Document:

s22-9390_ex101.htm

 

Exhibit 10.1

 

COMMON STOCK PURCHASE AGREEMENT

 

Dated October 1, 2009

 

by and between

 

EMCORE CORPORATION

 

and

 

COMMERCE COURT SMALL CAP VALUE FUND, LTD.

 

 

 

 

 

TABLE OF CONTENTS

 

	 	 	Page
	 	 	 
	Article I PURCHASE AND SALE OF COMMON STOCK	1
	Section 1.1.	Purchase and Sale of Stock	1
	Section 1.2.	Effective Date; Settlement Dates	2
	Section 1.3.	Reservation of Common Stock	2
	Section 1.4.	Current Report; Prospectus Supplement	2
	 	 	 
	Article II FIXED REQUEST TERMS; OPTIONAL AMOUNT	3
	Section 2.1.	Fixed Request Notice	3
	Section 2.2.	Fixed Requests	3
	Section 2.3.	Share Calculation	4
	Section 2.4.	Limitation of Fixed Requests	5
	Section 2.5.	Reduction of Commitment	5
	Section 2.6.	Below Threshold Price	5
	Section 2.7.	Settlement	5
	Section 2.8.	Reduction of Pricing Period	6
	Section 2.9.	Optional Amount	7
	Section 2.10.	Calculation of Optional Amount Shares	7
	Section 2.11.	Exercise of Optional Amount	7
	Section 2.12.	Aggregate Limit	8
	Section 2.13.	Commitment Shares and Warrants	9
	 	 	 
	Article III REPRESENTATIONS AND WARRANTIES OF THE INVESTOR	9
	Section 3.1.	Organization and Standing of the Investor	9
	Section 3.2.	Authorization and Power	9
	Section 3.3.	No Conflicts	10
	Section 3.4.	Information	10
	 	 	 
	Article IV REPRESENTATIONS AND WARRANTIES OF THE COMPANY	10
	Section 4.1.	Organization, Good Standing and Power	11
	Section 4.2.	Authorization, Enforcement	11
	Section 4.3.	Capitalization	11
	Section 4.4.	Issuance of Securities	12
	Section 4.5.	No Conflicts	12
	Section 4.6.	Commission Documents, Financial Statements	13
	Section 4.7.	Subsidiaries	14
	Section 4.8.	No Material Adverse Effect	14
	Section 4.9.	Indebtedness	14
	Section 4.10.	Title To Assets	15
	Section 4.11.	Actions Pending	15
	Section 4.12.	Compliance With Law	15
	Section 4.13.	Certain Fees	15

 

 

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TABLE OF CONTENTS (Continued)

 

 

	 	 	Page
	 	 	 
	Section 4.14.	Operation of Business	16
	Section 4.15.	Environmental Compliance	17
	Section 4.16.	Material Agreements	17
	Section 4.17.	Transactions WIth Affiliates	18
	Section 4.18.	Securities Act	18
	Section 4.19.	Employees	20
	Section 4.20.	Use of Proceeds	20
	Section 4.21.	Investment Company Act Status	20
	Section 4.22.	ERISA	20
	Section 4.23.	Taxes	21
	Section 4.24.	Insurance	21
	Section 4.25.	Acknowledgement Regarding Investor's Acquisition of Securities	21
	 	 	 
	Article V COVENANTS	21
	Section 5.1.	Securities Compliance; FINRA Filing	21
	Section 5.2.	Registration and Listing	22
	Section 5.3.	Compliance with Laws	23
	Section 5.4.	Keeping of Records and Books of Account; Foreign Corrupt Practices Act	23
	Section 5.5.	Limitations on Holdings and Issuances	24
	Section 5.6.	Other Agreements and Other Financings	24
	Section 5.7.	Stop Orders	26
	Section 5.8.	Amendments to the Registration Statement; Prospectus Supplements; Free Writing Prospectuses	27
	Section 5.9.	Prospectus Delivery	27
	Section 5.10.	Selling Restrictions	28
	Section 5.11.	Effective Registration Statement	29
	Section 5.12.	Non-Public Information	29
	Section 5.13.	Broker/Dealer	29
	Section 5.14.	Disclosure Schedule	29
	 	 	 
	Article VI ISSUANCE OF COMMIT6MENT SHARES AND WARRANTS, OPINION OF COUNSEL AND CERTIFICATE; CONDITIONS TO THE SALE AND PURCHASE OF THE SHARES	30
	Section 6.1.	Issuance of Commitment Shares and Warrants; Opinion of Counsel; Certificate	30
	Section 6.2.	Conditions Precedent to the Obligation of the Company	30
	Section 6.3.	Conditions Precedent to the Obligation of the Investor	32
	 	 	 
	Article VII TERMINATION	35
	Section 7.1.	Term, Termination by Mutual Consent	35
	Section 7.2.	Other Termination	36
	Section 7.3.	Effect of Termination	37
	 	 	 
	Article VIII INDEMNIFICATION	38
	Section 8.1.	General Indemnity	38
	Section 8.2.	Indemnification Procedures	39

 

 

 

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TABLE OF CONTENTS (Continued)

 

 

 

 

 

	 	 	Page
	 	 
	Article IX MISCELLANEOUS	41
	Section 9.1.	Fees and Expenses	41
	Section 9.2.	Specific Enforcement, Cnosent to Jurisdiction, Waiver of Jury Trial	41
	Section 9.3.	Entire Agreement; Amendment	42
	Section 9.4.	Notices	42
	Section 9.5.	Waivers	43
	Section 9.6.	Headigns	43
	Section 9.7.	Successors and Assigns	43
	Section 9.8.	Governing Law	44
	Section 9.9.	Survival	44
	Section 9.10.	Counterparts	44
	Section 9.11.	Publicity	44
	Section 9.12.	Severability	45
	Section 9.13.	Further Assurances	45
	 	 	 
	Annex A.	Definitions	 

 

 

 

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COMMON STOCK PURCHASE AGREEMENT

 

This COMMON STOCK PURCHASE AGREEMENT, made and entered into on this 1st day of October 2009 (this “Agreement”), by and between
Commerce Court Small Cap Value Fund, Ltd., a business company incorporated under the laws of the British Virgin Islands (the “Investor”), and EMCORE Corporation, a corporation organized and existing under the laws of the State of New Jersey (the “Company”). Capitalized terms used but not defined herein shall have the meanings ascribed to such terms in Annex
A hereto.

 

RECITALS

 

WHEREAS, the parties desire that, upon the terms and subject to the conditions contained herein, the Company may issue and sell to the Investor and the Investor shall thereupon purchase from the Company up to $25,000,000 of newly issued shares of the Company’s common stock,
no par value (“Common Stock”), subject, in all cases, to the Trading Market Limit;

 

WHEREAS, in partial consideration for the Investor’s execution and delivery of this Agreement, the Company is concurrently issuing to the Investor Warrants in the form of Exhibit A hereto (the “Warrants”),
pursuant to which the Investor may purchase from the Company up to an aggregate of 1,600,000 shares of Common Stock (subject to adjustment), upon the terms and subject to the conditions set forth therein;

 

WHEREAS, in partial consideration for the Investor’s execution and delivery of this Agreement, the Company is concurrently causing its transfer agent to issue to the Investor the Commitment Shares in accordance with the terms and subject to the conditions of this Agreement;
and

 

WHEREAS, the issuance of the Warrants (and the Warrant Shares upon exercise thereof) and the Commitment Shares and the offer and sale of the Shares hereunder have been registered by the Company in the Registration Statement, which has been declared effective by order of the Commission
under the Securities Act;

 

NOW, THEREFORE, the parties hereto, intending to be legally bound, hereby agree as follows:

 

ARTICLE I

 

PURCHASE AND SALE OF COMMON STOCK

 

Section 1.1. Purchase and Sale of Stock.  Upon
the terms and subject to the conditions of this Agreement, during the Investment Period the Company in its discretion may issue and sell to the Investor up to $25,000,000 (the “Total Commitment”) of duly authorized, validly issued, fully paid and non-assessable shares of Common Stock (subject in all cases to the Trading Market Limit, the “Aggregate Limit”),
by (i) the delivery to the Investor of not more than 24 separate Fixed Request Notices (unless the Investor and the Company mutually agree that a different number of Fixed Request Notices may be delivered) as provided in Article II hereof and (ii) the exercise by the Investor of Optional Amounts, which the Company may in its discretion grant to the Investor and which may be exercised by the Investor, in whole or in part, as provided in Article II hereof.  The aggregate of all Fixed Request Amounts and
Optional Amount Dollar Amounts shall not exceed the Aggregate Limit.

 

 

 

 

 

Section 1.2. Effective Date; Settlement Dates.  This
Agreement shall become effective and binding upon the payment of the fees required to be paid on or prior to the Effective Date pursuant to Section 9.1, the delivery of irrevocable instructions to issue the Commitment Shares and the issuance of the Warrants to the Investor or its designees as provided in Sections 2.13 and 6.1, the delivery of counterpart signature pages of this Agreement executed by each of the parties hereto, and the delivery of all other documents, instruments and writings required to be delivered
on the Effective Date, in each case as provided in Section 6.1, to the offices of Greenberg Traurig, LLP, 200 Park Avenue, New York, New York 10166, at 5:00 p.m., New York time, on the Effective Date. In consideration of and in express reliance upon the representations, warranties and covenants, and otherwise upon the terms and subject to the conditions, of this Agreement, from and after the Effective Date and during the Investment Period (i) the Company shall issue and sell to the Investor, and the Investor
agrees to purchase from the Company, the Shares in respect of each Fixed Request and (ii) the Investor may in its discretion elect to purchase Shares in respect of each Optional Amount.  The issuance and sale of Shares to the Investor pursuant to any Fixed Request or Optional Amount shall occur on the applicable Settlement Date in accordance with Sections 2.7 and 2.9 (or on such Trading Day in accordance with Section 2.8, as applicable), provided in each case that all of the conditions precedent thereto
set forth in Article VI theretofore shall have been fulfilled or (to the extent permitted by applicable law) waived.

 

Section 1.3. Reservation of Common Stock.  The
Company has or will have duly authorized and reserved for issuance, and covenants to continue to so reserve once reserved for issuance, free of all preemptive and other similar rights, at all times during the Investment Period, the requisite aggregate number of authorized but unissued shares of its Common Stock to timely effect the issuance, sale and delivery in full to the Investor of all Shares to be issued in respect of all Fixed Requests and Optional Amounts under this Agreement, in any case prior to the
issuance to the Investor of such Shares. The Company shall take all action necessary to have at all times during the Investment Period authorized and reserved for the purpose of issuance no less than the maximum number of shares of Common Stock issuable upon exercise of the Warrants (without regard to any limitations on the exercise of the Warrants set forth therein). The number of shares of Common Stock so reserved from time to time, as theretofore increased or reduced as hereinafter provided, may be reduced
by the number of shares of Common Stock actually delivered pursuant to this Agreement or the Warrants.

 

Section 1.4. Current Report; Prospectus Supplement.  As
soon as practicable, but in any event not later than 5:30 p.m. (New York time) on the first Trading Day immediately following the Effective Date, the Company shall file with the Commission a report on Form 8-K relating to the transactions contemplated by, and describing the material terms and conditions of, this Agreement and the Warrants and disclosing all information relating to the transactions contemplated hereby required to be disclosed in the Registration Statement and the Base Prospectus (but which permissibly
has been omitted therefrom in accordance with the Securities Act), including, without limitation, information required to be disclosed in the section captioned “Plan of Distribution” in the Base Prospectus (the “Current Report”).  The Current Report shall include a copy of this Agreement and the form of the Warrants as exhibits. To the extent

 

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applicable, the Current Report shall be incorporated by reference in the Registration Statement in accordance with the provisions of Rule 430B under the Securities Act.  The Company heretofore has provided the Investor a reasonable opportunity to comment on a draft of such Current Report and has given due consideration to such comments. The Company shall file a final Base Prospectus pursuant to Rule 424(b) under the Securities Act on or prior to the second Trading Day immediately following the
Effective Date. Pursuant to Section 5.9 and subject to the provisions of Section 5.8, on the first Trading Day immediately following the last Trading Day of each Pricing Period, the Company shall file with the Commission a Prospectus Supplement pursuant to Rule 424(b) under the Securities Act disclosing the number of Shares to be issued and sold to the Investor thereunder, the total purchase price therefor and the net proceeds to be received by the Company therefrom and, to the extent required by the Securities
Act, identifying the Current Report.

 

ARTICLE II

 

FIXED REQUEST TERMS; OPTIONAL AMOUNT

 

Subject to the satisfaction of the conditions set forth in this Agreement, the parties agree (unless otherwise mutually agreed upon by the parties in writing) as follows:

 

Section 2.1. Fixed Request Notice.  The
Company may, from time to time in its sole discretion, no later than 9:30 a.m. (New York time) on the first Trading Day of the Pricing Period, provide to the Investor a Fixed Request notice, substantially in the form attached hereto as Exhibit B (the “Fixed Request Notice”), which Fixed Request Notice shall become effective at 9:30 a.m. (New York time) on the first Trading
Day of the Pricing Period specified in the Fixed Request Notice; provided; however, that if the Company delivers the Fixed Request Notice to the Investor later than 9:30 a.m. (New York time) on a Trading Day, then the first Trading Day of such Pricing Period shall not be the Trading Day on which the Investor received such Fixed Request Notice (it being acknowledged and agreed that
if such Fixed Request Notice is defective as a result of such delivery, the Investor shall so notify the Company and the Company may reissue a Fixed Request Notice in compliance with this Article II). The Fixed Request Notice shall specify the Fixed Amount Requested, establish the Threshold Price for such Fixed Request, designate the first and last Trading Day of the Pricing Period and specify the Optional Amount, if any, that the Company elects to grant to the Investor during the Pricing Period and the applicable
Threshold Price for such Optional Amount (the “Optional Amount Threshold Price”). The Threshold Price and the Optional Amount Threshold Price established by the Company in a Fixed Request Notice may be the same or different, in the Company’s sole discretion. Upon the terms and subject to the conditions of this Agreement, the Investor is obligated to accept each Fixed Request Notice prepared and delivered in accordance with the
provisions of this Agreement.

 

Section 2.2. Fixed Requests.  From
time to time during the Investment Period, the Company may in its sole discretion deliver to the Investor a Fixed Request Notice for a specified Fixed Amount Requested, and the applicable discount price (the “Discount Price”) shall be determined, in accordance with the price and share amount parameters as set forth below or such other parameters mutually agreed upon by the Investor and the Company, and upon the terms and subject to the
conditions of this Agreement, the Investor shall purchase from the Company the Shares subject to such Fixed Request Notice at the Discount Price; provided, however, that

 

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(i) if an ex-dividend date is established by the Trading Market in respect of the Common Stock on or between the first Trading Day of the applicable Pricing Period and the applicable Settlement Date, the Discount Price shall be reduced by the per share dividend amount and (ii) the Company may not deliver any single Fixed Request Notice for a Fixed Amount Requested in excess of the lesser of (a) the amount in the applicable Fixed Amount Requested column below and (b) 2.5% of the Market Capitalization:

 

	
Threshold Price
	
Fixed Amount Requested
	
Discount Price

	
Equal to or greater than $7.00

 
	
Not to exceed $14,000,000
	
95.00% of the VWAP

	
Equal to or greater than $6.00 and less than $7.00

 
	
Not to exceed $12,000,000
	
95.00% of the VWAP

	
Equal to or greater than $5.00 and less than $6.00

 
	
Not to exceed $10,000,000
	
95.00% of the VWAP

	
Equal to or greater than $4.50 and less than $5.00
	
Not to exceed $9,000,000
	
95.00% of the VWAP

 

	
Equal to or greater than $4.00 and less than $4.50
	
Not to exceed $8,000,000
	
95.00% of the VWAP

 

	
Equal to or greater than $3.50 and less than $4.00
	
Not to exceed $7,000,000
	
95.00% of the VWAP

 

	
Equal to or greater than $3.00 and less than $3.50
	
Not to exceed $6,000,000
	
95.00% of the VWAP

 

	
Equal to or greater than $2.50 and less than $3.00
	
Not to exceed $5,000,000
	
95.00% of the VWAP

 

	
Equal to or greater than $2.00 and less than $2.50
	
Not to exceed $4,000,000
	
95.00% of the VWAP

 

	
Equal to or greater than $1.50 and less than $2.00
	
Not to exceed $3,000,000
	
95.00% of the VWAP

 

	
Equal to or greater than $1.00 and less than $1.50
	
Not to exceed $2,000,000
	
95.00% of the VWAP

 

	
Equal to or greater than $0.75 and less than $1.00
	
Not to exceed $1,500,000
	
95.00% of the VWAP

 

	
Equal to or greater than $0.50 and less than $0.75
	
Not to exceed $1,000,000
	
95.00% of the VWAP

 

 

Anything to the contrary in this Agreement notwithstanding, at no time shall the Investor be required to purchase more than $14,000,000 worth of Common Stock in respect of any Pricing Period (not including Common Stock subject to any Optional Amount).  The date on which the Company delivers any Fixed Request Notice in accordance
with this Section 2.2 hereinafter shall be referred to as a “Fixed Request Exercise Date”.

 

Section 2.3. Share Calculation.  With
respect to the Trading Days during the applicable Pricing Period for which the VWAP equals or exceeds the Threshold Price, the number of Shares to be issued by the Company to the Investor pursuant to a Fixed Request shall equal the aggregate sum of each quotient (calculated for each Trading Day during the applicable Pricing Period for which the VWAP equals or exceeds the Threshold Price) determined pursuant to the following equation (rounded to the nearest whole Share):

 

N = (A x B)/C, where:

 

 

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N = the number of Shares to be issued by the Company to the Investor in respect of a Trading Day during the applicable Pricing Period for which the VWAP equals or exceeds the Threshold Price,

 

A = 0.10 (the “Multiplier”),

 

B = the total Fixed Amount Requested, and

 

C = the applicable Discount Price.

 

Section 2.4. Limitation of Fixed Requests.  The
Company shall not make more than one Fixed Request in each Pricing Period.  Not less than five Trading Days shall elapse between the end of one Pricing Period and the commencement of any other Pricing Period during the Investment Period.  There shall be permitted a maximum of 24 Fixed Requests during the Investment Period.  Each Fixed Request automatically shall expire immediately following the last Trading Day of each Pricing Period.

 

Section 2.5. Reduction of Commitment.  On
the last Trading Day of each Pricing Period, the Investor’s Total Commitment under this Agreement automatically (and without the need for any amendment to this Agreement) shall be reduced, on a dollar-for-dollar basis, by the total amount of the Fixed Request Amount and the Optional Amount Dollar Amount, if any, for such Pricing Period paid to the Company at the Settlement Date.

 

Section 2.6. Below Threshold Price.  If
the VWAP on any Trading Day in a Pricing Period is lower than the Threshold Price, then for each such Trading Day the Fixed Amount Requested shall be reduced, on a dollar-for-dollar basis, by an amount equal to the product of (x) the Multiplier and (y) the total Fixed Amount Requested, and no Shares shall be purchased or sold with respect to such Trading Day, except as provided below.  If trading in the Common Stock on NASDAQ (or any other U.S. national securities exchange on which the Common Stock
is then listed) is suspended for any reason for more than three hours on any Trading Day, the Investor may at its option deem the price of the Common Stock to be lower than the Threshold Price for such Trading Day and, for each such Trading Day, the total amount of the Fixed Amount Requested shall be reduced as provided in the immediately preceding sentence, and no Shares shall be purchased or sold with respect to such Trading Day, except as provided below.  For each Trading Day during a Pricing Period
on which the VWAP is lower (or is deemed to be lower as provided in the immediately preceding sentence) than the Threshold Price, the Investor may in its sole discretion elect to purchase such U.S. dollar amount of Shares equal to the amount by which the Fixed Amount Requested has been reduced in accordance with this Section 2.6, at the Threshold Price multiplied by 0.95.  The Investor shall inform the Company via facsimile transmission not
later than 8:00 p.m. (New York time) on the last Trading Day of such Pricing Period as to the number of Shares, if any, the Investor elects to purchase as provided in this Section 2.6.

 

Section 2.7. Settlement.  The
payment for, against simultaneous delivery of, Shares in respect of each Fixed Request shall be settled on the second Trading Day next following the last Trading Day of each Pricing Period, or on such earlier date as the parties may mutually agree (the “Settlement Date”). On each Settlement Date, the Company shall, or shall cause its transfer

 

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agent to, electronically transfer the Shares purchased by the Investor by crediting the Investor’s or its designees’ account at DTC through its Deposit/Withdrawal at Custodian (DWAC) system, which Shares shall be freely tradable and transferable and without restriction on resale, against simultaneous payment therefor to the Company’s designated account by wire transfer of immediately available funds; provided that if the Shares are received by the Investor later than 1:00 p.m. (New York
time), payment therefor shall be made with next day funds. As set forth in Section 9.1(ii), a failure by the Company to deliver such Shares shall result in the payment of liquidated damages by the Company to the Investor.

