Document:

form10q_102909exh101.htm

    Exhibit 10.1

      FIFTH
SUPPLEMENT AND FORBEARANCE AGREEMENT

      TO
THE

      MASTER
CREDIT AGREEMENT

      

      THIS
FIFTH SUPPLEMENT AND FORBEARANCE AGREEMENT TO THE MASTER CREDIT AGREEMENT
(�Fifth
Supplement�) is made and entered
into as of September 30, 2009 (�Effective
Date�), by and between NEDAK ETHANOL, LLC, a Nebraska limited liability
company (�Borrower�),
and AGCOUNTRY FARM CREDIT SERVICES, FLCA (formerly Farm Credit Services of Grand
Forks, FLCA) (�Lender�).

       

      RECITALS:

      

      A.           Lender
and Borrower have entered into that certain Master Credit Agreement dated as of
February 14, 2007 (the �Master Credit
Agreement�), that certain First Supplement to Master Credit Agreement
dated as of February 14, 2007 (the �First
Supplement�), that certain Second Supplement to Master Credit Agreement
dated as of February 14, 2007 (�Second
Supplement�), and that certain Third Supplement and Forbearance Agreement
to Master Credit Agreement dated as of April 11, 2008 (�Third
Supplement�), that certain Fourth Supplement and Forbearance Agreement
dated as of March 29, 2009 (�Fourth
Supplement�), and together with the Master Credit Agreement, First
Supplement, Second Supplement, Third Supplement, Fourth Supplement and this
Fifth Supplement, as amended, replaced, restated, modified, or supplemented from
time to time, are referred to as the (�Master
Agreement�) pursuant to which Lender has extended certain credit
facilities to Borrower under the terms and conditions set forth in the Master
Agreement.  Capitalized terms not defined in this Fifth Supplement
shall have the meaning provided in the Master Agreement.

       

      B.           Borrower
did not obtain mechanical completion, as defined in the Construction Agreement
(�Mechanical
Completion�), of the Project by or on July 15, 2008.

       

      C.           Borrower
did not achieve 100% name plate production for its ethanol facility or pass the
required performance tests within 60 days after achieving Mechanical
Completion.

       

      D.           Borrower
has not complied with any of the financial covenants set forth in Article V
of the Master Credit Agreement.

       

      E.           The
failure to (i) meet the Mechanical Completion date, (ii) achieve 100% name plate
production, and (iii) to comply with the financial covenants has created one or
more defaults under the Master Agreement.

       

      F.           In
the letter dated February 11, 2009, Lender declared a Default by
Borrower.

       

      G.           Borrower
acknowledges that Lender has determined that one or more defaults of the Master
Agreement remain uncured, and that while Lender is not availing itself of
remedies and actions that it is entitled to, the Lender does not waive its right
to take such other and further action the Lender may deem necessary at any time,
now or in the future.

       

      H.           As
additional collateral for the Loans, Borrower caused Delta-T and Bateman to
provide a letter of credit confirmed by the FNBO for which Lender was a payment
beneficiary

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      and a
first secured party to the proceeds (as is further described in the Third and
Fourth Supplement.)  In connection with a drawing on a LOC, Lender
received $3.995 million of letter of credit proceeds (the �LOC Proceeds�), which
Lender continues to hold as collateral for the Loans.  Borrower and
Lender desire that Lender release $2.0 million of the LOC Proceeds to Borrower
exclusively to fund the purchase of grain inventories, subject to the provisions
of this Agreement.

       

      I.           As
a condition to releasing the LOC Proceeds, Borrower and Lender desire to further
amend the Master Agreement as set forth in this Fifth Supplement.

       

      AGREEMENT:

       

      Now,
therefore, in consideration of the mutual covenants and agreements contained in
this Agreement and other good and valuable consideration, the receipt and
adequacy of which are acknowledged, the parties agree as follows:

       

      A.           Effect of
Fifth Supplement.  This Fifth Supplement
supplements the Master Agreement (including the First Supplement, Second
Supplement, Third Supplement and Fourth Supplement) and applies to all Loans
thereunder.

       

      B.           Amendments
to Master Agreement.  The Master Agreement is
amended as follows:

       

      1.           Section 1.15 Loan Fee referred
to in the Fourth Supplement (and previously identified as �Section 1.14� in the
Third Supplement) is amended to require
the first payment of $50,000 of the $250,000 Lender Fee on January 1, 2010 and
quarterly payments of $50,000 thereafter until paid in full.

       

      2.           Section 1.16 Restructure Fee
is amended to require the Borrower to pay the $100,000 restructure fee on or
before June 30, 2010.

       

      3.           Section 1.17 Collateral
Repayment is added to read as follows:

       

      Collateral
Repayment.  If the Borrower obtains a USDA Business and
Industry Loan Guarantee and if Borrower receives a $5.0 million working capital
loan, then within ninety days of the receipt of the loan proceeds, the Borrower
shall return the $2.0 million of LOC Proceeds provided to Borrower for the
purchase of corn under this Fifth Supplement, with such funds to be available to
Borrower to fund reserves required by the Master Agreement unless otherwise
agreed by the parties.

