Document:

EX-10.1

 EXHIBIT 10.1 

EMPLOYEE MATTERS AGREEMENT 
 BY AND
BETWEEN 
 HENRY SCHEIN, INC., 

HS SPINCO, 
 AND 

DIRECT VET MARKETING, INC. 
 DATED
AS OF APRIL 20, 2018 

 TABLE OF CONTENTS 

 

							
	 	  	 	  	Page	 
	 ARTICLE I DEFINITIONS
	  	 	4	 
	 Section 1.1
	  	Definitions	  	 	4	 
	 Section 1.2
	  	Interpretation	  	 	8	 
		
	 ARTICLE II ASSIGNMENT OF EMPLOYEES
	  	 	8	 
	 Section 2.1
	  	Transfer of Employment	  	 	8	 
	 Section 2.2
	  	Employee Records	  	 	10	 
		
	 ARTICLE III BENEFIT ARRANGEMENTS AND OTHER MATTERS
	  	 	11	 
	 Section 3.1
	  	Termination of Participation in Harbor Benefit Plans	  	 	11	 
	 Section 3.2
	  	Accrued Time Off	  	 	11	 
	 Section 3.3
	  	Leaves of Absence	  	 	11	 
	 Section 3.4
	  	Continuation or Establishment of Spinco Dedicated Benefit Plans; Continuation of Voyager Benefit Plans	  	 	11	 
	 Section 3.5
	  	Transition to Combined Company Benefit Plans; Service for Eligibility, Vesting, and Benefit Purposes	  	 	12	 
	 Section 3.6
	  	No Duplication or Acceleration of Benefits	  	 	13	 
	 Section 3.7
	  	Employment Conditions	  	 	13	 
	 Section 3.8
	  	Business Associate Agreement	  	 	13	 
		
	 ARTICLE IV CASH AND EQUITY INCENTIVE COMPENSATION PLANS
	  	 	14	 
	 Section 4.1
	  	Cash Incentives	  	 	14	 
	 Section 4.2
	  	Equity Awards	  	 	14	 
		
	 ARTICLE V QUALIFIED RETIREMENT PLANS
	  	 	16	 
	 Section 5.1
	  	Defined Contribution Plans	  	 	16	 
		
	 ARTICLE VI WELFARE PLANS
	  	 	17	 
	 Section 6.1
	  	Spinco Welfare Plans	  	 	17	 
	 Section 6.2
	  	Transitional Matters Under Spinco Welfare Plans	  	 	17	 
	 Section 6.3
	  	Waiver of Conditions or Restrictions	  	 	19	 
	 Section 6.4
	  	Insurance Contracts	  	 	19	 
	 Section 6.5
	  	Third-Party Vendors	  	 	19	 
	 Section 6.6
	  	Workers’ Compensation	  	 	19	 
	 Section 6.7
	  	Flexible Spending Accounts	  	 	20	 
		
	 ARTICLE VII GENERAL PROVISIONS, SECTION 280G, AND INDEMNIFICATION
	  	 	20	 
	 Section 7.1
	  	Preservation of Rights to Amend	  	 	20	 
	 Section 7.2
	  	Entire Agreement	  	 	20	 
	 Section 7.3
	  	Binding Effect; No Third-Party Beneficiaries or Plan Amendment; Assignment	  	 	20	 
	 Section 7.4
	  	Amendment; Waivers	  	 	21	 
	 Section 7.5
	  	Remedies Cumulative	  	 	21	 
	 Section 7.6
	  	Notices	  	 	21	 
	 Section 7.7
	  	Counterparts	  	 	21	 

  
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	 Section 7.8
	  	Severability	  	 	21	 
	 Section 7.9
	  	Governing Law, Consent to Jurisdiction and Waiver of Right to Jury Trial	  	 	21	 
	 Section 7.10
	  	Performance	  	 	21	 
	 Section 7.11
	  	Termination	  	 	21	 
	 Section 7.12
	  	Headings	  	 	21	 
	 Section 7.13
	  	Assignment	  	 	21	 
	 Section 7.14
	  	280G Waivers and Consent	  	 	22	 
	 Section 7.15
	  	Survival and Indemnification	  	 	22	 

  
 ii 

 EMPLOYEE MATTERS AGREEMENT 

This EMPLOYEE MATTERS AGREEMENT, made and entered into effective as of April 20, 2018 (this “Agreement”), is by and between Henry
Schein, Inc., a Delaware corporation (“Harbor”), HS Spinco, Inc., a Delaware corporation and wholly owned subsidiary of Harbor (“Spinco”), and Direct Vet Marketing, Inc. (“Voyager”). Harbor, Spinco and Voyager are also
referred to in this Agreement individually as a “Party” and collectively as the “Parties.” Capitalized terms used herein and not otherwise defined shall have the meanings ascribed to them in the Agreement and Plan of Merger, by
and among Harbor, Spinco, HS Merger Sub, Inc., a Delaware corporation and a direct, wholly-owned subsidiary of Spinco (“Merger Sub”), Voyager, and Shareholder Representative Services LLC, of even date herewith (as such agreement may be
amended from time to time, the “Merger Agreement”). Terms capitalized but not defined in this Agreement shall have the meaning set forth in the Merger Agreement. 

RECITALS 
 WHEREAS, Harbor has
determined that it would be appropriate, desirable and in the best interests of Harbor and the stockholders of Harbor to separate the Spinco Business from Harbor; 

WHEREAS, the Distribution Agreement and the Merger Agreement provide for the execution and delivery of certain other agreements, including
this Agreement, in order to facilitate and provide for the separation of Spinco and its subsidiaries from Harbor; 
 WHEREAS, pursuant to
the Merger Agreement at the Effective Time, Merger Sub will merge with and into Voyager, with Voyager surviving the Merger as a direct, wholly-owned subsidiary of Spinco; and 

WHEREAS, in order to ensure an orderly transition under the Distribution Agreement and Merger Agreement, it will be necessary for the Parties
to allocate between them certain assets and liabilities with respect to certain employee compensation and benefit plans and programs, and to address certain other employment matters related to the transactions contemplated by the Distribution
Agreement and the Merger Agreement, and they have chosen to do so in this Agreement. 
 NOW, THEREFORE, in consideration of the foregoing
and the covenants and agreements set forth below and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and intending to be legally bound hereby, the Parties hereby agree as follows: 

  
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 ARTICLE I 

DEFINITIONS 
 Section 1.1
Definitions. As used in this Agreement, the following terms shall have the meanings set forth in this Section 1.1: 

“Adjustment Ratio” means the quotient obtained by dividing the Spinco Stock Value by the Harbor Stock Value. 

“Agreement” means this Employee Matters Agreement, together with all Schedules hereto and all amendments, modifications, and changes
hereto entered into pursuant to Section 7.4. 
 “Benefit Plan” means each “employee benefit plan” (as defined in
Section 3(3) of ERISA), and all other employee compensation, benefit, pension, profit-sharing, savings, deferred compensation, bonus, incentive compensation, commission, stock ownership, stock option,
stock appreciation right, stock purchase, phantom stock, restricted stock, restricted stock unit or other equity compensation, performance, retirement, thrift, savings, employee loan, stock bonus, excess benefits, supplemental unemployment, paid
time off, vacation, perquisite, tuition reimbursement, outplacement, sick leave, workers’ compensation, cafeteria, disability, death benefit, severance, retention, termination, redundancy, change in control, health and welfare (including post-retirement health and life insurance), accidental death and disability insurance, pre-tax premium conversion benefits, dependent care assistance programs, employee
assistance programs, flexible spending and fringe benefit plans, policies, programs, contracts, agreements and arrangements, whether or not subject to ERISA, written or unwritten, insured or self-insured, domestic or foreign; provided,
however, the term “Benefit Plan” does not include (i) any plan, program or arrangement sponsored, maintained or administered by a Governmental Authority or (ii) any multiemployer pension plan, multiemployer health and
welfare plan or other plan maintained by a joint board of union and employer appointed trustees and to which employers are required to contribute for the benefit of union employees as part of a collective bargaining agreement. 

“COBRA” means the Consolidated Omnibus Budget Reconciliation Act of 1985, as codified at Section 601 et seq. of ERISA and at
Section 4980B of the Code, and any similar state or local Law. 
 “Combined Company Benefit Plan” means any Benefit Plan
sponsored, maintained or contributed to by Spinco or any of its Subsidiaries or which the Board of Directors of Spinco or its designee following the Distribution affirmatively establishes or designates as a Benefit Plan in which Spinco Group
Employees and/or Voyager Employees shall participate (which, for avoidance of doubt, may be a Spinco Dedicated Benefit Plan, a Voyager Benefit Plan or a newly established Benefit Plan) or in which, following the Distribution, Spinco Group Employees
and/or Voyager Employees shall participate by operation of law. 
 “Combined Company Welfare Plan” means any Combined Company
Benefit Plan that is a Welfare Plan. 
 “Disabled Employee” has the meaning set forth in Section 2.1(b). 

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended, and the regulations promulgated thereunder. 

“Exchange” shall mean a stock exchange located in the United States to be mutually agreed upon by the Parties in accordance with the
Merger Agreement. 
 “FICA” has the meaning set forth in Section 2.1(c). 

  
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 “FUTA” has the meaning set forth in Section 2.1(c). 

“Harbor” has the meaning set forth in the preamble to this Agreement. 

“Harbor 401(k) Plan” means the Henry Schein, Inc. 401(k) Savings Plan, as amended from time to time. 

“Harbor Benefit Plan” means any Benefit Plan sponsored, maintained or contributed, or required to be contributed to, by a Harbor
Entity on or immediately prior to the Distribution that is not a Spinco Dedicated Benefit Plan. 
 “Harbor Former Employee” means
an employee of any of the Harbor Entities at any time prior to the Distribution whose employment with the applicable Harbor Entity terminates before the Distribution (and who is not actively employed by any of the Spinco Entities as of the
Distribution), and who has not provided services primarily to the Spinco Business while employed. 
 “Harbor Nonqualified Plans”
means the deferred compensation plans (other than the Harbor 401(k) Plan) sponsored, maintained or contributed to by the Harbor Entities as of the Distribution, including without limitation the Harbor, Inc. Supplemental Executive Retirement Plan and
the Harbor, Inc. Deferred Compensation Plan. 
 “Harbor Performance Restricted Stock” means a share of Harbor Common Stock granted
pursuant to the 2013 Plan that, as of immediately prior to the Effective Time, is subject to forfeiture, the vesting of which is based on continued service and the satisfaction of performance goals. 

“Harbor PSU Award” means an award issued under the 2013 Plan representing a general unsecured promise by Harbor to deliver to a
participant shares of Harbor Common Stock, the vesting of which is based on continued service and the satisfaction of performance goals.  

“Harbor Restricted Stock” means a share of Harbor Common Stock granted pursuant to the 2013 Plan that, as of immediately prior to
the Effective Time, is subject to forfeiture, the vesting of which is based on continued service. 
 “Harbor Retained Employees”
has the meaning set forth in Section 2.1(a). 
 “Harbor RSU Award” means an award issued under the 2013 Plan representing a
general unsecured promise by Harbor to deliver to a participant shares of Harbor Common Stock, the vesting of which is based on continued service.  

“Harbor Stock Value” means the average volume-weighted average price per share of Harbor Common Stock on the Nasdaq based upon all
trades on Nasdaq in shares of Harbor Common Stock during the primary trading session on Nasdaq beginning at 9:30 a.m., New York City time (or such other time as is the official open of trading on the Exchange) and ending at 4:00 p.m., New York City
time (or such other time as is the official close of trading on the Exchange) for the twenty (20) Trading Days prior to the Effective Time, as listed on Nasdaq. 

  
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 “Harbor Transfer Employee” mean each employee of a Harbor Entity who is transferred to
a Spinco Entity on or before the Distribution. 
 “Harbor Welfare Plan” means any Welfare Plan sponsored, maintained or
contributed to by any one or more of the Harbor Entities on or immediately prior to the Distribution, that is not a Spinco Welfare Plan. 

“HIPAA” means the Health Insurance Portability and Accountability Act of 1996, as amended, and the regulations promulgated
thereunder. 
 “IRS” means the Internal Revenue Service. 

“LTD” means long-term disability benefits. 

“Nasdaq” means the NASDAQ Global Select Market. 

“Parachute Payment Waiver” has the meaning set forth in Section 7.14(a). 

“Party” or “Parties” has the meaning set forth in the preamble to this Agreement. 

“Performance Calculation” means (i) if the Distribution Date occurs in 2018, the payout for the entire 2018 will be calculated
based on actual performance through the end of the last calendar month immediately prior to the Distribution Date but adjusted up to the Distribution Date (with the targets being equitably prorated), (ii) if the Distribution Date occurs between
January 1, 2019, and January 31, 2019, inclusive, the payout for the portion of 2019 occurring prior to the Distribution Date shall be deemed to be achieved at 95% of target, and the payout for the portion of 2019 occurring on or after the
Distribution Date shall be based on actual performance compared to targets established by Spinco, and (iii) if the Distribution Date occurs on or after February 1, 2019, the payout for the portion of 2019 occurring prior to the
Distribution Date shall be based on actual performance through the end of the last calendar month immediately prior to the Distribution Date but adjusted up to the Distribution Date (with the targets being equitably prorated), and the payout for the
portion of 2019 shall be based on actual performance compared to targets established by Spinco. 
 “Spinco” has the meaning set
forth in the preamble to this Agreement. 
 “Spinco 401(k) Plan” has the meaning set forth in Section 5.1(b). 

“Spinco Dedicated Benefit Plan” means any Benefit Plan (i) sponsored, maintained or contributed to by a Harbor or any of its
Subsidiaries (including Spinco or any of the Spinco Subsidiaries) or to which Harbor or any of its Subsidiaries (including Spinco) is a party and (ii) in which any Spinco Group Employee, Spinco Former Employee (or their beneficiaries) of Spinco
who is a participant following the Distribution, including without limitation, any Benefit Plan sponsored, maintained, or contributed to by a Spinco Entity on or prior to the Distribution. 

“Spinco Entities” means Spinco and each of the Spinco Subsidiaries, including, following the Distribution, the Surviving
Corporation. 

  
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 “Spinco Former Employee” means (i) an employee of any of the Spinco Entities at
any time prior to the Distribution whose employment with the applicable Spinco Entity terminates before the Distribution (and who is not actively employed by any of the Harbor Entities as of the Distribution), and (ii) an employee of any of the
Harbor Entities at any time prior to the Distribution whose employment with the applicable Harbor Entity terminates before the Distribution (and who is not actively employed by any of the Spinco Entities as of the Distribution) who provided services
primarily to the Spinco Business while employed. 
 “Spinco Group Employee” means (i) any individual based in the U.S. who is
an active employee of a Harbor Entity primarily working in the Spinco Business immediately prior to the transfer pursuant to Section 2.1(a) hereof, (ii) any individual based outside of the U.S. who is an active employee of a Harbor Entity
who is dedicated exclusively to the Spinco Business immediately prior to the transfer pursuant to Section 2.1(a) hereof, (iii) any individual who is an active employee of a Spinco Entity immediately prior to the Distribution, and
(iv) any individual who otherwise would be included in (i) (ii), or (iii) above but for the fact that he or she is absent from active employment on such date on account of vacation, ordinary sick leave reasonably expected to result in an
absence of short duration, short-term disability, long-term disability, leave under the federal Family and Medical Leave Act or leave under any similar Law, or any other reason that is similar in nature and
duration, including without limitation and the avoidance of doubt, each Disabled Employee; provided, however, that no individual shall be a “Spinco Group Employee” if his or her employment is not transferred from the
applicable Harbor Entity to a Spinco Entity; and provided further that (x) if at least 30 days prior to the Distribution Date, either of the two employees set forth on subsection (x) of Annex A hereto notifies Harbor
in writing that such employee does not wish to have his or her employment transferred to a Spinco Entity in the Distribution, and Harbor elects to retain such employee as a Harbor Retained Employee, such employee shall remain a Harbor Retained
Employee and shall not be treated as a Spinco Group Employee, and (y) with the prior written consent of Voyager, one or more individuals, including any individuals set forth on subsection (y) of Annex A, who are active employees of
a Harbor Entity but not primarily working in the Spinco Business immediately prior to the Distribution may also be treated as Spinco Group Employees. 

“Spinco Option” means an option to purchase shares of Spinco Common Stock. 

“Spinco Restricted Stock” means a share of Spinco Common Stock that is subject to forfeiture, the vesting of which is based solely
on continued service. 
 “Spinco RSU Award” means an award representing a general unsecured promise by Spinco to deliver to a
participant shares of Spinco Common Stock, the vesting of which is based solely on continued service. 
 “Spinco Stock Value”
means the closing price of Spinco Common Stock on the Exchange immediately prior to the Effective Date (as traded on the “when-issued” market). 

“Spinco Welfare Plan” means any Welfare Plan sponsored, maintained or contributed to by any one or more of the Spinco Entities as of
the Distribution. 
 “Spinco Welfare Plan Participants” has the meaning set forth in Section 6.1. 

  
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 “STD” means short-term disability benefits.

 “2013 Plan” means the Henry Schein, Inc. 2013 Stock Incentive Plan, as amended from time to time. 

“280G Approval” has the meaning set forth in Section 7.14(b). 

“Voyager Benefit Plan” means any Benefit Plan (i) sponsored, maintained or contributed to or required to be contributed to by
Voyager or any of its Subsidiaries or to which Voyager or any of its Subsidiaries is a party and (ii) in which any current or former Voyager Employee or current or former director or consultant or other service provider (or their beneficiaries)
of Voyager is a participant, on or immediately prior to the Effective Time. 
 “Voyager Common Stock” means the common stock of
Voyager, par value $0.001 per share. 
 “Voyager Employee” means as of any date, any individual who is an employee of Voyager or
its Subsidiaries (including employees who are not actively at work on such date by reason of illness, vacation, leave of absence, short-term disability or long-term disability). 

“Voyager Option” means an option to purchase shares of Voyager Common Stock. 

“Voyager Ratio” means the number of shares of Voyager Common Stock exchanged for each share of Spinco Common Stock in the Merger.

 “Welfare Plan” means, where applicable, a Benefit Plan that is a “welfare plan” (as defined in Section 3(1) of
ERISA) or a “cafeteria plan” under Section 125 of the Code, and any benefits offered thereunder, and any other plan offering health benefits (including medical, prescription drug, dental, vision, and mental health and substance
abuse), disability benefits, or life, accidental death and disability, and business travel insurance, pre-tax premium conversion benefits, dependent care assistance programs, employee assistance programs or
flexible spending accounts; provided, however, the term “Welfare Plan” does not include (x) any workers compensation or similar insurance plans, programs or policies or governmental plans or programs or (y) any plan
or arrangement providing for severance pay or termination benefits. 
 Section 1.2 Interpretation.
The provisions of Section 10.3 of the Distribution Agreement are hereby incorporated by reference. 
 ARTICLE II 

ASSIGNMENT OF EMPLOYEES 
 
Section 2.1 Transfer of Employment. 
 (a) Spinco Group Employees and
Employee-Related Liabilities. Except as otherwise set forth in this Agreement and subject to applicable Law, prior to the Distribution, each Harbor Entity and Spinco Entity shall have taken such
actions, if any, as are necessary to ensure that each Spinco Group Employee, whether or not actively working at the time of the Distribution, is employed by a Spinco Entity effective not later than the Distribution, provided,

  
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that, with respect to Spinco Group Employees located outside of the United States, subject to applicable Law, such transfer, if any, shall occur by the Distribution or as soon as
commercially reasonable thereafter, and, in furtherance thereof, the parties shall cooperate reasonably and in good faith to give effect to this covenant with respect to those Spinco Group Employees who are currently employed outside of the United
States by a Harbor Entity in jurisdictions in which there is no Spinco Entity. If, despite its commercially reasonable efforts, Harbor identifies, after the Distribution, an employee who was inadvertently not employed by a Spinco Entity as of the
Distribution, Harbor shall promptly notify Spinco or its successor, as applicable, of such fact, and the employment of such individual shall be transferred from a Harbor Entity to a Spinco Entity as soon as commercially reasonable thereafter in
accordance with applicable Law. Any individual so transferred shall, from the effective date of such transfer, be deemed a Spinco Group Employee under this Agreement. Each of the Parties agrees to execute such documentation and take such other
actions, and, if necessary to comply with applicable Law, to seek to have the applicable employees and/or their representatives execute such documentation or take such other actions, if any, as may be necessary to effect the assignment and transfer
of employment to a Spinco Entity as described herein; provided, that the failure of a Spinco Group Employee to execute any such documentation or take any such action shall not prevent such Spinco Group Employee from being transferred to a
Spinco Entity unless otherwise required under applicable Law. Any employee who Harbor intends to retain as an employee of a Harbor Entity on or following the Distribution are collectively referred to herein as the “Harbor Retained
Employees.” The Harbor Entities shall assume or retain all employment-related Liabilities related to the Harbor Retained Employees and Harbor Former Employees, regardless of whether such Liability arises
prior to, on, or after the Distribution. Subject to Section 3.1 hereof and except as otherwise specifically provided in this Agreement or Section 6.25 of the Merger Agreement, the Spinco Entities shall automatically assume and/or retain
all Liabilities to or relating to (i) Spinco Group Employees and Spinco Former Employees (other than with respect to payments to or relating to the Spinco Group Employees payable, or that have accrued or been incurred, under any applicable
Harbor Benefit Plans for the time period prior to the Distribution Date), (ii) Spinco Dedicated Benefit Plans, and (iii) Voyager Benefit Plans, in each case, unless otherwise provided in this Section 2.1(a), regardless of whether such
Liability arises prior to, on or after the Distribution (including without limitation, but subject to applicable Law, with respect to the Spinco Entities’ non-U.S. operations). In addition, and for the
avoidance of doubt, the Spinco Entities shall assume or retain any Liabilities for severance, termination, redundancy, retention or similar types of compensation or benefits payable to any Spinco Group Employee arising out of the transfer of
employment from the applicable Harbor Entity to a Spinco Entity as described in this Section 2.1(a) (it being the intention of the Harbor Entities that no such liability shall arise out of any such transfer). 

(b) Disabled Spinco Group Employees. Each Spinco Group Employee who, on or prior to the Distribution, (i) participated in any
Harbor Welfare Plan that provides short and/or long-term disability benefits, (ii) became disabled as defined in such plan, and (iii) who retains such status as of the Distribution (a “Disabled
Employee”) shall, except as otherwise required by applicable Law and notwithstanding Section 2.1(a), remain a participant in the applicable Harbor Welfare Plans to the extent provided therein in order to provide the STD or LTD benefits as
described in Section 6.2(a), and shall become an employee of a Spinco Entity as of the date such Disabled Employee is able to return to active employment; provided that such
return-to-work date occurs within one year following the Distribution Date, or at such later date if, but only to the extent and under the conditions, required by
applicable Law. To the extent applicable, Spinco shall reimburse the applicable Harbor Entity for all costs associated with providing benefits to any Disabled Employee in accordance with Section 6.2 of this Agreement. 