 

Section 2.8. Reduction of Pricing Period.  If
during a Pricing Period the Company elects to reduce the number of Trading Days in such Pricing Period (and thereby amend its previously delivered Fixed Request Notice), the Company shall so notify the Investor before 9:00 a.m. (New York time) on any Trading Day during a Pricing Period (a “Reduction Notice”) and the last Trading Day of such Pricing Period shall be the Trading Day immediately preceding the Trading Day on which the Investor
received such Reduction Notice; provided, however, that if the Company delivers the Reduction Notice later than 9:00 a.m. (New York time) on a Trading Day during a Pricing Period, then the last Trading Day of such Pricing Period instead shall be the Trading Day on which the Investor received such Reduction Notice.

 

Upon receipt of a Reduction Notice, the Investor (i) shall purchase the Shares in respect of each Trading Day in such reduced Pricing Period for which the VWAP equals or exceeds the Threshold Price in accordance with Section 2.3 hereof; (ii) may elect to purchase the Shares in respect of any Trading Day in such reduced Pricing Period
for which the VWAP is (or is deemed to be) lower than the Threshold Price in accordance with Section 2.6 hereof; and (iii) may elect to exercise all or any portion of an Optional Amount on any Trading Day during such reduced Pricing Period in accordance with Sections 2.10 and 2.11 hereof.

 

In addition, upon receipt of a Reduction Notice, the Investor may elect to purchase such U.S. dollar amount of additional Shares equal to the product determined pursuant to the following equation:

 

D = (A/B) x (B – C), where:

 

D = the U.S. dollar amount of additional Shares to be purchased,

 

A = the Fixed Amount Requested,

 

B  = 10 or, for purposes of this Section 2.8, such lesser number of Trading Days as the parties may mutually agree to, and

 

C = the number of Trading Days in the reduced Pricing Period,

 

at a per Share price equal to (x) the Fixed Amount Requested attributable to the reduced Pricing Period divided by (y) the number of Shares to be purchased during such reduced Pricing Period pursuant to clauses (i) and (ii) (as applicable) of the immediately preceding paragraph.

 

 

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The Investor may also elect to exercise any portion of the applicable Optional Amount which was unexercised during the reduced Pricing Period by issuing an Optional Amount Notice to the Company not later than 10:00 a.m. (New York time) on the first Trading Day next following the last Trading Day of the reduced Pricing Period. The
number of Shares to be issued upon exercise of such Optional Amount shall be calculated pursuant to the equation set forth in Section 2.10 hereof, except that “C” shall equal the greater of (i) the VWAP for the Common Stock on the last Trading Day of the reduced Pricing Period or (ii) the Optional Amount Threshold Price.

 

The payment for, against simultaneous delivery of, Shares to be purchased and sold in accordance with this Section 2.8 shall be settled on the second Trading Day next following the Trading Day on which the Investor receives a Reduction Notice.

 

Section 2.9. Optional Amount.  With
respect to any Pricing Period, the Company may in its sole discretion grant to the Investor the right to exercise, from time to time during the Pricing Period (but not more than once on any Trading Day), all or any portion of an Optional Amount.  The maximum Optional Amount Dollar Amount and the Optional Amount Threshold Price shall be set forth in the Fixed Request Notice.  If an ex-dividend date is established by the Trading Market in respect of the Common Stock on or between the first Trading
Day of the applicable Pricing Period and the applicable Settlement Date, the applicable exercise price in respect of the Optional Amount shall be reduced by the per share dividend amount.  Each daily Optional Amount exercise shall be aggregated during the Pricing Period and settled on the next Settlement Date.  The Optional Amount Threshold Price designated by the Company in its Fixed Request Notice shall apply to each Optional Amount exercised during the applicable Pricing Period.

 

Section 2.10. Calculation of Optional Amount Shares.  The
number of shares of Common Stock to be issued in connection with the exercise of an Optional Amount shall be the quotient determined pursuant to the following equation (rounded to the nearest whole Share):

 

O = A/(B x C), where:

 

O = the number of shares of Common Stock to be issued in connection with such Optional Amount exercise,

 

A = the Optional Amount Dollar Amount with respect to which the Investor has delivered an Optional Amount Notice,

 

B = 0.95, and

 

C = the greater of (i) the VWAP for the Common Stock on the day the Investor delivers the Optional Amount Notice or (ii) the Optional Amount Threshold Price.

 

Section 2.11. Exercise of Optional Amount.  If
granted by the Company to the Investor with respect to a Pricing Period, all or any portion of the Optional Amount may be exercised by the Investor on any Trading Day during the Pricing Period, subject to the limitations set forth in Section 2.9.  As a condition to each exercise of an Optional Amount pursuant to this Section 2.11, the Investor shall issue an Optional Amount Notice to the Company no later than 8:00 p.m. (New York time) on the day of such Optional Amount exercise.  If the Investor
does not exercise an Optional Amount in full by 8:00 p.m. (New York time) on the last Trading Day of the applicable Pricing Period, such unexercised portion of the Investor’s Optional Amount with respect to that Pricing Period automatically shall lapse and terminate.

 

 

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Section 2.12. Aggregate Limit.  Notwithstanding
anything to the contrary contained in this Agreement, in no event may the Company issue a Fixed Request Notice or grant an Optional Amount to the extent that the sale of Shares pursuant thereto and pursuant to all prior Fixed Request Notices and Optional Amounts issued hereunder, and as liquidated damages pursuant to Section 9.1(ii), would cause the Company to sell or the Investor to purchase Shares which in the aggregate are in excess of the Aggregate Limit.  If the Company issues a Fixed Request Notice
or Optional Amount that otherwise would permit the Investor to purchase shares of Common Stock which would cause the aggregate purchases by Investor hereunder to exceed the Aggregate Limit, such Fixed Request Notice or Optional Amount shall be void ab initio to the extent of the amount by which the dollar value of shares or number of shares, as the case may be, of Common Stock otherwise issuable pursuant to such Fixed Request Notice or Optional Amount together
with the dollar value of shares or number of shares, as the case may be, of all other Common Stock purchased by the Investor pursuant hereto, or issued as liquidated damages pursuant to Section 9.1(ii), would exceed the Aggregate Limit. The Company hereby represents, warrants and covenants that neither it nor any of its Subsidiaries (i) has effected any transaction or series of transactions, (ii) is a party to any pending transaction or series of transactions or (iii) shall enter into any contract, agreement,
agreement-in-principle, arrangement or understanding with respect to, or shall effect, any Other Financing which, in any of such cases, may be aggregated with the transactions contemplated by this Agreement for purposes of determining whether approval of the Company’s stockholders is required under any bylaw, listed securities maintenance standards or other rules of the Trading Market; provided, however,
that the Company shall be permitted to take any action referred to in clause (iii) above if (a) the Company has timely provided the Investor with an Integration Notice as provided in Section 5.6(ii) hereof and (b) unless the Investor has previously terminated this Agreement pursuant to Section 7.2, the Company obtains the requisite stockholder approval prior to the closing of such Other Financing.

 

At the Company’s sole discretion, and effective automatically upon receipt by the Investor of notice thereof from the Company, this Agreement may be amended by the Company from time to time to reduce the Aggregate Limit by a specified dollar amount of Common Stock which shall be no greater than is required to enable the Company
to utilize the Registration Statement to consummate an underwritten public offering of Common Stock or a registered direct public offering of Common Stock during the Investment Period; provided, however, that any such amendment of this Agreement (and any such purported amendment) shall be void and of no force and effect if the effect thereof would restrict, materially delay, conflict
with or impair the ability or right of the Company to perform its obligations under this Agreement and the Warrants, including, without limitation, the obligation of the Company to deliver the Commitment Shares to the Investor on the Effective Date, the obligation of the Company to deliver the Shares to the Investor in respect of a previously delivered Fixed Request or Optional Amount on the applicable Settlement Date, and the obligation of the Company to deliver the Warrant Shares in respect of any exercise
(in whole or in part) of the Warrants in accordance with the terms thereof.  In the event the Company shall have elected to reduce the Aggregate Limit as provided in the immediately preceding sentence, at the Company’s sole discretion, and effective automatically upon receipt by the Investor of notice thereof from the Company, the

 

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Company may subsequently amend this Agreement to increase the Aggregate Limit up to $25,000,000; provided, however, that in no event shall the Company be entitled to issue Fixed Requests and grant Optional Amounts during the remainder of the Investment Period for an aggregate amount greater than the amount obtained by subtracting (x) the aggregate of all Fixed Request Amounts
and Optional Amount Dollar Amounts (including any amounts paid as liquidated damages pursuant to Section 9.1(ii) hereunder) covered by all Fixed Requests and Optional Amounts theretofore issued or granted by the Company in respect of which a settlement has occurred pursuant to Section 2.7 from (y) $25,000,000, subject in all cases to the Trading Market Limit.

 

Section 2.13. Commitment Shares and Warrants.  In
consideration for the Investor’s execution and delivery of this Agreement, concurrently with the execution and delivery of this Agreement on the Effective Date: (i) the Company shall deliver irrevocable instructions to its transfer agent to electronically transfer the Commitment Shares to the Investor, not later than 4:00 p.m. (New York time) on the second Trading Day immediately following the Effective Date, by crediting the Investor’s or its designees’ account at DTC through its Deposit/Withdrawal
at Custodian (DWAC) system, which Commitment Shares shall be issued pursuant to the Registration Statement and without any restriction on resale, provided that the Investor hereby agrees that it shall not resell or transfer such Commitment Shares for a period of 90 days immediately following the Effective Date, except for any transfer to an Affiliate of the Investor; and (ii) the Company shall execute, issue and deliver to the Investor, at its address set forth in Section 9.4 hereof by overnight courier, (a)
a Warrant, pursuant to which the Investor may purchase from the Company up to 666,667 Warrant Shares at an exercise price of $1.69, upon the terms and subject to the conditions set forth therein, (b) a Warrant, pursuant to which the Investor may purchase from the Company up to 666,667 Warrant Shares at an exercise price of $2.02, upon the terms and subject to the conditions set forth therein, and (c) a Warrant, pursuant to which the Investor may purchase from the Company up to 266,666 Warrant Shares at an exercise
price of $2.36, upon the terms and subject to the conditions set forth therein, all of which Warrants shall be issued pursuant to the Registration Statement and without any restriction on resale. For the avoidance of doubt, all of the Commitment Shares and each of the Warrants shall be fully earned as of the Effective Date, regardless of whether any Fixed Requests are issued by the Company or settled hereunder.

 

ARTICLE III

 

REPRESENTATIONS AND WARRANTIES OF THE INVESTOR

 

The Investor hereby makes the following representations and warranties to the Company:

 

Section 3.1. Organization and Standing of the Investor.  The
Investor is a business company duly organized, validly existing and in good standing under the laws of the British Virgin Islands.

 

Section 3.2. Authorization and Power.  The
Investor has the requisite corporate power and authority to enter into and perform its obligations under this Agreement and to purchase the Shares in accordance with the terms hereof.  The execution, delivery and performance of this Agreement by the Investor and the consummation by it of the transactions contemplated hereby have been duly authorized by all necessary corporate action, and no further

 

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consent or authorization of the Investor, its Board of Directors or stockholders is required.  This Agreement has been duly executed and delivered by the Investor.  This Agreement constitutes a valid and binding obligation of the Investor enforceable against it in accordance with its terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, liquidation, conservatorship, receivership, or similar laws relating to, or affecting
generally the enforcement of, creditor’s rights and remedies or by other equitable principles of general application.

 

Section 3.3. No Conflicts.  The
execution, delivery and performance by the Investor of this Agreement and the consummation by the Investor of the transactions contemplated herein do not and shall not (i) result in a violation of such Investor’s charter documents, bylaws or other applicable organizational instruments, (ii) conflict with, constitute a default (or an event which, with notice or lapse of time or both, would become a default) under, or give rise to any rights of termination, amendment, acceleration or cancellation of, any
material agreement, mortgage, deed of trust, indenture, note, bond, license, lease agreement, instrument or obligation to which the Investor is a party or is bound, (iii) create or impose any lien, charge or encumbrance on any property of the Investor under any agreement or any commitment to which the Investor is party or under which the Investor is bound or under which any of its properties or assets are bound, or (iv) result in a violation of any federal, state, local or foreign statute, rule, or regulation,
or any order, judgment or decree of any court or governmental agency applicable to the Investor or by which any of its properties or assets are bound or affected, except, in the case of clauses (ii), (iii) and (iv), for such conflicts, defaults, terminations, amendments, acceleration, cancellations and violations as would not, individually or in the aggregate, prohibit or otherwise interfere with the ability of the Investor to enter into and perform its obligations under this Agreement in any material respect.  The
Investor is not required under federal, state, local or foreign law, rule or regulation to obtain any consent, authorization or order of, or make any filing or registration with, any court or governmental agency in order for it to execute, deliver or perform any of its obligations under this Agreement or to purchase the Shares in accordance with the terms hereof.

 

Section 3.4. Information.  All
materials relating to the business, financial condition, management and operations of the Company and materials relating to the offer and sale of the Securities which have been requested by the Investor have been furnished or otherwise made available to the Investor or its advisors (subject to Section 5.12 of this Agreement).  The Investor and its advisors have been afforded the opportunity to ask questions of representatives of the Company.  The Investor has sought such accounting, legal
and tax advice as it has considered necessary to make an informed investment decision with respect to its acquisition of the Securities.  The Investor understands that it (and not the Company) shall be responsible for its own tax liabilities that may arise as a result of this investment or the transactions contemplated by this Agreement and the Warrants.

 

ARTICLE IV

 

REPRESENTATIONS AND WARRANTIES OF THE COMPANY

 

Except as set forth in the disclosure schedule delivered by the Company to the Investor (which is hereby incorporated by reference in, and constitutes an integral part of, this Agreement) (the “Disclosure Schedule”), the Company hereby makes the following
representations and warranties to the Investor:

 

 

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Section 4.1. Organization, Good Standing and Power.  The
Company is a corporation duly organized, validly existing and in good standing under the laws of the State of New Jersey and has the requisite corporate power and authority to own, lease and operate its properties and assets and to conduct its business as it is now being conducted.  The Company and each Subsidiary is duly qualified as a foreign corporation to do business and is in good standing in every jurisdiction in which the nature of the business conducted or property owned by it makes such qualification
necessary, except for any jurisdiction in which the failure to be so qualified would not have a Material Adverse Effect.

 

Section 4.2. Authorization, Enforcement.  The
Company has the requisite corporate power and authority to enter into and perform this Agreement and the Warrants and to issue and sell the Securities in accordance with the terms hereof and thereof, as applicable. Except for approvals of the Company’s Board of Directors or a committee thereof as may be required in connection with any issuance and sale of Shares to the Investor hereunder (which approvals shall be obtained prior to the delivery of any Fixed Request Notice), the execution, delivery and performance
by the Company of this Agreement and the Warrants and the consummation by it of the transactions contemplated hereby and thereby have been duly and validly authorized by all necessary corporate action and no further consent or authorization of the Company or its Board of Directors or stockholders is required.  Each of this Agreement and the Warrants has been duly executed and delivered by the Company and constitutes a valid and binding obligation of the Company enforceable against the Company in accordance
with its terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, liquidation, conservatorship, receivership or similar laws relating to, or affecting generally the enforcement of, creditor’s rights and remedies or by other equitable principles of general application.

 

Section 4.3. Capitalization.  The
authorized capital stock of the Company and the shares thereof issued and outstanding are as set forth in the Commission Documents as of the dates reflected therein.  All of the outstanding shares of Common Stock have been duly authorized and validly issued, and are fully paid and nonassessable.  Except as set forth in the Commission Documents, as of the Effective Date, no shares of Common Stock were entitled to preemptive rights or registration rights and there were no outstanding options,
warrants, scrip, rights to subscribe to, call or commitments of any character whatsoever relating to, or securities or rights convertible into or exchangeable for, any shares of capital stock of the Company, other than those issued or granted in the ordinary course of business.  Except as set forth in the Commission Documents, as of the Effective Date, there were no contracts, commitments, understandings, or arrangements by which the Company is or may become bound to issue additional shares of the capital
stock of the Company or options, securities or rights convertible into or exchangeable for any shares of capital stock of the Company.  Except for customary transfer restrictions contained in agreements entered into by the Company to sell restricted securities or as set forth in the Commission Documents, as of the Effective Date, the Company was not a party to, and it had no knowledge of, any agreement restricting the voting or transfer of any shares of the capital stock of the Company.  Except
as set forth in the Commission Documents, the offer and sale of all capital stock, convertible or exchangeable securities, rights, warrants or options of the Company issued prior to the Effective Date complied with all applicable federal and state securities laws, and no stockholder has any right of rescission or damages or any “put” or similar right with respect thereto that would have a Material Adverse

 

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Effect.  The Company has furnished or made available to the Investor via the Commission’s Electronic Data Gathering, Analysis and Retrieval System (“EDGAR”) true and correct copies of the Company’s Certificate of Incorporation as in effect on the Effective Date (the “Charter”), and the Company’s Bylaws as in effect on the Effective
Date (the “Bylaws”), and true and correct copies (redacted as appropriate) of all executed resolutions of the Company’s Board of Directors (and committees thereof) relating to the capital stock of the Company (and transactions in respect thereof) since December 31, 2005 (except with respect to issuances of shares of capital stock of the Company to directors or employees of the Company as fees or compensation that were duly approved
by the Company’s Board of Directors or a committee thereof).

 

Section 4.4. Issuance of Securities.
The Commitment Shares, the Warrants and the Warrant Shares have been, and the Shares to be issued under this Agreement have been or will be (prior to the delivery of any Fixed Request Notice to the Investor hereunder), duly authorized by all necessary corporate action on the part of the Company. The Commitment Shares, when issued in accordance with the terms of this Agreement, and the Shares, when paid for in accordance with the terms of this Agreement, shall be validly issued and outstanding, fully paid and
nonassessable and free from all liens, charges, taxes, security interests, encumbrances, rights of first refusal, preemptive or similar rights and other encumbrances with respect to the issue thereof. The Warrants have been validly issued to the Investor and are outstanding and are free from all liens, charges, taxes, security interests, encumbrances, rights of first refusal, preemptive or similar rights and other encumbrances with respect to the issue thereof. The Company has reserved from its duly authorized
capital stock not less than the maximum number of shares of Common Stock issuable upon exercise of the Warrants (without regard to any limitations on the exercise of the Warrants set forth therein). Upon issuance in accordance with the terms of the Warrants, the Warrant Shares shall be validly issued and outstanding, fully paid and nonassessable and free from all liens, charges, taxes, security interests, encumbrances, rights of first refusal, preemptive or similar rights and other encumbrances with respect to
the issue thereof, with the holders being entitled to all rights accorded to a holder of Common Stock.

 

Section 4.5. No Conflicts.  The
execution, delivery and performance by the Company of this Agreement and the Warrants and the consummation by the Company of the transactions contemplated hereby and thereby do not and shall not (i) result in a violation of any provision of the Company’s Charter or Bylaws, (ii) conflict with, constitute a default (or an event which, with notice or lapse of time or both, would become a default) under, or give rise to any rights of termination, amendment, acceleration or cancellation of, any material agreement,
mortgage, deed of trust, indenture, note, bond, license, lease agreement, instrument or obligation to which the Company or any of its Significant Subsidiaries is a party or is bound (including, without limitation, any listing agreement with the Trading Market), (iii) create or impose a lien, charge or encumbrance on any property of the Company or any of its Significant Subsidiaries under any agreement or any commitment to which the Company or any of its Significant Subsidiaries is a party or under which the Company
or any of its Significant Subsidiaries is bound or under which any of their respective properties or assets are bound, or (iv) result in a violation of any federal, state, local or foreign statute, rule, regulation, order, judgment or decree applicable to the Company or any of its Subsidiaries or by which any property or asset of the Company or any of its Subsidiaries are bound or affected, except, in the case of clauses (ii), (iii) and (iv), for such conflicts, defaults, terminations, amendments, acceleration,
cancellations, liens, charges, encumbrances and violations as would not, individually or in the aggregate, have a Material

 

12

 

Adverse Effect.  The Company is not required under federal, state, local or foreign law, rule or regulation to obtain any consent, authorization or order of, or make any filing or registration with, any court or governmental agency in order for it to execute, deliver or perform any of its obligations under this Agreement or the Warrants, or to issue and sell the Securities to the Investor in accordance with the terms hereof and thereof, as applicable (other than any filings which may be required
to be made by the Company with the Commission, the Financial Industry Regulatory Authority (the “FINRA”) or the Trading Market subsequent to the Effective Date, including but not limited to a Prospectus Supplement under Sections 1.4 and 5.9 of this Agreement, the FINRA Filing under Section 5.1 of this Agreement and any registration statement, prospectus or prospectus supplement which has been or may be filed pursuant to this Agreement).

