such time that such public information is no longer required
pursuant to Rule 144 (in each case, pro rated for periods totaling less than
thirty (30) days). The payments to which a holder of Registrable Securities
shall be entitled pursuant to this Section 5.3(c) are referred to herein as
“Registration Delay Payments.” Following the initial Registration Delay Payment
for any particular event or failure (which shall be paid on the date of such
event or failure, as set forth above), without limiting the foregoing, if an
event or failure giving rise to the Registration Delay Payments is cured prior
to any thirty (30) day anniversary of such event or failure, then such
Registration Delay Payment shall be made on the third (3rd) business day after
such cure. In the event the Company fails to make Registration Delay Payments in
a timely manner in accordance with the foregoing, such Registration Delay
Payments shall bear interest at the rate of one percent (1%) per month (prorated
for partial months) until paid in full. Notwithstanding the foregoing, no
Registration Delay Payments shall be owed to a Holder (other than with respect
to a Maintenance Failure resulting from a suspension or delisting of (or a
failure to timely list) the shares of common on the stock’s public market) with
respect to any period during which all of such Holder’s Registrable Securities
may be sold by such Holder without restriction under Rule 144 (including,
without limitation, volume restrictions) and without the need for current public
information required by Rule 144(c)(1). Notwithstanding the foregoing, the
maximum aggregate Registration Delay Payment payable pursuant to this Section
5.3(c) shall not exceed six percent (6%) of such Holder’s original purchase
price pursuant to the Warrant.

 

5.4           Registration Procedures. Whenever required under this Article V to
include Registrable Securities in a Company registration statement, the Company
shall, as expeditiously as reasonably possible:

 

14

 

 

(a)           Use reasonable best efforts to (i) cause such registration
statement to become effective, and (ii) cause such registration statement to
remain effective in accordance with Section 5.12 hereof. The Company will also
use its reasonable best efforts to, during the period that such registration
statement is required to be maintained hereunder, file such post-effective
amendments and supplements thereto as may be required by the Securities Act and
the rules and regulations thereunder or otherwise to ensure that the
registration statement does not contain any untrue statement of material fact or
omit to state a fact required to be stated therein or necessary to make the
statements contained therein, in light of the circumstances under which they are
made, not misleading; provided, however, that if applicable rules under the
Securities Act governing the obligation to file a post-effective amendment
permits, in lieu of filing a post-effective amendment that (i) includes any
prospectus required by Section 10(a)(3) of the Securities Act or (ii) reflects
facts or events representing a material or fundamental change in the information
set forth in the registration statement, the Company may incorporate by
reference information required to be included in (i) or (ii) in the preceding
sentence to the extent such information is contained in periodic reports filed
pursuant to Section 13 or 15(d) of the Exchange Act in the registration
statement. In the event that the Company becomes qualified for the use of Form
S-3 or any successor form at a time when any registration statement on any other
Form which includes Registrable Securities is required to be maintained
hereunder, the Company shall, upon the request of any selling Holder, subject to
Section 5.5, (i) as expeditiously as reasonably possible, use reasonable best
efforts to cause a Short-Form Registration covering such Registrable Securities
to become effective and (ii) comply with each of the other requirements of this
Section 5.4 which may be applicable thereto. Upon the effectiveness of such
Short-Form Registration, the Company shall be relieved of its obligations
hereunder to keep in effect the registration statement which initially covered
the Registrable Securities included in such Short-Form Registration.

 

(b)           Prepare and file with the SEC such amendments and supplements to
such registration statement, and the prospectus used in connection with such
registration statement, as may be necessary to comply with the provisions of the
Securities Act with respect to the disposition of all securities covered by such
registration statement.

 

(c)           Furnish to the selling Holders such numbers of copies of a
prospectus, including a preliminary prospectus as amended or supplemented from
time to time, in conformity with the requirements of the Securities Act, and
such other documents as they may reasonably request in order to facilitate the
disposition of Registrable Securities owned by them.

 

(d)           Use reasonable best efforts to register and qualify the securities
covered by such registration statement under the state securities laws of such
jurisdictions as shall be reasonably requested by the selling Holders; provided,
however, that the Company shall not be required in connection therewith or as a
condition thereto to qualify to do business or to file a general consent to
service of process in any such states, unless the Company is already subject to
service in such jurisdiction and except as may be required by the Securities
Act.