  
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 (c) Payroll and Related Taxes. Unless provided otherwise by applicable Law, with respect
to the portion of the tax year ending on and including the Distribution Date, Harbor will (i) be responsible for all payroll obligations, tax withholding and reporting obligations and (ii) furnish a Form
W-2 or similar earnings statement (as applicable) to all Spinco Group Employees. Unless provided otherwise by applicable Law, with respect to the remaining portion of such tax year and thereafter, Spinco or
its successor will (i) be responsible for all payroll obligations, tax withholding, and reporting obligations for the Spinco Group Employees and (ii) furnish a Form W-2 or similar earnings statement
(as applicable) to all Spinco Group Employees. With respect to each affected Spinco Group Employee, Harbor and Spinco shall, and shall cause their respective Affiliates to (to the extent permitted by applicable Law and practicable) (i) to the
extent applicable, treat Spinco (or the applicable Spinco Entity and any successors thereto) as a “successor employer” and Harbor (or the applicable Harbor Entity) as a “predecessor,” within the meaning of Sections
3121(a)(1) and 3306(b)(1) of the Code, to the extent appropriate, for purposes of taxes imposed under the United States Federal Insurance Contributions Act, as amended (“FICA”), or the United States Federal Unemployment Tax Act, as amended
(“FUTA”) and related state unemployment insurance laws, (ii) cooperate with each other to avoid, to the extent possible, the restart of FICA and FUTA and related state unemployment insurance laws upon or following the Distribution
Date with respect to each such Spinco Group Employee for the tax year during which the Distribution Date occurs, and (iii) file tax returns, exchange wage payment information, and report wage payments made by the respective predecessor and
successor employer on separate IRS Forms W-2 or similar earnings statements to each such Spinco Group Employee for the tax year in which the Distribution Date occurs, in a manner provided in
Section 4.02(1) of Revenue Procedure 2004-53. 
 (d)
At-Will Status. Notwithstanding the above or any other provision of this Agreement (and except as provided under an applicable written employment agreement or as required by Law), nothing in this
Agreement shall create any obligation on the part of any Harbor Entity or any Spinco Entity to (i) continue the employment of any employee or (except as required by this Agreement or applicable Law) permit the return from a leave of absence for
any period following the date of this Agreement or the Distribution or (ii) change the employment status of any employee from “at will,” to the extent such employee is an “at will” employee under applicable Law. 

Section 2.2 Employee Records. Not later than seven (7) days prior to the Distribution, subject to applicable Law, Harbor
shall use commercially reasonable standards to provide or cause to be provided to Spinco any and all employment records and information (including, but not limited to, any personnel files, Form I-9, Form W-2 or other IRS forms, and any non-U.S. documents) with respect to the Spinco Group Employees in the possession of Harbor and its Subsidiaries reasonably required by Spinco
to enable Spinco to properly employ the Spinco Group Employees and to carry out its obligations under this Agreement and any applicable Law. Following the date on which such records and information are provided, Spinco shall permit Harbor reasonable
access to such records and information, to the extent reasonably necessary for Harbor’s reasonable business needs or as required for Harbor to comply with applicable Law. 

  
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Each Party will indemnify and hold harmless the other from all Liabilities arising from the indemnifying Party’s willful or grossly negligent misuse of the records and information made
available to the indemnifying Party by the indemnified Party under the terms of this Agreement. All transfers of employee records pursuant to this Section 2.2 shall be conducted in all material respects in accordance with applicable Law,
including, without limitation, all applicable Laws concerning data protection or data privacy, and each of the Parties agrees to execute such documentation and take such other actions, if any, as may be necessary to effect the transfer of records
and information as described herein in accordance with applicable Law. 
 ARTICLE III 

BENEFIT ARRANGEMENTS AND OTHER MATTERS 

Section 3.1 Termination of Participation in Harbor Benefit Plans. Except as otherwise specifically provided under this Agreement,
effective as of the Distribution, Spinco Group Employees shall cease active participation in (including eligibility to contribute to) any Harbor Benefit Plan (unless otherwise provided under the terms of the applicable Harbor Benefit Plan, the terms
of this Agreement, or applicable Law). Harbor shall retain (i) all Liabilities to or relating to Harbor Retained Employees and Harbor Former Employees under the Harbor Benefit Plans regardless of whether such Liability arises, accrues, is
incurred or is reported prior to, on, or after the Distribution, and (ii) the obligation to make payments to or relating to Spinco Group Employees and Spinco Former Employees under any applicable Harbor Benefit Plans solely for the time period
prior to the Distribution Date. The obligations and Liabilities so retained by Harbor under this Section 3.1 include obligations and Liabilities to or relating to Harbor Retained Employees and Harbor Former Employees under the Harbor
Nonqualified Plans, and, except to the extent set forth in Article VI, the Harbor 401(k) Plan and the Harbor Welfare Plans. To the extent that Harbor retains Liabilities under this Agreement, any Assets in respect of such Liabilities shall also
be retained by Harbor. 
 Section 3.2 Accrued Time Off. Following the Distribution, Spinco or its successor, as applicable,
shall recognize the Spinco Group Employees’ unused vacation, holiday, sick leave, flex days, personal days, paid-time off and other leave benefits that have been earned or awarded and are unused as of the
Distribution Date in such amounts as are reflected in the applicable HRIS system as of the Distribution Date. Following the Distribution, Spinco or its successor, as applicable, shall permit such earned or awarded leave benefits to be utilized
consistent with all applicable Laws, the business needs of the Spinco Entities, and any applicable policy. 
 Section 3.3 Leaves of
Absence. Following the Distribution, the applicable Spinco Entity will continue to apply the leave policies applicable to inactive Spinco Group Employees who are on an approved leave of absence as of the Distribution Date in accordance with the
terms of such policies applicable to the Spinco Group Employees as of immediately prior to the Distribution Date. For purposes of such policies, leaves of absence taken by Spinco Group Employees prior to the Distribution shall be deemed to have been
taken as employees of a Spinco Entity. 
 Section 3.4 Continuation or Establishment of Spinco Dedicated Benefit Plans; Continuation
of Voyager Benefit Plans. 

  
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 (a) For Spinco Group Employees. Subject to Sections 3.4(c) and 3.5, the Spinco Dedicated
Benefit Plans shall remain in effect and continue to cover eligible Spinco Group Employees (and eligible former Spinco Group Employees) in accordance with the terms of such plans (as may be modified from time to time in accordance with such terms),
applicable Law, or any applicable contractual obligations. Except as otherwise as provided for in this Agreement, prior to the Distribution, Spinco may in consultation with Voyager, (i) establish Spinco Dedicated Benefit Plans for the Spinco
Group Employees, to be effective no later than the Distribution, and (ii) terminate Spinco Dedicated Benefit Plans, as permitted pursuant to the applicable benefit plan. Harbor and Spinco shall reasonably cooperate to make sure that, to the
extent commercially reasonable, no Harbor Transfer Employee experiences a lapse in coverage as a result of the Distribution, taking into account any special considerations that may apply in the event that the Distribution Date occurs near the end of
a calendar year. 
 (b) For Voyager Employees. Subject to Section 3.4(c) and 3.5, the Voyager Benefit Plans shall remain in
effect and continue to cover eligible Voyager Employees (and eligible former Voyager Employees) in accordance with the terms of such plans (as may be modified from time to time in accordance with such terms), applicable Law, or any applicable
contractual obligations. 
 (c) After the Effective Time. As of the Effective Time and during subsequent periods, the Board of
Directors of Spinco or its successor, as applicable, or its designee shall have full discretion to determine the scope, terms and conditions of the Spinco Dedicated Benefit Plans, the Voyager Benefit Plans and the Combined Company Benefit Plans,
subject only to applicable Law and the terms of any applicable contractual obligations. 
 Section 3.5 Transition to Combined
Company Benefit Plans; Service for Eligibility, Vesting, and Benefit Purposes. Whenever following the date of this Agreement a Spinco Group Employee or Voyager Employee commences to participate in a Combined Company Benefit Plan in which such
Spinco Group Employee or Voyager Employee did not previously participate, Spinco or its successor, as applicable, shall use its commercially reasonable efforts to cause there to be no interruption of coverage with respect to the type of benefit
being provided under such Combined Company Benefit Plan. In addition, except as otherwise provided in any other provision of this Agreement, and except as shall derive from application of a uniform rule applied to all similarly situated employees,
from and after the Distribution, the Combined Company Benefit Plans shall, and Spinco shall use commercially reasonable efforts to cause each Spinco Entity to, recognize each Spinco Group Employee’s and Voyager Employee’s service prior to
the Distribution Date (including (x) for the Spinco Group Employees, service with any Harbor Entity or Spinco Entity, as applicable prior to the Distribution Date, and (y) for the Voyager Employees, service with Voyager or any Subsidiary
prior to the Distribution Date) for purposes of eligibility and vesting under any Combined Company Benefit Plan and for determination of level of benefits under any Combined Company Benefit Plan that is a vacation, paid leave, paid-time off or similar plan or severance or other termination benefit plan, to the same extent such service was recognized as of the Distribution Date. Notwithstanding the foregoing, nothing herein shall require a
Spinco Entity or any Combined Company Benefit Plan to credit service prior to the Distribution Date for purposes of any equity award or other equity-based benefit or
equity-based compensation, or retention benefit, that may be established by a Spinco Entity at any time prior to, on or after the Distribution Date, except as otherwise may be required by applicable Law. 

  
 12 

 Section 3.6 No Duplication or Acceleration of Benefits. Notwithstanding anything to
the contrary in this Agreement, the Distribution Agreement or any other Transaction Agreement, no participant in the Harbor Benefit Plans, Spinco Dedicated Benefit Plans, Voyager Benefit Plans, or Combined Company Benefit Plans shall receive
benefits to the extent that receipt of such benefits would result in duplication of benefits provided by another Harbor Benefit Plan, Spinco Dedicated Benefit Plan, Voyager Benefit Plan, or Combined Company Benefit Plan. Furthermore, unless
expressly provided for in this Agreement, the Distribution Agreement or in any other Transaction Agreement or required by applicable Law, no provision in this Agreement shall be construed to create any right to accelerated vesting or entitlements
under any Benefit Plan on the part of any Harbor Retained Employee, Harbor Former Employee, Spinco Former Employee, Spinco Group Employee or Voyager Employee. 

Section 3.7 Employment Conditions. Spinco hereby covenants that for the period commencing on the Effective Date and ending on the
date nine months immediately following the Effective Date (or, if earlier, the date of termination of the applicable Spinco Group Employee), (i) each Spinco Group Employee shall receive an annual base rate of salary or wages and annual target cash
incentive opportunities that in each case are no less favorable to such Spinco Group Employee than those in effect on the date of this Agreement, (ii) Spinco Group Employees, in the aggregate, shall receive qualified defined contribution plan
or similar benefits, health and welfare plan benefits, severance benefits, and target equity opportunities, that are substantially comparable in the aggregate to those qualified defined contribution plan or similar benefits, health and welfare plan
benefits, severance benefits, and target equity opportunities, provided by the Harbor Entities, Spinco Entities or their Affiliates, as applicable, to Spinco Group Employees in effect on the date of this Agreement; provided that Spinco Group
Employees located outside of the U.S. shall, to the extent required by applicable Law, also receive substantially comparable defined benefit pension benefits. Notwithstanding the foregoing, the Parties understand and agree that, any time prior to
the Effective Time, at the request of a Spinco Entity, or at the request of Voyager, the Parties shall take any actions reasonably necessary to amend, adopt or terminate any Spinco 401(k) Plan or Voyager Benefit Plan that is a 401(k) plan, and any
other Spinco Dedicated Benefit Plans and Voyager Plans, in each case, effective as of immediately prior to the Effective Time, contingent upon consummation of the Closing; provided that any such amendment, adoption, or termination shall not affect
or in any way interfere with Spinco’s covenants under this Section 3.7, and shall not create any additional Liability for any Harbor Entity or Spinco Entity. It is the Parties’ intent that actions pursuant to this
Section 3.7 will not trigger severance, redundancy, or similar obligations or Liabilities with respect to any Spinco Group Employees. Spinco also hereby covenants that for the period commencing on the Effective Date and
ending on the date nine months immediately following the Effective Date, each Harbor Transfer Employee shall be entitled to receive severance and other termination benefits that are no less favorable to such Harbor Transfer Employee than those in
effect on the date of this Agreement. 
 Section 3.8 Business Associate Agreement. The Parties acknowledge that the Harbor Entities
or the Spinco Entities may provide administrative services for certain of the other Party’s benefit programs for a transitional period under the terms of the Transition Services Agreement. 

  
 13 

 
The Parties agree to enter into a business associate agreement (if required by HIPAA or other applicable health information privacy Laws) in a customary form to be mutually agreed in connection
with the provision of such services. 
 ARTICLE IV 

CASH AND EQUITY INCENTIVE COMPENSATION PLANS 

Section 4.1 Cash Incentives. With respect to the fiscal year in which the Distribution occurs, (x) the applicable Spinco
Entity shall maintain a bonus plan for the benefit of Spinco Group Employees with substantially the same terms and conditions (including performance goals and bonus targets, as equitably adjusted by Spinco following the Distribution to the extent
necessary or appropriate to provide a substantially similar incentive opportunity) as the annual bonus plan applicable to such Spinco Group Employees immediately prior to the Distribution, (y) as soon as reasonably practicable following the end
of such fiscal year, the applicable Spinco Entity will pay bonuses payable to each Spinco Group Employee based on the Performance Calculation, and (z) to the extent that such annual bonuses are not reflect in the Spinco Working Capital
Adjustment (as the term is defined in the Distribution Agreement), Harbor shall reimburse Spinco for the prorated portion of the total of such bonus payments based on the applicable Spinco Group Employees’ service from the start of such fiscal
year until immediately prior to the Distribution Date promptly but in no event later than thirty (30) days after the presentation of a statement setting forth the amount of reimbursement to which Spinco is entitled; provided, however,
that, for the avoidance of doubt, no such reimbursement shall be payable with respect to any discretionary bonus payments made by any Spinco Entity to any Spinco Group Employee. Except as provided in the immediately preceding sentence, from and
after the Distribution, Spinco shall be solely responsible for funding, paying, and discharging all obligations and Liabilities relating to the cash incentive awards that any Spinco Group Employee is eligible to receive under any commission plan in
which the Spinco Group Employees participate, whether such obligation or Liability arises, accrues, is incurred or is reported prior to, on, or after the Distribution, and no Harbor Entity shall have any obligations or Liabilities with respect
thereto. 
 Section 4.2 Equity Awards. 

(a) Harbor PSU Awards or Harbor Performance Restricted Stock. Each outstanding Harbor PSU Award or share of Harbor Performance
Restricted Stock that is held by a Spinco Group Employee as of the Effective Time shall, subject to any requirements and restrictions under applicable Law, be converted into a Spinco RSU Award or share of Spinco Restricted Stock, as applicable, and
shall otherwise be subject to the same terms and conditions and contain the same features (including, without limitation, the “rule of 70” feature, to the extent applicable) after the Effective Time as the terms and conditions applicable
to, and the features contained in, such Harbor PSU Award or Harbor Performance Restricted Stock immediately prior to the Effective Time; provided, however, that (x) from and after the Effective Time, the number of shares of Spinco
Common Stock covered by such Spinco RSU Award or share of Spinco Restricted Stock, rounded to the nearest whole share, shall be equal to the quotient obtained by dividing (i) 100 % of the target number of shares of Harbor Common Stock
covered by such Harbor PSU Award or Harbor Performance Restricted Stock immediately prior to the Effective Time by (ii) the Adjustment Ratio, (y) immediately prior to the Effective Time, 

  
 14 

 
the Harbor PSU Awards and shares of Harbor Performance Restricted Stock held by Spinco Group Employees shall partially performance-vest to the extent described in the immediately following
sentence, and (z) subject to the immediately following sentence, the performance goals for vesting of the unvested portion of such Spinco RSU Award or share of Spinco Restricted Stock shall be adjusted to reflect the new Spinco business in a
manner intended to be reasonably equitable, as determined by Spinco after good faith consultation with Harbor. With respect to the Harbor PSU Awards and shares of Harbor Performance Restricted Stock held by Spinco Group Employees immediately prior
to the Effective Time: (i) if the Distribution Date occurs in 2018, performance-vesting through the end of the 2018 performance year will be calculated based on actual performance from the start of the performance cycle for such award through
the end of the last calendar month immediately prior to the Distribution Date but adjusted up to the Distribution Date, and (ii) if the Distribution Date occurs on or after January 1, 2019, performance-vesting through the end of the last
calendar month immediately prior to the Distribution Date will be calculated based on actual performance from the start of the performance cycle for such award through the end of the last calendar month immediately prior to the Distribution Date but
adjusted up to the Distribution Date. Nothing herein is intended to change the time-based vesting schedule that applies to the awards or the timing of payment of the award in accordance with the terms and conditions of the existing award agreements.

 (b) Harbor RSU or Restricted Stock. Each outstanding Harbor RSU Award or share of Harbor Restricted Stock that is held by a Spinco
Group Employee as of the Effective Time shall, subject to any requirements and restrictions under applicable Law, be converted into a Spinco RSU Award or share of Spinco Restricted Stock, as applicable, and shall otherwise be subject to the same
terms and conditions and contain the same features (including, without limitation, the “rule of 70” feature, to the extent applicable) after the Effective Time as the terms and conditions applicable to, and the features contained in, such
Harbor RSU Award or Harbor Restricted Stock immediately prior to the Effective Time. The number of shares of Spinco Common Stock covered by such Spinco RSU Award or share of Spinco Restricted Stock, rounded to the nearest whole share, shall be equal
to the quotient obtained by dividing (i) the number of shares of Harbor Common Stock covered by such Harbor RSU Award or Harbor Restricted Stock immediately prior to the Effective Time by (ii) the Adjustment Ratio. 

(c) Voyager Options. Each Voyager Option held by a Voyager Employee that by its terms (in the normal course without regard to
acceleration) is scheduled to vest after the Effective Time shall, subject to any requirements and restrictions under applicable Law, be converted into a Spinco Option and shall otherwise be subject to the same terms and conditions and contain the
same features after the Effective Time as the terms and conditions applicable to, and the features contained in, such Voyager Option immediately prior to the Effective Time; provided, however, that from and after the Effective Time:

 (i) the number of shares of Spinco Common Stock subject to such Voyager Option, rounded down to the nearest whole share,
shall be equal to the quotient obtained by dividing (A) the number of shares of Voyager Common Stock subject to such Voyager Option immediately prior to the Effective Time by (B) the Voyager Ratio; and 

  
 15 

 (ii) the per share exercise price of such Spinco Option, rounded up to the
nearest whole cent, shall be equal to the product obtained by multiplying (A) the per share exercise price of such Voyager Option immediately prior to the Effective Time by (B) the Voyager Ratio. 

(d) Miscellaneous. Harbor, Spinco, and Voyager shall take any and all actions reasonably necessary to effectuate the transactions
contemplated by this Section 4.2. Without limiting the generality of the foregoing, as soon as practicable after the Effective Time, Spinco or its successor, as applicable, shall prepare and file with the SEC a registration statement
registering a number of shares of Spinco Common Stock necessary to fulfill Spinco’s obligations under this Section 4.2. Following the conversions contemplated by this Section 4.2, no Harbor Entity shall have any obligation or
Liability with respect to any Harbor PSU Award, Harbor RSU Award, share of Harbor Restricted Stock or share of Harbor Performance Restricted Stock to or with respect any Spinco Group Employee or Spinco Former Employee. 

ARTICLE V 
 QUALIFIED
RETIREMENT PLANS 
 Section 5.1 Defined Contribution Plans. 

(a) Vesting under Harbor 401(k) Plan. As of the Distribution, the Harbor Entities agrees to take all necessary action to
fully vest each Spinco Group Employee who is a participant in any Harbor 401(k) Plan. 
 (b) Amendment of the Spinco 401(k)
Plans. Effective as of the Distribution Date, Spinco shall, or shall have caused one or more of its Subsidiaries to, continue to maintain, establish or adopt one or more defined contribution savings plans and related trusts intended to satisfy
the requirements of Sections 401(a) and 401(k) of the Code (each such defined contribution savings plan, a “Spinco 401(k) Plan”). 

(c) Spinco Group Employee Accounts Rollover from Harbor 401(k) Plan. As soon as commercially possible following the Distribution Date,
Harbor shall use commercially reasonable efforts to cause that, effective as of the Distribution Date, the Spinco Group Employees who, prior to the Distribution, participated in the Harbor 401(k) Plan that is not a Spinco Dedicated Benefit Plan,
shall be entitled to distribution from such Harbor 401(k) Plan, and Spinco shall use its commercially reasonable efforts to cause one or more Spinco 401(k) Plans to accept a “direct rollover” (as described in Section 401(a)(31) of the
Code) to the applicable Spinco 401(k) Plan. If such a Spinco Group Employee elects a “direct rollover” (as described in Section 401(a)(31) of the Code) of the account balances (including direct rollovers of outstanding loans and any
promissory notes or other documents evidencing such loans, but solely to the extent permitted under the terms and conditions of the applicable Spinco 401(k) Plan) each of the applicable Harbor Entities and the applicable Spinco Entities shall use
commercially reasonable efforts to cause the administrators of their respective 401(k) plans to accomplish such rollover. During the period following the Distribution Date and preceding any rollover pursuant to this Section 5.1(c), the
applicable Harbor Entities shall use commercially reasonable efforts to take such action as is necessary to prevent a default by any such Spinco Group Employee with an outstanding loan under the Harbor 401(k) Plan unless and until such

  
 16 

 
Spinco Group Employee fails to make a timely payment on such loan. With respect to the fiscal year in which the Effective Date occurs, Spinco shall make to the Spinco 401(k) Plan all employer
contributions (including employer matching contributions) that would have been made by Harbor on behalf of the Spinco Group Employees that participated in the Harbor 401(k) Plan as if the transactions contemplated by this Agreement had not occurred,
regardless of any service or end of year employment requirements and assuming the Spinco Group Employees would have continued to contribute 401(k) contributions at the level immediately in effect prior to the Distribution Date. 

ARTICLE VI 
 WELFARE PLANS

 Section 6.1 Spinco Welfare Plans. In accordance with Section 3.4, on or prior to the Distribution, Spinco shall, or
shall cause another Spinco Entity (in consultation with Voyager) to, continue to maintain, or establish and adopt Spinco Welfare Plans which will provide welfare benefits to each Spinco Group Employee who is a participant in any of the Harbor
Welfare Plans or Spinco Welfare Plans (and their eligible spouses, domestic partners and dependents, as the case may be) (collectively, the “Spinco Welfare Plan Participants”). Coverage and benefits under any Spinco Welfare Plans shall,
following the Effective Time, be provided to the Spinco Welfare Plan Participants on an uninterrupted basis, to the extent commercially reasonable, under the same Spinco Welfare Plan or under any analogous or newly established Spinco Welfare Plans.

 Section 6.2 Transitional Matters Under Spinco Welfare Plans. 

(a) Treatment of Claims Incurred. 

(i) Liability for Claims. With respect to unpaid covered claims incurred on or prior to the Distribution by any Spinco
Welfare Plan Participant under any Harbor Welfare Plans, including claims that are self-insured and claims that are fully insured through third-party insurance, Harbor
shall retain and be responsible for the payment for such claims or shall cause such Harbor Welfare Plans to fully perform, pay and discharge all such claims, as the case may be, and except as provided in Section 6.2(a)(iv), no Spinco Entity
shall be responsible for any Liability with respect to any such claims. Claims incurred by Spinco Welfare Plan Participants (i) in the ordinary course of business under any Spinco Welfare Plan prior to the Distribution, and (ii) after the
Distribution, shall be the sole responsibility of the Spinco Welfare Plan and the Spinco Entities. In the event that a claim incurred by a Spinco Welfare Plan Participant after the Distribution is paid by Harbor or an Harbor Welfare Plan, Spinco
shall reimburse Harbor for such payment, solely to the extent such claim is a covered claim under a Spinco Welfare Plan by its express terms but is not paid by Spinco or its insurance carriers, in full within thirty (30) days after the delivery
by Harbor to Spinco of an invoice therefor together with such supporting documentation as Spinco may reasonably request. 