 

Section 4.6. Commission Documents, Financial Statements.  (a)  The
Common Stock is registered pursuant to Section 12(b) or 12(g) of the Exchange Act and, except as disclosed in the Commission Documents, as of the Effective Date the Company had timely filed (giving effect to permissible extensions in accordance with Rule 12b-25 under the Exchange Act) all Commission Documents.  The Company has delivered or made available to the Investor via EDGAR or otherwise true and complete copies of the Commission Documents filed with the Commission prior to the Effective Date (including,
without limitation, the 2008 Form 10-K) and has delivered or made available to the Investor via EDGAR or otherwise true and complete copies of all of the Commission Documents heretofore incorporated by reference in the Registration Statement and the Prospectus.  The Company has not provided to the Investor any information which, according to applicable law, rule or regulation, should have been disclosed publicly by the Company but which has not been so disclosed, other than with respect to the transactions
contemplated by this Agreement.  As of its filing date, each Commission Document filed with the Commission and incorporated by reference in the Registration Statement and the Prospectus (including, without limitation, the 2008 Form 10-K) complied in all material respects with the requirements of the Exchange Act, and, as of its filing date (or, if amended or superseded by a filing prior to the Effective Date, on the date of such amended or superseded filing), such Commission Document did not contain
any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading.  Each Commission Document to be filed with the Commission after the Effective Date and incorporated by reference in the Registration Statement, the Prospectus and any Prospectus Supplement required to be filed pursuant to Sections 1.4 and 5.9 hereof during the Investment Period
(including, without limitation, the Current Report), when such document becomes effective or is filed with the Commission, as the case may be, shall comply in all material respects with the requirements of the Securities Act or the Exchange Act, and shall not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading.

 

(b) The financial statements, together with the related notes and schedules, of the Company included in the Commission Documents comply as to form in all material respects with all applicable accounting requirements
and the published rules and regulations of the Commission and all other applicable rules and regulations with respect thereto.  Such financial statements, together with the related notes and schedules, have been prepared in accordance with

 

13

 

GAAP applied on a consistent basis during the periods involved (except (i) as may be otherwise indicated in such financial statements or the notes thereto or (ii) in the case of unaudited interim statements, to the extent they may not include footnotes or may be condensed or summary statements and are subject to normal year-end audit adjustments), and fairly present in all material respects the financial condition of the Company and its consolidated Subsidiaries as of the dates thereof and the results of
operations and cash flows for the periods then ended (subject, in the case of unaudited statements, to normal year-end audit adjustments).

 

(c) The Company has timely filed with the Commission and made available to the Investor via EDGAR or otherwise all certifications and statements required by (x) Rule 13a-14 or Rule 15d-14 under the Exchange Act or
(y) 18 U.S.C. Section 1350 (Section 906 of the Sarbanes-Oxley Act of 2002 (“SOXA”)) with respect to all relevant Commission Documents.  The Company is in compliance in all material respects with the provisions of SOXA applicable to it as of the date hereof.  The Company maintains disclosure controls and procedures required by Rule 13a-15 or Rule 15d-15 under the Exchange Act; such controls and procedures are effective
to ensure that all material information concerning the Company and its Subsidiaries is made known on a timely basis to the individuals responsible for the timely and accurate preparation of the Company’s Commission filings and other public disclosure documents.  As used in this Section 4.6(c), the term “file” shall be broadly construed to include any manner in which a document or information is furnished, supplied or otherwise made available to the Commission.

 

(d) Deloitte & Touche LLP, who have expressed their opinions on the audited financial statements and related schedules included or incorporated by reference in the Registration Statement and the Base Prospectus
are, with respect to the Company, independent public accountants as required by the Securities Act and is an independent registered public accounting firm within the meaning of SOXA as required by the rules of the Public Company Accounting Oversight Board.

 

Section 4.7. Subsidiaries.  The
2008 Form 10-K sets forth each Subsidiary of the Company as of the Effective Date, showing its jurisdiction of incorporation or organization and the percentage of the Company’s ownership of the outstanding capital stock or other ownership interests of such Subsidiary, and the Company does not have any other Subsidiaries as of the Effective Date.

 

Section 4.8. No Material Adverse Effect.  Since September
30, 2008, the Company has not experienced or suffered any Material Adverse Effect, and there exists no current state of facts, condition or event which would reasonably be expected to have a Material Adverse Effect, except (i) as disclosed in any Commission Documents filed since September 30, 2008 or (ii) continued losses from operations.

 

Section 4.9. Indebtedness.  The
Company’s Quarterly Report on Form 10-Q for its fiscal quarter ended June 30, 2009 sets forth, as of June 30, 2009, all outstanding secured and unsecured Indebtedness of the Company or any Subsidiary, or for which the Company or any Subsidiary has commitments through such date. For the purposes of this Agreement, “Indebtedness” shall mean (a) any liabilities for borrowed money or amounts owed in excess of $10,000,000 (other than
trade accounts payable incurred in the ordinary course of business), (b)

 

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all guaranties, endorsements, indemnities and other contingent obligations in respect of Indebtedness of others in excess of $10,000,000, whether or not the same are or should be reflected in the Company’s balance sheet (or the notes thereto), except guaranties by endorsement of negotiable instruments for deposit or collection or similar transactions in the ordinary course of business; and (c) the present value of any lease payments in excess of $10,000,000 due under leases required to be capitalized
in accordance with GAAP.  There is no existing or continuing default or event of default in respect of any Indebtedness of the Company or any of its Subsidiaries.

 

Section 4.10. Title To Assets.  Each
of the Company and its Subsidiaries has good and marketable title to all of their respective real and personal property reflected in the Commission Documents, free of mortgages, pledges, charges, liens, security interests or other encumbrances, except for those indicated in the Commission Documents or those that would not have a Material Adverse Effect.  To the Company’s knowledge, all real property leases of the Company are valid and subsisting and in full force and effect in all material respects.

 

Section 4.11. Actions Pending.  There
is no action, suit, claim, investigation or proceeding pending, or to the knowledge of the Company threatened, against the Company or any Subsidiary which questions the validity of this Agreement or the Warrants or the transactions contemplated hereby or thereby or any action taken or to be taken pursuant hereto or thereto.  Except as set forth in the Commission Documents, there is no action, suit, claim, investigation or proceeding pending, or to the knowledge of the Company threatened, against or
involving the Company, any Subsidiary or any of their respective properties or assets, or involving any officers or directors of the Company or any of its Subsidiaries, including, without limitation, any securities class action lawsuit or stockholder derivative lawsuit, in each case which, if determined adversely to the Company, its Subsidiary or any officer or director of the Company or its Subsidiaries, would have a Material Adverse Effect.  With respect to each of those certain claims, disputes,
investigations, arbitrations, actions or proceedings under the caption “Item 1. Legal Proceedings” in Part II of the Company’s Quarterly Report on Form 10-Q for its fiscal quarter ended June 30, 2009, there has been no event or change required to be disclosed in a filing under the Exchange Act that has not been so disclosed.

 

Section 4.12. Compliance With Law.  The
business of the Company and the Subsidiaries has been and is presently being conducted in compliance with all applicable federal, state, local and foreign governmental laws, rules, regulations and ordinances, except as set forth in the Commission Documents and except for such non-compliance which, individually or in the aggregate, would not have a Material Adverse Effect.

 

Section 4.13. Certain Fees.  Except
for the placement fee payable by the Company to Reedland Capital Partners, an Institutional Division of Financial West Group, Member FINRA/SIPC (“Reedland”), which shall be set forth in a separate engagement letter between the Company and Reedland (a true and complete fully executed copy of which has heretofore been provided to the Investor), no brokers, finders or financial advisory fees or commissions shall be payable by the Company
or any Subsidiary (or any of their respective Affiliates) with respect to the transactions contemplated by this Agreement. Except as set forth in this Section 4.13 or as disclosed in Section 4.13 of the Disclosure Schedule or in the Registration Statement, the Prospectus or the Current Report, there are no contracts, agreements or understandings between

 

15

 

the Company and any person that would give rise to a valid claim against the Company, the Investor or the Broker-Dealer for a brokerage commission, finder’s fee or other like payment in connection with the transactions contemplated by this Agreement or, to the Company’s knowledge, any arrangements, agreements, understandings, payments or issuance with respect to the Company or any of its officers, directors, stockholders, partners, employees, Subsidiaries or Affiliates that may affect the FINRA’s
determination of the amount of compensation to be received by any FINRA member (including, without limitation, those FINRA members set forth on Schedule 4.13 of the Disclosure Schedule) or person associated with any FINRA member in connection with the transactions contemplated by this Agreement. Except as set forth in this Section 4.13 or as disclosed in Section 4.13 of the Disclosure Schedule or in the Registration Statement, the Prospectus or the Current Report, no “items of value” (within the meaning
of FINRA Rule 5110) have been received, and no arrangements have been entered into for the future receipt of any items of value, from the Company or any of its officers, directors, stockholders, partners, employees, Subsidiaries or Affiliates by any FINRA member (including, without limitation, those FINRA members set forth on Schedule 4.13 of the Disclosure Schedule) or person associated with any FINRA member, during the period commencing 180 days immediately preceding the Effective Date and ending on the date
this Agreement is terminated in accordance with Article VII, that may affect the FINRA’s determination of the amount of compensation to be received by any FINRA member or person associated with any FINRA member in connection with the transactions contemplated by this Agreement.

 

Section 4.14. Operation of Business.  (a)  The
Company or one or more of its Subsidiaries possesses such permits, licenses, approvals, consents and other authorizations (including licenses, accreditation and other similar documentation or approvals of any local health departments) (collectively, “Governmental Licenses”) issued by the appropriate federal, state, local or foreign regulatory agencies or bodies necessary to conduct the business now operated by it, except where the failure
to possess such Governmental Licenses, individually or in the aggregate, would not have a Material Adverse Effect.  The Company and its Subsidiaries are in compliance with the terms and conditions of all such Governmental Licenses and all applicable rules and regulations, guidelines and policies, except where the failure to so comply, individually or in the aggregate, would not have a Material Adverse Effect. All of the Governmental Licenses are valid and in full force and effect, except where the invalidity
of such Governmental Licenses or the failure of such Governmental Licenses to be in full force and effect, individually or in the aggregate, would not have a Material Adverse Effect.  Except as set forth in the Commission Documents or the Registration Statement, neither the Company nor any of its Subsidiaries has received any notice of proceedings relating to the revocation or modification of any such Governmental Licenses or relating to a potential violation of, failure to comply with, or request to
produce additional information under, any applicable rules and regulations, guidelines or policies which, if the subject of any unfavorable decision, ruling or finding, individually or in the aggregate, would have a Material Adverse Effect. This Section 4.14 does not relate to environmental matters, such items being the subject of Section 4.15.

 

(b)           To the Company’s knowledge, the Company or one or more of its Subsidiaries owns or possesses adequate patents, patent rights, licenses, inventions, copyrights, know-how (including trade secrets and other unpatented and/or unpatentable proprietary or confidential
information, systems or procedures), trademarks, service marks, trade names, trade dress, logos, copyrights and other intellectual property, including, without limitation, all of the

 

16

 

intellectual property described in the Commission Documents as being owned or licensed by the Company (collectively, “Intellectual Property”), necessary to carry on the business now operated by it.  Except as set forth in the Commission Documents, there are no actions, suits or judicial proceedings pending, or to the Company’s knowledge threatened, relating to patents or proprietary information to which the Company
or any of its Subsidiaries is a party or of which any property of the Company or any of its Subsidiaries is subject, and neither the Company nor any of its Subsidiaries has received any notice or is otherwise aware of any infringement of or conflict with asserted rights of others with respect to any Intellectual Property or of any facts or circumstances which could render any Intellectual Property invalid or inadequate to protect the interest of the Company and its Subsidiaries therein, and which infringement
or conflict (if the subject of any unfavorable decision, ruling or finding) or invalidity or inadequacy, individually or in the aggregate, would have a Material Adverse Effect.

 

Section 4.15. Environmental Compliance.  Except
as disclosed in the Commission Documents, the Company and each of its Subsidiaries have obtained all material approvals, authorization, certificates, consents, licenses, orders and permits or other similar authorizations of all governmental authorities, or from any other person, that are required under any Environmental Laws, except for any approvals, authorization, certificates, consents, licenses, orders and permits or other similar authorizations the failure of which to obtain does not or would not have a
Material Adverse Effect.  “Environmental Laws” shall mean all applicable laws relating to the protection of the environment including, without limitation, all requirements pertaining to reporting, licensing, permitting, controlling, investigating or remediating emissions, discharges, releases or threatened releases of hazardous substances, chemical substances, pollutants, contaminants or toxic substances, materials or wastes,
whether solid, liquid or gaseous in nature, into the air, surface water, groundwater or land, or relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of hazardous substances, chemical substances, pollutants, contaminants or toxic substances, material or wastes, whether solid, liquid or gaseous in nature.  Except for such instances as would not, individually or in the aggregate, have a Material Adverse Effect, to the Company’s knowledge,
there are no past or present events, conditions, circumstances, incidents, actions or omissions relating to or in any way affecting the Company or its Subsidiaries that violate or would reasonably be expected to violate any Environmental Law after the Effective Date or that would reasonably be expected to give rise to any environmental liability, or otherwise form the basis of any claim, action, demand, suit, proceeding, hearing, study or investigation (i) under any Environmental Law, or (ii) based on or related
to the manufacture, processing, distribution, use, treatment, storage (including without limitation underground storage tanks), disposal, transport or handling, or the emission, discharge, release or threatened release of any hazardous substance.

 

Section 4.16. Material Agreements.  Except
as set forth in the Commission Documents, neither the Company nor any Subsidiary of the Company is a party to any written or oral contract, instrument, agreement commitment, obligation, plan or arrangement, a copy of which would be required to be filed with the Commission as an exhibit to an annual report on Form 10-K (collectively, “Material Agreements”).  The Company and each of its Subsidiaries have performed in all material
respects all the obligations required to be performed by them under the Material Agreements, have received no notice of default or an event of default by the Company or any of its Subsidiaries thereunder and are not aware of any basis for the assertion thereof, and neither the Company or any of its Subsidiaries nor, to the knowledge of the

 

17

 

Company, any other contracting party thereto are in default under any Material Agreement now in effect, the result of which would have a Material Adverse Effect.  Each of the Material Agreements is in full force and effect, and constitutes a legal, valid and binding obligation enforceable in accordance with its terms against the Company and/or any of its Subsidiaries and, to the knowledge of the Company, each other contracting party thereto, except as such enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium, liquidation, conservatorship, receivership or similar laws relating to, or affecting generally the enforcement of, creditor’s rights and remedies or by other equitable principles of general application.

 

Section 4.17. Transactions With Affiliates.  Except
as set forth in the Commission Documents, there are no loans, leases, agreements, contracts, royalty agreements, management contracts, service arrangements or other continuing transactions exceeding $120,000 between (a) the Company or any Subsidiary, on the one hand, and (b) any person or entity who would be covered by Item 404(a) of Regulation S-K, on the other hand.  Except as disclosed in the Commission Documents, there are no outstanding amounts payable to or receivable from, or advances by the
Company or any of its Subsidiaries to, and neither the Company nor any of its Subsidiaries is otherwise a creditor of or debtor to, any beneficial owner of more than 5% of the outstanding shares of Common Stock, or any director, employee or Affiliate of the Company or any of its Subsidiaries, other than (i) reimbursement for reasonable expenses incurred on behalf of the Company or any of its Subsidiaries or (ii) as part of the normal and customary terms of such persons’ employment or service as a director
with the Company or any of its Subsidiaries.

 

Section 4.18. Securities Act.  The
Company has complied with all applicable federal and state securities laws in connection with the offer, issuance and sale of the Securities contemplated by this Agreement and the Warrants.

 

(i) The Company has prepared and filed with the Commission in accordance with the provisions of the Securities Act the Registration Statement, including a base prospectus relating to the Securities. The Registration
Statement was declared effective by order of the Commission on July 17, 2009. As of the date hereof, the Company has not received notice that the Commission has issued or intends to issue a stop order suspending the effectiveness of the Registration Statement. No order preventing or suspending the use of the Prospectus or any Permitted Free Writing Prospectus has been issued by the Commission.

 

(ii) The Company satisfies all of the requirements for the use of Form S-3 under the Securities Act for the offering and sale of the Securities contemplated by this Agreement and the Warrants (without reliance on
General Instruction I.B.6. of Form S-3). The Commission has not notified the Company of any objection to the use of the form of the Registration Statement pursuant to Rule 401(g)(1) under the Securities Act. The Registration Statement complied in all material respects on the date on which it was declared effective by the Commission, and will comply in all material respects at each deemed effective date with respect to the Investor pursuant to Rule 430B(f)(2) of the Securities Act, with the requirements of the
Securities Act, and the Registration Statement (including the documents incorporated by reference therein) did not on the date it was declared effective by the Commission, and shall not at each deemed effective date with respect to the Investor pursuant to Rule 430B(f)(2) of the Securities Act, contain an untrue statement of a material fact or omit to state a material fact

 

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required to be stated therein or necessary to make the statements therein not misleading; provided that this representation and warranty does not apply to statements in or omissions from the Registration Statement made in reliance upon and in conformity with information relating to the Investor furnished to the Company in writing by or on behalf of the Investor expressly for use therein. The Registration Statement, as of the Effective Date,
meets the requirements set forth in Rule 415(a)(1)(x) under the Securities Act. The Base Prospectus complied in all material respects on its date and on the Effective Date, and will comply in all material respects on each applicable Fixed Request Exercise Date and, when taken together with the applicable Prospectus Supplement and any applicable Permitted Free Writing Prospectus, on each applicable Settlement Date, with the requirements of the Securities Act and did not on its date and on the Effective Date and
shall not on each applicable Fixed Request Exercise Date and, when taken together with the applicable Prospectus Supplement and any applicable Permitted Free Writing Prospectus, on each applicable Settlement Date contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided that
this representation and warranty does not apply to statements in or omissions from the Base Prospectus made in reliance upon and in conformity with information relating to the Investor furnished to the Company in writing by or on behalf of the Investor expressly for use therein.

 

(iii) Each Prospectus Supplement required to be filed pursuant to Sections 1.4 and 5.9 hereof, when taken together with the Base Prospectus and any applicable Permitted Free Writing Prospectus, on its date and on
the applicable Settlement Date, shall comply in all material respects with the provisions of the Securities Act and shall not on its date and on the applicable Settlement Date contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they are made, not misleading, except that this representation and warranty does not apply to statements in or omissions from any Prospectus
Supplement made in reliance upon and in conformity with information relating to the Investor furnished to the Company in writing by or on behalf of the Investor expressly for use therein.

 

(iv) At the earliest time after the filing of the Registration Statement that the Company or another offering participant made a bona fide offer (within the meaning of Rule 164(h)(2) under the Securities Act) relating
to the Securities, the Company was not and is not an “ineligible issuer” (as defined in Rule 405 under the Securities Act).  Each Permitted Free Writing Prospectus (a) shall conform in all material respects to the requirements of the Securities Act on the date of its first use, (b) when considered together with the Prospectus on each applicable Fixed Request Exercise Date and on each applicable Settlement Date, shall not contain an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they are made, not misleading, and (c) shall not include any information that conflicts with the information contained in the Registration Statement, including any document incorporated by reference therein and any Prospectus Supplement deemed to be a part thereof that has not been superseded or modified.  The immediately preceding sentence does not apply to statements in or
omissions from any Permitted Free Writing Prospectus made in reliance upon and in conformity with information relating to the Investor furnished to the Company in writing by or on behalf of the Investor expressly for use therein.

 

 

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(v) Prior to the Effective Date, the Company has not distributed any offering material in connection with the offering and sale of the Securities.  From and after the Effective Date and prior to the completion
of the distribution of the Securities, the Company shall not distribute any offering material in connection with the offering and sale of the Securities, other than the Registration Statement, the Base Prospectus as supplemented by any Prospectus Supplement or a Permitted Free Writing Prospectus.

 

Section 4.19. Employees.  As
of the Effective Date, neither the Company nor any Subsidiary of the Company has any collective bargaining arrangements or agreements covering any of its employees, except as set forth in the Commission Documents.  As of the Effective Date, except as disclosed in the Registration Statement or the Commission Documents, no officer, consultant or key employee of the Company or any Subsidiary whose termination, either individually or in the aggregate, would reasonably be expected to have a Material Adverse
Effect, has terminated or, to the knowledge of the Company, has any present intention of terminating his or her employment or engagement with the Company or any Subsidiary.

 

Section 4.20. Use of Proceeds.  The
proceeds from the sale of the Shares and any proceeds that may be received upon any cash exercise of the Warrants shall be used by the Company and its Subsidiaries as set forth in the Base Prospectus and any Prospectus Supplement filed pursuant to Sections 1.4 and 5.9.

 

Section 4.21. Investment Company Act Status.  The
Company is not, and as a result of the consummation of the transactions contemplated by this Agreement and the Warrants and the application of the proceeds from the sale of the Shares and any proceeds that may be received upon any cash exercise of the Warrants as set forth in the Base Prospectus and any Prospectus Supplement shall not be, an “investment company” or a company “controlled” by an “investment company,” within the meaning of the Investment Company Act of 1940, as
amended.