 

(e)           In the event of any underwritten public offering, enter into and
perform its obligations under an underwriting agreement, in usual and customary
form, with the managing underwriter of such offering. Each selling Holder
participating in such underwriting shall also enter into and perform its
obligations under such an agreement.

 

(f)           Notify each Holder of Registrable Securities covered by such
registration statement, at any time when a prospectus relating thereto is
required to be delivered under the Securities Act, (i) when the registration
statement or any post-effective amendment and supplement thereto has become
effective; (ii) of the issuance by the SEC of any stop order or the initiation
of proceedings for that purpose (in which event the Company shall make every
effort to obtain the withdrawal of any order suspending effectiveness of the
registration statement at the earliest possible time or prevent the entry
thereof); (iii) of the receipt by the Company of any notification with respect
to the suspension of the qualification of the Registrable Securities for sale in
any jurisdiction or the initiation of any proceeding for such purpose; and
(iv) of the happening of any event as a result of which the prospectus included
in such registration statement, as then in effect, includes an untrue statement
of a material fact or omits to state a material fact required to be stated
therein or necessary to make the statements therein not misleading in the light
of the circumstances then existing (and each Holder agrees to suspend any
trading under the registration statement until such condition is abated).

 

15

 

 

(g)           Cause all such Registrable Securities registered hereunder to be
listed on each securities exchange or quotation service on which similar
securities issued by the Company are then listed or quoted or, if no such
similar securities are listed or quoted on a securities exchange or quotation
service, apply for qualification and use reasonable best efforts to qualify such
Registrable Securities for inclusion on a national securities exchange or the
Over-the-Counter Bulletin Board.

 

(h)           Provide a transfer agent and registrar for all Registrable
Securities registered hereunder and a CUSIP number for all such Registrable
Securities, in each case not later than the effective date of such registration.

 

(i)           Cooperate with the selling Holders and the managing underwriters,
if any, to facilitate the timely preparation and delivery of certificates
representing the Registrable Securities to be sold, which certificates will not
bear any restrictive legends; and enable such Registrable Securities to be in
such denominations and registered in such names as the managing underwriters, if
any, shall request at least two business days prior to any sale of the
Registrable Securities to the underwriters.

 

5.5           Furnish Information. It shall be a condition precedent to the
obligation of the Company to take any action pursuant to this Article V with
respect to the Registrable Securities of any Holder that such Holder shall
furnish to the Company such information regarding the Holder, the Registrable
Securities held by the Holder, and the intended method of disposition of such
securities as shall be reasonably required by the Company to effect the
registration of such Holder’s Registrable Securities.

 

5.6           Registration Expenses. The Company shall bear and pay all expenses
incurred in connection with any registration, filing or qualification of
Registrable Securities with respect to registrations pursuant to Sections 5.2 or
5.3 for each Holder, including (without limitation) all registration, filing,
and qualification fees, printers and accounting fees relating or apportionable
thereto (“Registration Expenses”), but excluding underwriting discounts and
commissions relating to Registrable Securities and excluding any professional
fees or costs of accounting, financial or legal advisors to any of the Holders,
except that the Company shall pay the legal fees for the Holders, such fees not
to exceed $10,000 in the aggregate.

 