(ii) Claims Incurred. For purposes of this Section 6.2(a), a claim or expense is deemed to be incurred
(A) with respect to medical (including continuous hospitalization), dental, vision and/or prescription drug benefits, upon the rendering of health services giving rise to such claim or expense; (B) with respect to life insurance,

  
 17 

 
accidental death and dismemberment and business travel accident insurance, upon the occurrence of the event giving rise to such claim or expense; and (C) with respect to short- and long-term disability benefits, upon the date of an individual’s disability, as determined by the disability benefit insurance carrier or claim administrator,
giving rise to such claim or expense. For avoidance of doubt, unless required otherwise by applicable Law, a claim incurred by a Person who is actively at work shall for purposes of this Section 6.2 be deemed unrelated to any prior claim
notwithstanding that the claim may be the same as, or substantially similar to, a prior claim made by such Person. 
 (iii)
Long Term Disability Benefits. The applicable Harbor Welfare Plan providing LTD to Disabled Employees on or immediately prior to the Distribution, if any, shall continue to provide such benefits to such employees after the Distribution to the
extent required by applicable Law as permitted under the terms and conditions of such Harbor Welfare Plan. After the Distribution, the Spinco Entities shall be solely responsible for providing LTD to eligible employees under Spinco Welfare Plans who
become disabled after the Distribution. 
 (iv) Disability Benefits. With respect to Disabled Employees who are
receiving STD on or immediately prior to the Distribution under applicable Harbor Welfare Plans, the applicable Harbor Welfare Plan shall continue to provide such STD, but Spinco will be responsible for paying for such benefits for the period after
the Distribution until such time as those STD benefits terminate in accordance with the terms of such Harbor Welfare Plan. In the event any such Disabled Employee or Spinco Group Employee, after the Distribution becomes eligible to transition
directly from receiving STD to receiving LTD, Harbor, the applicable Harbor Entity, or the applicable Harbor Welfare Plan will provide the LTD to which such Disabled Employee is entitled (taking into account, if applicable, the extent to which such
Disabled Employee has elected such coverage and has made the required contributions therefor). After the Distribution, the Spinco Entities shall be solely responsible for providing STD and LTD to eligible employees under Spinco Welfare Plans who
become disabled after the Distribution. 
 (b) COBRA. The Harbor Entities and the applicable Harbor Welfare Plans shall be solely
responsible for providing continued health coverage required by COBRA to employees (and their qualifying beneficiaries) who experience a COBRA qualifying event (as defined in Section 4980B of the Code) under such Harbor Welfare Plans on or
prior to the Distribution, and shall be solely responsible for all claims, obligations and Liabilities incurred under the applicable Harbor Welfare Plan as a result of such COBRA coverage. Spinco or its successor, as applicable, and the applicable
Spinco Welfare Plans shall be solely responsible for providing continued health coverage to the extent required by COBRA to (i) Spinco Group Employees and Spinco Former Employees who were employed by a Spinco Entity but were not covered by a
Harbor Welfare Plan prior to the Distribution, and (ii) all Spinco Group Employees who experience a COBRA qualifying event after the Distribution, and shall be solely responsible for all claims, obligations and Liabilities incurred under the
applicable Spinco Welfare Plan as a result of such COBRA coverage. 

  
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 Section 6.3 Waiver of Conditions or Restrictions. Without limiting the generality of
Section 3.5, with respect to Spinco Group Employees who participated in Harbor Welfare Plans prior to the Distribution, the Spinco Welfare Plans will use commercially reasonable efforts to have waived all eligibility periods, limitations as to
preexisting conditions, exclusions, service conditions, waiting periods or evidence of insurability requirements that would otherwise be applicable to the Spinco Welfare Plan Participant following the Distribution Date to the extent that such
employee had previously satisfied any such limitation or requirement under the corresponding Harbor Welfare Plan as of the Distribution Date. In addition, following the Distribution Date, (a) the Combined Company Welfare Plans will use
commercially reasonable efforts to have waived all eligibility periods, limitations as to preexisting conditions, exclusions, service conditions, waiting periods or evidence of insurability requirements that would otherwise be applicable to any
Spinco Group Employee or Voyager Employee to the extent that such employee had previously satisfied any such limitation or requirement under the corresponding Harbor Benefit Plan, Spinco Welfare Plan or Voyager Benefit Plan as the date of
commencement of participation in such Combined Company Welfare Plan and (b) Spinco shall use commercially reasonable efforts to cause the Combined Company Welfare Plans to credit Spinco Group Employees and Voyager Employees (and their
respective eligible dependents) for any deductibles, co-payments or other co-insurance and
out-of-pocket expenses paid in the plan year under the Harbor Benefit Plan, Spinco Welfare Plan or Voyager Benefit Plan prior to the transition of coverage for purposes
of satisfying applicable deductible, co-insurance and maximum out-of-pocket expenses under any corresponding applicable Combined
Company Welfare Plan with respect to the plan year in which the transition occurs. 
 Section 6.4 Insurance Contracts. To the
extent any Harbor Welfare Plan or Spinco Welfare Plan is funded through the purchase of an insurance contract or is subject to any stop loss contract, Harbor and Spinco will cooperate and each will use its reasonable best efforts to maintain any
pricing discounts or other preferential terms for both Harbor and Spinco for a reasonable term. Neither Party shall be liable for failure to obtain such insurance contracts, pricing discounts, or other preferential terms for the other Party. Each
Party shall be responsible for any new or additional premiums, charges, or administrative fees that such Party may incur with respect to its insurance coverage pursuant to this Section 6.4. 

Section 6.5 Third-Party Vendors. Except as provided below, to the extent any Harbor
Welfare Plan or Spinco Welfare Plan is administered by a third-party vendor, Harbor and Spinco will cooperate and each will use its reasonable best efforts to replicate any contract with such third-party vendor for Spinco, to the extent necessary, and to maintain any pricing discounts or other preferential terms for both Harbor and Spinco for a reasonable term. Neither Party shall be liable for failure
to obtain such pricing discounts or other preferential terms for the other Party. Each Party shall be responsible for any new or additional premiums, charges, or administrative fees that such Party may incur with respect to its contracts pursuant to
this Section 6.5. 
 Section 6.6 Workers’ Compensation. With respect to claims for workers compensation,
(a) the Harbor Entities shall be responsible for claims for workers compensation incurred in respect of Harbor Former Employees and Harbor Retained Employees, whether incurred prior to, at or following the Distribution, and (b) the Spinco
Entities shall be responsible for all claims for workers compensation in respect of Spinco Former Employees and Spinco Group Employees whether incurred prior to, at or following the Distribution. For purposes of this Section 6.6, claims shall
be deemed to be incurred upon the occurrence of the injury giving rise to such claim. 

  
 19 

 Section 6.7 Flexible Spending Accounts. The applicable Spinco Entity shall use
commercially reasonable efforts to establish, effective as of the Effective Date, flexible spending accounts for medical and dependent care expenses for the Harbor Transfer Employees and shall credit such accounts with the amounts credited as of the
Effective Date under comparable flexible spending accounts maintained for the benefit of the Harbor Transfer Employees by Harbor from the beginning of the plan year to the Effective Date. As soon as administratively practicable after the
Effective Date, (i) Harbor shall pay, or cause to be paid, to Spinco in cash the amount, if any, by which aggregate contributions made by Harbor Transfer Employees to flexible spending accounts maintained by Harbor exceeded the aggregate
benefits provided to such Harbor Transfer Employees as of the Effective Date, or (ii) Spinco shall pay, or cause to be paid, to Harbor, in cash the amount, if any, by which aggregate benefits provided to Harbor Transfer Employees under the
flexible spending accounts maintained by Harbor exceeded the aggregate contributions made by the Harbor Transfer Employees to such accounts as of the Effective Date. 

ARTICLE VII 
 GENERAL
PROVISIONS, SECTION 280G, AND INDEMNIFICATION 
 Section 7.1 Preservation of Rights to Amend. The rights of each Harbor
Entity, each Spinco Entity and Voyager and its Subsidiaries to amend, waive, or terminate any plan, arrangement, agreement, program, or policy referred to herein shall not be limited in any way by this Agreement. 

Section 7.2 Entire Agreement. Section 10.8 of the Distribution Agreement is incorporated herein by reference. To the extent
any provision of this Agreement conflicts with the provisions of the Distribution Agreement, the Merger Agreement or any other Transaction Agreement, the provisions of this Agreement shall be deemed to control with respect to the subject matter
hereof (except that the provision by Harbor of employee- or human resource-related services to Spinco to the extent set forth in the Transition Services Agreement shall
not be deemed to result in such a conflict). 
 Section 7.3 Binding Effect; No
Third-Party Beneficiaries or Plan Amendment; Assignment. This Agreement shall inure to the benefit of and be binding upon the Parties and their respective successors and permitted assigns. This
Agreement is solely for the benefit of the Parties and should not be deemed to confer upon any third parties (including without limitation any current or former employee, director, officer, service provider or other individual associated therewith)
any remedy, claim, Liability, reimbursement, cause of action, or other right in excess of those existing without reference to this Agreement. Except with respect to rights and obligations of the parties to each other under this Agreement, nothing in
this Agreement, express or implied, shall (i) limit the ability of Harbor, Spinco, Voyager, or any of their respective Affiliates from terminating the employment of any employee (including any Spinco Group Employee); (ii) be construed to
establish, amend or modify any Benefit Plan or other benefit or compensation plan, program, agreement, policy, contract or arrangement; or (iii) limit the ability of Harbor, Spinco, Voyager, or any of their respective Affiliates to amend,
modify or terminate any Benefit Plan or other benefit or compensation plan, program, agreement, policy, contract or arrangement at any time assumed, established, sponsored or maintained by any of them. This Agreement may not be assigned by any
Party, except with the prior written consent of the other Parties. 

  
 20 

 Section 7.4 Amendment; Waivers. Section 10.11 of the Distribution Agreement is
incorporated herein by reference. 
 Section 7.5 Remedies Cumulative. All rights and remedies existing under this Agreement are
cumulative to, and not exclusive of, any rights or remedies otherwise available to the Parties hereunder. 
 Section 7.6
Notices. Unless otherwise expressly provided herein, all notices, claims, certificates, requests, demands and other communications hereunder shall be made or given in accordance with the provisions of Section 10.2 of the Distribution
Agreement. 
 Section 7.7 Counterparts. Section 10.10 of the Distribution Agreement is incorporated herein by reference.

 Section 7.8 Severability. Section 10.5 of the Distribution Agreement is incorporated herein by reference. 

Section 7.9 Governing Law, Consent to Jurisdiction and Waiver of Right to Jury Trial. The provisions of Sections 10.9, 10.13 and
10.14 of the Distribution Agreement are incorporated herein by reference. 
 Section 7.10 Performance. Each of Harbor and Spinco
or its successor, as applicable, shall cause to be performed, and hereby guarantees the performance of, all actions, agreements and obligations set forth herein to be performed by any Harbor Entity and any Spinco Entity, respectively. The Parties
each agree to take such further actions and to execute, acknowledge, and deliver, or to cause to be executed, acknowledged, and delivered, all such further documents as are reasonably requested by the other for carrying out the purposes of this
Agreement or of any document delivered pursuant to this Agreement. The provisions of Section 10.15 of the Distribution Agreement governing specific performance are incorporated herein by reference. 

Section 7.11 Termination. The provisions of Section 10.12 of the Distribution Agreement are incorporated herein by reference.

 Section 7.12 Headings. The provisions of Section 10.4 of the Distribution Agreement are incorporated herein by
reference. 
 Section 7.13 Assignment. The provisions of Section 10.6 of the Distribution Agreement are incorporated herein
by reference. 

  
 21 

 Section 7.14 280G Waivers and Consent. Prior to the Effective Date, Voyager and its
Subsidiaries shall determine in good faith within the meaning of Section 280G of the Code and the regulations promulgated thereunder, whether any “disqualified individual” is expected to receive, or has the right or entitlement to
receive, any payments and/or other benefits that would reasonably be expected to constitute “parachute payments,” in which case, each of Voyager and its Subsidiaries: 

(a) To the extent applicable, will use reasonable best efforts to obtain a waiver (a “Parachute Payment Waiver”), prior to the
initiation of the 280G Approval described below, from each Person who, with respect to such entity, would reasonably be expected to be a “disqualified individual” (within the meaning of Section 280G of the Code and the regulations
promulgated thereunder and as determined immediately prior to the initiation of the 280G Approval), and who would otherwise reasonably be expected to receive, have received, or have the right or entitlement to receive any payments and/or other
benefits (including, without limitation, acceleration of vesting) that would otherwise constitute “parachute payments” under Section 280G of the Code, of such Person’s right or entitlement to receive a portion of such payments
and benefits (such that all remaining payments and benefits to such Person would not be deemed to be “parachute payments”), unless the 280G Approval has been obtained in a manner satisfying the applicable requirements of
Section 280G(b)(5)(B) of the Code and the regulations promulgated thereunder. 
 (b) To the extent applicable, will submit to its
respective stockholders for a vote all such waived payments in a manner such that, if such vote is adopted by such stockholders in a manner which satisfies the requirements of Section 280G(b)(5)(B) of the Code and the treasury regulations
thereunder, including Q-7 of Section 1.280G-1 of such treasury regulations, no payment or benefit received by such “disqualified individual” would be a
“parachute payment” for purposes of Section 280G of the Code (the “280G Approval”). Prior to the Effective Date, each of Voyager and its Subsidiaries, to the extent applicable, shall deliver to Harbor and Spinco evidence
that a vote of the stockholders was solicited in accordance with the foregoing provisions of this Section 7.14 and that either (i) 280G Approval was obtained, or (ii) 280G Approval was not obtained, and as a consequence,
the parachute payments subject to the Parachute Payment Waivers shall not be made or provided in accordance with such Parachute Payment Waivers. Voyager shall provide Harbor with drafts of all such solicitation materials and consents for review and
comment prior to delivery to stockholders or disqualified individuals, as applicable (such review and comment not to be unreasonably withheld, conditioned or delayed). 

Section 7.15 Survival and Indemnification. The provisions of Section 6.1 of the Distribution Agreement regarding the survival
of covenants, obligations and agreements of the Parties shall apply to the covenants, obligations and agreements described in this Agreement as if they were set forth in the Distribution Agreement. Without limiting the generality of the Distribution
Agreement, any Liabilities described in this Agreement as being assumed or retained by Harbor or a Harbor Entity shall be Excluded Liabilities, and any Liabilities described in this Agreement as being assumed or retained by Spinco or a Spinco Entity
shall be Spinco Liabilities and, in each case, the provisions of the Distribution Agreement (including the indemnification provision of Section 6.3 of the Distribution Agreement) shall apply to such Liabilities. 

[Signatures of the Parties on Next Page] 

  
 22 

 IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed in their names by a
duly authorized officer as of the date first written above. 
  

			
	 HENRY SCHEIN, INC.

		
	By:	 	/s/ Stanley Bergman
	Name:	 	Stanley Bergman
	Title:	 	Chairman of the Board and Chief Executive Officer

  

			
	HS SPINCO, INC.
		
	By:	 	/s/ Steven Paladino
	Name:	 	Steven Paladino
	Title:	 	Treasurer and Chief Financial Officer

  

			
	DIRECT VET MARKETING, INC.
		
	By:	 	/s/ Benjamin Shaw
	Name:	 	Benjamin Shaw
	Title:	 	President

  
 23apvo-ex101_7.htm

Exhibit 10.1

 

PURCHASE AGREEMENT

 

THIS PURCHASE AGREEMENT (the “Agreement”), dated as of December 20, 2018 (the “Execution Date”), is entered into by and between APTEVO THERAPEUTICS, INC., a Delaware corporation (the “Company”), and LINCOLN PARK CAPITAL FUND, LLC, an Illinois limited liability company (the “Investor”).  Capitalized terms used herein and not otherwise defined herein are defined in Section 1 hereof.

 

WHEREAS:

Subject to the terms and conditions set forth in this Agreement, the Company wishes to sell to the Investor, and the Investor wishes to buy from the Company, up to Thirty Five Million Dollars ($35,000,000.00) (the “Commitment Amount”) of the Company’s common stock, par value $0.001 per share (the “Common Stock”). The shares of Common Stock to be purchased hereunder are referred to herein as the “Purchase Shares”. 

NOW THEREFORE, in consideration of the mutual covenants contained in this Agreement, and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the Company and the Investor hereby agree as follows: 

	
 
	
1.
	
CERTAIN DEFINITIONS.  

 

For purposes of this Agreement, the following terms shall have the following meanings:

 

(a) “Accelerated Purchase Date” means, with respect to any Accelerated Purchase (as defined below) made pursuant to Section 2(b) hereof, the Business Day immediately following the applicable Purchase Date with respect to the corresponding Regular Purchase referred to in clause (i) of the second sentence of Section 2(a) hereof.

 

(b)“Accelerated Purchase Floor Price” means $1.50, which shall be appropriately adjusted for any reorganization, recapitalization, non-cash dividend, stock split or other similar transaction and, effective upon the consummation of any such reorganization, recapitalization, non-cash dividend, stock split or other similar transaction, the Accelerated Purchase Floor Price shall mean the lower of (i) the adjusted price and (ii) $1.50.

 

(c)“Accelerated Purchase Minimum Price Threshold” means, with respect to any Accelerated Purchase made pursuant to Section 2(b) hereof, any minimum per share price threshold set forth in the applicable Accelerated Purchase Notice.

 

(d)“Accelerated Purchase Notice” means, with respect to an Accelerated Purchase made pursuant to Section 2(b) hereof, an irrevocable written notice from the Company to the Investor directing the Investor to purchase the applicable Accelerated Purchase Share Amount at the Accelerated Purchase Price on the Accelerated Purchase Date for such Accelerated Purchase in accordance with this Agreement, and specifying any Accelerated Purchase Minimum Price Threshold determined by the Company.

 

(e)“Accelerated Purchase Price” means, with respect to an Accelerated Purchase made pursuant to Section 2(b) hereof, the lower of (i) ninety-six percent (96%) of the VWAP for the period beginning at 9:30:01 a.m., Eastern time, on the applicable Accelerated Purchase Date, or such other time publicly announced by Principal Market as the official open (or commencement) of trading on the Principal Market on such applicable Accelerated Purchase Date (the “Accelerated Purchase Commencement Time”), and ending at the earliest of (A) 4:00:00 p.m., Eastern time, on such applicable Accelerated Purchase Date, 

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or such other time publicly announced by Principal Market as the official close of trading on the Principal Market on such applicable Accelerated Purchase Date, (B) such time, from and after the Accelerated Purchase Commencement Time for such Accelerated Purchase, that total number (or volume) of shares of Common Stock traded on the Principal Market has exceeded the applicable Accelerated Purchase Share Volume Maximum, and (C) such time, from and after the Accelerated Purchase Commencement Time for such Accelerated Purchase, that the Sale Price has fallen below the applicable Accelerated Purchase Minimum Price Threshold (such earliest of (i)(A), (i)(B) and (i)(C) above, the “Accelerated Purchase Termination Time”), and (ii) the Closing Sale Price of the Common Stock on such applicable Accelerated Purchase Date (to be appropriately adjusted for any reorganization, recapitalization, non-cash dividend, stock split, reverse stock split or other similar transaction). 

 

(f)“Accelerated Purchase Share Amount” means, with respect to an Accelerated Purchase made pursuant to Section 2(b) hereof, the number of Purchase Shares directed by the Company to be purchased by the Investor in an Accelerated Purchase Notice, which number of Purchase Shares shall not exceed the lesser of (i) 300% of the number of Purchase Shares directed by the Company to be purchased by the Investor pursuant to the corresponding Regular Purchase Notice for the corresponding Regular Purchase referred to in clause (i) of the second sentence of Section 2(b) hereof (subject to the Purchase Share limitations contained in Section 2(b) hereof) and (ii) an amount equal to (A) the Accelerated Purchase Share Percentage multiplied by (B) the total number (or volume) of shares of Common Stock traded on the Principal Market during the period on the applicable Accelerated Purchase Date beginning at the Accelerated Purchase Commencement Time for such Accelerated Purchase and ending at the Accelerated Purchase Termination Time for such Accelerated Purchase.

 

(g)“Accelerated Purchase Share Percentage” means, with respect to an Accelerated Purchase made pursuant to Section 2(b) hereof, thirty percent (30%).

 

(h)“Accelerated Purchase Share Volume Maximum” means, with respect to an Accelerated Purchase made pursuant to Section 2(b) hereof, a number of shares of Common Stock equal to (i) the applicable Accelerated Purchase Share Amount to be purchased by the Investor pursuant to the applicable Accelerated Purchase Notice for such Accelerated Purchase, divided by (ii) the Accelerated Purchase Share Percentage (to be appropriately adjusted for any reorganization, recapitalization, non-cash dividend, stock split, reverse stock split or other similar transaction).

 

(i)“Additional Accelerated Purchase Date” means, with respect to an Additional Accelerated Purchase made pursuant to Section 2(c) hereof, the Business Day (i) that is the Accelerated Purchase Date with respect to the corresponding Accelerated Purchase referred to in Section 2(b) hereof and (ii) on which the Investor receives, prior to 1:00 p.m., Eastern time, on such Business Day, a valid Additional Accelerated Purchase Notice for such Additional Accelerated Purchase in accordance with this Agreement.

 

(j)“Additional Accelerated Purchase Floor Price” means $1.50, which shall be appropriately adjusted for any reorganization, recapitalization, non-cash dividend, stock split or other similar transaction and, effective upon the consummation of any such reorganization, recapitalization, non-cash dividend, stock split or other similar transaction, the Additional Accelerated Purchase Floor Price shall mean the lower of (i) the adjusted price and (ii) $1.00.

 

(k)“Additional Accelerated Purchase Minimum Price Threshold” means, with respect to an Additional Accelerated Purchase made pursuant to Section 2(c) hereof, any minimum per share price threshold set forth in the applicable Additional Accelerated Purchase Notice.

 

 

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(l)“Additional Accelerated Purchase Notice” means, with respect to an Additional Accelerated Purchase made pursuant to Section 2(c) hereof, an irrevocable written notice from the Company to the Investor directing the Investor to purchase the applicable Additional Accelerated Purchase Share Amount at the Additional Accelerated Purchase Price for such Additional Accelerated Purchase in accordance with this Agreement.

 

(m)“Additional Accelerated Purchase Price” means, with respect to an Additional Accelerated Purchase made pursuant to Section 2(b) hereof, the lower of (i) ninety-six percent (96%) of the VWAP for the period on the applicable Additional Accelerated Purchase Date, beginning at the latest of (A) the applicable Accelerated Purchase Termination Time with respect to the corresponding Accelerated Purchase referred to in Section 2(b) hereof on such Additional Accelerated Purchase Date, (B) the applicable Additional Accelerated Purchase Termination Time with respect to the most recently completed prior Additional Accelerated Purchase on such Additional Accelerated Purchase Date, as applicable, and (C) the time at which all Purchase Shares subject to all prior Accelerated Purchases and Additional Accelerated Purchases (as applicable), including, without limitation, those that have been effected on the same Business Day as the applicable Additional Accelerated Purchase Date with respect to which the applicable Additional Accelerated Purchase relates, have theretofore been received by the Investor as DWAC Shares in accordance with this Agreement (such latest of (i)(A), (i)(B) and (i)(C) above, the “Additional Accelerated Purchase Commencement Time”), and ending at the earliest of (X) 4:00 p.m., Eastern time, on such Additional Accelerated Purchase Date, or such other time publicly announced by Principal Market as the official close of trading on the Principal Market on such Additional Accelerated Purchase Date, (Y) such time, from and after the Additional Accelerated Purchase Commencement Time for such Additional Accelerated Purchase, that total number (or volume) of shares of Common Stock traded on the Principal Market has exceeded the applicable Additional Accelerated Purchase Share Volume Maximum, and (Z) such time, from and after the Additional Accelerated Purchase Commencement Time for such Additional Accelerated Purchase, that the Sale Price has fallen below the applicable Additional Accelerated Purchase Minimum Price Threshold (if any) (such earliest of (i)(X), (i)(Y) and (i)(Z) above, the “Additional Accelerated Purchase Termination Time”), and (ii) the Closing Sale Price of the Common Stock on such Additional Accelerated Purchase Date (to be appropriately adjusted for any reorganization, recapitalization, non-cash dividend, stock split, reverse stock split or other similar transaction). 