 

Section 4.22. ERISA.  No
liability to the Pension Benefit Guaranty Corporation has been incurred with respect to any Plan by the Company or any of its Subsidiaries which has had or would have a Material Adverse Effect.  No “prohibited transaction” (as defined in Section 406 of ERISA or Section 4975 of the Code) or “accumulated funding deficiency” (as defined in Section 203 of ERISA) or any of the events set forth in Section 4043(b) of ERISA has occurred with respect to any Plan which has had or would
have a Material Adverse Effect, and the execution and delivery of this Agreement and the issuance and sale of the Shares hereunder shall not result in any of the foregoing events.  Each Plan is in compliance in all material respects with applicable law, including ERISA and the Code; the Company has not incurred and does not expect to incur liability under Title IV of ERISA with respect to the termination of, or withdrawal from, any Plan; and each Plan for which the Company would have any liability that
is intended to be qualified under Section 401(a) of the Code is so qualified in all material respects and nothing has occurred, whether by action or failure to act, which would cause the loss of such qualifications.  As used in this Section 4.22, the term “Plan” shall mean an “employee pension benefit plan” (as defined in Section 3 of ERISA) which is or has been established or maintained, or to which contributions
are or have been made, by the Company or any Subsidiary or by any trade or business, whether or not incorporated, which, together with the Company or any Subsidiary, is under common control, as described in Section 414(b) or (c) of the Code.

 

 

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Section 4.23. Taxes.  The
Company (i) has filed all necessary federal, state and foreign income and franchise tax returns or has duly requested extensions thereof, except for those the failure of which to file would not have a Material Adverse Effect, (ii) has paid all federal, state, local and foreign taxes due and payable for which it is liable, except to the extent that any such taxes are being contested in good faith and by appropriate proceedings, except for such taxes the failure of which to pay would not have a Material Adverse
Effect, and (iii) does not have any tax deficiency or claims outstanding or assessed or, to the Company’s knowledge, proposed against it which would have a Material Adverse Effect.

 

Section 4.24. Insurance.  The
Company carries, or is covered by, insurance in such amounts and covering such risks as is adequate for the conduct of its and its Subsidiaries’ businesses and the value of their respective properties and as is customary for companies engaged in similar businesses in similar industries.

 

Section 4.25. Acknowledgement Regarding Investor’s Acquisition of Securities.  The
Company acknowledges and agrees that the Investor is acting solely in the capacity of an arm’s length purchaser with respect to this Agreement and the Warrants 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 this Agreement or the Warrants or the transactions contemplated hereby or thereby, and any advice given by the Investor or any of its
representatives or agents in connection with this Agreement or the Warrants or the transactions contemplated hereby or thereby is merely incidental to the Investor’s acquisition of the Securities.

 

ARTICLE V

 

COVENANTS

 

The Company covenants with the Investor, and the Investor covenants with the Company, as follows, which covenants of one party are for the benefit of the other party, during the Investment Period:

 

Section 5.1. Securities Compliance; FINRA Filing.

 

(i) The Company shall notify the Trading Market, as necessary, in accordance with its rules and regulations, of the transactions contemplated by this Agreement and the Warrants, and shall take all necessary action,
undertake all proceedings and obtain all registrations, permits, consents and approvals for the legal and valid issuance of the Securities to the Investor in accordance with the terms of this Agreement and the Warrants. The Investor acknowledges and agrees that no action has been or will be taken by the Company that would permit the offer or sale of the Securities or possession or distribution of the Prospectus or any other offering material relating to the securities in any non-U.S. jurisdiction where action
for that purpose is required.

 

(ii) As promptly as practicable, the Company shall (with the Investor’s assistance) prepare and, no later than 24 hours after the Effective Date, file with the FINRA’s Corporate Financing Department via
CobraDesk all documents and information required to be filed with the FINRA pursuant to FINRA Rule 5110 with regard to the transactions contemplated

 

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by this Agreement (the “FINRA Filing”). In connection therewith, on the Effective Date, the Company shall pay to the FINRA by wire transfer of immediately available funds the applicable filing fee with respect to the FINRA Filing, and the Company shall be solely responsible for payment of such fee.  The parties hereby agree to provide each other all requisite information and otherwise to assist each other in a timely
fashion in order for the Company to complete the preparation and submission of the FINRA Filing in accordance with this Section 5.1(ii) and to promptly respond to any inquiries or requests from FINRA or its staff.  Each party hereto shall (A) promptly notify the other party of any communication to that party or its Affiliates from the FINRA, including, without limitation, any request from the FINRA or its staff for amendments or supplements to or additional information in respect of the FINRA Filing
and permit the other party to review in advance any proposed written communication to the FINRA and (B) furnish the other party with copies of all written correspondence, filings and communications between them and their Affiliates and their respective representatives and advisors, on the one hand, and the FINRA or members of its staff, on the other hand, with respect to this Agreement and the transactions contemplated hereby.  Each of the parties hereto agrees to use its commercially reasonable efforts
to take, or cause to be taken, all actions, and to do, or cause to be done, and to assist and cooperate with the other party in doing, all things necessary, proper or advisable to obtain as promptly as practicable (but in no event later than 60 days after the Effective Date) written confirmation from the FINRA to the effect that the FINRA’s Corporate Financing Department has determined not to raise any objection with respect to the fairness and reasonableness of the terms of the transactions contemplated
by this Agreement; provided, however, that the Investor shall have no responsibility for the compliance or non-compliance of any Broker-Dealer with FINRA Rule 5110 and shall not be required to (x) disclose to the FINRA or to any other governmental agency, person or entity any business, financial or other information that the Investor deems, in its sole and absolute discretion, to be
proprietary, confidential or otherwise sensitive information, (y) amend, modify or change any of the terms or conditions of this Agreement or the Warrants or (z) otherwise take any other action, including, without limitation, modifying the Discount Price thresholds referred to in Section 2.2, the terms of the Warrants or the number of Warrant Shares subject thereto, the number of Commitment Shares or the amount of fees and commissions to be paid to the Broker-Dealer in connection with the transactions contemplated
by this Agreement, in each case, in such a manner that would, in the Investor’s sole and absolute discretion, render the terms and conditions of this Agreement or the Warrants or the transactions contemplated hereby or thereby to be no longer advisable to the Investor. Notwithstanding anything to the contrary contained in this Agreement, the Company shall not be permitted to deliver any Fixed Request Notice to the Investor, and the Investor shall not be obligated to purchase any Shares pursuant to a Fixed
Request Notice, unless and until the parties hereto shall have received written confirmation from the FINRA to the effect that the FINRA’s Corporate Financing Department has determined not to raise any objection with respect to the fairness and reasonableness of the terms of the transactions contemplated by this Agreement.

 

Section 5.2. Registration and Listing.  The
Company shall take all action necessary to cause the Common Stock to continue to be registered as a class of securities under Sections 12(b) or 12(g) of the Exchange Act, shall comply with its reporting and filing obligations under the Exchange Act, and shall not take any action or file any document (whether or not permitted by the Securities Act) to terminate or suspend such registration or to terminate or suspend its reporting and filing obligations under the Exchange Act or Securities Act, except as permitted

 

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herein. The Company shall take all action necessary to continue the listing and trading of its Common Stock and the listing of the Commitment Shares and the Shares acquired or purchased by the Investor hereunder and the Warrant Shares acquired by the Investor pursuant to the Warrants on the Trading Market (including, without limitation, maintaining sufficient tangible net assets), and shall comply with the Company’s reporting, filing and other obligations under the bylaws, listed securities maintenance
standards and other rules and regulations of the FINRA and the Trading Market. The Company shall not take any action which could reasonably be expected to result in the delisting or suspension of the Common Stock on the Trading Market.

 

Section 5.3. Compliance with Laws.

 

(i) The Company shall comply, and cause each Subsidiary to comply, (a) with all laws, rules, regulations and orders applicable to the business and operations of the Company and its Subsidiaries, except as would not
have a Material Adverse Effect and (b) with all applicable provisions of the Securities Act, the Exchange Act, the rules and regulations of the FINRA and the listing standards of the Trading Market.  Without limiting the generality of the foregoing, neither the Company nor any of its officers, directors or Affiliates has taken or will take, directly or indirectly, any action designed or intended to stabilize or manipulate the price of any security of the Company, or which caused or resulted in, or which
would in the future reasonably be expected to cause or result in, stabilization or manipulation of the price of any security of the Company.

 

(ii) The Investor shall comply with all laws, rules, regulations and orders applicable to the performance by it of its obligations under this Agreement and its investment in the Securities, except as would not, individually
or in the aggregate, prohibit or otherwise interfere with the ability of the Investor to enter into and perform its obligations under this Agreement in any material respect. Without limiting the foregoing, the Investor shall comply with all applicable provisions of the Securities Act and the Exchange Act and any applicable securities laws of any non-U.S. jurisdictions.

 

Section 5.4. Keeping of Records and Books of Account; Foreign Corrupt Practices Act.

 

(i) The Company shall keep and cause each Subsidiary to keep adequate records and books of account, in which complete entries shall be made in accordance with GAAP consistently applied, reflecting all financial transactions
of the Company and its Subsidiaries, and in which, for each fiscal year, all proper reserves for depreciation, depletion, obsolescence, amortization, taxes, bad debts and other purposes in connection with its business shall be made.  The Company shall maintain a system of internal accounting controls that (a) pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the Company; (b) provide reasonable assurance that
transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and (c) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that would likely have a material effect on the Company’s
financial statements.

 

 

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(ii) Neither the Company, nor any of its Subsidiaries, nor to the knowledge of the Company, any of their respective directors, officers, agents, employees or any other persons acting on their behalf shall, in connection
with the operation of the Company’s and its Subsidiaries’ respective businesses, (a) use any corporate funds for unlawful contributions, payments, gifts or entertainment or to make any unlawful expenditures relating to political activity to government officials, candidates or members of political parties or organizations, (b) pay, accept or receive any unlawful contributions, payments, expenditures or gifts, or (c) violate or operate in noncompliance with any export restrictions, anti-boycott regulations,
embargo regulations or other applicable domestic or foreign laws and regulations, except for such violations or noncompliant operations that would not likely result in a Material Adverse Effect.

 

(iii) Subject to the requirements of Section 5.12 of this Agreement, from time to time from and after the period beginning with the third Trading Day immediately preceding each Fixed Request Exercise Date through
and including the applicable Settlement Date, the Company shall make available for inspection and review by the Investor, customary documentation allowing the Investor and/or its appointed counsel or advisors to conduct due diligence.

 

Section 5.5. Limitations on Holdings and Issuances.
Notwithstanding any other provision of this Agreement, the Company shall not be obligated to issue and the Investor shall not be obligated to purchase any shares of Common Stock which, when aggregated with all other shares of Common Stock then beneficially owned (as calculated pursuant to Section 13(d) of the Exchange Act and Rule 13d-3 promulgated thereunder) by the Investor and its Affiliates, would result in the beneficial ownership by the Investor of more than 9.9% of the then issued and outstanding shares
of Common Stock.

 

Section 5.6. Other Agreements and Other Financings.

 

(i) The Company shall not enter into, announce or recommend to its stockholders 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 or any Subsidiary to perform its obligations under this Agreement and the Warrants, including, without limitation, the obligation of the Company to deliver the Commitment Shares to the Investor not later than 4:00 p.m. (New York time) on the second Trading Day immediately following the Effective Date, the obligation of the Company to deliver the Shares to the Investor in respect of a Fixed Request or Optional Amount on the applicable Settlement Date and the obligation of the
Company to deliver the Warrant Shares in respect of any exercise (in whole or in part) of the Warrants in accordance with the terms thereof.

 

(ii) The Company shall notify the Investor, within 48 hours, if it enters into any agreement, plan, arrangement or transaction with a third party, the principal purpose of which is to obtain during a Pricing Period
an Other Financing not constituting an Acceptable Financing (an “Other Financing Notice”); provided, however, that the Company shall notify the Investor promptly (but in no event later than 24 hours) (an “Integration Notice”) if it
enters into any agreement, plan, arrangement or transaction with a third party, the principal purpose of which is to obtain at any time during the Investment Period an Other Financing that would likely be aggregated with the transactions contemplated by this Agreement for purposes of determining

 

24

 

whether approval of the Company’s stockholders is required under any bylaw, listed securities maintenance standards or other rules of the Trading Market and, if required under applicable law, including, without limitation, Regulation FD promulgated by the Commission, or under the applicable rules and regulations of the Trading Market, the Company shall publicly disclose such information in accordance with Regulation FD and the applicable rules and regulations of the Trading Market. For purposes of
this Section 5.6(ii), any press release issued by, or Commission Document filed by, the Company shall constitute sufficient notice, provided that it is issued or filed, as the case may be, within the time requirements set forth in the first sentence of this Section 5.6(ii) for an Other Financing Notice or an Integration Notice, as applicable.  For greater certainty, the entry by the Company into any agreement, plan, arrangement or transaction with a third party to obtain an Other Financing (or any other
financing) outside of a Pricing Period shall not trigger any requirement for the Company to deliver an Other Financing Notice (it being acknowledged and agreed that nothing contained in this Section 5.6(ii) shall limit or modify in any respect the Company’s obligations in Section 7.2). During any Pricing Period in which the Company is required to provide an Other Financing Notice pursuant to the first sentence of this Section 5.6(ii), the Investor shall (i) have the option to purchase the Shares subject
to the Fixed Request at (x) the price therefor in accordance with the terms of this Agreement or (y) the third party’s per share purchase price in connection with the Other Financing, net of such third party’s discounts, Warrant Value and fees, or (ii) the Investor may elect to not purchase any Shares subject to the Fixed Request for that Pricing Period. An “Other Financing” shall mean (x) the issuance of Common Stock for
a purchase price less than, or the issuance of securities convertible into or exchangeable for Common Stock at an exercise or conversion price (as the case may be) less than, the then Current Market Price of the Common Stock (in each case, after all fees, discounts, Warrant Value and commissions associated with the transaction) (a “Below Market Offering”); (y) the implementation by the Company of any mechanism in respect of any securities
convertible into or exchangeable for Common Stock for the reset of the purchase price of the Common Stock to below the then Current Market Price of the Common Stock (including, without limitation, any antidilution or similar adjustment provisions in respect of any Company securities, but specifically excluding customary adjustments for stock splits, stock dividends, stock combinations and similar events); or (z) the issuance of options, warrants or similar rights of subscription in each case not constituting
an Acceptable Financing. “Acceptable Financing” shall mean the issuance by the Company of: (1) debt securities or any class or series of preferred stock of the Company, in each case that are not convertible into or exchangeable for Common Stock or securities convertible into or exchangeable for Common Stock; (2) shares of Common Stock or securities convertible into or exchangeable for Common Stock (including, without limitation, convertible
debt securities) other than in connection with a Below Market Offering; (3) shares of Common Stock or securities convertible into or exchangeable for Common Stock (including, without limitation, convertible debt securities) in connection with an underwritten public offering of securities of the Company or a registered direct public offering of securities of the Company, in each case where the price per share of such Common Stock (or the conversion or exercise price of such securities, as applicable) is fixed
concurrently with the execution of definitive documentation relating to such offering, and the issuance of shares of Common Stock upon the conversion, exercise or exchange thereof; (4) shares of Common Stock or securities convertible into or exchangeable for Common Stock in connection with awards under the Company’s benefit and equity plans and arrangements and the issuance of shares of Common Stock upon the conversion, exercise or exchange thereof; (5) shares of Common Stock issuable

 

25

 

upon the conversion or exchange of equity awards or convertible or exchangeable securities (including, without limitation, convertible debt securities) outstanding as of the Effective Date; (6) shares of Common Stock or securities convertible into or exchangeable for Common Stock (including, without limitation, convertible debt securities) issued in connection with the acquisition, license or sale of one or more other companies, equipment, technologies or lines of business, and the issuance of shares of
Common Stock upon the conversion, exercise or exchange thereof; (7) shares of Common Stock or securities convertible into or exchangeable for Common Stock (including, without limitation, convertible debt securities) or similar rights to subscribe for the purchase of shares of Common Stock in connection with technology sharing, licensing, research and joint development agreements (or amendments thereto) with third parties, and the issuance of shares of Common Stock upon the conversion, exercise or exchange thereof;
and (8) shares of Common Stock and/or warrants or similar rights to subscribe for the purchase of shares of Common Stock issued in connection with equipment financings and/or real property leases (or amendments thereto) and the issuance of shares of Common Stock upon the exercise thereof. 

 

Section 5.7. 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 Commission for amendment of or a supplement to the Registration Statement, the Prospectus, any Permitted Free Writing Prospectus or for any additional information; (ii) of the Company’s receipt of notice of the issuance by the Commission of any stop order suspending the effectiveness of the Registration Statement or
prohibiting or suspending the use of the Prospectus or any Prospectus Supplement, or 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, the Prospectus or any Permitted Free Writing Prospectus untrue or which requires the making of any additions
to or changes to the statements then made in the Registration Statement, the Prospectus or any Permitted Free Writing Prospectus 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 (in the case of the Prospectus, in light of the circumstances under which they were made) not misleading, or of the necessity to amend the Registration Statement or supplement the Prospectus or any Permitted Free Writing Prospectus 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 issue any Fixed Request during the continuation of any of the foregoing events. If at any time the Commission shall issue any stop order suspending the effectiveness of
the Registration Statement or prohibiting or suspending the use of the Prospectus or any Prospectus Supplement, the Company shall use commercially reasonable efforts to obtain the withdrawal of such order at the earliest possible time. The Company shall also advise the Investor promptly (but in no event later than 24 hours) and shall confirm such advice in writing of the Company becoming aware of the happening of any event, which makes any statement made in the FINRA Filing untrue or which requires the making
of any additions to or changes to the statements then made in the FINRA Filing in order to comply with FINRA Rule 5110.

 

 

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Section 5.8. Amendments to the Registration Statement; Prospectus Supplements; Free Writing Prospectuses.

 

(i) Except as provided in this Agreement and other than periodic reports required to be filed pursuant to the Exchange Act, the Company shall not file with the Commission any amendment to the Registration Statement
that relates to the Investor, this Agreement, the Warrants or the transactions contemplated hereby or thereby or file with the Commission any Prospectus Supplement that relates to the Investor, this Agreement, the Warrants or the transactions contemplated hereby or thereby with respect to which (a) the Investor shall not previously have been advised, (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
after being so advised, unless it is necessary to amend the Registration Statement or make any supplement to the Prospectus 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 relating to the Investor and the Company shall expeditiously furnish to the Investor an electronic copy thereof.
In addition, for so long as, in the reasonable opinion of counsel for the Investor, the Prospectus (or in lieu thereof, the notice referred to in Rule 173(a) under the Securities Act) 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 delivering or making available a copy of such Prospectus Supplement, together with the Base Prospectus, to the Investor promptly.

 

(ii) The Company agrees that, unless it obtains the prior written consent of the Investor, it has not made and will not make an offer relating to the Securities that would constitute an Issuer Free Writing Prospectus
or that would otherwise constitute a Free Writing Prospectus required to be filed by the Company or the Investor with the Commission or retained by the Company or the Investor under Rule 433 under the Securities Act.  The Investor agrees that, unless it obtains the prior written consent of the Company, it has not made and will not make an offer relating to the Securities that would constitute a Free Writing Prospectus required to be filed by the Company with the Commission or retained by the Company
under Rule 433 under the Securities Act.  Any such Issuer Free Writing Prospectus or other Free Writing Prospectus consented to by the Investor or the Company is referred to in this Agreement as a “Permitted Free Writing Prospectus.”  The Company agrees that (x) it has treated and will treat, as the case may be, each Permitted Free Writing Prospectus as an Issuer Free Writing Prospectus and (y) it has complied and
will comply, as the case may be, with the requirements of Rules 164 and 433 under the Securities Act applicable to any Permitted Free Writing Prospectus, including in respect of timely filing with the Commission, legending and record keeping.

 

Section 5.9. Prospectus Delivery.

 

(i)           The Company shall file with the Commission a Prospectus Supplement pursuant to Rule 424(b) under the Securities Act on the first Trading Day immediately following the last Trading Day of each Pricing Period.  The Company shall provide the Investor a reasonable
opportunity to comment on a draft of each such Prospectus Supplement and any Issuer Free Writing Prospectus, shall give due consideration to all such comments and, subject to

 

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the provisions of Section 5.8 hereof, shall deliver or make available to the Investor, without charge, an electronic copy of each form of Prospectus Supplement, together with the Base Prospectus, and any Permitted Free Writing Prospectus on each applicable Settlement Date.  The Company consents to the use of the Prospectus (and of any 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 (or in lieu thereof, the notice referred to in Rule 173(a) under the Securities Act) 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 judgment of the Company and its counsel is required to be set forth in the Registration Statement or the
Prospectus or any Permitted Free Writing Prospectus or should be set forth therein in order to make the statements made therein (in the case of the Prospectus, in light of the circumstances under which they were made) not misleading, or if it is necessary to amend the Registration Statement or supplement or amend the Prospectus or any Permitted Free Writing Prospectus to comply with the Securities Act or any other applicable law or regulation, the Company shall forthwith prepare and, subject to Section 5.8 above,
file with the Commission an appropriate amendment to the Registration Statement or Prospectus Supplement to the Prospectus (or supplement to the Permitted Free Writing Prospectus) and shall expeditiously furnish or make available to the Investor an electronic copy thereof.

 

(ii)           The Investor shall comply with any Prospectus delivery requirements under the Securities Act applicable to it. The Investor acknowledges and agrees that it is not authorized to give any information or to make any representation not contained in the Prospectus or
the documents incorporated by reference or specifically referred to therein in connection with the offer and sale of the Securities.

 

Section 5.10. Selling Restrictions.