5.7           Underwriting Requirements. In connection with any offering
involving an underwriting of shares of the Company’s capital stock, the Company
shall not be required under Section 5.2 to include any of the Holders’
Registrable Securities in such underwriting unless they accept the terms of the
underwriting as agreed upon between the Company and the underwriters selected by
it (or by other persons entitled to select the underwriters), and then only in
such quantity as the underwriters determine in their sole discretion will not
jeopardize the success of the offering by the Company. If the total amount of
securities, including Registrable Securities, requested by stockholders to be
included in such offering exceeds the amount of securities sold other than by
the Company that the underwriters determine in their sole discretion is
compatible with the success of the offering, then the Company shall be required
to include in the offering only that number of such securities, including
Registrable Securities, which the underwriters determine in their sole
discretion will not jeopardize the success of the offering (the securities so
included to be apportioned pro rata among the selling Holders according to the
total amount of securities entitled to be included therein owned by each selling
Holder or in such other proportions as shall mutually be agreed to by such
selling Holders). For purposes of the preceding parenthetical concerning
apportionment, for any selling Holder who is a holder of Registrable Securities
and is a partnership or corporation, the partners, retired partners and
stockholders of such Holder, or the estates and family members of any such
partners and retired partners and any trusts for the benefit of any of the
foregoing persons shall be deemed to be a single “selling Holder”, and any
pro-rata reduction with respect to such “selling Holder” shall be based upon the
aggregate amount of shares carrying registration rights owned by all entities
and individuals included in such “selling Holder”, as defined in this sentence.

 

16

 

 

5.8           Delay of Registration. No Holder shall have any right to obtain or
seek an injunction restraining or otherwise delaying any such registration as
the result of any controversy that might arise with respect to the
interpretation or implementation of this Article V.

 

5.9           Indemnification. In the event that any Registrable Securities are
included in a registration statement under this Article V:

 

(a)          To the extent permitted by law, the Company will indemnify and hold
harmless each Holder, any underwriter (as defined in the Securities Act) for
such Holder and each person, if any, who controls such Holder or underwriter
within the meaning of the Securities Act or the Exchange Act, against any
losses, claims, damages, or liabilities (joint or several) to which they may
become subject under the Securities Act, or the Exchange Act, insofar as such
losses, claims, damages, or liabilities (or actions in respect thereof) arise
out of or are based upon any of the following statements, omissions or
violations (collectively a “Violation”): (i) any untrue statement or alleged
untrue statement of a material fact contained in such registration statement,
including any preliminary prospectus or final prospectus contained therein or
any amendments or supplements thereto, (ii) the omission or alleged omission to
state therein a material fact required to be stated therein, or necessary to
make the statements therein not misleading, or (iii) any violation or alleged
violation by the Company of the Securities Act, the Exchange Act, or any rule or
regulation promulgated under the Securities Act, or the Exchange Act, and the
Company will pay to each such Holder, underwriter or controlling person, as
incurred, any legal or other expenses reasonably incurred by them in connection
with investigating or defending any such loss, claim, damage, liability, or
action; provided, however, that the indemnity agreement contained in this
Section 5.9(a) shall not apply to amounts paid in settlement of any such loss,
claim, damage, liability, or action if such settlement is effected without the
consent of the Company (which consent shall not be unreasonably withheld), nor
shall the Company be liable in any such case for any such loss, claim, damage,
liability, or action to the extent that it arises out of or is based upon a
Violation which occurs in reliance upon and in conformity with written
information furnished expressly for use in connection with such registration by
any such Holder, underwriter or controlling person or a violation of any
provision of this Agreement by a Holder.

 

(b)          To the extent permitted by law, each selling Holder will indemnify
and hold harmless the Company, each of its directors, each of its officers, each
person, if any, who controls the Company within the meaning of the Securities
Act, any underwriter, any other Holder selling securities in such registration
statement and any controlling person of any such underwriter or other Holder,
against any losses, claims, damages, or liabilities (joint or several) to which
any of the foregoing persons may become subject, under the Securities Act, or
the Exchange Act, insofar as such losses, claims, damages, or liabilities (or
actions in respect thereto) arise out of or are based upon any Violation, in
each case to the extent (and only to the extent) that such Violation occurs in
reliance upon and in conformity with written information furnished by such
Holder expressly for use in connection with such registration or a violation of
any provision of this Agreement by a Holder; and each such Holder will pay, as
incurred, any legal or other expenses reasonably incurred by any person intended
to be indemnified pursuant to this Section 5.9(b), in connection with
investigating or defending any such loss, claim, damage, liability, or action;
provided, however, that the indemnity agreement contained in this Section 5.9(b)
shall not apply to amounts paid in settlement of any such loss, claim, damage,
liability or action if such settlement is effected without the consent of the
Holder, which consent shall not be unreasonably withheld; provided, further,
that, in no event shall any indemnity under this Section 5.9(b) exceed the
greater of the cash value of the (i) gross proceeds from the offering received
by such Holder or (ii) such Holder’s investment pursuant to this Agreement as
set forth on the signature page attached hereto.