 

(n)“Additional Accelerated Purchase Share Amount” means, with respect to an Additional Accelerated Purchase made pursuant to Section 2(c) hereof, the number of Purchase Shares directed by the Company to be purchased by the Investor on an Additional Accelerated Purchase Notice, which number of Purchase Shares shall not exceed the lesser of (i) 300% of the number of Purchase Shares directed by the Company to be purchased by the Investor pursuant to the corresponding Regular Purchase Notice for the corresponding Regular Purchase referred to in Section 2(c) hereof (subject to the Purchase Share limitations contained in Section 2(a) hereof) and (ii) an amount equal to (A) the Additional Accelerated Purchase Share Percentage multiplied by (B) the total number (or volume) of shares of Common Stock traded on the Principal Market during the period on the applicable Additional Accelerated Purchase Date beginning at the Additional Accelerated Purchase Commencement Time for such Additional Accelerated Purchase and ending at the Additional Accelerated Purchase Termination Time for such Additional Accelerated Purchase.

 

(o)“Additional Accelerated Purchase Share Percentage” means, with respect to an Additional Accelerated Purchase made pursuant to Section 2(c) hereof, thirty percent (30%).

 

(p)“Additional Accelerated Purchase Share Volume Maximum” means, with respect to an Additional Accelerated Purchase made pursuant to Section 2(c) hereof, a number of shares of Common Stock equal to (i) the applicable Additional Accelerated Purchase Share Amount properly directed by the Company to be purchased by the Investor in the applicable Additional Accelerated Purchase Notice for such Additional Accelerated Purchase, divided by (ii) the Additional Accelerated Purchase Share Percentage (to be appropriately adjusted for any reorganization, recapitalization, non-cash dividend, stock split, reverse stock split or other similar transaction)

 

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(q)“Alternate Adjusted Regular Purchase Share Limit” means, with respect to a Regular Purchase made pursuant to Section 2(a) hereof, the maximum number of Purchase Shares which, taking into account the applicable per share Purchase Price therefor calculated in accordance with this Agreement, would enable the Company to deliver to the Investor, on the applicable Purchase Date for such Regular Purchase, a Regular Purchase Notice for a Purchase Amount equal to, or as closely approximating without exceeding, One Hundred Thousand Dollars ($100,000).

 

(r)“Available Amount” means, initially, Thirty-Five Million Dollars ($35,000,000) in the aggregate, which amount shall be reduced by the Purchase Amount each time the Investor purchases Purchase Shares pursuant to Section 2 hereof.

 

(s)“Average Price” means a price per Purchase Share (rounded to the nearest tenth of a cent) equal to the quotient obtained by dividing (i) the aggregate gross purchase price paid by the Investor for all Purchase Shares purchased pursuant to this Agreement, by (ii) the aggregate number of Purchase Shares issued pursuant to this Agreement.

 

(t)“Bankruptcy Law” means Title 11, U.S. Code, or any similar federal or state law for the relief of debtors.

 

 

(u)“Business Day” means any day on which the Principal Market is open for trading, including any day on which the Principal Market is open for trading for a period of time less than the customary time.

 

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

 

(w)“Closing Sale Price” means, for any security as of any date, the last closing sale price for such security on the Principal Market as reported by the Principal Market.

 

(x)“Commencement” means the satisfaction of the conditions set forth in Sections 7 and 8 hereof.

 

(y)“Commencement Date” means the date on which the satisfaction of the conditions set forth in Sections 7 and 8 hereof has taken place.

 

(z)“Confidential Information” means any information disclosed by either party to the other party, either directly or indirectly, in writing, orally or by inspection of tangible objects (including, without limitation, documents, prototypes, samples, plant and equipment), which is designated as "Confidential," "Proprietary" or some similar designation. Information communicated orally shall be considered Confidential Information if such information is confirmed in writing as being Confidential Information within ten (10) Business Days after the initial disclosure. Confidential Information may also include information disclosed to a disclosing party by third parties. Confidential Information shall not, however, include any information which (i) was publicly known and made generally available in the public domain prior to the time of disclosure by the disclosing party; (ii) becomes publicly known and made generally available after disclosure by the disclosing party to the receiving party through no action or inaction of the receiving party; (iii) is already in the possession of the receiving party without confidential restriction at the time of disclosure by the disclosing party as shown by the receiving party’s files and records immediately prior to the time of disclosure; (iv) is obtained by the receiving party from a third party without 

 

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a breach of such third party’s obligations of confidentiality; (v) is independently developed by the receiving party without use of or reference to the disclosing party’s Confidential Information, as shown by documents and other competent evidence in the receiving party’s possession; or (vi) is required by law to be disclosed by the receiving party, provided that the receiving party gives the disclosing party prompt written notice of such requirement prior to such disclosure and assistance in obtaining an order protecting the information from public disclosure.

 

(aa)“Custodian” means any receiver, trustee, assignee, liquidator or similar official under any Bankruptcy Law.

 

(bb)“DTC” means The Depository Trust Company, or any successor performing substantially the same function for the Company.

 

(cc)“DWAC Shares” means shares of Common Stock that are (i) issued in electronic form, (ii) freely tradable and transferable and without restriction on resale and (iii) timely credited by the Company, once a DWAC notice is received, to the Investor’s or its designee’s specified Deposit/Withdrawal at Custodian (DWAC) account with DTC under its Fast Automated Securities Transfer (FAST) Program, or any similar program hereafter adopted by DTC performing substantially the same function.

 

(dd)“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.

 

(ee)“Floor Price” means $1.00, which shall be appropriately adjusted for any reorganization, recapitalization, non-cash dividend, stock split, reverse stock split or other similar transaction and, effective upon the consummation of any such reorganization, recapitalization, non-cash dividend, stock split, reverse stock split or other similar transaction, the Floor Price shall mean the lower of (i) the adjusted price and (ii) $1.00.

 

(ff)“Fully Adjusted Regular Purchase Share Limit” means, with respect to any reorganization, recapitalization, non-cash dividend, stock split or other similar transaction from and after the date of this Agreement, the Regular Purchase Share Limit (as defined in Section 2(a) hereof) in effect on the applicable date of determination, after giving effect to the full proportionate adjustment thereto made pursuant to Section 2(a) hereof for or in respect of such reorganization, recapitalization, non-cash dividend, stock split or other similar transaction.

 

 

(gg)“Material Adverse Effect” means any material adverse effect on (i) the enforceability of any Transaction Document, (ii) the results of operations, assets, business or financial condition of the Company and its Subsidiaries, taken as a whole, other than any material adverse effect that resulted exclusively from (A) any change in the United States or foreign economies or securities or financial markets in general that does not have a disproportionate effect on the Company and its Subsidiaries, taken as a whole, (B) any change that generally affects the industry in which the Company and its Subsidiaries operate that does not have a disproportionate effect on the Company and its Subsidiaries, taken as a whole, (C) any change arising in connection with earthquakes, hostilities, acts of war, sabotage or terrorism or military actions or any escalation or material worsening of any such hostilities, acts of war, sabotage or terrorism or military actions existing as of the date hereof, (D) any action taken by the Investor, its affiliates or its or their successors and assigns with respect to the transactions contemplated by this Agreement, (E) the effect of any change in applicable laws or accounting rules that does not have a disproportionate effect on the Company and its Subsidiaries, taken as a whole, or (F) any change resulting from compliance with terms of this Agreement or the consummation of the transactions contemplated by this Agreement, or (iii) the Company’s ability to perform in any material respect on a timely basis its obligations under any Transaction Document to be performed as of the date of determination.

 

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(hh)“Maturity Date” means the first day of the month immediately following the thirty-six (36) month anniversary of the Commencement Date.

 

(ii)“PEA Period” means the period commencing at 9:30 a.m., Eastern time, on the fifth (5th) Business Day immediately prior to the filing of any post-effective amendment to the Registration Statement (as defined herein) or New Registration Statement (as such term is defined in the Registration Rights Agreement), and ending at 9:30 a.m., Eastern time, on the Business Day immediately following, the effective date of any post-effective amendment to the Registration Statement (as defined herein) or New Registration Statement (as such term is defined in the Registration Rights Agreement).

 

(jj)“Person” means an individual or entity including but not limited to any limited liability company, a partnership, a joint venture, a corporation, a trust, an unincorporated organization and a government or any department or agency thereof.

 

(kk)“Principal Market” means The Nasdaq Global Select Market (or any nationally recognized successor thereto); provided, however, that in the event the Company’s Common Stock is ever listed or traded on the Nasdaq Global Market, The Nasdaq Capital Market, the New York Stock Exchange, the NYSE American, the NYSE Arca, the OTC Bulletin Board, or the OTCQX or OTCQB operated by the OTC Markets Group, Inc. (or any nationally recognized successor to any of the foregoing), then the “Principal Market” shall mean such other market or exchange on which the Company’s Common Stock is then listed or traded.

 

(ll)“Prospectus Supplement” means any prospectus supplement to any Prospectus filed with the SEC pursuant to Rule 424(b) under the Securities Act in connection with the transactions contemplated by this Agreement, including the documents and information incorporated by reference therein.

 

(mm)“Purchase Amount” means, with respect to any Regular Purchase, any Accelerated Purchase or any Additional Accelerated Purchase made hereunder, as applicable, the portion of the Available Amount to be purchased by the Investor pursuant to Section 2 hereof.

 

(nn)“Purchase Date” means, with respect to a Regular Purchase made pursuant to Section 2(a) hereof, the Business Day on which the Investor receives, after 4:00 p.m., Eastern time, but prior to 7:00 p.m., Eastern time, on such Business Day, a valid Regular Purchase Notice for such Regular Purchase in accordance with this Agreement.

 

(oo)“Purchase Price” means, with respect to any Regular Purchase made pursuant to Section 2(a) hereof, the lower of: (i) the lowest Sale Price on the applicable Purchase Date for such Regular Purchase and (ii) the arithmetic average of the three (3) lowest Closing Sale Prices for the Common Stock during the ten (10) consecutive Business Days prior to the Purchase Date for such Regular Purchase (in each case, to be appropriately adjusted for any reorganization, recapitalization, non-cash dividend, stock split or other similar transaction that occurs on or after the date of this Agreement).

 

 

(pp)“Regular Purchase Notice” means, with respect to any Regular Purchase pursuant to Section 2(a) hereof, an irrevocable written notice from the Company to the Investor directing the Investor to buy such applicable amount of Purchase Shares at the applicable Purchase Price as specified by the Company therein on the applicable Purchase Date for such Regular Purchase.

 

(qq)“Sale Price” means any trade price for the shares of Common Stock on the Principal Market as reported by the Principal Market.

 

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(rr)“SEC” means the U.S. Securities and Exchange Commission.

 

(ss)“Securities” means, collectively, the Purchase Shares and the Commitment Shares (as defined below).

 

(tt)“Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.

 

 

(uu)“Subsidiary” means any Person the Company wholly owns or controls, or in which the Company, directly or indirectly, owns a majority of the voting stock or similar voting interest, in each case that would be disclosable pursuant to Item 601(b)(21) of Regulation S-K promulgated under the Securities Act.

 

(vv)“Transaction Documents” means, collectively, this Agreement and the schedules and exhibits hereto, the Registration Rights Agreement and the schedules and exhibits thereto, and each of the other agreements, documents, certificates and instruments entered into or furnished by the parties hereto in connection with the transactions contemplated hereby and thereby.

 

(ww)“Transfer Agent” means Broadridge Financial Solutions, Inc., or such other Person who is then serving as the transfer agent for the Company in respect of the Common Stock.

 

(xx)“VWAP” means in respect of an Accelerated Purchase Date and an Additional Accelerated Purchase Date, as applicable, the volume weighted average price of the Common Stock on the Principal Market, as reported on the Principal Market or by another reputable source such as Bloomberg, L.P.

2.PURCHASE OF COMMON STOCK.

Subject to the terms and conditions set forth in this Agreement, the Company has the right, but not the obligation, to sell to the Investor, in the Company’s sole and absolute discretion, and the Investor has the obligation to purchase from the Company, Purchase Shares as follows: 

(a)Commencement of Regular Sales of Common Stock. Beginning on the Commencement Date and thereafter, the Company shall have the right, but not the obligation, to direct the Investor, by its delivery to the Investor of a Regular Purchase Notice from time to time, to purchase up to One Hundred Thousand (100,000) Purchase Shares, subject to adjustment as set forth below in this Section 2(a) (such maximum number of Purchase Shares, as may be adjusted from time to time, the “Regular Purchase Share Limit”), at the Purchase Price on the Purchase Date (each such purchase a “Regular Purchase”); provided, however, that (i) the Regular Purchase Share Limit shall be increased to One Hundred Twenty-Five Thousand (125,000) Purchase Shares, if the Closing Sale Price of the Common Stock on the applicable Purchase Date is not below $2.00, (ii) the Regular Purchase Share Limit shall be increased to One Hundred Fifty Thousand (150,000) Purchase Shares, if the Closing Sale Price of the Common Stock on the applicable Purchase Date is not below $3.00 (iii) the Regular Purchase Share Limit shall be increased to Two Hundred Thousand (200,000) Purchase Shares, if the Closing Sale Price of the Common Stock on the applicable Purchase Date is not below $4.00 (all of which share and dollar amounts shall be appropriately proportionately adjusted for any reorganization, recapitalization, non-cash dividend, stock split or other similar transaction; provided that if, after giving effect to the full proportionate adjustment to the Regular Purchase Share Limit therefor, the Fully Adjusted Regular Purchase Share Limit then in effect would preclude the Company from delivering to the Investor a Regular Purchase Notice hereunder for a Purchase Amount (calculated by multiplying (X) the number of Purchase Shares equal to the Fully Adjusted 

 

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Regular Purchase Share Limit, by (Y) the Purchase Price per Purchase Share covered by such Regular Purchase Notice on the applicable Purchase Date therefor) equal to or greater than One Hundred Thousand Dollars ($100,000), the Regular Purchase Share Limit for such Regular Purchase Notice shall not be fully adjusted to equal the applicable Fully Adjusted Regular Purchase Share Limit, but rather the Regular Purchase Share Limit for such Regular Purchase Notice shall be adjusted to equal the applicable Alternate Adjusted Regular Purchase Share Limit as of the applicable Purchase Date for such Regular Purchase Notice); and provided, further, however, that the Investor’s committed obligation under any single Regular Purchase, other than any Regular Purchase with respect to which an Alternate Adjusted Regular Purchase Share Limit shall apply, shall not exceed Two Million and Dollars ($2,000,000) and provided, further, however, that the parties may mutually agree to increase the Regular Purchase Share Limit. If the Company delivers any Regular Purchase Notice for a Purchase Amount in excess of the limitations contained in the immediately preceding sentence, such Regular Purchase Notice shall be void ab initio to the extent of the amount by which the number of Purchase Shares set forth in such Regular Purchase Notice exceeds the number of Purchase Shares which the Company is permitted to include in such Regular Purchase Notice in accordance herewith, and the Investor shall have no obligation to purchase such excess Purchase Shares in respect of such Regular Purchase Notice; provided, however, that the Investor shall remain obligated to purchase the number of Purchase Shares which the Company is permitted to include in such Regular Purchase Notice. The Company may deliver multiple Regular Purchase Notices to the Investor in a day as often as every Business Day, so long as the Company has not failed to deliver Purchase Shares for the most recent prior Regular Purchase. Notwithstanding the foregoing, the Company shall not deliver a Regular Purchase Notice to the Investor (i) on any Purchase Date that the Closing Sale Price of the Common Stock is less than the Floor Price or (ii) during the PEA Period. 

 

(b)Accelerated Purchases.  Subject to the terms and conditions of this Agreement, from and after the Commencement Date, in addition to purchases of Purchase Shares as described in Section 2(a) above, the Company shall also have the right, but not the obligation, to direct the Investor, by its delivery to the Investor of an Accelerated Purchase Notice from time to time in accordance with this Agreement, to purchase the applicable Accelerated Purchase Share Amount at the Accelerated Purchase Price on the Accelerated Purchase Date therefor in accordance with this Agreement (each such purchase, an “Accelerated Purchase”). The Company may deliver an Accelerated Purchase Notice to the Investor only on a Purchase Date on which (i) the Company also properly submitted a Regular Purchase Notice providing for a Regular Purchase of a number of Purchase Shares not less than the Regular Purchase Share Limit then in effect on such Purchase Date in accordance with this Agreement (including, without limitation, giving effect to any automatic increase to the Regular Purchase Share Limit as a result of the Closing Sale Price of the Common Stock exceeding certain thresholds set forth in Section 2(b) above on such Purchase Date and any other adjustments to the Regular Purchase Share Limit, in each case pursuant to Section 2(b) above) and (ii) the Closing Sale Price of the Common Stock is not less than the Accelerated Purchase Floor Price. If the Company delivers any Accelerated Purchase Notice directing the Investor to purchase an amount of Purchase Shares that exceeds the Accelerated Purchase Share Amount that the Company is then permitted to include in such Accelerated Purchase Notice, such Accelerated Purchase Notice shall be void ab initio to the extent of the amount by which the number of Purchase Shares set forth in such Accelerated Purchase Notice exceeds the Accelerated Purchase Share Amount that the Company is then permitted to include in such Accelerated Purchase Notice (which shall be confirmed in an Accelerated Purchase Confirmation), and the Investor shall have no obligation to purchase such excess Purchase Shares in respect of such Accelerated Purchase Notice; provided, however, that the Investor shall remain obligated to purchase the Accelerated Purchase Share Amount which the Company is permitted to include in such Accelerated Purchase Notice; and provided, further, however, that the parties may mutually agree to increase the Accelerated Purchase Share Amount applicable to any Accelerated Purchase, and all of the Purchase Shares subject to such increased Accelerated Purchase shall be purchased by the Investor at the Accelerated Purchase Price for such increased Accelerated Purchase in accordance with this Agreement. Within one (1) Business Day after completion of each Accelerated Purchase Date for an Accelerated Purchase, the Investor 

 

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will provide to the Company a written confirmation of such Accelerated Purchase setting forth the applicable Accelerated Purchase Share Amount and Accelerated Purchase Price for such Accelerated Purchase (each, an “Accelerated Purchase Confirmation”). Notwithstanding the foregoing, the Company shall not deliver any Accelerated Purchase Notices during the PEA Period.

(c)Additional Accelerated Purchases.  Subject to the terms and conditions of this Agreement, beginning one (1) Business Day following the Commencement Date and thereafter, in addition to purchases of Purchase Shares as described in Section 2(a) and Section 2(b) above, the Company shall also have the right, but not the obligation, to direct the Investor, by its timely delivery to the Investor of an Additional Accelerated Purchase Notice on an Additional Accelerated Purchase Date in accordance with this Agreement, to purchase the applicable Additional Accelerated Purchase Share Amount at the applicable Additional Accelerated Purchase Price therefor in accordance with this Agreement (each such purchase, an “Additional Accelerated Purchase”). The Company may deliver multiple Additional Accelerated Purchase Notices to the Investor on an Additional Accelerated Purchase Date; provided, however, that the Company may deliver an Additional Accelerated Purchase Notice to the Investor only (i) on a Business Day that is also the Accelerated Purchase Date for an Accelerated Purchase with respect to which the Company properly submitted to the Investor an Accelerated Purchase Notice in accordance with this Agreement on the applicable Purchase Date for a Regular Purchase of a number of Purchase Shares not less than the Regular Purchase Share Limit then in effect in accordance with this Agreement (including, without limitation, giving effect to any automatic increase to the Regular Purchase Share Limit as a result of the Closing Sale Price of the Common Stock exceeding certain thresholds set forth in Section 2(b) above on such Purchase Date and any other adjustments to the Regular Purchase Share Limit, in each case pursuant to Section 2(b) above), (ii) if the Closing Sale Price of the Common Stock on the Business Day immediately preceding the Business Day on which such Additional Accelerated Purchase Notice is delivered is not less than the Additional Accelerated Purchase Floor Price, and (iii) if all Purchase Shares subject to all prior Regular Purchases, Accelerated Purchases and Additional Accelerated Purchases, including, without limitation, those that have been effected on the same Business Day as the applicable Additional Accelerated Purchase Date with respect to which the applicable Additional Accelerated Purchase relates, have theretofore been received by the Investor as DWAC Shares in accordance with this Agreement. If the Company delivers any Additional Accelerated Purchase Notice directing the Investor to purchase an amount of Purchase Shares that exceeds the Additional Accelerated Purchase Share Amount that the Company is then permitted to include in such Additional Accelerated Purchase Notice in accordance with the terms of this Agreement, such Additional Accelerated Purchase Notice shall be void ab initio to the extent of the amount by which the number of Purchase Shares set forth in such Additional Accelerated Purchase Notice exceeds the Additional Accelerated Purchase Share Amount that the Company is then permitted to include in such Additional Accelerated Purchase Notice in accordance with the terms of this Agreement (which shall be confirmed in an Additional Accelerated Purchase Confirmation (defined below)), and the Investor shall have no obligation to purchase such excess Purchase Shares in respect of such Additional Accelerated Purchase Notice; provided, however, that the Investor shall remain obligated to purchase the Additional Accelerated Purchase Share Amount which the Company is permitted to include in such Additional Accelerated Purchase Notice; and provided, further, however, that the parties may mutually agree to increase the Additional Accelerated Purchase Share Amount applicable to any Additional Accelerated Purchase, and all of the Purchase Shares subject to such increased Additional Accelerated Purchase shall be purchased by the Investor at the Additional Accelerated Purchase Price for such increased Additional Accelerated Purchase in accordance with this Agreement. Within one (1) Business Day after completion of each Additional Accelerated Purchase Date, the Investor will provide to the Company a written confirmation of each Additional Accelerated Purchase on such Additional Accelerated Purchase Date setting forth the applicable Additional Accelerated Purchase Share Amount and Additional Accelerated Purchase Price for each such Additional Accelerated Purchase on such Additional Accelerated Purchase Date (each, an “Additional Accelerated Purchase Confirmation”).