 

(i) Except as expressly set forth below, the Investor covenants that from and after the date hereof through and including the 90th day
next following the termination of this Agreement (the “Restricted Period”), neither the Investor nor any of its Affiliates nor any entity managed or controlled by the Investor (collectively, the “Restricted Persons” and each of the foregoing is referred to herein as a “Restricted Person”)
shall, directly or indirectly, (i) intentionally engage in any Short Sales involving the Company’s securities or (ii) grant any option to purchase, or acquire any right to dispose of or otherwise dispose for value of, any shares of Common Stock or any securities convertible into or exercisable or exchangeable for any shares of Common Stock, or enter into any swap, hedge or other similar agreement that transfers, in whole or in part, the economic risk of ownership of the Common Stock. Notwithstanding the
foregoing, it is expressly understood and agreed that nothing contained herein shall (without implication that the contrary would otherwise be true) prohibit any Restricted Person during the Restricted Period from: (1) selling “long” (as defined under Rule 200 promulgated under Regulation SHO) the Commitment Shares, the Shares, the Warrant or the Warrant Shares; (2) selling a number of shares of Common Stock equal to the number of Shares that such Restricted Person is or may be obligated
to purchase under a pending Fixed Request Notice but has not yet taken possession of so long as such Restricted Person (or the Broker-Dealer, as applicable) delivers the Shares purchased pursuant to such Fixed Request Notice to

 

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the purchaser thereof or the applicable Broker-Dealer; provided, however, such Restricted Person (or the applicable Broker-Dealer, as applicable) shall not be required to so deliver any such Shares subject to such Fixed Request Notice if (a) such Fixed Request is terminated by mutual agreement of the Company and the Investor and, as a result of such termination, no such Shares
are delivered to the Investor under this Agreement or (b) the Company otherwise fails to deliver such Shares to the Investor on the applicable Settlement Date upon the terms and subject to the provisions of this Agreement; or (3) executing one or more transactions of any kind or nature from time to time and at any time so long as such transaction or transactions (as the case may be) do not result, at any one time during the Restricted Period, in a then-outstanding aggregate
open “short” position (within the meaning of Rule 200 under Regulation SHO) and open “put equivalent positions” (within the meaning of Section 16 of the Exchange Act and the rules and regulations promulgated thereunder) (without duplication) in a number of shares of Common Stock that exceeds 1,785,185 shares of Common Stock (as adjusted for stock dividends, splits, combinations and other similar events after the date hereof) (it being understood and agreed that clause (2) above shall not
be taken into account in making determinations under this clause (3)).

 

(ii) In addition to the foregoing, in connection with any sale of Securities (including any sale permitted by paragraph (i) above), the Investor shall comply in all respects with all applicable laws, rules, regulations
and orders, including, without limitation, the requirements of the Securities Act and the Exchange Act.

 

Section 5.11. Effective Registration Statement.  During
the Investment Period, the Company shall use its best efforts to maintain the continuous effectiveness of the Registration Statement under the Securities Act.

 

Section 5.12. Non-Public Information.  Neither
the Company nor any of its directors, officers or agents shall disclose any material non-public information about the Company to the Investor, unless a timely public announcement thereof is made by the Company in the manner contemplated by Regulation FD.

 

Section 5.13. Broker/Dealer.  The
Investor shall use one or more broker-dealers to effectuate all sales, if any, of the Securities that it may acquire from the Company pursuant to this Agreement or the Warrants which (or whom) shall be unaffiliated with the Investor and not then currently engaged or used by the Company (collectively, the “Broker-Dealer”). The Investor shall provide the Company with all information regarding the Broker-Dealer reasonably requested by the
Company.  The Investor shall be solely responsible for all fees and commissions of the Broker-Dealer, which shall not exceed customary brokerage fees and commissions.

 

Section 5.14. Disclosure Schedule.

 

(i) During the Investment Period, the Company shall from time to time update the Disclosure Schedule as may be required to satisfy the condition set forth in Section 6.3(i).  For purposes of this Section
5.14, any disclosure made in a schedule to the Compliance Certificate substantially in the form attached hereto as Exhibit E shall be deemed to be an update of the Disclosure Schedule.  Notwithstanding anything in this Agreement to the contrary, no update to the Disclosure Schedule pursuant to this Section 5.14 shall cure any breach of a representation or warranty of the Company contained in this Agreement and shall not affect any of the
Investor’s rights or remedies with respect thereto.

 

 

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(ii) Notwithstanding anything to the contrary contained in the Disclosure Schedules or in this Agreement, the information and disclosure contained in any Schedule of the Disclosure Schedules shall be deemed to be
disclosed and incorporated by reference in any other Schedule of the Disclosure Schedules as though fully set forth in such Schedule for which applicability of such information and disclosure is readily apparent on its face.  The fact that any item of information is disclosed in the Disclosure Schedules shall not be construed to mean that such information is required to be disclosed by this Agreement.  Except as expressly set forth in this Agreement, such information and the thresholds (whether
based on quantity, qualitative characterization, dollar amounts or otherwise) set forth herein shall not be used as a basis for interpreting the terms “material” or “Material Adverse Effect” or other similar terms in this Agreement.

 

ARTICLE VI

 

ISSUANCE OF COMMITMENT SHARES AND WARRANTS, OPINION OF COUNSEL AND CERTIFICATE; CONDITIONS TO THE SALE AND PURCHASE OF THE SHARES

 

Section 6.1. Issuance of Commitment Shares and Warrants; Opinion of Counsel; Certificate.
On the Effective Date, (i) the Company shall deliver irrevocable instructions to its transfer agent to electronically transfer the Commitment Shares to the Investor, not later than 4:00 p.m. (New York time) on the second Trading Day immediately following the Effective Date, by crediting the Investor’s or its designees’ account at DTC through its Deposit/Withdrawal at Custodian (DWAC) system, which Commitment Shares shall be issued pursuant to the Registration Statement and without any restriction
on resale (except as expressly provided in the proviso to clause (i) of Section 2.13), and (ii) the Company shall execute, issue and deliver to the Investor, at its address set forth in Section 9.4 hereof by overnight courier, the Warrants, which Warrants shall be issued pursuant to the Registration Statement and without any restriction on resale. For the avoidance of doubt, all of the Commitment Shares and each of the Warrants shall be fully earned as of the Effective Date, regardless of whether any Fixed Requests
are issued by the Company or settled hereunder. Simultaneously with the execution and delivery of this Agreement, the Investor’s counsel has received (a) an opinion of outside counsel to the Company, dated the Effective Date, in the form mutually agreed to by the parties hereto, (b) a certificate from the Company, dated the Effective Date, in the form of Exhibit D hereto, (c) a copy of the irrevocable instructions to the transfer agent regarding
the Commitment Shares, and (d) a copy of the certificates or other instruments representing the Warrants (with confirmation that the originals thereof have been sent directly to the Investor at its address set forth in Section 9.4 hereof by overnight courier).

 

Section 6.2. Conditions Precedent to the Obligation of the Company.  The
obligation hereunder of the Company to issue and sell the Shares to the Investor under any Fixed Request or Optional Amount is subject to the satisfaction or (to the extent permitted by applicable law) waiver of each of the conditions set forth below. These conditions are for the Company’s sole benefit and (to the extent permitted by applicable law) may be waived by the Company at any time in its sole discretion.

 

 

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(i) Accuracy of the Investor’s Representations and Warranties.  The representations and warranties of the Investor
contained in this Agreement (i) that are not qualified by “materiality” shall have been true and correct in all material respects when made and shall be true and correct in all material respects as of the applicable Fixed Request Exercise Date and the applicable Settlement Date with the same force and effect as if made on such dates, except to the extent such representations and warranties are as of another date, in which case, such representations and warranties shall be true and correct in all material
respects as of such other date and (ii) that are qualified by “materiality” shall have been true and correct when made and shall be true and correct as of the applicable Fixed Request Exercise Date and the applicable Settlement Date with the same force and effect as if made on such dates, except to the extent such representations and warranties are as of another date, in which case, such representations and warranties shall be true and correct as of such other date.

 

(ii) Registration Statement. The Registration Statement is effective and neither the Company nor the Investor shall have received
notice that the Commission has issued or intends to issue a stop order with respect to the Registration Statement.  The Company shall have a maximum dollar amount certain of Common Stock registered under the Registration Statement which (A) as of the Effective Date, is sufficient to issue to the Investor not less than (1) the Total Commitment plus (2) the Commitment Shares plus (3) the maximum number of shares of Common Stock issuable upon exercise of the Warrants (without regard to any limitations
on the exercise of the Warrants set forth therein) and (B) as of the applicable Fixed Request Exercise Date and the applicable Settlement Date, is sufficient to issue to the Investor not less than (1) the maximum dollar amount worth of Shares issuable pursuant to the applicable Fixed Request Notice and applicable Optional Amount, if any, plus (2) the maximum number of shares of Common Stock issuable upon exercise of the Warrants (without regard to any limitations on the exercise of the Warrants set forth therein).
As of the Effective Date, the Company shall have a maximum dollar amount certain of warrants registered under the Registration Statement which are in an amount sufficient to issue each of the Warrants to the Investor on the Effective Date in accordance with the terms of this Agreement. The Current Report shall have been filed with the Commission, as required pursuant to Section 1.4, and all Prospectus Supplements shall have been filed with the Commission, as required pursuant to Sections 1.4 and 5.9 hereof, to
disclose the sale of the Shares prior to each Settlement Date, as applicable. Any other material required to be filed by the Company or any other offering participant pursuant to Rule 433(d) under the Securities Act shall have been filed with the Commission within the applicable time periods prescribed for such filings by Rule 433 under the Securities Act.

 

(iii) Performance by the Investor.  The Investor shall have performed, satisfied and complied in all material respects
with all covenants, agreements and conditions required by this Agreement to be performed, satisfied or complied with by the Investor at or prior to the applicable Fixed Request Exercise Date and the applicable Settlement Date.

 

(iv) No Injunction.  No statute, regulation, order, decree, writ, ruling or injunction shall have been enacted, entered,
promulgated, threatened or endorsed by any 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 this Agreement or the Warrants.

 

 

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(v) No Suspension, Etc.  Trading in the Common Stock shall not have been suspended by the Commission or the Trading Market
(except for any suspension of trading of limited duration agreed to by the Company, which suspension shall be terminated prior to the applicable Fixed Request Exercise Date and applicable Settlement Date), and, at any time prior to the applicable Fixed Request Exercise Date and applicable Settlement Date, none of the events described in clauses (i), (ii) and (iii) or the last sentence of Section 5.7 shall have occurred, trading in securities generally as reported on the Trading Market shall not have been suspended
or limited, nor shall a banking moratorium have been declared either by the United States or New York State authorities, nor shall there have occurred any material outbreak or escalation of hostilities or other national or international calamity or crisis of such magnitude in its effect on, or any material adverse change in, any financial, credit or securities market which, in each case, in the reasonable judgment of the Company, makes it impracticable or inadvisable to issue the Shares.

 

(vi) No Proceedings or Litigation.  No action, suit or proceeding
before any arbitrator or any court or governmental authority shall have been commenced or threatened, and no inquiry or investigation by any governmental authority shall have been commenced or threatened, against the Company or any Subsidiary, or any of the officers, directors or Affiliates of the Company or any Subsidiary, seeking to restrain, prevent or change the transactions contemplated by this Agreement or the Warrants, or seeking damages in connection with such transactions.

 

(vii) Aggregate Limit.  The issuance and sale of the Shares issuable
pursuant to such Fixed Request Notice or Optional Amount shall not violate Sections 2.2, 2.12 and 5.5 hereof.

 

(viii) No Unresolved FINRA Objection.   There shall not exist
any unresolved objection raised by the FINRA’s Corporate Financing Department with respect to the fairness and reasonableness of the terms of the transactions contemplated by this Agreement, and the parties hereto shall have obtained written confirmation thereof from the FINRA.

 

Section 6.3. Conditions Precedent to the Obligation of the Investor.  The
obligation hereunder of the Investor to accept a Fixed Request Notice or Optional Amount grant and to acquire and pay for the Shares is subject to the satisfaction or (to the extent permitted by applicable law) waiver, at or before each Fixed Request Exercise Date and each Settlement Date, of each of the conditions set forth below. These conditions are for the Investor’s sole benefit and (to the extent permitted by applicable law) may be waived by the Investor at any time in its sole discretion.

 

(i) Accuracy of the Company’s Representations and Warranties.  The representations and warranties of the Company
contained in this Agreement (i) that are not qualified by “materiality” or “Material Adverse Effect” shall have been true and correct in all material respects when made and shall be true and correct in all material respects as of the applicable Fixed Request Exercise Date and the applicable Settlement Date with the same force and effect as if made on such dates, except to the extent such representations and warranties are as of another date, in which case, such representations and warranties
shall be true and correct in all material respects as of such other date and (ii) that are qualified by “materiality” or “Material

 

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Adverse Effect” shall have been true and correct when made and shall be true and correct as of the applicable Fixed Request Exercise Date and the applicable Settlement Date with the same force and effect as if made on such dates, except to the extent such representations and warranties are as of another date, in which case, such representations and warranties shall be true and correct as of such other date.

 

(ii) Registration Statement. The Registration Statement is effective and
neither the Company nor the Investor shall have received notice that the Commission has issued or intends to issue a stop order with respect to the Registration Statement. The Company shall have a maximum dollar amount certain of Common Stock registered under the Registration Statement which (A) as of the Effective Date, is sufficient to issue to the Investor not less than (1) the Total Commitment plus (2) the Commitment Shares plus (3) the maximum number of shares of Common Stock issuable upon exercise of the
Warrants (without regard to any limitations on the exercise of the Warrants set forth therein) and (B) as of the applicable Fixed Request Exercise Date and the applicable Settlement Date, is sufficient to issue to the Investor not less than (1) the maximum dollar amount worth of Shares issuable pursuant to the applicable Fixed Request Notice and applicable Optional Amount, if any, plus (2) the maximum number of shares of Common Stock issuable upon exercise of the Warrants (without regard to any limitations on
the exercise of the Warrants set forth therein). As of the Effective Date, the Company shall have a maximum dollar amount certain of warrants registered under the Registration Statement which are in an amount sufficient to issue each of the Warrants to the Investor on the Effective Date in accordance with the terms of this Agreement. As of the Effective Date, the applicable Fixed Request Exercise Date and the applicable Settlement Date, the Investor shall be permitted to utilize the Prospectus to resell all of
the Securities it then owns or has the right to acquire pursuant to all Fixed Request Notices issued pursuant to this Agreement or pursuant to the Warrants (subject, in the case of the Commitment Shares, to the proviso to clause (i) of Section 2.13). The Current Report shall have been filed with the Commission, as required pursuant to Section 1.4, and all Prospectus Supplements shall have been filed with the Commission, as required pursuant to Sections 1.4 and 5.9 hereof, to disclose the sale of the Shares prior
to each Settlement Date, as applicable, and an electronic copy of each such Prospectus Supplement together with the Base Prospectus shall have been delivered or made available to the Investor in accordance with Section 5.9 hereof. Any other material required to be filed by the Company or any other offering participant pursuant to Rule 433(d) under the Securities Act shall have been filed with the Commission within the applicable time periods prescribed for such filings by Rule 433 under the Securities Act.

 

(iii) No Suspension.  Trading in the Common Stock shall not have been suspended by the Commission or the Trading Market
(except for any suspension of trading of limited duration agreed to by the Company, which suspension shall be terminated prior to the applicable Fixed Request Exercise Date and applicable Settlement Date), and, at any time prior to the applicable Fixed Request Exercise Date and applicable Settlement Date, none of the events described in clauses (i), (ii) and (iii) or the last sentence of Section 5.7 shall have occurred, trading in securities generally as reported on the Trading Market shall not have been suspended
or limited, nor shall a banking moratorium have been declared either by the United States or New York State authorities, nor shall there have occurred any material outbreak or escalation of hostilities or other national or international calamity or crisis of such magnitude in its effect on, or any material adverse change in, any financial, credit or securities market which, in each case, in the reasonable judgment of the Investor, makes it impracticable or inadvisable to purchase the Shares.

 

 

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(iv) Performance of the Company.  The Company shall have performed, satisfied and complied in all material respects with
all covenants, agreements and conditions required by this Agreement to be performed, satisfied or complied with by the Company at or prior to the applicable Fixed Request Exercise Date and the applicable Settlement Date. The Company shall have timely issued and delivered (or caused to be issued and delivered) all Warrant Shares (or otherwise shall have timely complied with its obligations under Section 1(c) of the Warrants) in respect of all exercise(s) (in whole or in part) of the Warrants prior to the applicable
Fixed Request Exercise Date and the applicable Settlement Date, and the Company shall not otherwise be in breach or default in any material respect under any of the other provisions of the Warrants. The Company shall have delivered to the Investor on the applicable Settlement Date the Compliance Certificate substantially in the form attached hereto as Exhibit E.

 

(v) No Injunction. No statute, rule, regulation, order, decree, writ, ruling or injunction shall have been enacted, entered, promulgated,
threatened or endorsed by any 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 this Agreement or the Warrants.

 

(vi) No Proceedings or Litigation.  No action, suit or proceeding before any arbitrator or any court or governmental authority
shall have been commenced or threatened, and no inquiry or investigation by any governmental authority shall have been commenced or threatened, against the Company or any Subsidiary, or any of the officers, directors or Affiliates of the Company or any Subsidiary, seeking to restrain, prevent or change the transactions contemplated by this Agreement or the Warrants, or seeking damages in connection with such transactions.

 

(vii) Aggregate Limit.  The issuance and sale of the Shares issuable pursuant to such Fixed Request Notice or Optional
Amount shall not violate Sections 2.2, 2.12 and 5.5 hereof.

 

(viii) Shares Authorized and Delivered.  The Shares issuable pursuant
to such Fixed Request Notice or Optional Amount shall have been duly authorized by all necessary corporate action of the Company. The Company shall have delivered all Shares relating to all prior Fixed Request Notices and Optional Amounts, as applicable.

 

(ix) Notification of Listing of Shares, Commitment Shares and Warrant Shares.  If
required, the Company shall have submitted to the Trading Market a notification form of listing of additional shares related to the Shares issuable pursuant to such Fixed Request or Optional Amount and all Commitment Shares and Warrant Shares in accordance with the bylaws, listed securities maintenance standards and other rules of the Trading Market.

 

(x) Opinions of Counsel; Bring-Down.  Subsequent to the filing of the Current Report pursuant to Section 1.4 and prior to the first Fixed Request Exercise Date,

 

 

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the Investor shall have received an opinion from outside counsel to the Company in the form mutually agreed to by the parties hereto and an opinion from in-house counsel to the Company in the form mutually agreed to by the parties hereto.  On each Settlement Date, the Investor shall have received an opinion “bring down” from outside counsel to the Company in the form mutually agreed to by the parties hereto and an opinion “bring down” from in-house counsel to the Company
in the form mutually agreed to by the parties hereto.

 

(xi) No Unresolved FINRA Objection.   There shall not exist
any unresolved objection raised by the FINRA’s Corporate Financing Department with respect to the fairness and reasonableness of the terms of the transactions contemplated by this Agreement, and the parties hereto shall have obtained written confirmation thereof from the FINRA.

 

(xii) Payment of Investor’s Counsel Fees; Due Diligence Expenses.  On
the Effective Date, the Company shall have paid by wire transfer of immediately available funds to an account designated by the Investor’s counsel, the fees and expenses of the Investor’s counsel in accordance with clause (B) of the proviso to the first sentence of Section 9.1(i) of this Agreement.  On the 30th day of the third month in each calendar quarter during the Investment Period, the Company shall have
paid by wire transfer of immediately available funds to an account designated by the Investor, the due diligence expenses incurred by the Investor in accordance with the provisions of the second sentence of Section 9.1(i) of this Agreement.