       

      4.           Article II, Section 2.1 of the
Master Credit Agreement is amended to add the following conditions
precedent:

       

      (p)           Borrower
shall have paid all legal fees and expenses due and owing to Lender under the
Master Agreement and this Fifth Supplement.

       

      (q)           Borrower
shall cause LOC 1067 or the Extended LOC (as those terms are defined in
Amendment #3 of the Construction Agreement) provided to Lender as additional
collateral to continue to be assigned to Lender as a first secured party of that
collateral.

       

      
        
           

        

        
          2

          
            

          

        

        
           

        

      

      5.           The Master Agreement, including but
not limited to paragraph 9 of the First Supplement, is amended to require
repayment of the term loan in level monthly payments of principal plus accrued
interest at the Annual Rate so that the principal amount is fully amortized over
96 months beginning on April 1, 2010 and ending on February 1, 2018, with
any unpaid balance, if any, is immediately payable to Lender on that
date.  Accrued interest must be paid with each principal
payment.  The final maturity date remains February 1,
2018.

       

      C.           Conditions
to Effectiveness of this Fifth Supplement.  The effectiveness
of this Fifth Supplement is subject to satisfaction, in Lender�s sole
discretion, of each of the following conditions precedent:

       

      1.           Representations and
Warranties. The representations and
warranties of Borrower in the Master Agreement, except those set forth at
Section 3.04 of the Master Credit Agreement, are true and correct in all
material respects on and as of the date hereof.

       

      2.           Delivery of Executed Loan
Documents. Lender shall have
received this Fifth Supplement, which may be in counterparts, executed by
Borrower and Lender together with the EPC Collateral Assignment Agreement in a
form acceptable to the Lender and executed by Borrower and Delta-T.

       

      3.           Delivery of $2.0 Million to Murex
Grain for Corn Purchases.  Lender shall, upon request of the
Borrower, release up to $2.0 million of the LOC Proceeds to Borrower or to
Borrower�s agent, J.E.M. Trading LLC, and/or J.E. Meuret Grain Co. Inc., 101
Franklin Street, PO Box 146, Brunswick, NE 68720 (�Meuret�).  Such
funds shall be used exclusively to fund the purchase of corn for production of
ethanol by the Borrower.  No other use may be made of this collateral
other than to purchase corn for production of ethanol by
Borrower.  For each release of LOC Proceeds made to Borrower or to
Meuret on Borrower�s behalf, Borrower shall provide or shall cause Meuret to
provide documentary evidence of the related corn purchase that to Lender within
three days of each purchase of corn by Borrower or Meuret.

      

      4.           Maintenance of Confirmed Letter of
Credit.  Borrower shall cause Delta-T to maintain a confirmed
letter of credit for the benefit of Borrower, in the amount and according to the
conditions identified in Amendment Number Three to Engineering, Procurement and
Construction Services Fixed Price Contract (Third Amended EPC), including but
not limited to Paragraph 2, and to cause the confirming bank to assign the
proceeds of the letter of credit to Lender until the expiration of the letter of
credit on June 30, 2010.

       
 

      D.           General
Provisions.

       

      1.           No Other
Modifications.  The Master Agreement, as expressly modified by
this Agreement, shall continue in full force and effect and be binding upon the
parties.

       

      2.           Successors and
Assigns.  This Fifth Supplement shall be binding upon and inure
to the benefit of Borrower and Lender and their respective successors and
assigns, except that Borrower may not assign or transfer its rights or
obligations.

       

      
        
           

        

        
          3

          
            

          

        

        
           

        

      

      3.           Definitions.  Capitalized
terms used, but not defined, in this Fifth Supplement shall have the meaning set
forth in the Master Agreement.

       

      4.           Severability.  Should
any provision of this Fifth Supplement be deemed unlawful or unenforceable, the
provision shall be deemed several and apart from all other provisions of this
Fifth Supplement and all remaining provisions of this Fifth Supplement shall be
fully enforceable.

       

      5.           Governing Law.  To
the extent not governed by federal law, this Fifth Supplement and the rights and
obligations of the parties shall be governed by, interpreted and enforced in
accordance with the laws of the State of North Dakota.

       

      6.           Headings.  The
captions or headings in this Fifth Supplement are for convenience only and in no
way define, limit or describe the scope or intent of any provision of this Fifth
Supplement.

       

      7.           Counterparts.  This
Fifth Supplement may be executed by the parties in separate counterparts, each
of which, when so executed and delivered, shall be an original, but all such
counterparts shall together constitute one and the same
instrument.  Each counterpart may consist of a number of copies
hereof, each signed by less than all, but together signed by all, of the parties
hereto.  Copies of documents or signature pages bearing original
signatures, and executed documents or signature pages delivered by a party by
telefax, facsimile, or e-mail transmission of an Adobe� file format document
(also known as a PDF file) shall, in each such instance, be deemed to be, and
shall constitute and be treated as, an original signed document or counterpart,
as applicable.  Any party delivering an executed counterpart of this
Fifth Supplement by telefax, facsimile, or e-mail transmission of an Adobe� file
format document also shall deliver an original executed counterpart of this
Fifth Supplement, but the failure to deliver an original executed counterpart
shall not affect the validity, enforceability, and binding effect of this Fifth
Supplement.