 

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(d) Payment for Purchase Shares.    For each Regular Purchase, Accelerated Purchase and Additional Accelerated Purchase, the Investor shall pay to the Company an amount equal to the Purchase Amount with respect to such Regular Purchase, Accelerated Purchase Additional Accelerated Purchase, as the case may be, as full payment for such Purchase Shares via wire transfer of immediately available funds on the same Business Day that the Investor receives such Purchase Shares, if such Purchase Shares are received by the Investor before 1:00 p.m., Eastern time, or, if such Purchase Shares are received by the Investor after 1:00 p.m., Eastern time, the next Business Day. If the Company or the Transfer Agent shall fail for any reason or for no reason to electronically transfer any Purchase Shares as DWAC Shares submitted by the Investor or its agent in respect of any Regular Purchase, Accelerated Purchase or Additional Accelerated Purchase (as applicable) within two (2) Business Days following the receipt by the Company of the Purchase Price, Accelerated Purchase Price or Additional Accelerated Purchase Price, respectively, therefor in compliance with this Section 2(d), and if on or after such two Business Days the Investor purchases (in an open market transaction or otherwise) shares of Common Stock to deliver in satisfaction of a sale by the Investor of such Purchase Shares that the Investor anticipated receiving from the Company in respect of such Regular Purchase, Accelerated Purchase or Additional Accelerated Purchase (as applicable), then the Company shall, within two (2) Business Days after the Investor’s request, either (i) pay cash to the Investor in an amount equal to the Investor’s total purchase price (including customary brokerage commissions, if any) for the shares of Common Stock so purchased (the “Cover Price”), at which point the Company’s obligation to deliver such Purchase Shares as DWAC Shares shall terminate, or (ii) promptly honor its obligation to deliver to the Investor such Purchase Shares as DWAC Shares and pay cash to the Investor in an amount equal to the excess (if any) of the Cover Price over the total Purchase Amount paid by the Investor pursuant to this Agreement for all of the Purchase Shares to be purchased by the Investor in connection with such purchases.  The Company shall not issue any fraction of a share of Common Stock upon any Regular Purchase, Accelerated Purchase or Additional Accelerated Purchase.  If the issuance would result in the issuance of a fraction of a share of Common Stock, the Company shall round such fraction of a share of Common Stock up or down to the nearest whole share. All payments made under this Agreement shall be made in lawful money of the United States of America or wire transfer of immediately available funds to such account as the Company may from time to time designate by written notice in accordance with the provisions of this Agreement. Whenever any amount expressed to be due by the terms of this Agreement is due on any day that is not a Business Day, the same shall instead be due on the next succeeding day that is a Business Day.

(e)Compliance with Rules of Principal Market.  

(i)Exchange Cap.  Subject to Section 2(e)(ii) below, the Company shall not issue or sell any shares of Common Stock pursuant to this Agreement, and the Investor shall not purchase or acquire any shares of Common Stock pursuant to this Agreement, to the extent that after giving effect thereto, the aggregate number of shares of Common Stock that would be issued pursuant to this Agreement and the transactions contemplated hereby would exceed 4,538,320 shares of Common Stock, representing 19.99% of the shares of Common Stock outstanding on the date of this Agreement  (which number of shares shall be reduced, on a share-for-share basis, by the number of shares of Common Stock issued or issuable pursuant to any transaction or series of transactions that may be aggregated with the transactions contemplated by this Agreement under applicable rules of the Nasdaq Global Select Market or any other Principal Market on which the Common Stock may be listed or quoted) (the “Exchange Cap”), unless and until the Company elects to solicit stockholder approval of the issuance of Common Stock as contemplated by this Agreement and the stockholders of the Company have in fact approved such issuance in accordance with the applicable rules and regulations of the Nasdaq Global Select Market, any other Principal Market on which the Common Stock may be listed or quoted, and the Company’s Certificate of Incorporation, as amended (the “Certificate of Incorporation”), and the Company’s Amended and Restated Bylaws, as amended (the “Bylaws”). For the avoidance of doubt, the Company may, but shall be under no obligation to, request its stockholders to approve the issuance of Common Stock as contemplated by this Agreement; 

 

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provided, that if stockholder approval is not obtained in accordance with this Section 2(e)(i), the Exchange Cap shall be applicable for all purposes of this Agreement and the transactions contemplated hereby at all times during the term of this Agreement (except as set forth in Section 2(e)(ii) below).

(ii)At-Market Transaction.  Notwithstanding Section 2(e)(i) above and subject to the prior approval of the Nasdaq Global Select Market or any other Principal Market on which the Common Stock may be listed or quoted (to the extent required), the Exchange Cap shall not be applicable for any purposes of this Agreement and the transactions contemplated hereby, solely to the extent that (and only for so long as) the Average Price shall equal or exceed the Base Price and in accordance with any other applicable rules of the Nasdaq Global Select Market or any other Principal Market on which the Common Stock may be listed or quoted (it being hereby acknowledged and agreed that the Exchange Cap shall be applicable for all purposes of this Agreement and the transactions contemplated hereby at all other times during the term of this Agreement, unless the stockholder approval referred to in Section 2(e)(i) is obtained). “Base Price” means a price per Purchase Share equal to the sum of (i) the Signing Market Price and (ii) $0.10 (subject to adjustment for any reorganization, recapitalization, non-cash dividend, stock split, reverse stock split or other similar transaction that occurs on or after the date of this Agreement). “Signing Market Price” means $1.40, representing the closing price of the Common Stock on The Nasdaq Global Select Market on the date of this Agreement. 

(iii)General.  The Company shall not issue any Securities pursuant to this Agreement if such issuance would reasonably be expected to result in (A) a violation of the Securities Act or (B) a breach of the rules and regulations of the Principal Market. The provisions of this Section 2(e) shall be implemented in a manner otherwise than in strict conformity with the terms hereof only if necessary to ensure compliance with the Securities Act and the rules and regulations of the Principal Market.

(f)Beneficial Ownership Limitation.  Notwithstanding anything to the contrary contained in this Agreement, the Company shall not issue or sell, and the Investor shall not purchase or acquire, any Common Stock under this Agreement which, when aggregated with all other shares of Common Stock then beneficially owned by the Investor and its affiliates (as calculated pursuant to Section 13(d) of the Exchange Act and Rule 13d-3 promulgated thereunder) would result in the beneficial ownership by the Investor and its affiliates of more than 9.99% of the then issued and outstanding Common Stock (the “Beneficial Ownership Limitation”). Upon the written or oral request of the Investor, the Company shall promptly (but not later than 24 hours) confirm orally or in writing to the Investor the amount of Common Stock then outstanding. The Investor and the Company shall each cooperate in good faith in the determinations required hereby and the application hereof. The Investor shall promptly confirm orally or in writing to the Company the total number of shares beneficially held by it and its affiliates from time to time and the Investor’s written certification to the Company of the applicability of the Beneficial Ownership Limitation, and the resulting effect thereof hereunder at any time, shall be conclusive with respect to the applicability thereof and such result absent manifest error.

3.INVESTOR'S REPRESENTATIONS AND WARRANTIES.

The Investor represents and warrants to the Company that as of the Execution Date and as of the Commencement Date: 

 

(a)Organization, Authority. Investor is an entity duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization, with the requisite power and authority to enter into and to consummate the transactions contemplated by this Agreement and otherwise to carry out its obligations hereunder and thereunder.

 

 

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(b)Accredited Investor Status.  The Investor is an “accredited investor” as that term is defined in Rule 501(a)(3) of Regulation D promulgated under the Securities Act.

 

(c)Investment Purpose. The Investor is acquiring the Securities as principal for its own account and not with a view to or for distributing or reselling such Securities or any part thereof in violation of the Securities Act or any applicable state securities law, has no present intention of distributing any of such Securities in violation of the Securities Act or any applicable state securities law and has no direct or indirect arrangement or understandings with any other Persons to distribute or regarding the distribution of such Securities in violation of the Securities Act or any applicable state securities law (this representation and warranty not limiting the Investor’s right to sell the Securities at any time pursuant to the Registration Statement described herein or otherwise in compliance with applicable federal and state securities laws). The Investor is acquiring the Securities hereunder in the ordinary course of its business.  The Investor understands that the Securities are being offered and sold to it in reliance on specific exemptions from the registration requirements of United States federal and state securities laws and that the Company is relying in part upon the truth and accuracy of, and the Investor's compliance with, the representations, warranties, agreements, acknowledgments and understandings of the Investor set forth herein in order to determine the availability of such exemptions and the eligibility of the Investor to acquire the Securities.

 

(d)Information.  The Investor understands that its investment in the Securities involves a high degree of risk.  The Investor (i) is able to bear the economic risk of an investment in the Securities including a total loss thereof, (ii) has such knowledge and experience in financial and business matters that it is capable of evaluating the merits and risks of the proposed investment in the Securities and (iii) has had an opportunity to ask questions of and receive answers from the officers of the Company concerning the financial condition and business of the Company and others matters related to an investment in the Securities.  Neither such inquiries nor any other due diligence investigations conducted by the Investor or its representatives shall modify, amend or affect the Investor's right to rely on the Company's representations and warranties contained in Section 4 below. The Investor has sought such accounting, legal and tax advice from its own independent advisors as it has considered necessary to make an informed investment decision with respect to its acquisition of the Securities and is not relying on any accounting, legal, tax or other advice from the Company or its officers, employees, representatives or advisors.

 

(e)No Governmental Review.  The Investor understands that no federal, state 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 an investment in the Securities nor have such authorities passed upon or endorsed the merits of the offering of the Securities.

 

(f) Transfer or Sale. The Investor understands that (i) the Securities may not be offered for sale, sold, assigned or transferred unless (A) registered pursuant to the Securities Act or (B) an exemption exists permitting such Securities to be sold, assigned or transferred without such registration; (ii) any sale of the Securities made in reliance on Rule 144 may be made only in accordance with the terms of Rule 144.

 

(g)Validity; Enforcement.  This Agreement has been duly and validly authorized, executed and delivered on behalf of the Investor and is a valid and binding agreement of the Investor enforceable against the Investor in accordance with its terms, subject as to enforceability to general principles of equity and to applicable bankruptcy, insolvency, reorganization, moratorium, liquidation and other similar laws relating to, or affecting generally, the enforcement of applicable creditors' rights and remedies. 

 

(h)Residency.  The Investor’s principal place of business is in the State of Illinois.

 

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(i)No Short Selling.  The Investor represents and warrants to the Company that at no time prior to the date of this Agreement has any of the Investor, its agents, representatives or affiliates engaged in or effected, in any manner whatsoever, directly or indirectly, any (i) “short sale” (as such term is defined in Rule 200 of Regulation SHO of the Exchange Act) of the Common Stock or (ii) hedging transaction, which establishes a net short position with respect to the Common Stock.

 

4.REPRESENTATIONS AND WARRANTIES OF THE COMPANY.

 

The Company represents and warrants to the Investor that as of the Execution Date and as of the Commencement Date:

 

(a)Organization and Qualification.  The Company and each of its Subsidiaries is an entity duly incorporated or otherwise organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation or organization, with the requisite corporate power and authority to own and use its properties and assets and to carry on its business as currently conducted.  Neither the Company nor any of its Subsidiaries is in violation or default of any of the provisions of its respective certificate or articles of incorporation, bylaws or other organizational or charter documents.  Each of the Company and its Subsidiaries is duly qualified to conduct business and is in good standing as a foreign corporation or other entity in each jurisdiction in which the nature of the business conducted or property owned by it makes such qualification necessary, except where the failure to be so qualified or in good standing, as the case may be, could not have or reasonably be expected to result in a Material Adverse Effect and no proceeding has been instituted in any such jurisdiction revoking, limiting or curtailing or seeking to revoke, limit or curtail such power and authority or qualification.  The Company has no Subsidiaries except as set forth on Exhibit 21 to the Company’s Registration Statement on Form 10 filed with the SEC on June 29, 2016.

 

(b)Authorization; Enforcement; Validity.  (i) The Company has the requisite corporate power and authority to enter into and perform its obligations under this Agreement and each of the other Transaction Documents to which it is a party, and to issue the Securities in accordance with the terms hereof and thereof, (ii) the execution and delivery of the Transaction Documents by the Company to which it is a party and the consummation by it of the transactions contemplated hereby and thereby, including without limitation, the issuance of the Commitment Shares and the reservation for issuance and the issuance of the Purchase Shares issuable under this Agreement, have been duly authorized by the Company's Board of Directors and no further consent or authorization is required by the Company, its Board of Directors or its shareholders, (iii) this Agreement has been, and each other Transaction Document shall be on the Commencement Date, duly executed and delivered by the Company and (iv) this Agreement constitutes, and each other Transaction Document upon its execution on behalf of the Company, shall constitute, the valid and binding obligations of the Company enforceable against the Company in accordance with their terms, except as such enforceability may be limited by general principles of equity or applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or similar laws relating to, or affecting generally, the enforcement of creditors’ rights and remedies. The Board of Directors of the Company has passed all applicable resolutions (the “Resolutions”) to authorize this Agreement and the transactions contemplated hereby.  The Resolutions are valid, in full force and effect and have not been modified or supplemented in any respect.  The Company has delivered to the Investor a certified copy of the Resolutions passed by the Board of Directors of the Company.  Except as set forth in this Agreement, no other approvals or consents of the Company’s Board of Directors, any authorized committee thereof, and/or shareholders is necessary under applicable laws, and the Certificate of Incorporation and Bylaws of the Company, to authorize the execution and delivery of this Agreement or any of the transactions contemplated hereby, including, but not limited to, the issuance of the Commitment Shares and the issuance of the Purchase Shares.

 

 

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(c)Capitalization.  As of the date hereof, the authorized capital stock of the Company is set forth in the Company’s Quarterly Report on Form 10-Q filed on November 14, 2018 for the quarter ended September 30, 2018.  Except as disclosed in the SEC Documents (as defined below) or on Schedule 4(c), (i) no shares of the Company's capital stock are subject to preemptive rights or any other similar rights or any liens or encumbrances suffered or permitted by the Company, (ii) there are no outstanding debt securities, (iii) there are no outstanding options, warrants, scrip, rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities or rights convertible into, any shares of capital stock of the Company or any of its Subsidiaries, or contracts, commitments, understandings or arrangements by which the Company or any of its Subsidiaries is or may become bound to issue additional shares of capital stock of the Company or any of its Subsidiaries or options, warrants, scrip, rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities or rights convertible into, any shares of capital stock of the Company or any of its Subsidiaries, (iv) there are no agreements or arrangements under which the Company or any of its Subsidiaries is obligated to register the sale of any of their securities under the Securities Act, (v) there are no outstanding securities or instruments of the Company or any of its Subsidiaries which contain any redemption or similar provisions, and there are no contracts, commitments, understandings or arrangements by which the Company or any of its Subsidiaries is or may become bound to redeem a security of the Company or any of its Subsidiaries, (vi) there are no securities or instruments containing anti-dilution or similar provisions that will be triggered by the issuance of the Securities as described in this Agreement and (vii) the Company does not have any stock appreciation rights or "phantom stock" plans or agreements or any similar plan or agreement.  The Company has furnished to the Investor true and correct copies of (A) the Company's certificate of incorporation, as amended and as in effect on the date hereof (the "Certificate of Incorporation"), (B) the Company's Bylaws, as amended and as in effect on the date hereof (the "Bylaws"), and (C) summaries of the material terms of all securities convertible into or exercisable for Common Stock, if any, and copies of any documents containing the material rights of the holders thereof in respect thereto, which in the case of these clauses (A), (B) and (C), are not disclosed in any SEC Document or filed as an exhibit thereto.

 

(d)Issuance of Securities.  Upon issuance and payment therefor in accordance with the terms and conditions of this Agreement, the Purchase Shares shall be validly issued, fully paid and nonassessable and free from all taxes, liens, charges, restrictions, rights of first refusal and preemptive rights with respect to the issue thereof, with the holders being entitled to all rights accorded to a holder of Common Stock.  Upon issuance in accordance with the terms and conditions of this Agreement, the Commitment Shares shall be validly issued, fully paid and nonassessable and free from all taxes, liens, charges, restrictions, rights of first refusal and preemptive rights with respect to the issue thereof, with the holders being entitled to all rights accorded to a holder of Common Stock. Thirty-five million (35,000,000) shares of Common Stock (the “Reserve Amount”) have been duly authorized and reserved for issuance upon purchase under this Agreement as Purchase Shares.

 

(e)No Conflicts.  The execution, delivery and performance of the Transaction Documents by the Company and the consummation by the Company of the transactions contemplated hereby and thereby (including, without limitation, the reservation for issuance and issuance of the Purchase Shares and the Commitment Shares) will not (i) result in a violation of the Certificate of Incorporation, any Certificate of Designations, Preferences and Rights of any outstanding series of preferred stock of the Company or the Bylaws or (ii) conflict with, or constitute a default (or an event which with notice or lapse of time or both would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation of, any agreement, indenture or instrument to which the Company or any of its Subsidiaries is a party, or result in a violation of any law, rule, regulation, order, judgment or decree (including federal and state securities laws and regulations and the rules and regulations of the Principal Market applicable to the Company or any of its Subsidiaries) or by which any property or asset of the Company or any of its Subsidiaries is bound or affected, except in the case of conflicts, defaults, terminations, amendments, accelerations, cancellations and violations under clause (ii), which could not reasonably be expected to 

 

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result in a Material Adverse Effect.  Neither the Company nor its Subsidiaries is in violation of any term of or in default under its Certificate of Incorporation, any Certificate of Designation, Preferences and Rights of any outstanding series of preferred stock of the Company or Bylaws or their organizational charter or bylaws, respectively.  Neither the Company nor any of its Subsidiaries is in violation of any term of or is in default under any material contract, agreement, mortgage, indebtedness, indenture, instrument, judgment, decree or order or any statute, rule or regulation applicable to the Company or its Subsidiaries, except for possible conflicts, defaults, terminations or amendments that could not reasonably be expected to have a Material Adverse Effect.  The business of the Company and its Subsidiaries is not being conducted, and shall not be conducted, in violation of any law, ordinance or regulation of any governmental entity, except for possible violations, the sanctions for which either individually or in the aggregate could not reasonably be expected to have a Material Adverse Effect.  Except as specifically contemplated by this Agreement and as required under the Securities Act or applicable state securities laws and the rules and regulations of the Principal Market, the Company is not 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 contemplated by the Transaction Documents in accordance with the terms hereof or thereof.  Except as set forth elsewhere in this Agreement, all consents, authorizations, orders, filings and registrations which the Company is required to obtain pursuant to the preceding sentence shall be obtained or effected on or prior to the Commencement Date.  Except as disclosed in the SEC Documents (as defined below), since one year prior to the date hereof, the Company has not received nor delivered any notices or correspondence from or to the Principal Market, other than notices with respect to listing of additional shares of Common Stock and other routine correspondence. Except as disclosed in the SEC Documents, the Principal Market has not commenced any delisting proceedings against the Company.

 

(f)SEC Documents; Financial Statements. The Company is, and has been during the 12-month period immediately preceding the date of this Agreement, required to file reports, schedules, forms, statements and other documents with the SEC pursuant to Section 13 or 15(d) of the Exchange Act. The Company has filed all reports, schedules, forms, statements and other documents required to be filed by the Company with the SEC under the Exchange Act, including pursuant to Section 13(a) or 15(d) thereof, and under the Securities Act, in each case during the 12-month period immediately preceding the date of this Agreement (the foregoing materials, including the exhibits thereto and documents incorporated by reference therein, being collectively referred to herein as the “SEC Documents”) on a timely basis or has received a valid extension of such time of filing and has filed any such SEC Documents prior to the expiration of any such extension.  As of their respective dates, the SEC Documents complied in all material respects with the requirements of the Securities Act and the Exchange Act, as applicable. None of the SEC Documents, when filed, contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. The financial statements of the Company included in the SEC Documents comply in all material respects with applicable accounting requirements and the rules and regulations of the SEC with respect thereto as in effect at the time of filing.  Such financial statements have been prepared in accordance with United States generally accepted accounting principles applied on a consistent basis during the periods involved (“GAAP”), except as may be otherwise specified in such financial statements or the notes thereto and except that unaudited financial statements may not contain all footnotes required by GAAP, and fairly present in all material respects the financial position of the Company and its consolidated Subsidiaries as of and for the dates thereof and the results of operations and cash flows for the periods then ended, subject, in the case of unaudited statements, to normal, immaterial, year-end audit adjustments.  Except as set forth in the SEC Documents, the Company has received no notices or correspondence from the SEC for the one year preceding the date hereof.  The SEC has not commenced any enforcement proceedings against the Company or any of its Subsidiaries.

 

 

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(g)Absence of Certain Changes.  Except as disclosed in the SEC Documents, since December 31, 2017, there has been no material adverse change in the business, properties, operations, financial condition or results of operations of the Company or its Subsidiaries.  The Company is not in violation or default of (i) any provision of the Certificate of Incorporation or Bylaws, (ii) the terms of any indenture, contract, lease, mortgage, deed of trust, note agreement, loan agreement or other agreement, obligation, condition, covenant or instrument to which it is a party or bound or to which its property is subject, or (iii) any statute, law, rule, regulation, judgment, order or decree of any court, regulatory body, administrative agency, governmental body, arbitrator or other authority having jurisdiction over the Company or any of its properties, which, in the case of clauses (ii) or (iii), could be reasonably expected to have a Material Adverse Effect.  Except as described in the SEC Documents, no dispute between the Company and any third party exists or, to the knowledge of the Company, is threatened or imminent that could reasonably be expected to have a Material Adverse Effect. The Company has not taken any steps, and does not currently expect to take any steps, to seek protection pursuant to any Bankruptcy Law nor does the Company or any of its Subsidiaries have any knowledge or reason to believe that its creditors intend to initiate involuntary bankruptcy or insolvency proceedings. The Company is financially solvent and is generally able to pay its debts as they become due.

 

(h)Absence of Litigation. Except as disclosed in the SEC Documents, there is no action, suit, proceeding, inquiry or investigation before or by any court, public board, government agency, self-regulatory organization or body pending or, to the knowledge of the Company or any of its Subsidiaries, threatened against or affecting the Company, the Common Stock or any of the Company’s or its Subsidiaries’ officers or directors in their capacities as such, which could reasonably be expected to have a Material Adverse Effect.   

 

(i)Acknowledgment Regarding Investor’s Status.  The Company acknowledges and agrees that the Investor is acting solely in the capacity of arm’s length purchaser with respect to the Transaction Documents and the transactions contemplated hereby and thereby.  The Company further acknowledges that the Investor 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 the Investor or any of its representatives or agents in connection with the Transaction Documents and the transactions contemplated hereby and thereby is merely incidental to the Investor’s purchase of the Securities.  The Company further represents to the Investor 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 and advisors.

 

(j)No Aggregated Offering.  Neither the Company, nor any of its affiliates, nor any Person acting on its or their behalf has, directly or indirectly, made any offers or sales of any security or solicited any offers to buy any security, under circumstances that would cause this offering of the Securities to be integrated or aggregated with prior offerings by the Company in a manner that would require stockholder approval pursuant to the rules of the Principal Market on which any of the securities of the Company are listed or designated. The issuance and sale of the Securities hereunder does not contravene the rules and regulations of the Principal Market.

 

 (k)Intellectual Property Rights.  Except as disclosed in the SEC Documents, the Company and its Subsidiaries own or possess adequate rights or licenses to use all material trademarks, trade names, service marks, service mark registrations, service names, patents, patent rights, copyrights, inventions, licenses, approvals, governmental authorizations, trade secrets and rights necessary to conduct their respective businesses as now conducted.  Except as disclosed in the SEC Documents, none of the Company’s material trademarks, service marks, patents, patent rights, copyrights, licenses, or other registered intellectual property rights have expired or terminated, or, by the terms and conditions thereof, could expire or terminate within two years from the date of this Agreement; provided, however that 

 

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Company may allow trademarks, trade names, service marks, service mark registrations, service names, patents, patent rights, copyrights, inventions, licenses, approvals, government authorizations, trade secrets or other intellectual property rights to expire or may terminate such rights if reasonable to do so within the ordinary course of business, which includes adjustments to the Company’s business strategy and/or its product portfolio.  The Company and its Subsidiaries do not have any knowledge of any infringement by the Company or its Subsidiaries of any valid and enforceable trademark, trade name rights, copyrights, licenses, service names, service marks, service mark registrations, or trade secrets which could reasonably be believed to be material to the operations, assets, business or financial condition of the Company and its Subsidiaries.  There is no claim, action or proceeding being made or brought against, or to the Company’s knowledge, being threatened against, the Company or its Subsidiaries regarding trademark, trade name, patents, patent rights, invention, copyright, license, service names, service marks, service mark registrations, trade secret or other infringement, which could reasonably be expected to have a Material Adverse Effect.