 

ARTICLE VII

 

TERMINATION

 

Section 7.1. Term, Termination by Mutual Consent.  Unless
earlier terminated as provided hereunder, this Agreement shall terminate automatically on the earliest of (i) the first day of the month next following the 24-month anniversary of the Effective Date (the “Investment Period”), (ii) the date that the entire dollar amount of Common Stock registered under the Registration Statement have been issued and sold and (iii) the date the Investor shall have purchased the Total Commitment of shares
of Common Stock (subject in all cases to the Trading Market Limit). Subject to Section 7.3, this Agreement may be terminated at any time (A) by the mutual written consent of the parties, effective as of the date of such mutual written consent unless otherwise provided in such written consent, it being hereby acknowledged and agreed that the Investor may not consent to such termination during a Pricing Period or prior to a Settlement Date in the event the Investor has instructed the Broker-Dealer to effect an
open-market sale of Shares which are subject to a pending Fixed Request Notice but which have not yet been physically delivered by the Company (and/or credited by book-entry) to the Investor in accordance with the terms and subject to the conditions of this Agreement, or (B) by either the Company or the Investor effective upon written notice to the other party under Section 9.4, if the FINRA’s Corporate Financing Department has raised any objection with respect to the fairness and reasonableness of the
terms of the transactions contemplated by this Agreement, or has otherwise failed to confirm in writing that it has determined not to raise any such objection, and such objection shall not have been resolved, or such confirmation of no objection shall not have been obtained, prior to (1) the 60th day immediately following the Effective Date, in the case of an objection raised or confirmation failure occurring prior to the first Fixed
Request Exercise Date, or (2) prior to the 60th day immediately following the receipt by the Company or the Investor of notice of such objection, in the case of an objection raised after the first Fixed

 

35

 

Request Exercise Date; provided, however, that (x) the party seeking to terminate this Agreement pursuant to this clause (B) of Section 7.1 shall have used its commercially reasonable efforts to resolve such objection and/or to obtain such confirmation of no objection in accordance with and subject to the provisions of Section 5.1(ii) of this Agreement and (y) the right to terminate
this Agreement pursuant to this clause (B) of Section 7.1 shall not be available to any party whose action or failure to act has been a principal cause of, or has resulted in, such objection or confirmation failure and such action or failure to act constitutes a breach of this Agreement. Subject to Section 7.3, the Company may terminate this Agreement effective upon three Trading Days’ prior written notice to the Investor delivered in accordance with Section 9.4; provided, however,
that (i) such termination shall not occur during a Pricing Period or, subsequent to the issuance of a Fixed Request Notice, prior to the Settlement Date related to such Fixed Request Notice, (ii) the Company shall have timely issued and delivered (or caused to be issued and delivered) all Warrant Shares (or otherwise shall have timely complied with its obligations under Section 1(c) of the Warrants) in respect of all exercise(s) (in whole or in part) of the Warrants prior to such termination, and (iii) prior
to issuing any press release, or making any public statement or announcement, with respect to such termination, the Company shall consult with the Investor and shall obtain the Investor’s consent to the form and substance of such press release or other disclosure, which consent shall not be unreasonably delayed or withheld.

 

Section 7.2. Other Termination.  If
the Company provides the Investor with an Other Financing Notice or an Integration Notice, in each case pursuant to Section 5.6(ii) of this Agreement, or if the Company otherwise enters into any agreement, plan, arrangement or transaction with a third party, the principal purpose of which is to obtain outside a Pricing Period, but otherwise during the Investment Period, an Other Financing not constituting an Acceptable Financing, in which latter case the Company shall so notify the Investor within 48 hours thereof,
then in all such cases, subject to Section 7.3, the Investor shall have the right to terminate this Agreement within the subsequent 30-day period (the “Event Period”), effective upon one Trading Day’s prior written notice delivered to the Company in accordance with Section 9.4 at any time during the Event Period.  The Company shall promptly (but in no event later than 24 hours) notify the Investor (and, if required
under applicable law, including, without limitation, Regulation FD promulgated by the Commission, or under the applicable rules and regulations of the Trading Market, the Company shall publicly disclose such information in accordance with Regulation FD and the applicable rules and regulations of the Trading Market), and, subject to Section 7.3, the Investor shall have the right to terminate this Agreement at any time after receipt of such notification, if: (i) any condition, occurrence, state of facts or event
constituting a Material Adverse Effect has occurred; (ii) a Material Change in Ownership has occurred or the Company enters into a definitive agreement providing for a Material Change in Ownership; or (iii) a default or event of default has occurred and is continuing under the terms of any agreement, contract, note or other instrument to which the Company or any of its Subsidiaries is a party with respect to any indebtedness for borrowed money representing more than 10% of the Company’s consolidated assets,
in any such case, upon one Trading Day’s prior written notice delivered to the Company in accordance with Section 9.4 hereof. Subject to Section 7.3, the Investor shall have the right to terminate this Agreement effective upon one Trading Day’s prior written notice delivered to the Company in accordance with Section 9.4, if the Company shall have failed to timely issue and deliver (or caused to be issued and delivered) all Warrant Shares in respect of all exercise(s) (in whole or in part) of the Warrants
(and, with

 

36

 

respect to any such failure, shall have also failed to timely comply with its obligations under Section 1(c) of the Warrants), or the Company is otherwise in breach or default in any material respect under any of the other provisions of the Warrants, and, if such failure, breach or default is capable of being cured, such failure, breach or default is not cured within 10 Trading Days after notice of such failure, breach or default is delivered to the Company pursuant to Section 9.4.

 

Section 7.3. Effect of Termination.  In
the event of termination by the Company or the Investor pursuant to Section 7.1 or 7.2, as applicable, written notice thereof shall forthwith be given to the other party as provided in Section 9.4 and the transactions contemplated by this Agreement shall be terminated without further action by either party. If this Agreement is terminated as provided in Section 7.1 or 7.2 herein, this Agreement shall become void and of no further force and effect, except that (i) the provisions of Article VIII (Indemnification),
Section 9.1 (Fees and Expenses), Section 9.2 (Specific Enforcement, Consent to Jurisdiction, Waiver of Jury Trial), Section 9.4 (Notices), Section 9.8 (Governing Law), Section 9.9 (Survival), Section 9.12 (Severability) and this Article VII (Termination) shall remain in full force and effect indefinitely notwithstanding such termination, (ii) the covenants and agreements contained in Section 5.1(i) (Securities Compliance; FINRA Filing), Section 5.3 (Compliance with Laws), Section 5.7 (Stop Orders), Section 5.8
(Amendments to the Registration Statement; Prospectus Supplements; Free Writing Prospectuses), Section 5.9 (Prospectus Delivery), Section 5.11 (Effective Registration Statement), Section 5.12 (Non-Public Information) and 5.13 (Broker/Dealer) shall remain in full force and effect notwithstanding such termination for a period of six months following such termination, (iii) the covenants and agreements of the Investor contained in Section 5.10 (Selling Restrictions) shall remain in full force and effect notwithstanding
such termination for a period of 90 days following such termination, and (iv) the covenants and agreements of the Company contained in Section 5.2 (Registration and Listing) shall remain in full force and effect notwithstanding such termination for a period of 30 days following such termination. Notwithstanding anything in this Agreement to the contrary, no termination of this Agreement by any party shall (a) limit, alter, modify, change or otherwise affect the Company’s or the Investor’s (or any
other holder’s) rights or obligations under the Warrants, all of which shall survive any such termination (it being hereby acknowledged and agreed that each of the Warrants shall be fully earned as of the Effective Date, regardless of whether any Fixed Requests are issued by the Company or settled hereunder), (b) affect any Commitment Shares, or any rights of any holder thereof (it being hereby acknowledged and agreed that all of the Commitment Shares shall be fully earned as of the Effective Date, regardless
of whether any Fixed Requests are issued by the Company or settled hereunder), (c) affect any Warrant Shares previously issued or delivered upon exercise of the Warrants, or any rights of any holder thereof, or (d) affect any cash fees paid to the Investor or its counsel pursuant to Section 9.1, in each case all of which fees shall be non-refundable, regardless of whether any Fixed Requests are issued by the Company or settled hereunder. Nothing in this Section 7.3 shall be deemed to release the Company or the
Investor from any liability for any breach under this Agreement or any of the Warrants, as applicable, or to impair the rights of the Company and the Investor to compel specific performance by the other party of its obligations under this Agreement or any of the Warrants, as applicable.

 

 

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ARTICLE VIII

 

INDEMNIFICATION

 

Section 8.1. General Indemnity.

 

(i) Indemnification by the Company.  The Company shall indemnify
and hold harmless the Investor, the Broker-Dealer, each Affiliate, employee, representative and advisor of and to the Investor and the Broker-Dealer, and each person, if any, who controls the Investor or the Broker-Dealer within the meaning of Section 15 of the Securities Act or Section 20(a) of the Exchange Act from and against all losses, claims, damages, liabilities and expenses (including reasonable costs of defense and investigation and all attorneys’
fees) to which the Investor, the Broker-Dealer and each such other person may become subject, under the Securities Act or otherwise, insofar as such losses, claims, damages, liabilities and expenses (or actions in respect thereof) arise out of or are based upon (a) any violation of law (including United States federal securities laws, but excluding the laws of any jurisdiction outside the United States) in connection with the transactions contemplated by this Agreement and the Warrants by the Company or any of
its Subsidiaries, affiliates, officers, directors or employees, (b) 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, or (c) any untrue statement or alleged untrue statement of a material
fact contained, or incorporated by reference, in the Prospectus, any Issuer Free Writing Prospectus, or in any amendment thereof or supplement thereto, or in any “issuer information” (as defined in Rule 433 under the Securities Act) of the Company, which “issuer information” is required to be, or is, filed with the Commission or otherwise contained in any Free Writing Prospectus, or any amendment or supplement 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, in light of the circumstances under which they were made, not misleading; provided, however, that (A) the Company shall not be liable under this Section 8.1(i) to the extent that a court of competent jurisdiction shall have determined by a final judgment (from
which no further appeals are available) that such loss, claim, damage, liability or expense resulted directly and solely from any such acts or failures to act, undertaken or omitted to be taken by the Investor, any Broker-Dealer or such person through its bad faith or willful misconduct, (B) the foregoing indemnity shall not apply to any loss, claim, damage, liability or expense 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 the Investor or any Broker-Dealer expressly for use in the Current Report or any Prospectus Supplement or Permitted Free Writing Prospectus, or any amendment thereof or supplement thereto, and (C) with respect to the Prospectus, the foregoing indemnity shall not inure to the benefit of the Investor or any such person from whom the person asserting any loss, claim, damage, liability or expense purchased
Common Stock, if copies of all Prospectus Supplements required to be filed pursuant to Section 1.4 and 5.9, together with the Base Prospectus, were timely delivered or made available to the Investor pursuant hereto and a copy of the Base Prospectus, together with a Prospectus Supplement (as applicable), was not sent or given by or on behalf of the Investor or any such person to such person, if required by law to have been delivered, at or prior to the written confirmation of the sale of the Common Stock to such
person, and if delivery of the Base Prospectus, together with a Prospectus Supplement (as applicable), would have cured the defect giving rise to such loss, claim, damage, liability or expense.

 

 

38

 

 

The Company shall reimburse the Investor, the Broker-Dealer and each such controlling person promptly upon demand (with accompanying presentation of documentary evidence) for all legal and other costs and expenses reasonably incurred by the Investor, the Broker-Dealer or such indemnified persons in investigating, defending against,
or preparing to defend against any such claim, action, suit or proceeding with respect to which it is entitled to indemnification.

 

(ii) Indemnification by the Investor. The Investor shall indemnify and hold harmless the Company, each of its directors and officers,
and each person, if any, who controls the Company within the meaning of Section 15 of the Securities Act or Section 20(a) of the Exchange Act from and against all losses, claims, damages, liabilities and expenses (including reasonable costs of defense and investigation and all attorneys fees) to which the Company and each such other person may become subject, under the Securities Act or otherwise, insofar as such losses, claims, damages, liabilities and expenses (or actions in respect thereof) arise out of or
are based upon (a) any untrue statement or alleged untrue statement of a material fact contained in the Current Report or any Prospectus Supplement or Permitted Free Writing Prospectus, or in any amendment thereof or supplement thereto, or any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading, in each case, to the extent, but only to the extent, the untrue
statement, alleged untrue statement, omission or alleged omission was made in reliance upon, and in conformity with, written information furnished by the Investor to the Company expressly for inclusion in the Current Report or such Prospectus Supplement or Permitted Free Writing Prospectus, or any amendment thereof or supplement thereto, or (b) any untrue statement or alleged untrue statement of a material fact contained in the FINRA Filing, or any amendment thereof or supplement thereto, or any omission or alleged
omission to state therein a material fact necessary in order to comply with FINRA Rule 5110, in each case, to the extent, but only to the extent, the untrue statement, alleged untrue statement, omission or alleged omission was made in reliance upon, and in conformity with, written information furnished by the Investor to the Company expressly for inclusion in the FINRA Filing, or any amendment thereof or supplement thereto.

 

The Investor shall reimburse the Company and each such director, officer or controlling person promptly upon demand for all legal and other costs and expenses reasonably incurred by the Company or such indemnified persons in investigating, defending against, or preparing to defend against any such claim, action, suit or proceeding
with respect to which it is entitled to indemnification.

 

Section 8.2. Indemnification Procedures.  Promptly
after a person receives notice of a claim or the commencement of an action for which the person intends to seek indemnification under Section 8.1, the person will notify the indemnifying party in writing of the claim or commencement of the action, suit or proceeding; provided, however, that failure to notify the indemnifying party will not relieve the indemnifying party from liability
under Section 8.1, except to the extent it has been materially prejudiced by the failure to give notice.  The indemnifying party will be entitled to participate in the defense of any claim, action, suit or

 

39

 

proceeding as to which indemnification is being sought, and if the indemnifying party acknowledges in writing the obligation to indemnify the party against whom the claim or action is brought, the indemnifying party may (but will not be required to) assume the defense against the claim, action, suit or proceeding with counsel satisfactory to it.  After an indemnifying party notifies an indemnified party that the indemnifying party wishes to assume the defense of a claim, action, suit or proceeding,
the indemnifying party will not be liable for any legal or other expenses incurred by the indemnified party in connection with the defense against the claim, action, suit or proceeding except that if, in the opinion of counsel to the indemnifying party, one or more of the indemnified parties should be separately represented in connection with a claim, action, suit or proceeding, the indemnifying party will pay the reasonable fees and expenses of one separate counsel for the indemnified parties.  Each
indemnified party, as a condition to receiving indemnification as provided in Section 8.1, will cooperate in all reasonable respects with the indemnifying party in the defense of any action or claim as to which indemnification is sought.  No indemnifying party will be liable for any settlement of any action effected without its prior written consent.  Notwithstanding the foregoing sentence, if at any time an indemnified party shall have requested (by written notice provided in accordance with
Section 9.4) an indemnifying party to reimburse the indemnified party for fees and expenses of counsel, such indemnifying party agrees that it shall be liable for any settlement of the nature contemplated hereby effected without its written consent if (i) such settlement is entered into more than 45 days after receipt by such indemnifying party of the aforesaid request, (ii) such indemnifying party shall have received written notice of the terms of such settlement at least 30 days prior to such settlement being
entered into and (iii) such indemnifying party shall not have reimbursed such indemnified party in accordance with such request prior to the date of such settlement.  No indemnifying party will, without the prior written consent of the indemnified party, effect any settlement of a pending or threatened action with respect to which an indemnified party is, or is informed that it may be, made a party and for which it would be entitled to indemnification, unless the settlement includes an unconditional
release of the indemnified party from all liability and claims which are the subject matter of the pending or threatened action.

 

If for any reason the indemnification provided for in this Agreement is not available to, or is not sufficient to hold harmless, an indemnified party in respect of any loss or liability referred to in Section 8.1 as to which such indemnified party is entitled to indemnification thereunder, each indemnifying party shall, in lieu of
indemnifying the indemnified party, contribute to the amount paid or payable by the indemnified party as a result of such loss or liability, (i) in the proportion which is appropriate to reflect the relative benefits received by the indemnifying party, on the one hand, and by the indemnified party, on the other hand, from the sale of Shares which is the subject of the claim, action, suit or proceeding which resulted in the loss or liability or (ii) if the allocation provided by clause (i) is not permitted by
applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause (i) above, but also the relative fault of the indemnifying party, on the one hand, and the indemnified party, on the other hand, with respect to the statements or omissions which are the subject of the claim, action, suit or proceeding that resulted in the loss or liability, as well as any other relevant equitable considerations.

 

The remedies provided for in Section 8.1 and this Section 8.2 are not exclusive and shall not limit any rights or remedies which may otherwise be available to any indemnified person at law or in equity.

 

 

40

 

 

ARTICLE IX

 

MISCELLANEOUS

 

Section 9.1. Fees and Expenses.

 

(i) Each party shall bear its own fees and expenses related to the transactions contemplated by this Agreement; provided, however,
that the Company shall pay, on or prior to the Effective Date, by wire transfer of immediately available funds (A) to the FINRA, the applicable filing fee with respect to the FINRA Filing and (B) to an account designated by the Investor’s counsel, promptly following the receipt of an invoice therefor, all reasonable attorneys’ fees and expenses (exclusive of disbursements and out-of-pocket expenses) incurred by the Investor, up to $45,000, in connection with the preparation, negotiation, execution
and delivery of this Agreement and the Warrants, legal due diligence of the Company and review of the Registration Statement, the Base Prospectus, the Current Report, any Permitted Free Writing Prospectus and all other related transaction documentation. In addition, during any full calendar quarter that falls within the Investment Period when no Shares have been purchased or sold because the Company did not deliver a Fixed Request Notice, the Company shall pay following the end of such calendar quarter, promptly
upon receipt of an invoice therefor (however, the Investor shall not be required to provide detailed time sheets), all reasonable attorneys’ fees and expenses, up to $5,000, representing the due diligence expenses incurred by the Investor during such calendar quarter. The Company shall pay all U.S. federal, state and local stamp and other similar transfer and other taxes and duties levied in connection with issuance of the Securities pursuant hereto. For the avoidance of doubt, all of the fees payable to
the Investor or its counsel pursuant to this Section 9.1 shall be non-refundable, regardless of whether any Fixed Requests are issued by the Company or settled hereunder.

 

(ii) If the Company issues a Fixed Request Notice and fails to deliver the Shares to the Investor on the applicable Settlement Date and such failure continues for 10 Trading Days, the Company shall pay the Investor,
in cash (or, at the option of the Investor, in shares of Common Stock which have not been registered under the Securities Act valued at the applicable Discount Price of the Shares failed to be delivered; provided that the issuance thereof by the Company would not violate the Securities Act or any applicable U.S. state securities laws), as liquidated damages for such failure and not as a penalty, an amount equal to 2.0% of the payment required to be paid by the Investor on such Settlement Date (i.e., the sum of
the Fixed Amount Requested and the Optional Amount Dollar Amount) for the initial 30 days following such Settlement Date until the Shares have been delivered, and an additional 2.0% for each additional 30-day period thereafter until the Shares have been delivered, which amount shall be prorated for such periods less than 30 days (subject in all cases to the Trading Market Limit).

 

Section 9.2. Specific Enforcement, Consent to Jurisdiction, Waiver of Jury Trial

 

(i) The Company and the Investor acknowledge and agree that irreparable damage would occur in the event that any of the provisions of this Agreement were not performed in accordance with their specific terms or were
otherwise breached. It is accordingly agreed that either party shall be entitled to an injunction or injunctions to prevent or cure breaches of the provisions of this Agreement by the other party and to enforce specifically the terms and provisions hereof this being in addition to any other remedy to which either party may be entitled by law or equity.

 

 

41

 

 

(ii) Each of the Company and the Investor (a) hereby irrevocably submits to the jurisdiction of the United States District Court and other courts of the United States sitting in the City and State of New York, Borough
of Manhattan, for the purposes of any suit, action or proceeding arising out of or relating to this Agreement, and (b) hereby waives, and agrees not to assert in any such suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of such court, that the suit, action or proceeding is brought in an inconvenient forum or that the venue of the suit, action or proceeding is improper. Each of the Company and the Investor consents to process being served in any such suit, action or proceeding
by mailing a copy thereof to such party at the address in effect for notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing in this Section 9.2 shall affect or limit any right to serve process in any other manner permitted by law.

 

(iii) Each of the Company and the Investor hereby waives to the fullest extent permitted by applicable law, any right it may have to a trial by jury in respect to any litigation directly or indirectly arising out
of, under or in connection with this Agreement or the transactions contemplated hereby or disputes relating hereto. Each of the Company and the Investor (a) certifies that no representative, agent or attorney of any other party has represented, expressly or otherwise, that such other party would not, in the event of litigation, seek to enforce the foregoing waiver and (b) acknowledges that it and the other parties hereto have been induced to enter into this Agreement by, among other things, the mutual waivers
and certifications in this Section 9.2.

 

Section 9.3. Entire Agreement; Amendment.  This
Agreement, together with the exhibits referred to herein and the Disclosure Schedule, and the Warrants represent the entire agreement of the parties with respect to the subject matter hereof, and there are no promises, undertakings, representations or warranties by either party relative to subject matter hereof not expressly set forth herein and therein. No provision of this Agreement may be amended other than by a written instrument signed by both parties hereto.  The Disclosure Schedule and all exhibits
to this Agreement are hereby incorporated by reference in, and made a part of, this Agreement as if set forth in full herein.

 

Section 9.4. Notices.  Any
notice, demand, request, waiver or other communication required or permitted to be given hereunder shall be in writing and shall be effective (a) upon hand delivery or facsimile (with facsimile machine confirmation of delivery received) at the address or number designated below (if delivered on a business day during normal business hours where such notice is to be received), or the first business day following such delivery (if delivered other than on a business day during normal business hours where such notice
is to be received) or (b) on the second business day following the date of mailing by express courier service, fully prepaid, addressed to such address, or upon actual receipt of such mailing, whichever shall first occur. The address for such communications shall be:

 

 

42

 

 

	
  
	
If to the Company:
	
EMCORE Corporation

	
  
	
10420 Research Road, SE

	
  
	
Albuquerque, New Mexico 87123

	
  
	
Telephone Number: (505) 332-5000

	
  
	
Fax: (505) 332-5100

	
  
	
Attention: Keith J. Kosco, Esq.

	
  
	
With copies to:
	
Jenner & Block LLP

	
  
	
919 Third Avenue, 37th Floor

	
  
	
New York, New York 10022

	
  
	
Telephone Number: (212) 891-1600

	
  
	
Fax: (212) 909-0820

	
  
	
Attention: Tobias L. Knapp, Esq.