       

      G.           Amended
and Restated Master Agreement. Borrower agrees that on or before any Loan Conversion
Date, Borrower will cooperate with Lender and use commercially reasonable
efforts to amend and restate the Master Agreement to reflect the terms
applicable to the Construction and Term Loan Facility and Revolving Facility at
the sole discretion of the Lender.

       

      H.           Reservation
of Rights.  Nothing in this Fifth
Supplement shall be deemed to create a course of dealing or otherwise entitle
the Borrower to a consent to, or a waiver, amendment, modification, or other
change of, any of the terms, conditions, obligations, covenants, or agreements
contained in the Master Agreement or any other Loan Documents in similar or
different circumstances in the future.

       

      I.           Release.  BORROWER RELEASES, WAIVES AND FOREVER
DISCHARGES LENDER AND ITS RESPECTIVE SHAREHOLDERS, DIRECTORS, OFFICERS,
EMPLOYEES AND AGENTS FROM ALL KNOWN AND UNKNOWN, ABSOLUTE AND CONTINGENT,
CLAIMS, DEFENSES, SETOFFS, COUNTERCLAIMS, CAUSES OF ACTIONS, ACTIONS, SUITS OR
OTHER LEGAL PROCEEDINGS OF ANY KIND

       

      
        
           

        

        
          4

          
            

          

        

        
           

        

      

      EXISTING
OR ACCRUED IN FAVOR OF BORROWER AS OF THE DATE OF THIS FIFTH
SUPPLEMENT.

       

      J.           Release
for Advances to Murex Grain.  BORROWER ACKNOWLEDGES AND AGREES THAT
LENDER SHALL ADVANCE UP TO $2.0 MILLION OF LENDER�S COLLATERAL, SOME OF WHICH
MAY BE ADVANCED DIRECTLY TO MEURET FOR ITS PURCHASES OF CORN FOR AND ON
BORROWER�S BEHALF.  BORROWER AGREES TO HOLD LENDER HARMLESS FROM
MEURET LOSS OF COLLATERAL INCLUDING BUT NOT LIMITED TO, BY REASON OF THE
FINANCIAL FAILURE OF MEURET.  BORROWER ALSO RELEASES, WAIVES AND
FOREVER DISCHARGES LENDER AND ITS RESPECTIVE SHAREHOLDERS, DIRECTORS, OFFICERS,
EMPLOYEES AND AGENTS FROM ALL KNOWN AND UNKNOWN, ABSOLUTE AND CONTINGENT,
CLAIMS, DEFENSES, SETOFFS, COUNTERCLAIMS, CAUSES OF ACTIONS, ACTIONS, SUITS OR
OTHER LEGAL PROCEEDINGS OF ANY KIND EXISTING OR ACCRUED IN FAVOR OF BORROWER
THAT WOULD FOLLOW FROM THE FAILURE OF MEURET TO ACCOUNT FOR OR GUARANTEE THAT
THE ADVANCES ARE USED TO PURCHASE GRAIN AVAILABLE FOR USE BY
BORROWER.

       

      K.           Recitals.  The
Recitals to this Agreement are incorporated into the Agreement.

       

      

      (Remainder
of Page Intentionally Left Blank)

      
        
           

        

        
          5

          
            

          

        

        
           

        

      

      IN WITNESS WHEREOF, the
parties have caused this Fifth Supplement to be duly executed by their
respective authorized officers effective as of the day and year first written
above.

       

      
        
          	 	
                  BORROWER:

                   

                	 
	 	
                  NEDAK
      ETHANOL, LLC

                   

                   

                	 
	
                   

                	
                  By:
      

                	/s/ 
      Jerome Fagerland	 
	 	 	Jerome
      Fagerland	 
	 	 	President	 
	 	 	 	 

        

      

       

      
        	 	
                BORROWER:

                 

              	 
	 	
                NEDAK
      ETHANOL, LLC

                 

                 

              	 
	
                 

              	
                By:
      

              	/s/ 
      Everett L. Vogel	 
	 	 	Everett L.
      Vogel	 
	 	 	Chairman	 
	 	 	 	 

      

      
        
          	 	
                   

                   

                  LENDER:

                   

                	 
	 	
                  AGCOUNTRY
      FARM CREDIT SERVICES, FLCA

                   

                   

                	 
	
                   

                	
                  By:
      

                	/s/ Randolph
      Aberle	 
	 	 	 Randolph
      Aberle	 
	 	 	Vice
      President	 
	 	 	 	 

        

      

       

       

      
        
           

        

        
          6

          
            

          

        

        
           

        

      

,Exhibit 10.1

SUBSCRIPTION AGREEMENT

 

________, 2009

 

The undersigned investor (the “Investor”) hereby confirms its agreement with Javelin Pharmaceuticals, Inc. (the “Company”) as follows:

 

1.  This Subscription Agreement (this “Agreement”) is made as of the date set forth below between the Company and the Investor.

 

2.   The
    Company has authorized the sale and issuance to certain investors of up to
    an aggregate of 3,186,700 shares (the “Shares”)
    of its common stock, par value $0.001 per share (the “Common
    Stock”), for a purchase price of $1.24 per
    share (the “Purchase Price”).