 

(l)Environmental Laws.  The Company and its Subsidiaries (i) are in compliance with any and all applicable foreign, federal, state and local laws and regulations relating to the protection of human health and safety, the environment or hazardous or toxic substances or wastes, pollutants or contaminants (“Environmental Laws”), (ii) have received all permits, licenses or other approvals required of them under applicable Environmental Laws to conduct their respective businesses and (iii) are in compliance with all terms and conditions of any such permit, license or approval, except where, in each of the three foregoing clauses, the failure to so comply could not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.

 

(m)Title.   Except as set forth in the SEC Documents, the Company and its Subsidiaries have good and marketable title in fee simple to all real property owned by them and good and marketable title in all personal property owned by them that is material to the business of the Company and its Subsidiaries, in each case free and clear of all liens, encumbrances and defects (“Liens”) and, except for Liens as do not materially affect the value of such property and do not materially interfere with the use made and proposed to be made of such property by the Company and its Subsidiaries and Liens for the payment of federal, state or other taxes, the payment of which is neither delinquent nor subject to penalties.  Any real property and facilities held under lease by the Company and its Subsidiaries are held by them under valid, subsisting and enforceable leases with which the Company and its Subsidiaries are in compliance with such exceptions as are not material and do not interfere with the use made and proposed to be made of such property and buildings by the Company and its Subsidiaries.

 

(n)Insurance.  The Company and each of its Subsidiaries are insured by insurers of recognized financial responsibility against such losses and risks and in such amounts as management of the Company believes to be prudent and customary in the businesses in which the Company and its Subsidiaries are engaged.  Neither the Company nor any such Subsidiary has been refused any insurance coverage sought or applied for and neither the Company nor any such Subsidiary has any reason to believe that it will not be able to renew its 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 materially and adversely affect the condition, financial or otherwise, or the earnings, business or operations of the Company and its Subsidiaries, taken as a whole.

 

(o)Regulatory Permits.  Except as disclosed in the SEC Documents, the Company and its Subsidiaries possess all material certificates, authorizations and permits issued by the appropriate federal, state, local or foreign regulatory authorities necessary to conduct their respective businesses, and neither the Company nor any such Subsidiary has received any notice of proceedings relating to the revocation or modification of any such certificate, authorization or permit.

 

 

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(p)Tax Status.  Except as set forth on Schedule 4(p) the Company and each of its Subsidiaries has made or filed all federal and state income and all other material tax returns, reports and declarations required by any jurisdiction to which it is subject (unless and only to the extent that the Company and each of its Subsidiaries has set aside on its books provisions reasonably adequate for the payment of all unpaid and unreported taxes) and 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 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 officers of the Company know of no basis for any such claim.

 

(q)Transactions With Affiliates.   Except as set forth in the SEC Documents, none of the officers or directors of the Company and, to the knowledge of the Company, none of the employees of the Company is presently a party to any transaction with the Company or any Subsidiary (other than for services as employees, officers and directors) that is required to be disclosed and is not disclosed, including any contract, agreement or other arrangement providing for the furnishing of services to or by, providing for rental of real or personal property to or from, or otherwise requiring payments to or from any officer, director or such employee or, to the knowledge of the Company, any entity in which any officer, director, or any such employee has a substantial interest or is an officer, director, trustee or partner, in each case in excess of $120,000 other than for (i) payment of salary or consulting fees for services rendered, (ii) reimbursement for expenses incurred on behalf of the Company and (iii) other employee benefits, including stock option agreements under any stock option plan of the Company.

 

(r)Application of Takeover Protections.  The Company and its board of directors have taken or will take prior to the Commencement Date all necessary action, if any, in order to render inapplicable any control share acquisition, business combination, poison pill (including any distribution under a rights agreement) or other similar anti-takeover provision under the Certificate of Incorporation, the laws of the state of its incorporation or otherwise which is or could become applicable to the Investor as a result of the transactions contemplated by this Agreement, including, without limitation, the Company’s issuance of the Securities and the Investor’s ownership of the Securities.

 

(s) Disclosure.   Except with respect to the material terms and conditions of the transactions contemplated by the Transaction Documents that will be timely publicly disclosed by the Company, the Company confirms that neither it nor any other Person acting on its behalf has provided the Investor or its agents or counsel with any information that it believes constitutes or might constitute material, non-public information which is not otherwise disclosed in the Registration Statement or the SEC Documents.   The Company understands and confirms that the Investor will rely on the foregoing representation in effecting purchases and sales of securities of the Company.  All of the disclosure furnished by or on behalf of the Company to the Investor regarding the Company, its business and the transactions contemplated hereby, including the disclosure schedules to this Agreement, is true and correct and does not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements made therein, in light of the circumstances under which they were made, not misleading. The Company acknowledges and agrees that the Investor neither makes nor has made any representations or warranties with respect to the transactions contemplated hereby other than those specifically set forth in Section 3 hereof.

 

(t)Foreign Corrupt Practices; Money Laundering Laws; Sanctions.  Neither the Company nor any of the Subsidiaries nor, to the knowledge of the Company, any director, officer, agent, employee or affiliate of the Company or any of the Subsidiaries is aware of or has taken any action, directly or indirectly, that would result in a violation by such persons of the Foreign Corrupt Practices Act of 1977, as amended, and the rules and regulations thereunder (the “FCPA”), including, without limitation, making use of the 

 

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mails or any means or instrumentality of interstate commerce corruptly in furtherance of an offer, payment, promise to pay or authorization of the payment of any money, or other property, gift, promise to give, or authorization of the giving of anything of value to any “foreign official” (as such term is defined in the FCPA) or any foreign political party or official thereof or any candidate for foreign political office, in contravention of the FCPA; and the Company, the Subsidiaries and, to the knowledge of the Company, its affiliates have conducted their businesses in compliance with the FCPA and have instituted and maintain policies and procedures designed to ensure, and which are reasonably expected to continue to ensure, continued compliance therewith. The operations of the Company and the Subsidiaries are and have been conducted at all times in compliance with applicable financial recordkeeping and reporting requirements and the money laundering statutes and the rules and regulations thereunder and any related or similar rules, regulations or guidelines, issued, administered or enforced by any applicable governmental agency, including, without limitation, Title 18 U.S. Code section 1956 and 1957, the Patriot Act, the Bank Secrecy Act, and international anti-money laundering principles or procedures by an intergovernmental group or organization, such as the Financial Action Task Force on Money Laundering, of which the United States is a member and with which designation the United States representative to the group or organization continues to concur, all as amended, and any Executive order, directive or regulation pursuant to the authority of any of the foregoing, or any orders or licenses issued thereunder (collectively, the “Money Laundering Laws”), and no action, suit or proceeding by or before any court or governmental agency, authority or body or any arbitrator involving the Company or any of its Subsidiaries with respect to the Money Laundering Laws is pending or, to the best knowledge of the Company, threatened. Neither the Company nor any of its Subsidiaries, nor to the knowledge of the Company any of the directors, officers or employees, agents, affiliates or representatives of the Company or its Subsidiaries, is an individual or entity that is, or is owned or controlled by an individual or entity that is: (i) the subject of any sanctions administered or enforced by the U.S. Department of Treasury's Office of Foreign Assets Control, the United Nations Security Council, the European Union, Her Majesty’s Treasury, or other relevant sanctions authority (collectively, “Sanctions”), nor (ii) located, organized or resident in a country or territory that is the subject of Sanctions (including, without limitation, Burma/Myanmar, Cuba, Iran, Libya, North Korea, Venezuela, Sudan and Syria). Neither the Company nor any of its Subsidiaries will, directly or indirectly, use the proceeds of the offering, or lend, contribute or otherwise make available such proceeds to any subsidiary, joint venture partner or other individual or entity: (i) to fund or facilitate any activities or business of or with any individual or entity or in any country or territory that, at the time of such funding or facilitation, is the subject of Sanctions or (ii) in any other manner that will result in a violation of Sanctions by any individual or entity (including any individual or entity participating in the offering, whether as underwriter, advisor, investor or otherwise). For the past five years, neither the Company nor any of its Subsidiaries has knowingly engaged in, and is not now knowingly engaged in, any dealings or transactions with any individual or entity, or in any country or territory, that at the time of the dealing or transaction is or was the subject of Sanctions.

 

(u)DTC Eligibility.  The Company, through the Transfer Agent, currently participates in the DTC Fast Automated Securities Transfer (FAST) Program and the Common Stock can be transferred electronically to third parties via the DTC Fast Automated Securities Transfer (FAST) Program.

 

(v) Accounting Controls; Sarbanes-Oxley. The Company maintains a system of internal accounting controls sufficient to provide reasonable assurances that (A) transactions are executed in accordance with management’s general or specific authorization; (B) transactions are recorded as necessary to permit preparation of financial statements in conformity with GAAP and to maintain  accountability for assets; (C) access to assets is permitted only in accordance with management’s general or specific authorization; and (D) the recorded accountability for assets is compared with existing assets at reasonable intervals and appropriate action is taken with respect to any differences.  Except as disclosed in the SEC Documents, the Company has concluded that its internal control over financial reporting is effective and none of the Company, its board of directors and audit committee is 

 

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aware of any “significant deficiencies” or “material weaknesses” (each as defined by the rules adopted by the SEC) in its internal control over financial reporting, or any fraud, whether or not material, that involves management or other employees of the Company and its Subsidiaries who have a significant role in the Company’s internal controls; and since the end of the latest audited fiscal year, there has been no change in the Company’s internal control over financial reporting (whether or not remediated) that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting. The Company’s board of directors has, subject to the exceptions, cure periods and the phase in periods specified in the applicable stock exchange rules of the Principal Market (“Exchange Rules”), validly appointed an audit committee to oversee internal accounting controls whose composition satisfies the applicable independence and other requirements of the Exchange Rules and the rules under the Exchange Act, and the Company’s board of directors and/or the audit committee has adopted a charter that satisfies the requirements of the Exchange Rules and the rules under the Exchange Act. Neither the Company’s board of directors nor the audit committee has been informed, nor is any director of the Company or the Company aware, of (A) any significant deficiencies in the design or operation of the Company’s internal controls which could adversely affect the Company’s ability to record, process, summarize and report financial data or any material weakness in the Company’s internal controls; or (B) any fraud, whether or not material, that involves management or other employees of the Company who have a significant role in the Company’s internal controls. No relationship, direct or indirect, exists between or among the Company, on the one hand, and the directors, officers, shareholders, customers or suppliers of the Company, on the other hand, which is required to be described in the Registration Statement which is not so described. The Company has not, directly or indirectly, extended or maintained credit, or arranged for the extension of credit, or renewed an extension of credit, in the form of a personal loan to or for any of its directors or executive officers in violation of applicable laws, including Section 402 of the Sarbanes-Oxley Act of 2002 and the rules and regulations promulgated in connection therewith (the “Sarbanes-Oxley Act”).

 

(w)Certain Fees. Except as disclosed on Schedule 4(x), no brokerage or finder’s fees or commissions are or will be payable by the Company to any broker, financial advisor or consultant, finder, placement agent, investment banker, bank or other Person with respect to the transactions contemplated by the Transaction Documents. Except as disclosed on Schedule 4(x), the Investor shall have no obligation with respect to any fees or with respect to any claims made by or on behalf of other Persons for fees of a type contemplated in this Section 4(x) that may be due in connection with the transactions contemplated by the Transaction Documents. 

(x)Investment Company. The Company is not, and immediately after receipt of payment for the Securities will not be, an “investment company” within the meaning of the Investment Company Act of 1940, as amended (the “Investment Company Act”). 

(y)Listing and Maintenance Requirements. The Common Stock is registered pursuant to Section 12(b) of the Exchange Act, and the Company has taken no action designed to, or which to its knowledge is likely to have the effect of, terminating the registration of the Common Stock pursuant to the Exchange Act nor has the Company received any notification that the SEC is currently contemplating terminating such registration. Except as disclosed in the SEC Documents, the Company has not, in the twelve (12) months preceding the date hereof, received any notice from any Person to the effect that the Company is not in compliance with the listing or maintenance requirements of the Principal Market. Except as disclosed in the SEC Documents, the Company is, and has no reason to believe that it will not in the foreseeable future continue to be, in compliance with all such listing and maintenance requirements.

(z)Accountants.  The Company’s accountants are set forth in the SEC Documents and, to the knowledge of the Company, such accountants are an independent registered public accounting firm as required by the Securities Act.

 

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(aa)No Market Manipulation. The Company has not, and to its knowledge no Person acting on its behalf has, (i) taken, directly or indirectly, any action designed to cause or to result in the stabilization or manipulation of the price of any security of the Company to facilitate the sale or resale of any of the Securities, (ii) sold, bid for, purchased, or, paid any compensation for soliciting purchases of, any of the Securities, or (iii) paid or agreed to pay to any Person any compensation for soliciting another to purchase any other securities of the Company.

(bb)Benefit Plans; Labor Matters.  Each benefit and compensation plan, agreement, policy and arrangement that is maintained, administered or contributed to by the Company for current or former employees or directors of, or independent contractors with respect to, the Company has been maintained in compliance with its terms and the requirements of any applicable statutes, orders, rules and regulations and the Company has complied in all material respects with all applicable statutes, orders, rules and regulations in regard to such plans, agreements, policies and arrangements. Each stock option granted under any stock option plan of the Company (each, a “Stock Plan”) was granted with a per share exercise price no less than the market price per common share on the grant date of such option in accordance with the rules of the Principal Market, and no such grant involved any “back-dating,” “forward-dating” or similar practice with respect to the effective date of such grant; each such option (i) was granted in compliance in all material respects with applicable laws and with the applicable Stock Plan(s), (ii) was duly approved by the Board of Directors (or a duly authorized committee thereof) of the Company, and (iii) has been properly accounted for in the Company's financial statements and disclosed, to the extent required, in the Company's filings or submissions with the SEC, and the Principal Market. No labor problem or dispute with the employees of the Company exists or is threatened or imminent, and the Company is not aware of any existing or imminent labor disturbance by the employees of any of its principal suppliers or contractors, that could have a Material Adverse Effect.

 

(cc)Regulatory. Except as described in the SEC Documents,  the Company and each of its Subsidiaries:  (A) is and at all times has been in material compliance with all applicable U.S. and foreign statutes, rules, regulations, or guidance applicable to Company and its Subsidiaries (“Applicable Laws”), except as could not, individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect; (B) have not received any notice of adverse finding, warning letter, untitled letter or other correspondence or notice from any federal, state, or foreign governmental authority having authority over the Company (“Governmental Authority”) alleging  or asserting  noncompliance with any Applicable  Laws or any licenses, certificates, approvals, clearances, authorizations,  permits and supplements or amendments thereto required by any such Applicable Laws (“Authorizations”); (C) possess all material Authorizations and such material Authorizations are valid and in full force and effect and are not in violation of any term of any such material Authorizations; (D) have not received notice of any claim, action, suit, proceeding, hearing, enforcement, investigation, arbitration or other action from any Governmental Authority or third party alleging that any product operation or activity is in violation of any Applicable Laws or Authorizations and have no knowledge that any such Governmental Authority or third party is considering any such claim, litigation, arbitration, action, suit, investigation or proceeding; (E) have not received notice that any Governmental Authority has taken, is taking or intends to take action to limit, suspend, modify or revoke any Authorizations and the Company has no knowledge that any such Governmental Authority is considering such action; and (F) have filed, obtained, maintained or submitted all material reports, documents, forms, notices, applications, records, claims, submissions and supplements or amendments as required by any Applicable Laws or material Authorizations and that all such reports, documents, forms, notices, applications, records, claims, submissions and supplements or amendments were complete and correct in all material respects on the date filed (or were corrected or supplemented by a subsequent submission). To the Company's knowledge, all studies, tests and preclinical and clinical trials conducted by or on behalf of the Company were and, if still pending, are, in all material respects, being conducted in accordance with experimental protocols, procedures and controls pursuant to accepted professional scientific standards and all applicable laws, 

 

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including, without limitation, the United States Federal Food, Drug and Cosmetic Act; the descriptions of the results of such studies, tests and trials contained in the SEC Documents are accurate and complete in all material respects and fairly present the data derived from such studies, tests and trials; the descriptions in the SEC Documents of the results of such clinical trials are consistent in all material respects with such results and to the Company’s knowledge there are no other studies or other clinical trials whose results are materially inconsistent with or otherwise materially call into question the results described or referred to in the SEC Documents; and the Company has not received any notices or correspondence from any Governmental Authority requiring the termination, suspension or material modification of any studies, tests or preclinical or clinical trials conducted by or on behalf of the Company or its Subsidiaries. The Company has concluded that it uses commercially reasonable efforts to review, from time to time, the progress and results of the studies, tests and preclinical and clinical trials and, based upon (i) the information provided to the Company by the third parties conducting such studies, tests, preclinical studies and clinical trials that are described in the SEC Documents and the Company’s review of such information, and (ii) the Company’s actual knowledge, the Company reasonably believes that the descriptions of the results of such studies, tests, preclinical studies and clinical trials are accurate and complete in all material respects.

 

(dd)Absence of Schedules. In the event that at Closing, the Company does not deliver any disclosure schedule contemplated by this Agreement, the Company hereby acknowledges and agrees that each such undelivered disclosure schedule shall be deemed to read as follows: “Nothing to Disclose”.

 

5.COVENANTS.

 

(a)Filing of Current Report and Registration Statement.  The Company agrees that it shall, within the time required under the Exchange Act, file with the SEC a report on Form 8-K relating to the transactions contemplated by, and describing the material terms and conditions of, the Transaction Documents (the “Current Report”). The Company further agrees that it shall, within thirty (30) calendar days of the Execution Date, a registration statement (“Registration Statement”) covering only the resale of the Purchase Shares and Commitment Shares in accordance with the terms of the Registration Rights Agreement by and between the Company and the Investor dated as of the Execution Date (the “Registration Rights Agreement”).   The Company shall permit the Investor to review and comment upon the Current Report at least two (2) Business Days prior to their filing with the SEC, the Company shall give due consideration to all such comments, and the Company shall not file the Current Report with the SEC in a form to which the Investor reasonably objects. The Investor shall use its reasonable best efforts to comment upon the Current Report within one (1) Business Day from the date the Investor receives the final pre-filing draft version thereof from the Company. The Investor shall furnish to the Company such information regarding itself, the Securities held by it and the intended method of distribution thereof, including any arrangement between the Investor and any other Person relating to the sale or distribution of the Securities, as shall be reasonably requested by the Company in connection with the preparation and filing of the Current Report, and shall otherwise cooperate with the Company as reasonably requested by the Company in connection with the preparation and filing of the Current Report with the SEC.

 

(b)Blue Sky. The Company shall take all such action, if any, as is reasonably necessary in order to obtain an exemption for or to qualify (i) the issuance of the Commitment Shares and the sale of the Purchase Shares to the Investor under this Agreement and (ii) any subsequent resale of all Commitment Shares and all Purchase Shares by the Investor, in each case, under applicable securities or “Blue Sky” laws of the states of the United States in such states as is reasonably requested by the Investor during the Registration Period, and shall provide evidence of any such action so taken to the Investor.

 

 

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(c)Listing/DTC.  The Company shall promptly secure the listing of all of the Purchase Shares and Commitment Shares to be issued to the Investor hereunder on the Principal Market (subject to official notice of issuance) and upon each other national securities exchange or automated quotation system, if any, upon which the Common Stock is then listed, and shall maintain, so long as any shares of Common Stock shall be so listed, such listing of all such Securities from time to time issuable hereunder. The Company shall use reasonable best efforts to maintain the listing of the Common Stock on the Principal Market and shall comply in all respects with the Company’s reporting, filing and other obligations under the bylaws or rules and regulations of the Principal Market. Neither the Company nor any of its Subsidiaries shall take any action that would reasonably be expected to result in the delisting or suspension of the Common Stock on the Principal Market.  The Company shall promptly, and in no event later than the following Business Day, provide to the Investor copies of any notices it receives from any Person regarding the continued eligibility of the Common Stock for listing on the Principal Market; provided, however, that the Company shall not be required to provide the Investor copies of any such notice that the Company reasonably believes constitutes material non-public information and the Company would not be required to publicly disclose such notice in any report or statement filed with the SEC and under the Exchange Act or the Securities Act. The Company shall pay all fees and expenses in connection with satisfying its obligations under this Section 5(c).  The Company shall take all action necessary to ensure that its Common Stock can be transferred electronically as DWAC Shares.

 

(d)Prohibition of Short Sales and Hedging Transactions.  The Investor agrees that, beginning on the date of this Agreement and ending on the date of termination of this Agreement as provided in Section 11, the Investor and its agents, representatives and affiliates shall not in any manner whatsoever enter into or effect, directly or indirectly, any (i) “short sale” (as such term is defined in Rule 200 of Regulation SHO of the Exchange Act) of the Common Stock or (ii) hedging transaction, which establishes a net short position with respect to the Common Stock.  

 

(e)Issuance of Commitment Shares.  In consideration for the Investor’s execution and delivery of this Agreement, the Company shall cause to be issued to the Investor a total of 105,467 shares

of Common Stock  immediately upon the execution of this Agreement (the "Initial Commitment Shares") and 195,867 shares of Common Stock immediately upon the Commencement Date (the “Additional Commitment Shares”, and together with the Initial Commitment Shares, the “Commitment Shares”).  The Company shall deliver (a) on the Execution Date the Irrevocable Transfer Agent Instructions to the Transfer Agent and cause the Initial Commitment Shares to be issued to the Investor immediately upon execution of this Agreement and (b) on the Commencement Date the Commencement Irrevocable Transfer Agent Instructions to the Transfer Agent and cause the Additional Commitment Shares to be issued to the Investor within one Business Day of the Commencement Date, and, for the avoidance of doubt, upon each such issuance, all of the Initial Commitment Shares and Additional Commitment Shares, respectively, shall be fully earned, whether or not any other Purchase Shares are purchased by the Investor under this Agreement and irrespective of any subsequent termination of this Agreement.

 

(f)Due Diligence; Non-Public Information.  During the term of this Agreement, the Investor shall have the right, from time to time as the Investor may reasonably deem appropriate, to perform reasonable due diligence on the Company during normal business hours.  The Company and its officers and employees shall provide information and reasonably cooperate with the Investor in connection with any reasonable request by the Investor related to the Investor’s due diligence of the Company.  Each party hereto agrees not to disclose any Confidential Information of the other party to any third party and shall not use the Confidential Information for any purpose other than in connection with, or in furtherance of, the transactions contemplated hereby.  Each party hereto acknowledges that the Confidential Information shall remain the property of the disclosing party and agrees that it shall take all reasonable measures to protect the secrecy of any Confidential Information disclosed by the other party. From and after the date of this Agreement, the Company confirms that neither it nor any other Person acting on its behalf shall provide the 

 

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Investor or its agents or counsel with any information that the Company believes constitutes material, non-public information, unless a simultaneous public announcement thereof is made by the Company in the manner contemplated by Regulation FD under the Exchange Act. In the event of a breach of the foregoing covenant by the Company or any Person acting on its behalf (as determined in the reasonable good faith judgment of the Investor), in addition to any other remedy provided herein or in the other Transaction Documents, the Investor shall have the right to make a public disclosure, in the form of a press release, public advertisement or otherwise, of such material, non-public information without the prior approval by the Company; provided the Investor shall have first provided notice to the Company that it believes it has received information that constitutes material, non-public information, the Company shall have at least 24 hours to publicly disclose such material, non-public information prior to any such disclosure by the Investor, and the Company shall have failed to publicly disclose such material, non-public information within such time period. The Investor shall not have any liability to the Company, any of its Subsidiaries, or any of their respective directors, officers, employees, shareholders or agents, for any such disclosure. The Company understands and confirms that the Investor shall be relying on the foregoing covenants in effecting transactions in securities of the Company.