	
  
	
If to the Investor:
	
Commerce Court Small Cap Value Fund, Ltd.

	
  
	
Fiduciary Services (BVI) Limited

Qwomar Complex, 4th Floor

P.O. Box 3170

Road Town, Tortola

British Virgin Islands

Telephone Number: (284) 494-8086

Fax:  (284) 494-9474

Attention: Peter W. Poole

	
  
	
With copies to:
	
Greenberg Traurig, LLP

	
  
	
The MetLife Building

	
  
	
200 Park Avenue

	
  
	
New York, NY 10166

	
  
	
Telephone Number: (212) 801-9200

	
  
	
Fax:  (212) 801-6400

	
  
	
Attention: Anthony J. Marsico, Esq.

 

Either party hereto may from time to time change its address for notices by giving at least 10 days advance written notice of such changed address to the other party hereto.

 

Section 9.5. Waivers.  No
waiver by either party of any default with respect to any provision, condition or requirement of this Agreement shall be deemed to be a continuing waiver in the future or a waiver of any other provisions, condition or requirement hereof nor shall any delay or omission of any party to exercise any right hereunder in any manner impair the exercise of any such right accruing to it thereafter. 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.

 

Section 9.6. Headings.  The
article, section and subsection headings in this Agreement are for convenience only and shall not constitute a part of this Agreement for any other purpose and shall not be deemed to limit or affect any of the provisions hereof.

 

Section 9.7. Successors and Assigns.  The Investor may not assign this Agreement to any person without
the prior consent of the Company, in the Company’s sole discretion. This 

 

 

43

 

Agreement shall be binding upon and inure to the benefit of the parties and their successors and assigns. The assignment by a party to this Agreement of any rights hereunder shall not affect the obligations of such party under this Agreement.

 

Section 9.8. Governing Law.  This
Agreement shall be governed by and construed in accordance with the internal procedural and substantive laws of the State of New York, without giving effect to the choice of law provisions of such state  that would cause the application of the laws of any other jurisdiction.

 

Section 9.9. Survival.  The
representations, warranties, covenants and agreements of the Company and the Investor contained in this Agreement shall survive the execution and delivery hereof until the termination of this Agreement; provided, however, that (i) the provisions of Article VII (Termination), Article VIII (Indemnification), Section 9.1 (Fees and Expenses), Section 9.2 (Specific Enforcement, Consent
to Jurisdiction, Waiver of Jury Trial), Section 9.4 (Notices), Section 9.8 (Governing Law), Section 9.12 (Severability) and this Section 9.9 (Survival) shall remain in full force and effect indefinitely notwithstanding such termination, (ii) the covenants and agreements contained in Section 5.1(i) (Securities Compliance; FINRA Filing), Section 5.3 (Compliance with Laws), Section 5.7 (Stop Orders), Section 5.8 (Amendments to the Registration Statement; Prospectus Supplements; Free Writing Prospectuses), Section
5.9 (Prospectus Delivery), Section 5.11 (Effective Registration Statement), Section 5.12 (Non-Public Information) and 5.13 (Broker/Dealer) shall remain in full force and effect notwithstanding such termination for a period of six months following such termination, (iii) the covenants and agreements of the Investor contained in Section 5.10 (Selling Restrictions) shall remain in full force and effect notwithstanding such termination for a period of 90 days following such termination, and (iv) the covenants and
agreements of the Company contained in Section 5.2 (Registration and Listing) shall remain in full force and effect notwithstanding such termination for a period of 30 days following such termination.

 

Section 9.10. Counterparts.  This
Agreement may be executed in counterparts, all of which taken together shall constitute one and the same original and binding instrument and shall become effective when all counterparts have been signed by each party and delivered to the other parties hereto, it being understood that all parties hereto need not sign the same counterpart. In the event any signature is delivered by facsimile, digital or electronic transmission, such transmission shall constitute delivery of the manually executed original and the
party using such means of delivery shall thereafter cause four additional executed signature pages to be physically delivered to the other parties within five days of the execution and delivery hereof.  Failure to provide or delay in the delivery of such additional executed signature pages shall not adversely affect the efficacy of the original delivery.

 

Section 9.11. Publicity.  On
or after the Effective Date, the Company may issue a press release or otherwise make a public statement or announcement with respect to this Agreement and the Warrants and the transactions contemplated hereby and thereby or the existence of this Agreement and the Warrants (including, without limitation, by filing a copy of this Agreement and the form of the Warrants with the Commission); provided, however,
that prior to issuing any such press release, or making any such public statement or announcement, the Company shall consult with the Investor on the form and substance of such press release or other disclosure.

 

 

44

 

 

Section 9.12. Severability.  The
provisions of this Agreement are severable and, in the event that any court of competent jurisdiction shall determine that any one or more of the provisions or part of the provisions contained in this Agreement shall, for any reason, be held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other provision or part of a provision of this Agreement, and this Agreement shall be reformed and construed as if such invalid or illegal or unenforceable
provision, or part of such provision, had never been contained herein, so that such provisions would be valid, legal and enforceable to the maximum extent possible.

 

Section 9.13. Further Assurances.  From
and after the date of this Agreement, upon the request of the Investor or the Company, each of the Company and the Investor shall execute and deliver such instrument, documents and other writings as may be reasonably necessary or desirable to confirm and carry out and to effectuate fully the intent and purposes of this Agreement and the Warrants.

 

 

[Signature Page Follows]

 

 

 

45

 

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective authorized officer as of the date first above written.

 

 

EMCORE CORPORATION:

 

 

	
  
	
By:
	
/s/ John M. Markovich                            

	
  
	
Name:  John M. Markovich

	
  
	
Title:  Chief Financial Officer

 

COMMERCE COURT SMALL CAP VALUE FUND, LTD.:

 

	
  
	
By:
	
/s/ Deirdre M. McCoy                           

	
  
	
Name:  Deirdre M. McCoy

	
  
	
Title:  Corporate Secretary

 

 

46

 

ANNEX A TO THE

 

COMMON STOCK PURCHASE AGREEMENT

 

DEFINITIONS

 

(a) “Acceptable Financing” shall have the meaning assigned to such term in Section 5.6(ii) hereof.

 

(b) “Affiliate” shall have the meaning assigned to such term in Rule 12b-2 of the Exchange Act.

 

(c) “Aggregate Limit” shall have the meaning assigned to such term in Section 1.1 hereof.

 

(d) “Base Prospectus” shall mean the Company’s prospectus, dated October 1, 2009, a preliminary form of which is included in the Registration
Statement, including the documents incorporated by reference therein.

 

(e) “Below Market Offering” shall have the meaning assigned to such term in Section 5.6(ii) hereof.

 

(f) “Broker-Dealer” shall have the meaning assigned to such term in Section 5.13 hereof.

 

(g) “Bylaws” shall have the meaning assigned to such term in Section 4.3 hereof.

 

(h) “Charter” shall have the meaning assigned to such term in Section 4.3 hereof.

 

(i) “Code” shall mean the Internal Revenue Code of 1986, as amended.

 

(j) “Commission” shall mean the Securities and Exchange Commission or any successor entity.

 

(k) “Commission Documents” shall mean (1) all reports, schedules, registrations, forms, statements, information and other documents filed
by the Company with the Commission pursuant to the reporting requirements of the Exchange Act, including all material filed pursuant to Section 13(a) or 15(d) of the Exchange Act, which have been filed by the Company since September 30, 2008 and which hereafter shall be filed by the Company during the Investment Period, including, without limitation, the Current Report and the Form 10-K filed by the Company for its fiscal year ended September 30, 2008 (the “2008
Form 10-K”), (2) the Registration Statement, as the same may be amended from time to time, the Prospectus and each Prospectus Supplement, and each Permitted Free Writing Prospectus and (3) all information contained in such filings and all documents and disclosures that have been and heretofore shall be incorporated by reference therein.

 

(l) “Commitment Shares” means 185,185 shares of duly authorized, validly issued, fully paid and non-assessable shares of Common Stock issued
by the Company to the Investor concurrently with the execution and delivery of this Agreement on the Effective Date.

 

 

 

 

 

(m) “Common Stock” shall have the meaning assigned to such term in the Recitals.

 

(n) “Current Market Price” means, with respect to any particular measurement date, the closing price of a share of Common Stock as reported
on the Trading Market for the Trading Day immediately preceding such measurement date.

 

(o) “Current Report” shall have the meaning assigned to such term in Section 1.4 hereof.

 

(p) “Discount Price” shall have the meaning assigned to such term in Section 2.2 hereof.

 

(q) “EDGAR” shall have the meaning assigned to such term in Section 4.3 hereof.

 

(r) “Effective Date” shall mean the date of this Agreement.

 

(s) “Environmental Laws” shall have the meaning assigned to such term in Section 4.15 hereof.

 

(t) “ERISA” shall mean the Employee Retirement Income Security Act of 1974, as amended.

 

(u) “Event Period” shall have the meaning assigned to such term in Section 7.2 hereof.

 

(v) “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended, and the rules and regulations of the Commission thereunder.

 

(w) “FINRA” shall have the meaning assigned to such term in Section 4.5 hereof.

 

(x) “FINRA Filing” shall have the meaning assigned to such term in Section 5.1 hereof.

 

(y) “Fixed Amount Requested” shall mean the amount of a Fixed Request requested by the Company in a Fixed Request Notice delivered pursuant
to Section 2.1 hereof.

 

(z) “Fixed Request” means the transactions contemplated under Sections 2.1 through 2.8 of this Agreement.

 

(aa) “Fixed Request Amount” means the actual amount of proceeds received by the Company pursuant to a Fixed Request under this Agreement.

 

(bb) “Fixed Request Exercise Date” shall have the meaning assigned to such term in Section 2.2 hereof.

 

(cc) “Fixed Request Notice” shall have the meaning assigned to such term in Section 2.1 hereof.

 

 

 

 

 

(dd) “Free Writing Prospectus” shall mean a “free writing prospectus” as defined in Rule 405 promulgated under the Securities
Act.

 

(ee) “GAAP” shall mean generally accepted accounting principles in the United States of America as applied by the Company.

 

(ff) “Governmental Licenses” shall have the meaning assigned to such term in Section 4.14(a) hereof.

 

(gg) “Indebtedness” shall have the meaning assigned to such term in Section 4.9 hereof.

 

(hh) “Integration Notice” shall have the meaning assigned to such term in Section 5.6(ii) hereof.

 

(ii) “Intellectual Property” shall have the meaning assigned to such term in Section 4.14(b) hereof.

 

(jj) “Investment Period” shall have the meaning assigned to such term in Section 7.1 hereof.

 

(kk) “Issuer Free Writing Prospectus” shall mean an “issuer free writing prospectus” as defined in Rule 433 promulgated under
the Securities Act.

 

(ll) “Market Capitalization” shall be calculated on the Trading Day preceding the applicable Pricing Period and shall be the product of
(x) the number of shares of Common Stock outstanding and (y) the closing bid price of the Common Stock, both as determined by Bloomberg Financial LP using the DES and HP functions.

 

(mm) “Material Adverse Effect” shall mean any condition, occurrence, state of facts or event having, or insofar as reasonably can be foreseen
would likely have, any effect on the business, operations, properties or condition (financial or otherwise) of the Company that is material and adverse to the Company and its Subsidiaries, taken as a whole, and/or any condition, occurrence, state of facts or event that would prohibit or otherwise materially interfere with or delay the ability of the Company to perform any of its obligations under this Agreement or the Warrant; provided, however,
that none of the following, individually or in the aggregate, shall be taken into account in determining whether a Material Adverse Effect has occurred or insofar as reasonably can be foreseen would likely occur: (i) changes in conditions in the U.S. or global capital, credit or financial markets generally, including changes in the availability of capital or currency exchange rates, provided such changes shall not have affected the Company in a materially disproportionate manner as compared to other similarly
situated companies; (ii) changes generally affecting the semiconductor or solar power industries, provided such changes shall not have affected the Company in a materially disproportionate manner as compared to other similarly situated companies; and (iii) any effect of the announcement of this Agreement or the consummation of the transactions contemplated by this Agreement on the Company’s relationships, contractual or otherwise, with customers, suppliers, vendors, bank lenders, strategic venture partners
or employees.

 

 

 

 

 

(nn) “Material Agreements” shall have the meaning assigned to such term in Section 4.16 hereof.

 

(oo) “Material Change in Ownership” shall mean the occurrence of any one or more of the following: (i) the acquisition by any person, including
any syndicate or group deemed to be a “person” under Section 13(d)(3) of the Exchange Act, of beneficial ownership, directly or indirectly, through a purchase, merger or other acquisition transaction or series of transactions, of shares of capital stock or other securities of the Company entitling such person to exercise, upon an event of default or default or otherwise, 50% or more of the total voting power of all series and classes of capital stock and other securities of the Company entitled to
vote generally in the election of directors, other than any such acquisition by the Company, any Subsidiary of the Company or any employee benefit plan of the Company; (ii) any consolidation or merger of the Company with or into any other person, any merger of another person into the Company, or any conveyance, transfer, sale, lease or other disposition of all or substantially all of the properties and assets of the Company to another person, other than (a) any such transaction (x) that does not result in any
reclassification, conversion, exchange or cancellation of outstanding shares of capital stock of the Company and (y) pursuant to which holders of capital stock of the Company immediately prior to such transaction have the entitlement to exercise, directly or indirectly, 50% or more of the total voting power of all shares of capital stock of the Company entitled to vote generally in the election of directors of the continuing or surviving person immediately after such transaction or (b) any merger which is effected
solely to change the jurisdiction of incorporation of the Company and results in a reclassification, conversion or exchange of outstanding shares of Common Stock solely into shares of common stock of the surviving entity; (iii) during any consecutive two-year period, individuals who at the beginning of that two-year period constituted the Board of Directors (together with any new directors whose election to the Board of Directors, or whose nomination for election by the stockholders of the Company, was approved
by a vote of a majority of the directors then still in office who were either directors at the beginning of such period or whose elections or nominations for election were previously so approved) cease for any reason to constitute a majority of the Board of Directors then in office; or (iv) the Company is liquidated or dissolved or a resolution is passed by the Company’s stockholders approving a plan of liquidation or dissolution of the Company. Beneficial ownership shall be determined in accordance with
Rule 13d-3 promulgated by the SEC under the Exchange Act. The term “person” shall include any syndicate or group which would be deemed to be a “person” under Section 13(d)(3) of the Exchange Act.

 

(pp) “Multiplier” shall have the meaning assigned to such term in Section 2.3 hereof.

 

(qq) “NASDAQ” means the NASDAQ Global Market or any successor thereto.

 

(rr) “Optional Amount” means the transactions contemplated under Sections 2.9 through 2.11 of this Agreement.

 

(ss) “Optional Amount Dollar Amount” shall mean the actual amount of proceeds received by the Company pursuant to the exercise of an Optional
Amount under this Agreement.

 

 

 

 

 

(tt) “Optional Amount Notice” shall mean a notice sent to the Company with regard to the Investor’s election to exercise all or any
portion of an Optional Amount, as provided in Section 2.11 hereof and substantially in the form attached hereto as Exhibit C.

 

(uu) “Optional Amount Threshold Price” shall have the meaning assigned to such term in Section 2.1 hereof.

 

(vv) “Other Financing” shall have the meaning assigned to such term in Section 5.6(ii) hereof.

 

(ww) “Other Financing Notice” shall have the meaning assigned to such term in Section 5.6(ii) hereof.

 

(xx) “Permitted Free Writing Prospectus” shall have the meaning assigned to such term in Section 5.8(ii) hereof.

 

(yy) “Plan” shall have the meaning assigned to such term in Section 4.22 hereof.

 

(zz) “Pricing Period shall mean a period of 10 consecutive Trading Days commencing on the Pricing Period start date set forth in the Fixed Request
Notice, or such other period mutually agreed upon by the Investor and the Company.

 

(aaa) “Prospectus” shall mean the Base Prospectus, together with any final prospectus filed with the Commission pursuant to Rule 424(b),
as supplemented by any Prospectus Supplement, including the documents incorporated by reference therein.

 

(bbb) “Prospectus Supplement” shall mean any prospectus supplement to the Base Prospectus filed with the Commission pursuant to Rule 424(b)
under the Securities Act, including the documents incorporated by reference therein.

 

(ccc) “Reduction Notice” shall have the meaning assigned to such term in Section 2.8 hereof.

 

(ddd) “Reedland” shall have the meaning assigned to such term in Section 4.13 hereof.

 

(eee) “Registration Statement” shall mean the registration statement on Form S-3, Commission File Number 333-160437, filed by the Company
with the Commission under the Securities Act for the registration of the Shares, as such Registration Statement may be amended and supplemented from time to time (including pursuant to Rule 462(b) under the Securities Act), including all documents filed as part thereof or incorporated by reference therein, and including all information deemed to be a part thereof at the time of effectiveness pursuant to Rule 430A or Rule 430B under the Securities Act.

 

(fff) “Restricted Period” shall have the meaning assigned to such term in Section 5.10(i) hereof.

 

(ggg) “Restricted Person” shall have the meaning assigned to such term in Section 5.10(i) hereof.

 

 

 

 

 

(hhh) “Restricted Persons” shall have the meaning assigned to such term in Section 5.10(i) hereof.

 

(iii) “Securities” shall mean, collectively, the Shares, the Commitment Shares, the Warrants and the Warrant Shares.

 

(jjj) “Securities Act” shall mean the Securities Act of 1933, as amended, and the rules and regulations of the Commission thereunder.

 

(kkk) “Settlement Date” shall have the meaning assigned to such term in Section 2.7 hereof.

 

(lll) “Shares” shall mean shares of Common Stock issuable to the Investor upon exercise of a Fixed Request and shares of Common Stock issuable
to the Investor upon exercise of an Optional Amount.

 

(mmm) “Short Sales” means “short sales” as defined in Rule 200 promulgated under Regulation SHO under the Exchange Act.

 

(nnn) “Significant Subsidiary” means any Subsidiary of the Company that would constitute a Significant Subsidiary of the Company within
the meaning of Rule 1-02 of Regulation S-X of the Commission.

 

(ooo) “SOXA” shall have the meaning assigned to such term in Section 4.6(c) hereof.

 

(ppp) “Subsidiary” shall mean any corporation or other entity of which at least a majority of the securities or other ownership interest
having ordinary voting power (absolutely or contingently) for the election of directors or other persons performing similar functions are at the time owned directly or indirectly by the Company and/or any of its other Subsidiaries.

 

(qqq) “Threshold Price” is the lowest price (except to the extent otherwise provided in Section 2.6) at which the Company may sell Shares
during the applicable Pricing Period as set forth in a Fixed Request Notice (not taking into account the applicable percentage discount during such Pricing Period determined in accordance with Section 2.2); provided, however, that at no time shall the Threshold Price be lower than $0.50 per share unless the Company and the Investor mutually shall agree.

 

(rrr) “Total Commitment” shall have the meaning assigned to such term in Section 1.1 hereof.

 

(sss) “Trading Day” shall mean a full trading day (beginning at 9:30 a.m., New York City time, and ending at 4:00 p.m., New York City time)
on the NASDAQ.

 

(ttt) “Trading Market” means the following markets or exchanges on which the Common Stock is listed or quoted for trading on the date in
question: the American Stock Exchange, the New York Stock Exchange or the NASDAQ.

 

 

 

 

 

(uuu) “Trading Market Limit” means 15,971,169 shares of duly authorized, validly issued, fully paid and non-assessable shares of Common
Stock (as adjusted for any stock splits, stock combinations, stock dividends, recapitalizations and other similar transactions that occur on or after the date of this Agreement); provided, however, that the Trading Market Limit shall not exceed under any circumstances that number of shares of Common Stock that the Company may issue pursuant to this Agreement and the transactions contemplated
hereby without (a) breaching the Company’s obligations under the rules and regulations of the Trading Market or (b) obtaining stockholder approval under the applicable rules and regulations of the Trading Market (notwithstanding that such approval may have been obtained).

 

(vvv) “VWAP” shall mean the daily volume weighted average price (based on a Trading Day from 9:30 a.m. to 4:00 p.m. (New York time)) of
the Company on the NASDAQ as reported by Bloomberg Financial L.P. using the AQR function.

 

(www) “Warrants” shall have the meaning assigned to such term in the Recitals.

 

(xxx) “Warrant Shares” shall mean the shares of Common Stock issuable upon exercise of the Warrants.