 

17

 

 

(c)          Promptly after receipt by an indemnified party under this
Section 5.9 of notice of the commencement of any action (including any
governmental action), such indemnified party shall, if a claim in respect
thereof is to be made against any indemnifying party under this Section 5.9,
deliver to the indemnifying party a written notice of the commencement thereof
and the indemnifying party shall have the right to participate in, and, to the
extent the indemnifying party so desires, jointly with any other indemnifying
party similarly notified, to assume the defense thereof with counsel selected by
the indemnifying party and approved by the indemnified party (whose approval
shall not be unreasonably withheld); provided, however, that an indemnified
party (together with all other indemnified parties which may be represented
without conflict by one counsel) shall have the right to retain one separate
counsel, with the fees and expenses to be paid by the indemnifying party, if
representation of such indemnified party by the counsel retained by the
indemnifying party would be inappropriate due to actual or potential differing
interests between such indemnified party and any other party represented by such
counsel in such proceeding. The failure to deliver written notice to the
indemnifying party within a reasonable time of the commencement of any such
action, if prejudicial to its ability to defend such action, shall relieve such
indemnifying party of any liability to the indemnified party under this
Section 5.9, but the omission so to deliver written notice to the indemnifying
party will not relieve it of any liability that it may have to any indemnified
party otherwise than under this Section 5.9.

 

(d)          If the indemnification provided for in this Section 5.9 is held by
a court of competent jurisdiction to be unavailable to an indemnified party with
respect to any loss, liability, claim, damage, or expense referred to therein,
then the indemnifying party, in lieu of indemnifying such indemnified party
hereunder, shall contribute to the amount paid or payable by such indemnified
party as a result of such loss, liability, claim, damage, or expense in such
proportion as is appropriate to reflect the relative fault of the indemnifying
party on the one hand and of the indemnified party on the other in connection
with the statements or omissions that resulted in such loss, liability, claim,
damage, or expense as well as any other relevant equitable considerations. The
relative fault of the indemnifying party and of the indemnified party shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the alleged omission to state a material
fact relates to information supplied by the indemnifying party or by the
indemnified party and the parties’ relative intent, knowledge, access to
information, and opportunity to correct or prevent such statement or omission.

 

(e)           Notwithstanding the foregoing, to the extent that the provisions
on indemnification and contribution contained in the underwriting agreement
entered into in connection with the underwritten public offering are in conflict
with the foregoing provisions, the provisions in the underwriting agreement
shall control.

 

(f)          The obligations of the Company and Holders under this Section 5.9
shall survive the completion of any offering of Registrable Securities in a
registration statement under this Article V, and otherwise.

 

5.10         Reports under Securities Exchange Act of 1934. With a view to
making available to the Holders the benefits of Rule 144 and any other rule or
regulation of the SEC that may at any time permit a Holder to sell securities of
the Company to the public without registration or pursuant to a registration on
Form S-3, the Company agrees to:

 

18

 

 

(a)           make and keep public information available, as those terms are
understood and defined in Rule 144, at all times after 90 days after the
effective date of the IPO or Trading Event by the Company;

 

(b)           file with the SEC in a timely manner all reports and other
documents required of the Company under the Securities Act and the Exchange Act;
and

 

(c)           furnish to any Holder, so long as the Holder owns any Registrable
Securities, forthwith upon request (i) a copy of the most recent annual or
quarterly report of the Company and such other reports and documents so filed by
the Company, and (ii) such other information as may be reasonably requested in
availing any Holder of any rule or regulation of the SEC which permits the
selling of any such securities without registration or pursuant to such form.

 

5.11         Permitted Transferees. The rights to cause the Company to register
Registrable Securities granted to the Holders by the Company under this Article
V may be assigned in full by a Holder in connection with a transfer by such
Holder of its Registrable Securities if: (a) such transferee agrees in writing
to comply with the terms and provisions of this Agreement; (b) such transfer is
otherwise in compliance with this Agreement; (c) such transfer is otherwise
effected in accordance with applicable securities laws; and (d) such Holder
transfers at least 51% of its shares of Registrable Securities to the
transferee. Except as specifically permitted by this Section 5.11, the rights of
a Holder with respect to Registrable Securities as set out herein shall not be
transferable to any other Person, and any attempted transfer of such
registration rights shall by void.