 

3.  The offering and sale of the Shares (the “Offering”) is being made pursuant to (1) an effective Registration Statement on Form S-3 (Registration No. 333-140481) filed by the Company with the Securities and Exchange Commission (the “Commission”) (the “Registration Statement”), which contains the base prospectus dated February 12, 2007 (the “Base Prospectus”) and was declared effective by the Commission on February 12, 2007, (2) if applicable, certain “free writing prospectuses” (as that term is defined in Rule 405 under the Securities Act of 1933, as amended), that have or will be filed with the Commission and delivered to the
Investor on or prior to the date hereof and (3) a final prospectus supplement (the “Prospectus Supplement” and together with the Base Prospectus, the “Prospectus”) containing certain supplemental information regarding the Shares and terms of the Offering that will be filed with the Commission and delivered to the Investor (or made available to the Investor by the filing by the Company of an electronic version thereof with the Commission) along with the Company’s counterpart to this Agreement.

 

4.  The Company and the Investor agree that the Investor will purchase from the Company and the Company will issue and sell to the Investor the Shares set forth below for the aggregate purchase price set forth below. The Shares shall be purchased pursuant to the Terms and Conditions for Purchase of Shares attached hereto as Annex I and incorporated herein by this reference as if fully set forth herein. The Investor acknowledges that the Offering is not being underwritten by the placement agent (the “Placement Agent”) named in the Prospectus Supplement and that there is no minimum offering amount.

 

5.  The manner of settlement of the Shares purchased by the Investor shall be determined by such Investor as follows:

 

Delivery
    by electronic book-entry at The Depository Trust Company (“DTC”),
    registered in the Investor’s name and address as set forth below, and
    released by American Stock Transfer & Trust Company, the Company’s
    transfer agent (the “Transfer Agent”)
(attention: Donna Ansbro, telephone: (718) 921-8261, to the Investor at
the Closing (as defined in Section 3.1 of Annex A hereto). NO
LATER THAN ONE (1) BUSINESS
DAY AFTER THE EXECUTION OF THIS AGREEMENT BY THE INVESTOR AND THE COMPANY, THE
INVESTOR SHALL:

 

	
             
 	
            I.
 	
            DIRECT THE BROKER-DEALER AT WHICH THE ACCOUNT OR ACCOUNTS TO BE CREDITED WITH THE SHARES ARE MAINTAINED TO SET UP A DEPOSIT/WITHDRAWAL AT CUSTODIAN (“DWAC”) INSTRUCTING THE TRANSFER AGENT TO CREDIT SUCH ACCOUNT OR ACCOUNTS WITH THE SHARES, AND 
 

 

 

 

	
             
 	
            II.
 	
            REMIT BY WIRE TRANSFER THE AMOUNT OF FUNDS EQUAL TO THE AGGREGATE PURCHASE PRICE FOR THE SHARES BEING PURCHASED BY THE INVESTOR TO THE FOLLOWING ACCOUNT:
 

 

Bank of America

ABA # 

Account Name: Javelin Pharmaceuticals, Inc.

Account Number: 

Swift: 

 

IT IS THE INVESTOR’S RESPONSIBILITY TO (A) MAKE THE NECESSARY WIRE TRANSFER OR CONFIRM THE PROPER ACCOUNT BALANCE IN A TIMELY MANNER AND (B) ARRANGE FOR SETTLEMENT BY WAY OF DWAC IN A TIMELY MANNER. IF THE INVESTOR DOES NOT DELIVER THE AGGREGATE PURCHASE PRICE FOR THE SHARES OR DOES NOT MAKE PROPER ARRANGEMENTS FOR SETTLEMENT IN A TIMELY MANNER, THE SHARES MAY NOT BE DELIVERED AT CLOSING TO THE INVESTOR OR THE INVESTOR MAY BE EXCLUDED FROM THE CLOSING ALTOGETHER.

 

6.  [Intentionally Omitted].

 

7.  The Investor represents that, except as set forth below, (a) it has had no position, office or other material relationship within the past three years with the Company or persons known to it to be affiliates of the Company, (b) it is not a FINRA member or an Associated Person (as such term is defined under the FINRA Membership and Registration Rules Section 1011) as of the Closing, and (c) neither the Investor nor any group of Investors (as identified in a public filing made with the Commission) of which the Investor is a part in connection with the Offering of the Shares, acquired, or obtained the right to acquire, 20% or more of the Common Stock (or securities convertible into or exercisable for Common Stock) or the voting power of the Company on a post-transaction basis.

 

Exceptions

 

(If no exceptions, write “none.” If left blank,
response will be deemed to be “none.”)

 

8.  The Investor represents that it has received (or otherwise had made available to it by the filing by the Company of an electronic version thereof with the Commission)  the Base Prospectus, which is part of the Company’s Registration Statement, the documents incorporated by reference therein, and any issuer free writing prospectus (as defined in Rule 433, relating to the Shares in the form filed or required to be filed with the Commission or, if not required to be filed, in the form retained in the Company’s records pursuant to Rule 433(g)) (collectively, the “Disclosure Package”), prior to or in connection with the receipt of this Agreement. The Investor acknowledges that, prior to the delivery of this Agreement to the Company, the Investor will receive certain additional information regarding the Offering, including
pricing information (the “Offering Information”). Such information may be provided to the Investor by any means permitted under the Act, including the Prospectus Supplement, an issuer free writing prospectus and oral communications.