(g)Purchase Records. The Investor and the Company shall each maintain records showing the remaining Available Amount at any given time and the dates and Purchase Amounts for each Regular Purchase, Accelerated Purchase and Additional Accelerated Purchase or shall use such other method, reasonably satisfactory to the Investor and the Company. 

(h)Taxes.  The Company shall pay any and all transfer, stamp or similar taxes that may be payable with respect to the issuance and delivery of any Common Stock to the Investor made under this Agreement.  

 

(i) Effective Registration Statement. Once the Registration Statement becomes effective, the Company shall use its reasonable best efforts to keep the Registration Statement effective pursuant to Rule 415 promulgated under the Securities Act, and to keep the Registration Statement current and available for issuances and sales of all of the Securities by the Company to the Investor, and for the resale by the Investor as prescribed by Registration Rights Agreement, the Company shall comply with all applicable federal, state and foreign securities laws in connection with the offer, issuance and sale of the Securities contemplated by the Transaction Documents. Without limiting the generality of the foregoing, neither the Company nor any of its officers, directors or affiliates will take, directly or indirectly, any action designed or intended to stabilize or manipulate the price of any security of the Company, or which would reasonably be expected to cause or result in, stabilization or manipulation of the price of any security of the Company.

 

(j)Compliance with Laws. The Company and each of its Subsidiaries shall maintain, or cause to be maintained, all material permits, licenses and other authorizations required by federal, state and local law in order to conduct their businesses substantially as described in the SEC Documents, and the Company and each of its Subsidiaries shall conduct their businesses, or cause their businesses to be conducted, in substantial compliance with such permits, licenses and authorizations and with applicable laws, except where the failure to maintain or be in compliance with such permits, licenses and authorizations could not reasonably be expected to have a Material Adverse Effect. The Company shall comply with all requirements imposed upon it by the Securities Act and the Exchange Act and applicable U.S. state securities or “Blue Sky” laws as from time to time may be in force in connection with the offer, issuance and sale of the Securities contemplated by the Transaction Documents. Without limiting the generality of the foregoing, neither the Company nor any of its officers, directors or affiliates will take, directly or indirectly, any action designed or intended to stabilize or manipulate the price of any security of the Company, or which would reasonably be expected to cause or result in, stabilization or manipulation of the price of any security of the Company. The Company will conduct its affairs in such a manner so as to reasonably ensure that neither it nor the Subsidiaries will be or become, at any time prior to the termination of this Agreement, an 

 

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“investment company,” as such term is defined in the Investment Company Act, assuming no change in the SEC’s current interpretation as to entities that are not considered an investment company. The Company and the Subsidiaries will use their best efforts to comply with all effective applicable provisions of the Sarbanes-Oxley Act and The Dodd–Frank Wall Street Reform and Consumer Protection Act.

 

(k)Stop Orders.  The Company shall advise the Investor promptly (but in no event later than 24 hours) and shall confirm such advice in writing: (i) of the Company’s receipt of notice of any request by the SEC for amendment of or a supplement to the Registration Statement or for any additional information; (ii) of the Company’s receipt of notice of the issuance by the SEC of any stop order suspending the effectiveness of the Registration Statement, or of the Company’s receipt of any notification of the suspension of qualification of the Securities for offering or sale in any jurisdiction or the initiation or contemplated initiation of any proceeding for such purpose; and (iii) of the Company becoming aware of the happening of any event, which makes any statement of a material fact made in the Registration Statement untrue or which requires the making of any additions to or changes to the statements then made in the Registration Statement in order to state a material fact required by the Securities Act to be stated therein or necessary in order to make the statements then made therein not misleading, or of the necessity to amend the Registration Statement to comply with the Securities Act or any other law. The Company shall not be required to disclose to the Investor the substance or specific reasons of any of the events set forth in clauses (i) through (iii) of the immediately preceding sentence, but rather, shall only be required to disclose that the event has occurred. The Company shall not deliver to the Investor any Regular Purchase Notice, Accelerated Purchase Notice or Additional Accelerated Purchase Notice, and the Investor shall not be obligated to purchase any shares of Common Stock under this Agreement, during the continuation or pendency of any of the foregoing events. If at any time the SEC shall issue any stop order suspending the effectiveness of the Registration Statement, the Company shall use its reasonable best efforts to obtain the withdrawal of such order at the earliest possible time. The Company shall furnish to the Investor, without charge, a copy of any correspondence from the SEC or the staff of the SEC to the Company or its representatives relating to the Registration Statement.

 

(l)Amendments to Registration Statement. Except as provided in this Agreement and other than periodic and current reports required to be filed pursuant to the Exchange Act, the Company shall not file with the SEC any amendment to the Registration Statement that refers to the Investor, the Transaction Documents or the transactions contemplated thereby, in each case with respect to which (a) the Investor shall not previously have been advised and afforded the opportunity to review and comment thereon at least two (2) Business Days prior to filing with the SEC, as the case may be, (b) the Company shall not have given due consideration to any comments thereon received from the Investor or its counsel, or (c) the Investor shall reasonably object, unless the Company reasonably has determined that it is necessary to amend the Registration Statement to comply with the Securities Act or any other applicable law or regulation, in which case the Company shall promptly (but in no event later than 24 hours) so inform the Investor, the Investor shall be provided with a reasonable opportunity to review and comment upon any disclosure referring to the Investor, the Transaction Documents or the transactions contemplated thereby, as applicable, and the Company shall expeditiously furnish to the Investor a copy thereof. In addition, for so long as, in the reasonable opinion of counsel for the Investor, the prospectus contained in the Registration Statement (the “Prospectus”) is required to be delivered in connection with any acquisition or sale of Securities by the Investor, the Company shall not file any Prospectus Supplement with respect to the Securities without furnishing to the Investor as many copies of such Prospectus Supplement, together with the Prospectus, as the Investor may reasonably request.

 

 

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(m)Prospectus Delivery.  The Company consents to the use of the Prospectus (and of each Prospectus Supplement thereto) in accordance with the provisions of the Securities Act and with the securities or “blue sky” laws of the jurisdictions in which the Securities may be sold by the Investor, in connection with the offering and sale of the Securities and for such period of time thereafter as the Prospectus is required by the Securities Act to be delivered in connection with sales of the Securities. The Company will make available to the Investor upon request, and thereafter from time to time will furnish to the Investor, as many copies of the Prospectus (and each Prospectus Supplement thereto) as the Investor may reasonably request for the purposes contemplated by the Securities Act within the time during which the Prospectus is required by the Securities Act to be delivered in connection with sales of the Securities. If during such period of time any event shall occur that in the reasonable judgment of the Company and its counsel, or in the reasonable judgment of the Investor and its counsel, is required to be set forth in the Registration Statement, the Prospectus or any Prospectus Supplement or should be set forth therein in order to make the statements made therein (in the case of the Prospectus or any Prospectus Supplement, in light of the circumstances under which they were made) not misleading, or if in the reasonable judgment of the Company and its counsel, or in the reasonable judgment of the Investor and its counsel, it is otherwise necessary to amend the Registration Statement or supplement the Prospectus or any Prospectus Supplement to comply with the Securities Act or any other applicable law or regulation, the Company shall forthwith prepare and, subject to Section 5(l) above, file with the SEC an appropriate amendment to the Registration Statement or an appropriate Prospectus Supplement and in each case shall expeditiously furnish to the Investor, at the Company’s expense, such amendment to the Registration Statement or such Prospectus Supplement, as applicable, as may be necessary to reflect any such change or to effect such compliance. The Company shall have no obligation to separately advise the Investor of, or deliver copies to the Investor of, the SEC Documents, all of which the Investor shall be deemed to have notice of. 

 

(n)Aggregation.  From and after the date of this Agreement, neither the Company, nor or any of its affiliates will, and the Company shall use its reasonable best efforts to ensure that no Person acting on their behalf will, directly or indirectly, make any offers or sales of any security or solicit any offers to buy any security, under circumstances that would cause this offering of the Securities by the Company to the Investor to be aggregated with other offerings by the Company in a manner that would require stockholder approval pursuant to the rules of the Principal Market on which any of the securities of the Company are listed or designated, unless stockholder approval is obtained before the closing of such subsequent transaction in accordance with the rules of such Principal Market.

 

(o)Other Transactions. During the term of this Agreement, the Company shall not enter into, announce or recommend to its shareholders any agreement, plan, arrangement or transaction in or of which the terms thereof would restrict, materially delay, conflict with or impair the ability or right of the Company to perform its obligations under the Transaction Documents, including, without limitation, the obligation of the Company to deliver the Purchase Shares and the Commitment Shares to the Investor in accordance with the terms of the Transaction Documents.

 

(p)Limitation on Variable Rate Transactions.  From and after the date of this Agreement until the Maturity Date, the Company and its Subsidiaries shall be prohibited from effecting or entering into an agreement to effect any issuance by the Company or any of its Subsidiaries of Common Stock or Common Stock Equivalents (or a combination of units thereof) involving a Variable Rate Transaction, other than in connection with an Exempt Issuance (as defined below).  The Investor shall be entitled to seek injunctive relief against the Company and its Subsidiaries to preclude any such issuance, which remedy shall be in addition to any right to collect damages, without the necessity of showing economic loss and without any bond or other security being required. “Variable Rate Transaction” means a transaction in which the Company (i) issues or sells any equity or debt securities that are convertible into, exchangeable or exercisable for, or include the right to receive additional shares of Common Stock or Common Stock 

 

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Equivalents either (A) at a conversion price, exercise price, exchange rate or other price that is based upon and/or varies with the trading prices of or quotations for the Common Stock at any time after the initial issuance of such equity or debt securities (including, without limitation, pursuant to any “cashless exercise” provision), or (B) with a conversion, exercise or exchange price that is subject to being reset at some future date after the initial issuance of such equity or debt security or upon the occurrence of specified or contingent events directly or indirectly related to the business of the Company or the market for the Common Stock (including, without limitation, any “full ratchet” or “weighted average” anti-dilution provisions, but not including any standard anti-dilution protection for any reorganization, recapitalization, non-cash dividend, stock split or other similar transaction), (ii) issues or sells any equity or debt securities, including without limitation, Common Stock or Common Stock Equivalents, either (A) at a price that is subject to being reset at some future date after the initial issuance of such debt or equity security or upon the occurrence of specified or contingent events directly or indirectly related to the business of the Company or the market for the Common Stock (other than standard anti-dilution protection for any reorganization, recapitalization, non-cash dividend, stock split or other similar transaction), or (B) that is subject to or contains any put, call, redemption, buy-back, price-reset or other similar provision or mechanism (including, without limitation, a “Black-Scholes” put or call right) that provides for the issuance of additional equity securities of the Company or the payment of cash by the Company, or (iii) enters into any agreement, including, but not limited to, an “equity line of credit”, “at-the-market offering” that is not an Exempt Issuance or other continuous offering or similar offering of Common Stock or Common Stock Equivalents, whereby the Company may sell Common Stock or Common Stock Equivalents at a future determined price. “Exempt Issuance” means the issuance of (a) Common Stock, options or other equity incentive awards to employees, officers, directors or vendors of the Company pursuant to any equity incentive plan duly adopted for such purpose, by the Board of Directors or a majority of the members of a committee of directors established for such purpose, (b) any Securities issued to the Investor pursuant to this Agreement, (c) shares of Common Stock, Common Stock Equivalents or other securities issued to the Investor pursuant to any other existing or future contract, agreement or arrangement between the Company and the Investor, (d) shares of Common Stock, Common Stock Equivalents or other securities upon the exercise, exchange or conversion of any shares of Common Stock, Common Stock Equivalents or other securities held by the Investor at any time, (e) any securities issued upon the exercise or exchange of or conversion of any Common Stock Equivalents issued and outstanding on the date of this Agreement, provided that such securities or Common Stock Equivalents referred to in this clause (e) have not been amended since the date of this Agreement to increase the number of such securities or Common Stock underlying such securities or to decrease the exercise price, exchange price or conversion price of such securities, (f) Common Stock Equivalents that are convertible into, exchangeable or exercisable for, or include the right to receive shares of Common Stock at a conversion price, exercise price, exchange rate or other price (which may be below the then current market price of the Common Stock) that is fixed at the time of initial issuance of such Common Stock Equivalents (subject only to standard anti-dilution protection for any reorganization, recapitalization, non-cash dividend, stock split or other similar transaction), which fixed conversion price, exercise price, exchange rate or other price shall not at any time after the initial issuance of such Common Stock Equivalent be based upon or varying with the trading prices of or quotations for the Common Stock or subject to being reset at some future date, (g) securities issued pursuant to acquisitions, divestitures, licenses, partnerships, collaborations or strategic transactions approved by the Board of Directors or a majority of the members of a committee of directors established for such purpose, which acquisitions, divestitures, licenses, partnerships, collaborations or strategic transactions can have a Variable Rate Transaction component, provided that any such issuance shall only be to a Person (or to the equity holders of a Person) which is, itself or through its subsidiaries, an operating company or an asset in a business synergistic with the business of the Company and shall provide to the Company additional benefits in addition to the investment of funds, but shall not include a transaction in which the Company is issuing securities primarily for the purpose of raising capital or to an entity whose primary business is investing in securities, (h) Common Stock issued pursuant to an “at-the-market offering” by the Company exclusively through a registered broker-dealer acting as agent of the Company pursuant to a written 

 

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agreement between the Company and such registered broker-dealer or (i) securities (such as warrants)  or Common Stock issued in connection with future financings or offerings of the Company, such as but not limited to, registered direct offerings, rights offerings, and confidentially marketed public offerings; provided such transactions do not involve a Variable Rate Transaction.

6.TRANSFER AGENT INSTRUCTIONS.

 

(a)On the date of this Agreement, the Company shall issue to the Transfer Agent irrevocable instructions, in the form substantially similar to those used by the Investor in substantially similar transactions and in any case agreed to by the Investor, to issue the Securities in accordance with the terms of this Agreement (the “Irrevocable Transfer Agent Instructions”). The Company warrants to the Investor that no instruction other than as set forth in this Section 6 will be given by the Company to the Transfer Agent with respect to the Securities, and the Securities shall otherwise be freely transferable on the books and records of the Company.

 

(b)On the earlier of (i) the Commencement Date and (ii) such time that the Investor shall request, provided all conditions of Rule 144 under the Securities Act are met, the Company shall, no later than one (1) Business Day following the delivery by the Investor to the Company or the Transfer Agent of one or more legended certificates or book-entry statements representing the Commitment Shares (which certificates or book-entry statements the Investor shall promptly deliver on or prior to the first to occur of the events described in clauses (i) and (ii) of this sentence), as directed by the Investor, issue and deliver (or cause to be issued and delivered) to the Investor, as requested by the Investor, either: (A) a certificate or book-entry statement representing such Commitment Shares that is free from all restrictive and other legends or (B) a number of shares of Common Stock equal to the number of Commitment Shares represented by the certificate(s) or book-entry statement(s) so delivered by the Investor as DWAC Shares. The Company shall take all actions to carry out the intent and accomplish the purposes of the immediately preceding sentence, including, without limitation, delivering all such legal opinions, consents, certificates, resolutions and instructions to the Transfer Agent, and any successor transfer agent of the Company, as may be requested from time to time by the Investor or necessary or desirable to carry out the intent and accomplish the purposes of the immediately preceding sentence. On the Commencement Date, the Company shall issue to the Transfer Agent, and any subsequent transfer agent, (i) irrevocable instructions in the form substantially similar to those used by the Investor in substantially similar transactions (the “Commencement Irrevocable Transfer Agent Instructions”) and (ii) the notice of effectiveness of the Registration Statement in the form attached as an exhibit to the Registration Rights Agreement (the “Notice of Effectiveness of Registration Statement”), in each case to issue the Commitment Shares and the Purchase Shares in accordance with the terms of this Agreement and the Registration Rights Agreement. All Purchase Shares to be issued from and after Commencement to or for the benefit of the Investor pursuant to this Agreement shall be issued only as DWAC Shares. The Company represents and warrants to the Investor that, while this Agreement is effective, no instruction other than the Commencement Irrevocable Transfer Agent Instructions and the Notice of Effectiveness of Registration Statement referred to in this Section 6(b) will be given by the Company to the Transfer Agent with respect to the Purchase Shares or the Commitment Shares from and after Commencement, and the Purchase Shares and the Commitment Shares covered by the Registration Statement shall otherwise be freely transferable on the books and records of the Company. The Company agrees that if the Company fails to fully comply with the provisions of this Section 6(b) within five (5) Business Days of the Investor providing the deliveries referred to above, the Company shall, at the Investor’s written instruction, purchase such Shares of Common Stock containing the Restrictive Legend from the Investor at the greater of the (i) purchase price paid for such shares of Common Stock (as applicable) and (ii) the Closing Sale Price of the Common Stock on the date of the Investor’s written instruction.

 

 

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7.
	
CONDITIONS TO THE COMPANY'S RIGHT TO COMMENCE

SALES OF COMMON STOCK.

 

The right of the Company hereunder to commence sales of the Purchase Shares on the Commencement Date is subject to the satisfaction or, where legally permissible, the waiver of each of the following conditions:

 

(a)The Investor shall have executed each of the Transaction Documents and delivered the same to the Company; 

 

(b)No stop order with respect to the Registration Statement shall be pending or threatened by the SEC; and

 

(c)The representations and warranties of the Investor shall be true and correct in all material respects as of the Execution Date and as of the Commencement Date as though made at that time.

 

	
 
	
8.
	
CONDITIONS TO THE INVESTOR'S OBLIGATION TO PURCHASE COMMON STOCK.

 

The obligation of the Investor to buy Purchase Shares under this Agreement is subject to the satisfaction or, where legally permissible, the waiver of each of the following conditions on or prior to the Commencement Date and, once such conditions have been initially satisfied, there shall not be any ongoing obligation to satisfy such conditions after the Commencement has occurred:

 

(a)The Company shall have executed each of the Transaction Documents and delivered the same to the Investor;

 

(b)The Common Stock shall be listed or quoted on the Principal Market and all Securities to be issued by the Company to the Investor pursuant to this Agreement shall have been approved for listing on the Principal Market in accordance with the applicable rules and regulations of the Principal Market, subject only to official notice of issuance;

 

(c)The Investor shall have received opinions of the Company's legal counsel which are customary of transactions of this type dated as of the Commencement Date substantially in the forms agreed to prior to the date of this Agreement by the Company’s legal counsel and the Investor’s legal counsel;

 

(d)The representations and warranties of the Company contained in this Agreement shall be true and correct in all material respects (except to the extent that any of such representations and warranties is qualified as to materiality, in which case, any of such representations and warranties shall be true and correct as so qualified) as of the Execution Date and as of the Commencement 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 in all material respects as of such date) and the Company shall have performed, satisfied and complied in all material respects with the covenants, agreements and conditions required by the Transaction Documents to be performed, satisfied or complied with by the Company at or prior to the Commencement Date.  The Investor shall have received a certificate, executed by the CEO, President or CFO of the Company, dated as of the Commencement Date, to the foregoing effect in the form attached hereto as Exhibit A;

 

(e)The Board of Directors of the Company shall have adopted resolutions in connection with this Agreement and the transactions contemplated hereby which shall be in full force and effect without any amendment or supplement thereto as of the Commencement Date;   

 

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(f)As of the Commencement Date, the Company shall have reserved out of its authorized and unissued Common Stock the Reserve Amount, solely for the purpose of effecting purchases of Purchase Shares hereunder;

 

(g)The Irrevocable Transfer Agent Instructions, the Commencement Irrevocable Transfer Agent Instructions and the Notice of Effectiveness of Registration Statement shall have been delivered to the Company’s Transfer Agent (or any successor transfer agent) and acknowledged in writing by the Company and the Company’s Transfer Agent (or any successor transfer agent), and the Commitment Shares shall have been issued directly to the Investor electronically as DWAC Shares; 

 

(h)The Company shall have delivered to the Investor a certificate evidencing the incorporation and good standing of the Company in the State of Delaware issued by the Secretary of State of the State of Delaware as of a date within ten (10) Business Days of the Commencement Date;

 

(i)The Company shall have delivered to the Investor a certified copy of the Certificate of Incorporation as certified by the Secretary of State of the State of Delaware within ten (10) Business Days of the Commencement Date;

 

(J)The Company shall have delivered to the Investor an secretary’s certificate executed by the Secretary of the Company, dated as of the Commencement Date, in the form attached hereto as Exhibit B;

 

(k)The Registration Statement shall become effective and no stop order with respect to the Registration Statement shall be pending or threatened by the SEC. The Company shall have a maximum dollar amount of Common Stock registered under the Registration Statement which is sufficient to issue to the Investor not less than (i) the full Available Amount worth of Purchase Shares plus (ii) all of the Commitment Shares. The Current Report shall have been filed with the SEC, as required pursuant to Section 5(a), and copies of the Prospectus shall have been delivered to the Investor in accordance with Section 5(m) hereof. Registration Statement (and the Prospectus of which such Registration Statement is made a part) shall be current and available for issuances and sales of all of the Securities by the Company to the Investor, and for the resale of all of the Securities by the Investor. All reports, schedules, registrations, forms, statements, information and other documents required to have been filed by the Company with the SEC at or prior to the Commencement Date pursuant to the reporting requirements of the Exchange Act shall have been filed with the SEC within the applicable time periods prescribed for such filings under the Exchange Act;

 

(l)No Event of Default has occurred, or any event which, after notice and/or lapse of time, would become an Event of Default has occurred;

 

(m)All federal, state and local governmental laws, rules and regulations applicable to the transactions contemplated by the Transaction Documents and necessary for the execution, delivery and performance of the Transaction Documents and the consummation of the transactions contemplated thereby in accordance with the terms thereof shall have been complied with, and all consents, authorizations and orders of, and all filings and registrations with, all federal, state and local courts or governmental agencies and all federal, state and local regulatory or self-regulatory agencies necessary for the execution, delivery and performance of the Transaction Documents and the consummation of the transactions contemplated thereby in accordance with the terms thereof shall have been obtained or made, including, without limitation, in each case those required under the Securities Act, the Exchange Act, applicable state securities or “Blue Sky” laws or applicable rules and regulations of the Principal Market, or otherwise required by the SEC, the Principal Market or any state securities regulators;

 

 

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(n)No statute, regulation, order, decree, writ, ruling or injunction shall have been enacted, entered, promulgated, threatened or endorsed by any federal, state, local or foreign court or governmental authority of competent jurisdiction which prohibits the consummation of or which would materially modify or delay any of the transactions contemplated by the Transaction Documents; 

 

(o)No action, suit or proceeding before any federal, state, local or foreign arbitrator or any court or governmental authority of competent jurisdiction shall have been commenced or threatened, and no inquiry or investigation by any federal, state, local or foreign governmental authority of competent jurisdiction shall have been commenced or threatened, against the Company, or any of the officers, directors or affiliates of the Company, seeking to restrain, prevent or change the transactions contemplated by the Transaction Documents, or seeking material damages in connection with such transactions; and

 

(p)The Company shall have provided the Investor with the information requested by the Investor in connection with its due diligence requests in accordance with the terms of Section 5(f) hereof.