 

5.12         Termination of Registration Rights. The right of any Holder to
request or demand inclusion in any registration pursuant to Section 5.2 and
Section 5.3 shall terminate if all Registrable Securities held by such Holder
may immediately be sold under Rule 144 without restriction.]

 

VI.          MISCELLANEOUS

 

6.1           Any notice or other communication given hereunder shall be deemed
sufficient if in writing and sent by registered or certified mail, return
receipt requested, or delivered by hand against written receipt therefor,
addressed as follows:

 

if to the Company, to it at:

 

[ _____ ]

 

if to Coronado, to it at:

 

Coronado Biosciences, Inc.

24 New England Executive Park

Burlington, MA 01803

Attn: President

 

With a copy to:

 

Wyrick Robbins Yates & Ponton LLP

4101 Lake Boone Trail, Suite 300

Raleigh, NC 27607-7506

Facsimile: (919) 781-4865

Attn: W. David Mannheim, Esq.

 

19

 

 

if to the Subscriber, to the Subscriber’s address indicated on the signature
page of this Agreement.

 

Notices shall be deemed to have been given or delivered on the date of mailing,
except notices of change of address, which shall be deemed to have been given or
delivered when received.

 

6.2           Except as otherwise expressly provided herein, any term of this
Agreement may be amended and the observance of any term of this Agreement may be
waived (either generally or in a particular instance, either retroactively or
prospectively and either for a specified period of time or indefinitely) with
the written consent of the Company and subscribers holding [Replacement Notes
evidencing] at least sixty six and two-thirds percent (66 2/3%) of the then
outstanding [principal amount of the Replacement Notes]/[Warrants] issued
pursuant to this Agreement and substantially similar agreements. Any amendment
or waiver effected in accordance with this Section 6.2 shall be binding upon the
Subscriber and the Company (even if the Subscriber does not consent to such
amendment or waiver), and upon the effectuation of each such amendment or
waiver, the Company shall promptly give written notice thereof to the Subscriber
if the Subscriber has not previously consented thereto in writing.

 

6.3           This Agreement shall be binding upon and inure to the benefit of
the parties hereto and to their respective heirs, legal representatives,
successors and assigns. This Agreement sets forth the entire agreement and
understanding between the parties as to the subject matter hereof and merges and
supersedes all prior discussions, agreements and understandings of any and every
nature among them.

 

6.4           Upon the execution and delivery of this Agreement by the
Subscriber, this Agreement shall become a binding obligation of the Subscriber
with respect to the purchase of Securities as herein provided, subject, however,
to the right hereby reserved by the Company to enter into the same agreements
with other subscribers and to add and/or delete other persons as subscribers.

 

6.5           NOTWITHSTANDING THE PLACE WHERE THIS AGREEMENT MAY BE EXECUTED BY
ANY OF THE PARTIES HERETO, THE PARTIES EXPRESSLY AGREE THAT ALL THE TERMS AND
PROVISIONS HEREOF SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE
SUBSTANTIVE AND PROCEDURAL LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO SUCH
STATE’S PRINCIPLES OF CONFLICTS OF LAW. IN THE EVENT THAT A JUDICIAL PROCEEDING
IS NECESSARY, THE SOLE FORUM FOR RESOLVING DISPUTES ARISING OUT OF OR RELATING
TO THIS AGREEMENT IS THE STATE AND FEDERAL COURTS sitting in the Borough of
Manhattan, County of New York. THE PARTIES HEREBY IRREVOCABLY CONSENT TO THE
JURISDICTION OF SUCH COURTS AND AGREE TO SAID VENUE.