 

9.  No offer by the Investor to buy Shares will be accepted and no part of the Purchase Price will be delivered to the Company until the Investor has received the Offering Information and until the Company has accepted such offer by countersigning a copy of this Agreement, and any such offer may be withdrawn or revoked, without obligation or commitment of any kind, at any time prior to the Company (or a Placement Agent on behalf of the Company) sending (orally, in writing, or by electronic mail) notice of its 

acceptance of such offer. An indication of interest will involve no obligation or commitment of any kind until this Agreement is accepted and countersigned by or on behalf of the Company.

 

[SIGNATURE PAGE AND ANNEXES FOLLOW]

 

 

 

Number of Shares :   _____________

Purchase Price Per Share : $________

Aggregate
Purchase Price : $________

 

Please confirm that the foregoing correctly sets forth the agreement between us by signing in the space provided below for that purpose.

 

Dated as of October __, 2009

 

 

	
             
 	
            ______________________________
 
	
             
 	
            INVESTOR
 

 

	
             
 	
            By:___________________________
 
	
             
 	
            Print Name:____________________
 
	
             
 	
            Title:_________________________
 
	
             
 	
            Address:
 

 

 

Accepted and agreed this __

day of ________ 2009:

 

JAVELIN PHARMACEUTICALS, INC.

 

By:                                          
                  

	
            Name:
 
	
            Title:
 

ANNEX I

TERMS AND CONDITIONS FOR PURCHASE OF SHARES

 

1.  Authorization and Sale of the Shares.
    Subject to the terms and conditions of this Agreement, the Company has authorized
the sale of the Shares.

 

2.  Agreement to Sell and Purchase the Shares; Placement Agent.

 

2.1.  At the Closing (as defined in Section 3.1 of this Annex I), the Company will sell to the Investor, and the Investor will purchase from the Company, upon the terms and conditions set forth herein, the number of Shares set forth on the last page of the Agreement to which these Terms and Conditions for Purchase of Shares are attached as Annex I (the “Signature Page”) for the aggregate purchase price therefor set forth on the Signature Page.

 

2.2.  The Company proposes to enter into substantially this same form of Subscription Agreement with certain other investors (the “Other Investors”) and expects to complete sales of Shares to them. The Investor and the Other Investors are hereinafter sometimes collectively referred to as the “Investors ,” and this Agreement and the Subscription Agreements executed by the Other Investors are hereinafter sometimes collectively referred to as the “Agreements.”

 

2.3.  The Investor acknowledges that the Company intends to pay Ladenburg Thalmann & Co. Inc. (the “Placement Agent”) a fee (the “Placement Fee”) in respect of the sale of Shares to the Investor.

 

2.4.
    The Company has entered into a Placement Agency Agreement, dated October 30,
    2009 (the “Placement Agreement”),
    with the Placement Agent that contains certain representations, warranties,
    covenants, and agreements of the Company that may be relied upon by the Investor,
    which shall be a third party beneficiary thereof. The Company represents
    and warrants that a true and correct copy of the Placement Agreement is attached
    hereto as Annex II and the Company confirms that all references in the Placement
    Agreement to “Purchaser” or “Purchasers” shall include
    the Investor and Other Investors. The Company shall promptly notify the Investor
    of any proposed amendment or modification to Section 4 (Representations and
    Warranties of the Company), Section 5 (Certain Agreements of the Company),
    Section 7 (Conditions to the  Obligations of the Placement Agent), Section
    9 (Survival of Certain Representations and Warranties), Section 11 (Successors;
    Persons Entitled to Benefit of Agreement) and Section 14 (Amendment) of the
    Placement Agreement, which shall require the prior written consent of the
    Investor.

 

2.5  The Company acknowledges that the only material, non-public information relating to the Company or its subsidiaries that the Company, its employees or agents has provided to the Investor in connection with the Offering prior to the date hereof is the existence of the Offering.  The Company confirms that neither it nor any other Person acting on its behalf has provided the Investor or their agents or counsel with any information, other than information relating to the Offering, that constitutes or could reasonably be expected to constitute material, nonpublic information, except as will be disclosed in the Prospectus and the Company’s Form 8-K to be filed with the Commission in connection with the Offering.  The Company understands and confirms that the Investor will rely on the foregoing representations in effecting transactions in securities of the Company.

 

3.  Closings and Delivery of the Shares and Funds.

 

3.1.  Closing.     The completion of the purchase and sale of the Shares (the “Closing”) shall occur at a place and time (the “Closing Date”) to be specified by the Company and the Placement Agent, and of which the Investors will be notified in advance by the Placement Agent, in accordance with Rule 15c6-1 promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). At the Closing, (a) the Company shall cause the Transfer Agent to deliver to the Investor the number of Shares set forth on the Signature Page registered in the name of the Investor or, if so indicated on the Investor Questionnaire
attached hereto as Schedule A, in the name of a nominee designated by the Investor and (b) the aggregate purchase price for the Shares being purchased by the Investor will be delivered by or on behalf of the Investor to the Company.