 

(q)The Company shall have paid to the Investor $15,000 as reimbursement for the Investors expenses in connection with entering into this Agreement and the transactions contemplated hereby.

 

	
 
	
9.
	
INDEMNIFICATION.  

 

In consideration of the Investor's execution and delivery of the Transaction Documents and acquiring the Securities hereunder and in addition to all of the Company's other obligations under the Transaction Documents, the Company shall defend, protect, indemnify and hold harmless the Investor and all of its affiliates, stockholders, officers, directors, members, managers, employees and direct or indirect investors and any of the foregoing Person's agents or other representatives (including, without limitation, 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 Indemnitee 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 Indemnitee as a result of, or arising out of or relating to: (a) any misrepresentation or breach of any representation or warranty made by the Company in the Transaction Documents or any other certificate, instrument or document contemplated hereby or thereby, (b) any breach of any covenant, agreement or obligation of the Company contained in the Transaction Documents or any other certificate, instrument or document contemplated hereby or thereby, (c) any cause of action, suit or claim brought or made against such Indemnitee and arising out of or resulting from the execution, delivery, performance or enforcement of the Transaction Documents or any other certificate, instrument or  document contemplated hereby or thereby, (d) any violation of the Securities Act, the Exchange Act, state securities or “Blue Sky” laws, or the rules and regulations of the Principal Market in connection with the transactions contemplated by the Transaction Documents by the Company or any of its Subsidiaries, affiliates, officers, directors or employees, or (e) any untrue statement or alleged untrue statement of a material fact contained, or incorporated by reference, in the Registration Statement or any amendment thereto or any omission or alleged omission to state therein, or in any document incorporated by reference therein, a material fact required to be stated therein or necessary to make the statements therein not misleading; provided, however, that (I) the indemnity contained in clause (c) of this Section 9 shall not apply to any Indemnified Liabilities which directly and primarily result from the fraud, gross negligence or willful misconduct of an Indemnitee, (II) the indemnity contained in clauses (d) and (e) of this Section 9 shall not apply to any Indemnified Liabilities to the extent, but only to the extent, arising out of or based upon any untrue statement or alleged untrue statement or omission or alleged omission made in reliance upon and in conformity with written information furnished to the Company by or on behalf of the Investor expressly for use in a Prospectus if the Prospectus was timely made available by the Company to the Investor pursuant to Section 5(l), (III) the indemnity contained in clauses (d) and (e) 

 

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of this Section 9 shall not inure to the benefit of the Investor to the extent such Indemnified Liabilities are based on a failure of the Investor to deliver or to cause to be delivered a Prospectus made available by the Company, if such Prospectus was timely made available by the Company pursuant to Section 5(l), and if delivery of such Prospectus would have cured the defect giving rise to such Indemnified Liabilities, and (IV) the indemnity in this Section 9 shall not apply to amounts paid in settlement of any claim if such settlement is effected without the prior written consent of the Company, which consent shall not be unreasonably withheld, conditioned or delayed. 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 which is permissible under applicable law.  Payment under this indemnification shall be made within thirty (30) days from the date the Investor makes written request for it. A certificate containing reasonable detail as to the amount of such indemnification submitted to the Company by Investor shall be conclusive evidence, absent manifest error, of the amount due from the Company to Investor. If any action shall be brought against any Indemnitee in respect of which indemnity may be sought pursuant to this Agreement, such Indemnitee shall promptly notify the Company in writing, and the Company shall have the right to assume the defense thereof with counsel of its own choosing reasonably acceptable to the Indemnitee. Any Indemnitee shall have the right to employ separate counsel in any such action and participate in the defense thereof, but the fees and expenses of such counsel shall be at the expense of such Indemnitee, except to the extent that (i) the employment thereof has been specifically authorized by the Company in writing, (ii) the Company has failed after a reasonable period of time to assume such defense and to employ counsel or (iii) in such action there is, in the reasonable opinion of such separate counsel, a material conflict on any material issue between the position of the Company and the position of such Indemnitee, in which case the Company shall be responsible for the reasonable fees and expenses of no more than one such separate counsel.

 

10.EVENTS OF DEFAULT.  

 

An “Event of Default” shall be deemed to have occurred at any time as any of the following events occurs:

 

(a)the effectiveness of the Registration Statement registering the Securities lapses for any reason (including, without limitation, the issuance of a stop order or similar order), the Registration Statement is unavailable for the sale by the Company to the Investor (or the resale by the Investor) of any or all of the Securities to be issued to the Investor under the Transaction Documents, and any such lapse or unavailability continues for a period of ten (10) consecutive Business Days or for more than an aggregate of thirty (30) Business Days in any 365-day period;

 

(b)the suspension of the Common Stock from trading or the failure of the Common Stock to be listed on the Principal Market for a period of one (1) Business Day, provided that the Company may not direct the Investor to purchase any Common Stock during any such suspension;

 

(c)the delisting of the Common Stock from the Nasdaq Global Select Market provided, however, that the Common Stock are not immediately thereafter trading on the New York Stock Exchange, the NASDAQ Global Market, The NASDAQ Capital Market, the NYSE Arca, the OTC Bulletin Board or OTC Markets (or nationally recognized successor to any of the foregoing);

 

(d)the failure for any reason by the Transfer Agent to issue Purchase Shares to the Investor within three (3) Business Days after Purchase Date, Accelerated Purchase Date or Additional Accelerated Purchase Date, as applicable, on which the Investor is entitled to receive such Purchase Shares;

 

 

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(e)the Company breaches any representation, warranty, covenant or other term or condition under any Transaction Document if such breach could have a Material Adverse Effect and except, in the case of a breach of a covenant which is reasonably curable, only if such breach continues for a period of at least five (5) Business Days;

 

(f)if any Person commences a proceeding against the Company pursuant to or within the meaning of any Bankruptcy Law; 

 

(g)if the Company is at any time insolvent, or pursuant to or within the meaning of any Bankruptcy Law, (i) commences a voluntary case, (ii) consents to the entry of an order for relief against it in an involuntary case, (iii) consents to the appointment of a Custodian of it or for all or substantially all of its property, or (iv) makes a general assignment for the benefit of its creditors or is generally unable to pay its debts as the same become due; 

 

(h)a court of competent jurisdiction enters an order or decree under any Bankruptcy Law that (i) is for relief against the Company in an involuntary case, (ii) appoints a Custodian of the Company or for all or substantially all of its property, or (iii) orders the liquidation of the Company or any Subsidiary;

 

(i)if at any time the Company is not eligible to transfer its Common Stock electronically as DWAC Shares; or

 

(j)if at any time after the Commencement Date, the Exchange Cap is reached (to the extent the Exchange Cap is applicable pursuant to Section 2(d) hereof) and the Company’s shareholders have not approved the transactions contemplated by this Agreement in accordance with the applicable rules and regulations of the Nasdaq Global Select Market, any other Principal Market on which the Common Stock may be listed or quoted after the date of this Agreement, the Certificate of Incorporation and the Bylaws.

 

In addition to any other rights and remedies under applicable law and this Agreement, so long as an Event of Default has occurred and is continuing, or if any event which, after notice and/or lapse of time, would become an Event of Default, has occurred and is continuing, or so long as the Closing Sale Price is below the Floor Price, the Company shall not deliver to the Investor any Regular Purchase Notice or Accelerated Purchase Notice, and the Investor shall not purchase any Common Stock under this Agreement.

 

11.TERMINATION

 

This Agreement may be terminated only as follows: 

 

(a)If pursuant to or within the meaning of any Bankruptcy Law, the Company commences a voluntary case or any Person commences a proceeding against the Company, a Custodian is appointed for the Company or for all or substantially all of its property, or the Company makes a general assignment for the benefit of its creditors (any of which would be an Event of Default as described in Sections 10(f), 10(g) and 10(h) hereof), this Agreement shall automatically terminate without any liability or payment to the Company (except as set forth below) without further action or notice by any Person.  

 

(b)In the event that the Commencement shall not have occurred on or before June  20, 2019, due to the failure to satisfy the conditions set forth in Sections 7 and 8 above with respect to the Commencement, either the Company or the Investor shall have the option to terminate this Agreement at the close of business on such date or thereafter without liability of any party to any other party (except as set forth below); provided, however, that the right to terminate this Agreement under this Section 11(b) shall not be available to any party if such party is then in breach of any covenant or agreement contained in this Agreement or any representation or warranty of such party contained in this Agreement fails to be true and correct such that the conditions set forth in Section 7(c) or Section 8(d), as applicable, could not then be satisfied. 

 

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(c) At any time after the Commencement Date, the Company shall have the option to terminate this Agreement for any reason or for no reason by delivering notice (a “Company Termination Notice”) to the Investor electing to terminate this Agreement without any liability whatsoever of any party to any other party under this Agreement (except as set forth below in this Section 11).  The Company Termination Notice shall not be effective until one (1) Business Day after it has been received by the Investor.  

 

(d)This Agreement shall automatically terminate on the date that the Company sells and the Investor purchases the full Available Amount as provided herein, without any action or notice on the part of any party and without any liability whatsoever of any party to any other party under this Agreement (except as set forth below).

 

(e)If for any reason or for no reason the full Available Amount has not been purchased in accordance with Section 2 of this Agreement by the Maturity Date, this Agreement shall automatically terminate on the Maturity Date, without any action or notice on the part of any party and without any liability whatsoever of any party to any other party under this Agreement (except as set forth below). 

 

Except as set forth in Sections 11(a) (in respect of an Event of Default under Sections 10(f), 10(g), 10(h), 11(d) and 11(e), any termination of this Agreement pursuant to this Section 11 shall be effected by written notice from the Company to the Investor, or the Investor to the Company, as the case may be, setting forth the basis for the termination hereof).  The representations and warranties and covenants of the Company and the Investor contained in Sections 3, 4, 5, and 6 hereof, the indemnification provisions set forth in Section 9 hereof and the agreements and covenants set forth in Sections 10, 11 and 12 shall survive the Commencement and any termination of this Agreement whether prior to or after Commencement.  No termination of this Agreement shall (i) affect the Company’s or the Investor’s rights or obligations under this Agreement with respect to pending Regular Purchases, Accelerated Purchases and Additional Accelerated Purchases and the Company and the Investor shall complete their respective obligations with respect to any pending Regular Purchases, Accelerated Purchases and Additional Accelerated Purchases under this Agreement or (ii) be deemed to release the Company or the Investor from any liability for intentional misrepresentation or willful breach of any of the Transaction Documents.

 

12.MISCELLANEOUS.

 

(a)Governing Law; Jurisdiction; Jury Trial.  The corporate laws of the State of Delaware shall govern all issues concerning the relative rights of the Company and its stockholders. All other questions concerning the construction, validity, enforcement and interpretation of this Agreement and the other Transaction Documents shall be governed by the internal laws of the State of Illinois, without giving effect to any choice of law or conflict of law provision or rule (whether of the State of Illinois or any other jurisdictions) that would cause the application of the laws of any jurisdictions other than the State of Illinois.  Each party hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in the State of Illinois, County of Cook, for the adjudication of any dispute hereunder or under the other Transaction Documents or in connection herewith or therewith, 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 such notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof.  Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law.  EACH PARTY HEREBY IRREVOCABLY 

 

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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.

 

(b)Counterparts.  This Agreement 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 the other party; provided that a facsimile signature or signature delivered by e-mail in a “.pdf” format data file shall be considered due execution and shall be binding upon the signatory thereto with the same force and effect as if the signature were an original signature.

 

(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; Amendment.  This Agreement supersedes all other prior oral or written agreements between the Investor, the Company, their affiliates and Persons acting on their behalf with respect to the subject matter hereof, and this Agreement, the other Transaction Documents and the instruments referenced herein contain the entire understanding of the parties with respect to the matters covered herein and therein and, except as specifically set forth herein or therein, neither the Company nor the Investor makes any representation, warranty, covenant or undertaking with respect to such matters.  The Company acknowledges and agrees that is has not relied on, in any manner whatsoever, any representations or statements, written or oral, other than as expressly set forth in the Transaction Documents. No provision of this Agreement may be amended other than by a written instrument signed by both parties hereto.

 

(f)Notices.  Any notices, consents 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 email (provided confirmation of transmission is mechanically or electronically generated and 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 for such communications shall be:

 

If to the Company:

 

Aptevo Therapeutics, Inc.

2401 4th Avenue, Suite 1050

Seattle, WA 98121

Telephone: 206.838.0500

E-mail:

Attention:

 

 

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194229821 v2 

 

With a copy to (which shall not constitute notice or service of process):

 

Cooley LLP

1700 Seventh Avenue, Suite 1900

Seattle, WA 98101

Telephone: 206-452-8756

Facsimile: 206-229-3428

E-mail: ahambelton@cooley.com

Attention:  Alan Hambelton

 

If to the Investor:

 

Lincoln Park Capital Fund, LLC

440 North Wells, Suite 410

Chicago, IL 60654

Telephone: 312.822.9300

Facsimile: 312.822.9301

E-mail: jscheinfeld@lpcfunds.com/jcope@lpcfunds.com

Attention: Josh Scheinfeld/Jonathan Cope

 

With a copy to (which shall not constitute notice or service of process):

 

K&L Gates, LLP

200 South Biscayne Boulevard

Suite 3900

Miami, Florida 33131

Telephone: 305.539.3300

Facsimile: 305.358.7095

E-mail: clayton.parker@klgates.com/matthew.ogurick@klgates.com

Attention: Clayton E. Parker, Esq./Mathew Ogurick, Esq.

 

or at 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 three (3) Business Days prior to the effectiveness of such change.  Written confirmation of receipt (A) given by the recipient of such notice, consent or other communication, (B) mechanically or electronically generated by the sender's facsimile machine or email account containing the time, date, and recipient facsimile number or email address, as applicable, and an image of the first page of such transmission or (C) provided by a nationally recognized overnight delivery service, shall be rebuttable evidence of personal service, receipt by facsimile or receipt from a nationally recognized overnight delivery service in accordance with clause (i), (ii) or (iii) above, respectively.

 

(g)Successors and Assigns.  This Agreement shall be binding upon and inure to the benefit of the parties and their respective successors and assigns.  The Company shall not assign this Agreement or any rights or obligations hereunder without the prior written consent of the Investor, including by merger or consolidation.  The Investor may not assign its rights or obligations under this Agreement.

 

(h)No Third Party Beneficiaries.  This Agreement is intended for the benefit of the parties hereto and their respective permitted successors and assigns and, except as set forth in Section 9, is not for the benefit of, nor may any provision hereof be enforced by, any other Person.

 

 

 

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(i)Publicity.  The Company shall afford the Investor and its counsel with the opportunity to review and comment upon, shall consult with the Investor and its counsel on the form and substance of, and shall give due consideration to all such comments from the Investor or its counsel on, any press release by or on behalf of the Company relating to the Investor, its purchases hereunder or any aspect of the Transaction Documents or the transactions contemplated thereby, not less than 24 hours prior to the issuance thereof. The Investor must be provided with a final version of any such press release at least 24 hours prior to any release thereof.

 

(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 party 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.

 

(k)No Financial Advisor, Placement Agent, Broker or Finder.  The Company represents and warrants to the Investor that, except as disclosed in Schedule 4(x), it has not engaged any financial advisor, placement agent, broker or finder in connection with the transactions contemplated hereby.  The Investor represents and warrants to the Company that it has not engaged any financial advisor, placement agent, broker or finder in connection with the transactions contemplated hereby. The Company shall be responsible for the payment of any fees or commissions, if any, of any financial advisor, placement agent, broker or finder relating to or arising out of the transactions contemplated hereby.  The Company shall pay, and hold the Investor harmless against, any liability, loss or expense (including, without limitation, attorneys' fees and out of pocket expenses) arising in connection with any such claim.

 

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

 

(m)Remedies, Other Obligations, Breaches and Injunctive Relief.  The Investor’s remedies provided in this Agreement, including, without limitation, the Investor’s remedies provided in Section 9, shall be cumulative and in addition to all other remedies available to the Investor under this Agreement, at law or in equity (including a decree of specific performance and/or other injunctive relief), no remedy of the investor contained herein shall be deemed a waiver of compliance with the provisions giving rise to such remedy and nothing herein shall limit the Investor’s right to pursue actual damages for any failure by the other party to comply with the terms of this Agreement.  The parties acknowledge that a breach by any party of its obligations hereunder will cause irreparable harm to the non-breaching party and that the remedy at law for any such breach may be inadequate.  The parties therefore agree that, in the event of any such breach or threatened breach, the non-breaching party shall be entitled, in addition to all other available remedies, to an injunction restraining any breach, without the necessity of showing economic loss and without any bond or other security being required.

 

 

(n)Enforcement Costs.  If: (i) this Agreement is placed by a party hereto (the “Claimant Party”) in the hands of an attorney for enforcement or is enforced by the such Claimant Party through any legal proceeding; (ii) an attorney is retained to represent such Claimant Party in any bankruptcy, reorganization, receivership or other proceedings affecting creditors' rights and involving a claim under this Agreement; or (iii) an attorney is retained to represent such Claimant Party in any other proceedings whatsoever in connection with this Agreement, then the other party shall pay to the Claimant Party, as incurred by such Claimant Party, all reasonable costs and expenses including attorneys' fees incurred in connection therewith, in addition to all other amounts due hereunder.

 

 

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(o)Waivers.  No provision of this Agreement may be waived other than in a written instrument signed by the party against whom enforcement of such waiver is sought.  No failure or delay in the exercise of any power, right or privilege hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such power, right or privilege preclude other or further exercise thereof or of any other right, power or privilege.

 

(o)Adjustments for Share Splits. The parties acknowledge and agree that all share-related numbers contained in this Agreement shall be adjusted to take into account any reorganization, recapitalization, non-cash dividend, stock split or other similar transaction effected with respect to the Common Stock except as specifically stated herein.

 

 

 

*     *     *     *     *

 

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IN WITNESS WHEREOF, the Investor and the Company have caused this Agreement to be duly executed as of the Execution Date.

 

	
THE COMPANY:

	
 
	
 
	
 

	
APTEVO THERAPEUTICS INC.

	
 
	
 
	
 

	
By:
	
 
	
 

	
Name:
	
 
	
 

	
Title:
	
 
	
 

	
 
	
 
	
 

	
INVESTOR:

	
 
	
 
	
 

	
LINCOLN PARK CAPITAL FUND, LLC

	
BY: LINCOLN PARK CAPITAL, LLC

	
BY: ALEX NOAH INVESTORS, INC.

	
 
	
 
	
 

	
By:
	
 
	
 

	
Name:
	
 
	
Jonathan Cope

	
Title:
	
 
	
President

	
 
	
 
	
 

 

 

 

 

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194229821 v2 

 

SCHEDULES

 

		
	
Schedule 4(c)
	
Capitalization

	
Schedule 4(p)
	
Tax Status

	
Schedule 4(x)
	
Agent Fees

 

EXHIBITS

 

		
	
Exhibit A
	
Form of Officer’s Certificate

	
Exhibit B
	
Form of Secretary’s Certificate

	
Exhibit C
	
Information About Investor Furnished to the Company

	
 
	
 

 

194229821 v2 

 

DISCLOSURE SCHEDULES

Schedule 4(c)                      Capitalization

None. Schedule 4(p)     Tax Status

None.

Schedule 4(x) –  Certain Fees

None.

194229821 v2 

 

EXHIBIT A

 

FORM OF OFFICER’S CERTIFICATE

 

This Officer’s Certificate (“Certificate”) is being delivered pursuant to Section 8(d) of that certain Purchase Agreement dated as of October 18, 2018, (“Purchase Agreement”), by and between APTEVO THERAPEUTICS, INC., a Delaware corporation (the “Company”), and LINCOLN PARK CAPITAL FUND, LLC (the “Investor”).  Terms used herein and not otherwise defined shall have the meanings ascribed to them in the Purchase Agreement.

 

The undersigned, ___________, ______________ of the Company, hereby certifies as follows:

 

1.I am the _____________ of the Company and make the statements contained in this Certificate;

 

2.The representations and warranties of the Company contained in the Purchase Agreement are true and correct in all material respects (except to the extent that any of such representations and warranties are qualified as to materiality in the Purchase Agreement, in which case, such representations and warranties are true and correct in all material respects as so qualified) as of the date of the Purchase Agreement and as of the Commencement Date as though made at that time (except for representations and warranties that speak as of a specific date, in which case such representations and warranties are true and correct in all material respects as of such date);

 

3.The Company has performed, satisfied and complied in all material respects with covenants, agreements and conditions required by the Transaction Documents to be performed, satisfied or complied with by the Company at or prior to the Commencement Date, to the extent not otherwise waived.

 

4.The Company has not taken any steps, and does not currently expect to take any steps, to seek protection pursuant to any Bankruptcy Law nor does the Company or any of its Subsidiaries have any knowledge or reason to believe that its creditors intend to initiate involuntary bankruptcy or insolvency proceedings. The Company is financially solvent and is generally able to pay its debts as they become due.

 

IN WITNESS WHEREOF, I have hereunder signed my name on this ___ day of ___________.

 

	
 
	
Name:
	
 

	
 
	
Title:
	
 

 

The undersigned as Secretary of APTEVO THERAPEUTICS, INC., a Delaware corporation, hereby certifies that ___________ is the duly elected, appointed, qualified and acting ________ of _________ and that the signature appearing above is a genuine signature.

 

	
 

	
Secretary

 

 

 

194229821 v2 

 

EXHIBIT B

 

FORM OF SECRETARY’S CERTIFICATE

 

This Secretary’s Certificate (“Certificate”) is being delivered pursuant to Section 8(j) of that certain Purchase Agreement dated as of December __, 2018 (the “Purchase Agreement”), by and between APTEVO THERAPEUTICS, INC., a Delaware corporation (the “Company”) and LINCOLN PARK CAPITAL FUND, LLC (the “Investor”).  Terms used herein and not otherwise defined shall have the meanings ascribed to them in the Purchase Agreement.

 

The undersigned, ____________, Secretary of the Company, hereby certifies as follows:

 

1.I am the Secretary of the Company and make the statements contained in this Secretary’s Certificate.

 

2.Attached hereto as Exhibit A are true, correct and complete copies of the Company’s Certificate of Incorporation and Bylaws, as amended through the date hereof, and no action has been taken by the Company, its directors, officers or shareholders, in contemplation of the filing of any further amendment relating to or affecting such documents.

 

3.Attached hereto as Exhibit B are true, correct and complete copies of the resolutions either duly adopted by the Board of Directors of the Company on _____________, at which a quorum was present and acting throughout, or executed by all directors in accordance with Delaware General Corporations Law.  Such resolutions have not been amended, modified or rescinded and remain in full force and effect and such resolutions are the only resolutions adopted by the Company’s Board of Directors, or any committee thereof, or the shareholders of the Company relating to or affecting (i) the entering into and performance of the Purchase Agreement, or the issuance, offering and sale of the Purchase Shares and the Commitment Shares and (ii) and the performance of the Company of its obligation under the Transaction Documents as contemplated therein.

 

4.As of the date hereof, the authorized, issued and reserved capital stock of the Company is as set forth on Exhibit C hereto.

 

IN WITNESS WHEREOF, I have hereunder signed my name on this ___ day of _________________ 201___.

 

	
 

	
Secretary

 

The undersigned as Secretary of APTEVO THERAPEUTICS, INC., a Delaware corporation, hereby certifies that ___________ is the duly elected, appointed, qualified and acting ________ of _________ and that the signature appearing above is a genuine signature.

 

	
 

 

194229821 v2

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