 

6.6           The holding of any provision of this Agreement to be invalid or
unenforceable by a court of competent jurisdiction shall not affect any other
provision of this Agreement, which shall remain in full force and effect. If any
provision of this Agreement shall be declared by a court of competent
jurisdiction to be invalid, illegal or incapable of being enforced in whole or
in part, such provision shall be interpreted so as to remain enforceable to the
maximum extent permissible consistent with applicable law and the remaining
conditions and provisions or portions thereof shall nevertheless remain in full
force and effect and enforceable to the extent they are valid, legal and
enforceable, and no provisions shall be deemed dependent upon any other covenant
or provision unless so expressed herein.

 

6.7           It is agreed that a waiver by either party of a breach of any
provision of this Agreement shall not operate, or be construed, as a waiver of
any subsequent breach by that same party.

 

20

 

 

6.8           The parties agree to execute and deliver all such further
documents, agreements and instruments and take such other and further action as
may be necessary or appropriate to carry out the purposes and intent of this
Agreement.

 

6.9           This Agreement may be executed in two or more counterparts each of
which shall be deemed an original, but all of which shall together constitute
one and the same instrument.

 

6.10         Nothing in this Agreement shall create or be deemed to create any
rights in any person or entity not a party to this Agreement, except that the
Placement Agent may rely upon the representations and acknowledgements of the
Subscriber in Articles II and [VII] hereof and the representations and
warranties of the Company in Article III hereof.

 

Remainder of Page Intentionally Left Blank.

 

21

 

 

 

VII.         CONFIDENTIAL INVESTOR QUESTIONNAIRE

 

7.1           ALL INVESTORS - The undersigned represents and warrants as
indicated below by the undersigned’s mark:

 

A.   Individual investors:  (Please mark one or more of the following
statements)       1.                I certify that I am an accredited investor
because I have had individual income (exclusive of any income earned by my
spouse) of more than $200,000 in each of the most recent two years and I
reasonably expect to have an individual income in excess of $200,000 for the
current year.       2.                I certify that I am an accredited investor
because I have had joint income with my spouse in excess of $300,000 in each of
the most recent two years and reasonably expect to have joint income with my
spouse in excess of $300,000 for the current year.       3.                I
certify that I am an accredited investor because I have an individual net worth,
or my spouse and I have a joint net worth, in excess of $1,000,000 (exclusive of
my personal residence).       4.                I am a director or executive
officer of the Company.

 

B.Partnerships, corporations, trusts or other entities: (Please mark one of the
following seven statements). The undersigned hereby certifies that it is an
accredited investor because it is:

 

1.                an employee benefit plan whose total assets exceed $5,000,000;
      2.                an employee benefit plan whose investments decisions are
made by a plan fiduciary which is either a bank, savings and loan association or
an insurance company (as defined in Section 3(a) of the Securities Act) or an
investment adviser registered as such under the Investment Advisers Act of 1940;
      3.                a self-directed employee benefit plan, including an
Individual Retirement Account, with investment decisions made solely by persons
that are accredited investors;       4.                an organization described
in Section 501(c)(3) of the Internal Revenue Code of 1986, as amended, not
formed for the specific purpose of acquiring the Securities, with total assets
in excess of $5,000,000;       5.                a corporation, partnership,
limited liability company, limited liability partnership, other entity or
similar business trust, not formed for the specific purpose of acquiring the
Securities, with total assets excess of $5,000,000;       6.                a
trust, not formed for the specific purpose of acquiring the Securities, with
total assets exceed $5,000,000, whose purchase is directed by a person who has
such knowledge and experience in financial and business matters that he is
capable of evaluating the merits and risks of an investment in the Securities;
or       7.                an entity (including a revocable grantor trust but
other than a conventional trust) in which each of the equity owners qualifies as
an accredited investor.

 

22

 

 

7.2           EUROPEAN ECONOMIC AREA (“EEA”) INVESTORS - The undersigned further
represents and warrants as indicated below by the undersigned’s mark:

 

A.Please mark one of the following statements:

 

either

 

1.              The undersigned hereby certifies that it is a Qualified Investor
for the purposes of Directive 2003/71/EC because it is a person falling within
Article 2.1(e)(i), (ii) or (iii) of such directive or a person authorized by a
jurisdiction in the EEA to be considered as a qualified investor for the
purposes of such directive;

 

or

 

2.              The undersigned hereby certifies that it is not a Qualified
Investor for the purposes of Directive 2003/71/EC.