 

3.2(a).  Conditions to the Company’s Obligations.  The Company’s obligation to issue and sell the Shares to the Investor shall be subject to: (i) the receipt by the Company of the Purchase Price for the Shares being purchased hereunder as set forth on the Signature Page and (ii) the accuracy of the representations and warranties made by the Investor and the fulfillment of those undertakings of the Investor to be fulfilled prior to the Closing Date.

 

 (b).  Conditions to the Investor’s Obligations.  The Investor’s obligation to purchase the Shares will be subject to (i) the delivery by the Company of the Shares in accordance with the provisions of this Agreement, (ii) the accuracy of the representations and warranties made by the Company and the fulfillment of those undertakings of the Company to be fulfilled prior to the Closing Date that are contained in the Placement Agreement and the Subscription Agreement, and (iii) the condition that the Placement Agent shall not have: (x) terminated the Placement Agreement pursuant to the terms thereof or (y) determined that the conditions to the closing in the Placement Agreement have not been satisfied. The Investor’s obligations are expressly not conditioned on the purchase by any or all of the Other Investors of the
Shares that they have agreed to purchase from the Company or the issuance of any minimum amount of Shares by the Company.

 

3.3.  Delivery of Funds by Electronic Book-Entry at The Depository Trust Company . No later than one (1) business day after the execution of this Agreement by the Investor and the Company , the Investor shall remit by wire transfer the amount of funds equal to the aggregate purchase price for the Shares being purchased by the Investor to the following account designated by the Company and the Placement Agent:

 

Bank of America

ABA # 

Account Name: Javelin Pharmaceuticals, Inc.

Account Number: 

Swift: 

 

3.4.  Delivery of Shares by Electronic Book-Entry at The Depository Trust Company . No later than one (1) business day after the execution of this Agreement by the Investor and the Company , the Investor shall direct the broker-dealer at which the account or accounts to be credited with the Shares being purchased by such Investor are maintained, which broker/dealer shall be a DTC participant, to set up a Deposit/Withdrawal at Custodian (“DWAC”) instructing American Stock Transfer & Trust Company, the Company’s transfer agent, to credit such account or accounts with the Shares by means of an electronic book-entry delivery. Such DWAC shall indicate the settlement date for the
deposit of the Shares, which date shall be provided to the Investor by the Placement Agent. On the Closing Date, the Company shall direct its transfer agent to credit the Investor’s account or accounts with the Shares pursuant to the information contained in the DWAC.

4.  Representations, Warranties and Covenants of the Investor.

4.1.        The
    Investor represents and warrants to, and covenants with, the Company that
    (a) the Investor is knowledgeable, sophisticated and experienced in
    making, and is qualified to make decisions with respect to, investments in
    shares presenting an investment decision like that involved in the purchase
    of the Shares, including investments in securities issued by the Company
    and investments in comparable companies, and has requested, received, reviewed
    and considered all information it deemed relevant in making an informed decision
    to purchase the Shares, (b) the Investor has answered all questions
    on the Signature Page and the Investor Questionnaire for use in preparation
    of the Prospectus Supplement and the answers thereto are true and correct
    as of the date hereof and will be true and correct as of the  Closing Date,
    (c) the Investor, in connection with its decision to purchase the number
    of Shares set forth on the Signature Page, has reviewed the Disclosure Package
    and is relying only upon the Disclosure Package and the representations and
    warranties of the Company contained herein and the Placement Agreement and
    (d) the Investor is a “qualified institutional buyer”, as that term is defined
    in Rule 144A under the Securities Act of 1933, as amended.

 

4.2.        The Investor acknowledges, represents and agrees that no action has been or will be taken in any jurisdiction outside the United States by the Company or the Placement Agent that would permit an offering of the Shares, or possession or distribution of offering materials in connection with the issue of the Shares in any jurisdiction outside the United States where action for that purpose is required. Each Investor outside the United States will comply with all applicable laws and regulations in each foreign jurisdiction in which it purchases, offers, sells or delivers Shares or has in its possession or distributes any offering material, in all cases at its own expense. The Placement Agent is not authorized to make and have not made any representation or use of any information in connection with the issue, placement,
purchase and sale of the Shares, except as set forth or incorporated by reference in the Disclosure Package.

 

4.3.        The Investor further represents and warrants to, and covenants with, the Company that (a) the Investor has full right, power, authority and capacity to enter into this Agreement and to consummate the transactions contemplated hereby and has taken all necessary action to authorize the execution, delivery and performance of this Agreement, and (b) this Agreement constitutes a valid and binding obligation of the Investor enforceable against the Investor in accordance with its terms, except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting creditors’ and contracting parties’ rights generally and except as enforceability may be subject to general principles of equity (regardless of whether such enforceability is considered in a
proceeding in equity or at law) and except as the indemnification agreements of the Investors herein may be legally unenforceable.

 

4.4.        The Investor understands that nothing in this Agreement, the Prospectus or any other materials presented to the Investor in connection with the purchase and sale of the Shares constitutes legal, tax or investment advice. The Investor has consulted such legal, tax and investment advisors as it, in its sole discretion, has deemed necessary or appropriate in connection with its purchase of Shares.

 

4.5.        Each Investor represents, warrants and agrees that, since the earlier to occur of (i) the date on which the Placement Agent first contacted such Investor about the Offering and (ii) the date of this Agreement, it has not engaged in any transactions in the securities of the Company (including, without limitation, any Short Sales involving the Company’s securities). Each Investor covenants that it will not engage in any transactions in the securities of the Company (including Short Sales) prior to the time that the transactions contemplated by this Agreement are publicly disclosed. Each Investor agrees that it will not use any of the Shares acquired pursuant to this Agreement to cover any short position in the Common Stock if doing so would be in violation of applicable securities laws. For purposes hereof,
“Short Sales” include, without limitation, all “short sales” as defined in Rule 200 promulgated under 

Regulation SHO under the Exchange Act, whether or not against the box, and all types of direct and indirect stock pledges, forward sales contracts, options, puts, calls, short sales, swaps, “put equivalent positions” (as defined in Rule 16a-1(h) under the Exchange Act) and similar arrangements (including on a total return basis), and sales and other transactions through non-US broker dealers or foreign regulated brokers.

 

5.  Survival of Representations, Warranties and Agreements; Third Party Beneficiary . Notwithstanding any investigation made by any party to this Agreement or by the Placement Agent, all covenants, agreements, representations and warranties made by the Company and the Investor herein will survive the execution of this Agreement, the delivery to the Investor of the Shares being purchased and the payment therefor. The Placement Agent shall be a third party beneficiary with respect to representations, warranties and agreements of the Investor in Section 4 hereof.

 

6.  Participation Rights.

 

(a)           From the Closing Date until the date that is the twelve (12) month anniversary of the Closing Date, upon any issuance by the Company of New Securities (as defined below) (each, a “Subsequent Financing”), each Investor shall have the right to participate in the Subsequent Financing up to an amount equal to the lesser of (x) 100% of the aggregate purchase price for the Shares being purchased by such Investor and (y) twenty-five percent (25%) of the Subsequent Financing (the “Participation Maximum”) on the same terms, conditions and price provided for in the Subsequent Financing. For the avoidance of doubt, the participation right granted to the Investors in this Section 6 (a) shall survive
notwithstanding that the relevant Investor has sold, transferred, assigned or otherwise disposed of the shares purchased pursuant to this Offering and (b) shall not apply to any subsequent holder of the Shares.

(b)           The Company shall deliver to each Investor a written notice of its intention to effect a Subsequent Financing (the “Notice”), which Notice shall describe in reasonable detail the proposed terms of such Subsequent Financing, the amount intended to be raised thereunder, the general details of such Subsequent Financing and the person or persons through or with whom such Subsequent Financing is proposed to be effected.

(c)           Any Investor desiring to participate in such Subsequent Financing must provide written notice to the Company within seventy-two (72) hours after receiving the Notice that such Investor is willing to participate in the Subsequent Financing, the amount of the Investor’s participation, and that the Investor has such funds available for investment on the terms set forth in the Notice.  If the Company receives notice from an Investor within the period set forth above, the Company shall not execute definitive agreements relating to the Subsequent Financing until at least forty-eight (48) hours have elapsed from receipt of the timely notice from such Investor.  During such forty-eight (48) hour period, the Company agrees that it shall (i) confer with such Investor regarding certain non-material terms of the
Subsequent Financing and (ii) not unreasonably withhold its consent to any revisions proposed by such Investor, provided that such proposed revisions are reasonably acceptable to the other participants in the Subsequent Financing.

(d)           If the Company does not receive notice from an Investor within the seventy-two (72) hour period set forth in paragraph (c) above, such Investor shall be deemed to have notified the Company that it does not elect to participate in the Subsequent Financing.  

(e)           Notwithstanding the foregoing, this Section 6 shall not apply in respect of an Exempt Issuance (as defined below). 

For purposes of this Section 6, the following terms shall have the following meanings:

“New Securities” means any securities of the Company, whether now authorized or not, including, without limitation, any preferred stock, rights, options, warrants or other instrument or security that is at any time convertible into or exercisable or exchangeable for, or otherwise entitles the holder thereof to receive, shares of the common stock of the Company, other than an Exempt Issuance.

“Exempt Issuance” means the issuance of (a) shares of Common Stock, options or other convertible securities to current or former employees, officers, directors, independent contractors or vendors of the Company pursuant to any stock or option plan duly adopted for such purpose or in consideration of bona fide services rendered to the Company and approved by the Board of Directors or a majority of the members of a committee of non-employee directors established for such purpose; (b) securities upon the exercise or exchange of or conversion of any securities exercisable or exchangeable for or convertible into shares of Common Stock which have been issued and are outstanding on the date hereof; (c) securities issued pursuant to stock splits, stock dividends or distributions, recapitalizations and similar events affecting the Common Stock;
(d) securities issued pursuant to or in connection with mergers, acquisitions, business combinations or licensing or strategic transactions approved by a majority of the disinterested directors of the Company, provided that any such issuance shall not include a transaction in which the Company is issuing securities primarily for the purpose of raising capital; (e) securities issued upon the exercise or exchange of or conversion of any securities issued pursuant to item (d) above; and (f) securities issued or issuable to banks, equipment lessors or other financial institutions pursuant to a commercial leasing or debt financing transaction.