 

B.           Please mark one of the following statements.

 

1.              The undersigned hereby certifies that it is acting on its own
account and not for the account of or otherwise on behalf of any person or
persons; or

 

2.              The undersigned is in the United Kingdom and is a Qualified
Investor for the purposes of Directive 2003/71/EC and is acting as an agent in
the circumstances contemplated in section 86(2) of the United Kingdom Financial
Services and Markets Act 2000.

 

C.           Please mark the following statement:

 

1.              The undersigned hereby certifies that it has not received any
recommendation from the Placement Agent nor any person acting on their behalf in
relation to the purchase of the Securities.

 

D.           Please mark one of the following statements:

 

1.              The undersigned hereby certifies that it is not in the United
Kingdom.

 

2.              The undersigned hereby certifies that it is a person falling
within Article 19(5) of the Financial Services and Markets Act 2000 (Financial
Promotion) Order 2005 (“FPO”).

 

3.              The undersigned hereby certifies that it is a person falling
within Article 49(2)(a) to the (d) of the FPO.

 

7.3           ALL INVESTORS - The undersigned further represents and warrants as
indicated below by the undersigned’s mark:

 

FINRA AFFILIATION.

 

Are you affiliated or associated with an FINRA member firm:

 

Yes _________ No __________

 

23

 

 

If Yes, please describe:

_________________________________________________________

_________________________________________________________

_________________________________________________________

 

*If subscriber is a Registered Representative with an FINRA member firm, have
the following acknowledgment signed by the appropriate party:

 

The undersigned FINRA member firm acknowledges receipt of the notice required by
NASD Rule 3050.

 

    Name of FINRA Member Firm       By:     Authorized Officer       Date:    

 

7.4           ALL INVESTORS - Indicate manner in which title is to be held
(circle one)

 

  (a) Individual Ownership   (b) Community Property   (c) Joint Tenant with
Right of     Survivorship (both parties     must sign)   (d) Partnership   (e)
Tenants in Common   (f) Corporation   (g) Limited Liability Company   (h) Trust
  (i) Other

 

The undersigned is informed of the significance to the Company of the foregoing
representations and answers contained in the Confidential Investor Questionnaire
contained in this [Article VII] and such answers have been provided under the
assumption that the Company will rely on them.

 

24

 

 

AGGREGATE PRINCIPAL AMOUNT OF THE ORIGINAL NOTE = $                   (TOTAL
INVESTMENT)

 

        Signature   Signature (if purchasing jointly)                   Name
Typed or Printed   Name Typed or Printed                   Entity Name   Entity
Name                   Address   Address                   City, State and Zip
Code   City, State and Zip Code                   Telephone-Business  
Telephone-Business                   Telephone-Residence   Telephone-Residence  
                Facsimile-Business   Facsimile-Business                  
Facsimile-Residence   Facsimile-Residence                   Tax ID # or Social
Security #   Tax ID # or Social Security #           Name in which securities
should be issued:      

 

Dated:                                    , 201_  

 

 

 

 

This Securities Purchase Agreement is agreed to and accepted as of
______________________________.

 

  CORONADO BIOSCIENCES, INC.         By:     Name: Lindsay A. Rosenwald, MD  
Title: Chief Executive Officer

 

  COMPANY:       [ __________ ]               By:     Name:     Title:  

 

 

 

 

Annex A

 

CERTIFICATE OF SIGNATORY

 

(To be completed if Securities are

being subscribed for by an entity)

 

I,____________________________, am the____________________________ of
__________________________________________ (the “Entity”).

 

I certify that I am empowered and duly authorized by the Entity to execute and
carry out the terms of the Securities Purchase Agreement and to purchase and
hold the Securities, and certify further that the Securities Purchase Agreement
has been duly and validly executed on behalf of the Entity and constitutes a
legal and binding obligation of the Entity.

 

IN WITNESS WHEREOF, I have set my hand this ________ day of _________________,
201_

 

          (Signature)

 

 

 

 

EXHIBIT A

 

[Form of Replacement Note]

 

[Form of Warrant]