7.  Notices.  All notices, requests, consents and other communications hereunder will be in writing, will be mailed (a) if within the domestic United States by first-class registered or certified airmail, or nationally recognized overnight express courier, postage prepaid, or by facsimile or (b) if delivered from outside the United States, by International Federal Express or facsimile, and will be deemed given (i) if delivered by first-class registered or certified mail domestic, three business days after so mailed, (ii) if delivered by nationally recognized overnight carrier, one business day after so mailed, (iii) if delivered by International Federal Express, two business days after so mailed and (iv) if delivered by facsimile, upon electric confirmation of receipt and will be delivered and addressed as follows:

 

	
       
 	
  if to the Company, to:
 

 

Javelin Pharmaceuticals, Inc.

125 CambridgePark Drive

Cambridge, MA 02140

Attention: Stephen J. Tulipano, CFO

Facsimile: (617) 349-4505

 

	
       
 	
  with copies to:
 

 

Pryor Cashman LLP

7 Times Square

New York, NY 10036-6569

Attention: Jeffrey C. Johnson

Facsimile: (212) 798-6314

 

if to the Investor, at its address on the Signature Page hereto, or at such other address or addresses as may have been furnished to the Company in writing.

 

8.  Changes.  This Agreement may not be modified or amended except pursuant to an instrument in writing signed by the Company and the Investor.

9.  Headings.  The headings of the various sections of this Agreement have been inserted for convenience of reference only and will not be deemed to be part of this Agreement.

 

10.  Severability.  In case any provision contained in this Agreement should be invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein will not in any way be affected or impaired thereby.

 

11.  Governing Law.  This Agreement will be governed by, and construed in accordance with, the internal laws of the State of New York, without giving effect to the principles of conflicts of law that would require the application of the laws of any other jurisdiction.

 

12.  Counterparts.  This Agreement may be executed in two or more counterparts, each of which will constitute an original, but all of which, when taken together, will constitute but one instrument, and will become effective when one or more counterparts have been signed by each party hereto and delivered to the other parties. The Company and the Investor acknowledge and agree that the Company shall deliver its counterpart to the Investor along with the Base Prospectus and the Prospectus Supplement (or the filing by the Company of an electronic version thereof with the Commission).

 

13.  Confirmation of Sale.  The Investor acknowledges and agrees that such Investor’s receipt of the Company’s counterpart to this Agreement, together with the Base Prospectus and the Prospectus Supplement (or the filing by the Company of an electronic version thereof with the Commission), shall constitute written confirmation of the Company’s sale of Shares to such Investor.

 

14.  Disclosure.
    If the Company receives an executed signature page to this Agreement from
    the last Investor to participate in the Offering prior to 4:00 pm (Eastern
    Time) on any trading day, the Company and the Investor agree that the Company
    shall publicly disclose the Offering via either a press release or a Current
    Report on Form 8-K within thirty (30) minutes
    of receipt by the Company of such executed signature page. If the Company
    receives an executed signature page to this Agreement from the last Investor
    to participate in the Offering after 4:00 pm (Eastern Time) on any trading
    day, the Company and the Investor agree that the Company shall publicly disclose
    the Offering via either a press release or a Current Report on Form 8-K
    prior to the later to occur of (x) thirty (30) minutes following
    receipt by the Company of such executed signature page and (y) the
    opening of the financial markets in New York City on the trading day immediately
    after the date of receipt of such executed signature page. From and after
    the issuance of such Current Report on Form 8-K, the Company shall have publicly
    disclosed all material, non-public information delivered to the Investor
    by the Company, if any, or any of its officers or directors in connection
    with the transactions contemplated hereby. The Company shall not identify
    any Investor by name in any public filing, or otherwise publicly disclose
    any Investor’s
    name, without such Investor’s prior written consent, unless required
    by law or the rules and regulations of a national securities exchange.

 

15.  Termination.  In the event that the Placement Agreement is terminated by the Placement Agent pursuant to the terms thereof, this Agreement shall terminate without any further action on the part of the parties hereto. 

SCHEDULE A TO ANNEX I

JAVELIN PHARMACEUTICALS, INC.

INVESTOR QUESTIONNAIRE

 

Pursuant to Section 3 of Annex I to the Agreement, please provide us with the following information:

 

1.  The exact name that your Shares are to be registered in. You may use a nominee name if appropriate:

 

                                          
                                          
                                          
                                          
    

 

2.  The relationship between the Investor and the registered holder listed in response to item 1 above:

 

                                          
                                          
                                          
                                          
    

 

3.  The mailing address of the registered holder listed in response to item 1 above:

 

                                          
                                          
                                          
                                          
    

 

4.  The Social Security Number or Tax Identification Number of the registered holder listed in the response to item 1 above:

 

                                          
                                          
                                          
                                          
    

 

5.  Name of DTC Participant (broker-dealer at which the account or accounts to be credited with the Shares are maintained); please include the name and telephone number of the contract person at the broker-dealer:

 

                                          
                                          
                                          
                                          
    

 

6.  DTC Participant Number:

 

                                          
                                          
                                          
                                          
    

 

7.  Name of Account at DTC Participant being credited with the Shares:

 

                                          
                                          
                                          
                                          
    

 

8.  Account Number at DTC Participant being credited with the Shares:

                                          
                                          
                                          
                                          
     

 

ANNEX II

 

FORM OF PLACEMENT AGREEMENT

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