 

(yyy) “Warrant Value” shall mean the fair value of all warrants, options and other similar rights issued to a third party in connection
with an Other Financing, determined by using a standard Black-Scholes option-pricing model using an expected volatility percentage as shall be mutually agreed by the Investor and the Company.  In the case of a dispute relating to such expected volatility assumption, the Investor shall obtain applicable volatility data from three investment banking firms of nationally recognized reputation, and the parties hereto shall use the average thereof for purposes of determining the expected volatility percentage
in connection with the Black-Scholes calculation referred to in the immediately preceding sentence.s22-9390_ex102.htm

Exhibit 10.2

 

EMCORE CORPORATION

 

Warrant To Purchase Common Stock

Warrant No.: ______

Date of Issuance: October 1, 2009 (“Issuance Date”)

 

EMCORE Corporation, a New Jersey corporation (the “Company”), hereby certifies that, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Commerce Court Small Cap Value Fund, Ltd., the registered holder hereof
or its permitted assigns (the “Holder”), is entitled, subject to the terms set forth below, to purchase from the Company, at the Exercise Price (as defined below) then in effect, upon exercise of this Warrant to Purchase Common Stock (including any Warrants to Purchase Common Stock issued in exchange, transfer or replacement hereof, the “Warrant”), at any time
or times on or after the date immediately following the six-month anniversary of the Issuance Date (the “Initial Exercise Date”), but not after 11:59 p.m., New York City time, on the Expiration Date (as defined below), _________ (subject to adjustment as provided herein) fully paid and nonassessable shares of Common Stock (as defined below) (the “Warrant
Shares”). Except as otherwise defined herein, capitalized terms in this Warrant shall have the meanings set forth in Section 15. This Warrant is being issued pursuant to that certain Common Stock Purchase Agreement, dated as of October 1, 2009 (the “Purchase Agreement”), by and between the Company and Commerce Court Small Cap Value Fund, Ltd., and in partial consideration for Commerce Court Small Cap Value Fund, Ltd.’s
execution and delivery of the Purchase Agreement.

 

	
1.  
	
EXERCISE OF WARRANT.

 

(a) Mechanics of Exercise. Subject to the terms and conditions hereof
(including, without limitation, the limitations set forth in Section 1(f), this Warrant may be exercised by the Holder on any day on or after the Initial Exercise Date, in whole or in part, by delivery (whether via facsimile or otherwise) of a written notice, in the form attached hereto as Exhibit A (the “Exercise Notice”), of the Holder’s election to exercise
this Warrant.  Within one (1) Trading Day following an exercise of this Warrant as aforesaid, the Holder shall deliver payment to the Company of an amount equal to the Exercise Price in effect on the date of such exercise multiplied by the number of Warrant Shares as to which this Warrant was so exercised (the “Aggregate Exercise Price”) in cash or via wire transfer of immediately available funds if the Holder did not notify
the Company in such Exercise Notice that such exercise was made pursuant to a Cashless Exercise (as defined in Section 1(d)). The Holder shall not be required to deliver the original of this Warrant in order to effect an exercise hereunder. Execution and delivery of an Exercise Notice with respect to less than all of the Warrant Shares shall have the same effect as cancellation of the original of this Warrant and issuance of a new Warrant evidencing the right to purchase the remaining number of Warrant Shares.
Execution and delivery of an Exercise Notice for all of the then-remaining Warrant Shares shall have the same effect as cancellation of the original of this Warrant after delivery of the Warrant Shares in accordance with the terms hereof. On or before the first (1st) Trading Day following the date on which the Company has received an Exercise Notice, the Company shall transmit by facsimile or via electronic mail an acknowledgment of
confirmation of receipt of such Exercise Notice to the Holder and the Company’s transfer agent. On or before the third (3rd) Trading Day following the date on which the Company has received such Exercise Notice, the Company shall credit such

 

 

 

aggregate number of shares of Common Stock to which the Holder is entitled pursuant to such exercise to the Holder’s or its designee’s balance account with The Depository Trust Company (“DTC”) through its Deposit/Withdrawal at Custodian (DWAC) system, if the Company is then a participant in such system and either (i) the Registration Statement (as defined in the Purchase Agreement) is effective, (ii) there is an effective
registration statement permitting the resale of the Warrant Shares that are the subject of such Exercise Notice by the Holder or (iii) this Warrant is being exercised pursuant to a Cashless Exercise (as specified in the applicable Exercise Notice), and otherwise shall issue and deliver to the Holder or, at the Holder’s instruction pursuant to the Exercise Notice, the Holder’s agent or designee, in each case, sent by reputable overnight courier to the address as specified in the applicable Exercise
Notice, a certificate, registered in the Company’s share register in the name of the Holder or its designee (as indicated in the applicable Exercise Notice), for the number of shares of Common Stock to which the Holder is entitled pursuant to such exercise. Upon delivery of an Exercise Notice, the Holder shall be deemed for all corporate purposes to have become the holder of record of the Warrant Shares with respect to which this Warrant has been exercised, irrespective of the date such Warrant Shares are
credited to the Holder’s DTC account or the date of delivery of the certificates evidencing such Warrant Shares (as the case may be).  If this Warrant is submitted in connection with any exercise pursuant to this Section 1(a) and the number of Warrant Shares represented by this Warrant submitted for exercise is greater than the number of Warrant Shares being acquired upon an exercise, then, at the request of the Holder, the Company shall as soon as practicable and in no event later than three
(3) Business Days after any exercise and at its own expense, issue and deliver to the Holder (or its designee) a new Warrant (in accordance with Section 7(d)) representing the right to purchase the number of Warrant Shares purchasable immediately prior to such exercise under this Warrant, less the number of Warrant Shares with respect to which this Warrant is exercised.  No fractional shares of Common Stock are to be issued upon the exercise of this Warrant, but rather the number of shares of Common
Stock to be issued shall be rounded up to the nearest whole number. The Company shall pay any and all taxes which may be payable with respect to the issuance and delivery of Warrant Shares upon exercise of this Warrant.

 

(b) Exercise Price. For purposes of this Warrant, “Exercise
Price” means $____, subject to adjustment as provided herein.

 

(c) Company’s Failure to Timely Deliver Securities. If the
Company shall fail, for any reason or for no reason, to use its best efforts to issue to the Holder within three (3) Trading Days after receipt of the applicable Exercise Notice, a certificate for the number of shares of Common Stock to which the Holder is entitled and register such shares of Common Stock on the Company’s share register or to credit the Holder’s balance account with DTC for such number of shares of Common Stock to which the Holder is entitled upon the Holder’s exercise of this
Warrant (as the case may be), then, in addition to all other remedies available to the Holder, the Company shall pay in cash to the Holder on each day after such third (3rd) Trading Day that the issuance of such shares of Common Stock is not timely effected an amount equal to 1.5% of the product of (A) the aggregate the number of shares of Common Stock not issued to the Holder on a timely basis and to which the Holder is entitled and
(B) the Closing Sale Price of the Common Stock on the Trading Day immediately preceding the last possible date which the Company could have issued such shares of Common Stock to the Holder without violating Section 1(a). In addition to the foregoing, if within three (3) Trading Days after the Company’s receipt of the 

  

 

2

 

applicable Exercise Notice, the Company shall fail to issue and deliver a certificate to the Holder and register such shares of Common Stock on the Company’s share register or credit the Holder’s balance account with DTC for the number of shares of Common Stock to which the Holder is entitled upon the Holder’s exercise hereunder (as the case may be), and if on or after such third (3rd) Trading Day the Holder
purchases (in an open market transaction or otherwise) shares of Common Stock to deliver in satisfaction of a sale by the Holder of shares of Common Stock issuable upon such exercise that the Holder anticipated receiving from the Company (a “Buy-In”), then, in addition to all other remedies available to the Holder, the Company shall, within three (3) Business Days after the Holder’s request and in the Holder’s discretion,
either (i) pay cash to the Holder in an amount equal to the Holder’s total purchase price (including brokerage commissions, if any) for the shares of Common Stock so purchased (the “Buy-In Price”), at which point the Company’s obligation to deliver such certificate or credit the Holder’s balance account with DTC for the number of shares of Common Stock to which the Holder is entitled upon the Holder’s exercise
hereunder (as the case may be) (and to issue such shares of Common Stock) shall terminate, or (ii) promptly honor its obligation to deliver to the Holder a certificate or certificates representing such shares of Common Stock or credit the Holder’s balance account with DTC for the number of shares of Common Stock to which the Holder is entitled upon the Holder’s exercise hereunder (as the case may be) and pay cash to the Holder in an amount equal to the excess (if any) of the Buy-In Price over the
product of (A) such number of shares of Common Stock times (B) the Closing Sale Price of the Common Stock on the Trading Day immediately preceding the date of the applicable Exercise Notice.

 

(d) Cashless Exercise. Notwithstanding anything contained herein
to the contrary (other than Section 1(f) below), if at the time of exercise hereof (i) the Registration Statement is not effective (or the Prospectus (as defined in the Purchase Agreement) contained therein is not available for use by the Holder) and (ii) a registration statement permitting the resale by the Holder of all of the Warrant Shares is not effective, the Holder may, in its sole discretion, exercise this Warrant in whole or in part and, in lieu of making the cash payment otherwise contemplated
to be made to the Company upon such exercise in payment of the Aggregate Exercise Price, elect instead to receive upon such exercise the “Net Number” of shares of Common Stock determined according to the following formula (a “Cashless Exercise”):

 

Net Number = (A x B) - (A x C)

B

 

For purposes of the foregoing formula:

 

A= the total number of shares with respect to which this Warrant is then being exercised.

 

B= as applicable: (i) the Closing Sale Price of the Common Stock on the Trading Day immediately preceding the date of the applicable Exercise Notice if such Exercise Notice is (1) both executed and delivered pursuant to Section 1(a) hereof on a day that is not a Trading Day or (2) both executed and delivered pursuant to Section
1(a) hereof on a Trading Day prior to the opening of regular trading hours (as defined in Rule 600(b)(64) of Regulation NMS promulgated under the federal securities laws) on such Trading Day, (ii) the Bid Price (as defined below) of the 

  

 

3

 

Common Stock as of the time of the Holder’s execution of the applicable Exercise Notice if such Exercise Notice is executed during regular trading hours on a Trading Day and is delivered within two (2) hours thereafter pursuant to Section 1(a) hereof and (iii) the Closing Sale Price of the Common Stock on the date of the applicable Exercise Notice if the date of such Exercise Notice is a Trading Day and such Exercise Notice is both executed and delivered pursuant to Section 1(a) hereof after
the close of regular trading hours on such Trading Day.

 

	
  
	
C= the Exercise Price then in effect for the applicable Warrant Shares at the time of such exercise.

 

(e) Disputes.  In the case of a dispute as to the determination
of the Exercise Price or the arithmetic calculation of the number of Warrant Shares to be issued pursuant to the terms hereof, the Company shall promptly issue to the Holder the number of Warrant Shares that are not disputed and resolve such dispute in accordance with Section 13.

 

(f) Limitations on Exercises. Notwithstanding anything to the contrary contained in this Warrant, this Warrant shall not be exercisable by the Holder
hereof to the extent (but only to the extent) that the Holder or any of its affiliates would beneficially own in excess of  9.9% (the “Maximum Percentage”) of the Common Stock. To the extent the above limitation applies, the determination of whether this Warrant shall be exercisable (vis-à-vis other convertible, exercisable or exchangeable securities owned by the Holder) and of which such securities shall be exercisable
(as among all such securities owned by the Holder) shall, subject to such Maximum Percentage limitation, be determined on the basis of the first submission to the Company for conversion, exercise or exchange (as the case may be), and the Company shall have no obligation to verify or confirm the accuracy of such determination. No prior inability to exercise this Warrant pursuant to this paragraph shall have any effect on the applicability of the provisions of this paragraph with respect to any subsequent
determination of exercisability. For the purposes of this paragraph, beneficial ownership and all determinations and calculations (including, without limitation, with respect to calculations of percentage ownership) shall be determined in accordance with Section 13(d) of the 1934 Act (as defined below). The provisions of this paragraph shall be implemented in a manner otherwise than in strict conformity with the terms of this paragraph to correct this paragraph (or any portion hereof) which may be defective or
inconsistent with the intended Maximum Percentage beneficial ownership limitation herein contained or to make changes or supplements necessary or desirable to properly give effect to such Maximum Percentage limitation. The limitations contained in this paragraph shall apply to a successor Holder of this Warrant. The holders of Common Stock shall be third party beneficiaries of this paragraph and the Company may not waive this paragraph without the consent of holders of a majority of its Common Stock. For any
reason at any time, upon the written or oral request of the Holder, the Company shall within one (1) Business Day confirm orally and in writing to the Holder the number of shares of Common Stock then outstanding, including by virtue of any prior conversion or exercise of convertible or exercisable securities into Common Stock, including, without limitation, pursuant to this Warrant.

 

(g) Insufficient Authorized Shares . The Company shall at all times
keep reserved for issuance under this Warrant no less than the maximum number of shares of Common Stock as shall be necessary to satisfy the Company’s obligation to issue shares of Common Stock hereunder (without regard to any limitation otherwise contained herein with respect to the 

  

 

4

 

number of shares of Common Stock that may be acquirable upon exercise of this Warrant). If, notwithstanding the foregoing, and not in limitation thereof, at any time while this Warrant remains outstanding the Company does not have a sufficient number of authorized and unreserved shares of Common Stock to satisfy its obligation to reserve for issuance upon exercise of this Warrant at least a number of shares of Common Stock equal to the number of shares of Common Stock as shall from time to time be necessary
to effect the exercise of all of this Warrant (the “Required Reserve Amount”) (an “Authorized Share Failure”), then the Company shall immediately take all action necessary to increase the Company’s authorized shares of Common Stock to an amount sufficient to allow the Company to reserve the Required Reserve Amount for all of this Warrant. Without limiting
the generality of the foregoing sentence, as soon as practicable after the date of the occurrence of an Authorized Share Failure, but in no event later than sixty (60) days after the occurrence of such Authorized Share Failure, the Company shall hold a meeting of its stockholders for the approval of an increase in the number of authorized shares of Common Stock. In connection with such meeting, the Company shall provide each stockholder with a proxy statement and shall use its best efforts to solicit its stockholders’
approval of such increase in authorized shares of Common Stock and to cause its board of directors to recommend to the stockholders that they approve such proposal.

 

2. ADJUSTMENT OF EXERCISE PRICE AND NUMBER OF WARRANT SHARES. The Exercise Price
and number of Warrant Shares issuable upon exercise of this Warrant are subject to adjustment from time to time as set forth in this Section 2.

 

(a) Stock Dividends and Splits.  If the Company, at any
time on or after the date of the Purchase Agreement, (i) pays a stock dividend on one or more classes of its then outstanding shares of Common Stock or otherwise makes a distribution on any class of capital stock that is payable in shares of Common Stock, (ii) subdivides (by any stock split, stock dividend, recapitalization or otherwise) one or more classes of its then outstanding shares of Common Stock into a larger number of shares or (iii) combines (by combination, reverse stock split or otherwise) one or
more classes of its then outstanding shares of Common Stock into a smaller number of shares, then in each such case the Exercise Price shall be multiplied by a fraction of which the numerator shall be the number of shares of Common Stock outstanding immediately before such event and of which the denominator shall be the number of shares of Common Stock outstanding immediately after such event.  Any adjustment made pursuant to clause (i) of this paragraph shall become effective immediately after the
record date for the determination of stockholders entitled to receive such dividend or distribution, and any adjustment pursuant to clause (ii) or (iii) of this paragraph shall become effective immediately after the effective date of such subdivision or combination. If any event requiring an adjustment under this paragraph occurs during the period that an Exercise Price is calculated hereunder, then the calculation of such Exercise Price shall be adjusted appropriately to reflect such event.

 

(b) Number of Warrant Shares. Simultaneously with any adjustment
to the Exercise Price pursuant to paragraph (a) of this Section 2, the number of Warrant Shares that may be purchased upon exercise of this Warrant shall be increased or decreased proportionately, so that after such adjustment the aggregate Exercise Price payable hereunder for the adjusted number of Warrant Shares shall be the same as the aggregate Exercise Price in effect immediately prior to such adjustment (without regard to any limitations on exercise contained herein).

 

 

5

 

 

(c) Calculations. All calculations under this Section 2 shall be
made to the nearest cent or the nearest 1/100th of a share, as applicable. The number of shares of Common Stock outstanding at any given time shall not include shares owned or held by or for the account of the Company, and the disposition of any such shares shall be considered an issue or sale of Common Stock.

 

3. RIGHTS UPON DISTRIBUTION OF ASSETS. In addition to any adjustments pursuant to Section 2 above, if the Company shall declare or make any dividend
or other distribution of its assets (or rights to acquire its assets) to holders of shares of Common Stock, by way of return of capital or otherwise (including, without limitation, any distribution of cash, stock or other securities, property or options by way of a dividend, spin off, reclassification, corporate rearrangement, scheme of arrangement or other similar transaction) (a “Distribution”), at any time after the issuance of this
Warrant, then, in each such case, (i) the Company shall provide notice to the Holder at least 15 days prior to the date on which a record is taken for such Distribution, or if no such record is taken, the date as of which the record holders of shares of Common Stock are to be determined for the participation in such Distribution and (ii) upon each exercise of this Warrant, the Holder shall receive the applicable Distribution to the same extent that the Holder would have participated therein if the Holder had
held the number of shares of Common Stock acquirable upon such exercise of this Warrant immediately before the date on which a record is taken for such Distribution, or, if no such record is taken, the date as of which the record holders of shares of Common Stock are to be determined for the participation in such Distribution (and such Distribution shall be held in abeyance for the benefit of the Holder until such time, if ever, as its exercises this Warrant in whole or in part).

 

	
4.  
	
PURCHASE RIGHTS; FUNDAMENTAL TRANSACTIONS.

 

(a) Purchase Rights.  In addition to any adjustments pursuant
to Section 2 above, if at any time the Company grants, issues or sells any Options, Convertible Securities or rights to purchase stock, warrants, securities or other property pro rata to the record holders of any class of shares of Common Stock (the “Purchase Rights”), then (i) the Company shall provide notice to the Holder at least 15 days prior to the date on which a record is taken for the grant, issuance or sale of such Purchase
Rights, or if no such record is taken, the date as of which the record holders of shares of Common Stock are to be determined for the participation in for the grant, issuance or sale of such Purchase Rights and (ii) upon each exercise of this Warrant, the Holder shall acquire, upon the terms applicable to such Purchase Rights, the aggregate Purchase Rights which the Holder could have acquired if the Holder had held the number of shares of Common Stock acquirable upon such exercise of this Warrant immediately
before the date on which a record is taken for the grant, issuance or sale of such Purchase Rights, or, if no such record is taken, the date as of which the record holders of shares of Common Stock are to be determined for the grant, issue or sale of such Purchase Rights (and such Purchase Rights shall be held in abeyance for the benefit of the Holder until such time, if ever, as its exercises this Warrant in whole or in part).

 

(b) Fundamental Transactions.

 

(i) The Company shall not enter into or be party to a Fundamental Transaction unless the Company uses it reasonable best efforts to cause the Successor Entity to assume in writing all of the obligations of the Company
under this Warrant and

 

6

 

the other Transaction Documents (as defined in the Purchase Agreement) in accordance with the provisions of this Section 4(b) pursuant to written agreements in form and substance satisfactory to the Holder and approved by the Holder prior to such Fundamental Transaction (including agreements to deliver to the Holder in exchange for this Warrant a security of the Successor Entity evidenced by a written instrument substantially similar in form and substance to this Warrant, including, without limitation,
which is exercisable for a corresponding number of shares of capital stock equivalent to the shares of Common Stock acquirable and receivable upon exercise of this Warrant (without regard to any limitations on the exercise of this Warrant) prior to such Fundamental Transaction, and with an exercise price which applies the exercise price hereunder to such shares of capital stock (but taking into account the relative value of the shares of Common Stock pursuant to such Fundamental Transaction and the value of such
shares of capital stock, such adjustments to the number of shares of capital stock and such exercise price being for the purpose of protecting the economic value of this Warrant immediately prior to the consummation of such Fundamental Transaction)).

 

(ii) Upon the consummation of each Fundamental Transaction in which the Successor Entity so assumes this Warrant, the Successor Entity shall succeed to, and be substituted for (so that from and after the date of
the applicable Fundamental Transaction, the provisions of this Warrant and the other Transaction Documents referring to the “Company” shall refer instead to the Successor Entity), and may exercise every right and power of the Company and shall assume all of the obligations of the Company under this Warrant and the other Transaction Documents with the same effect as if such Successor Entity had been named as the Company herein.

 

(iii) In addition to and not in substitution for any other rights hereunder, if (1) the Successor Entity has not agreed prior to the consummation of a Fundamental Transaction to assume this Warrant pursuant to, and
in accordance with, this Section 4(b) upon consummation of such Fundamental Transaction and (2) such Fundamental Transaction is one pursuant to which holders of shares of Common Stock are entitled to receive securities or other assets (including, without limitation, cash) with respect to or in exchange for shares of Common Stock (a “Corporate Event”), then prior to the consummation of such Fundamental Transaction the Company shall make
appropriate provision to insure that the Holder will thereafter have the right to receive upon an exercise of this Warrant at any time after the consummation of such Fundamental Transaction but prior to the Expiration Date, in lieu of the shares of the Common Stock (or other securities, cash, assets or other property (except such items still issuable under Sections 3 and 4(a) above, which shall continue to be receivable thereafter)) issuable upon the exercise of the Warrant prior to such Fundamental Transaction,
such shares of stock, securities, cash, assets or any other property whatsoever (including warrants or other purchase or subscription rights) which the Holder would have been entitled to receive upon the happening of such Fundamental Transaction had this Warrant been exercised immediately prior to such Fundamental Transaction (without regard to any limitations on the exercise of this Warrant). In connection with making appropriate provision as contemplated by the foregoing, the Company shall cause the Successor
Entity to deliver to the Holder confirmation prior to the consummation of the applicable Fundamental Transaction that there shall be issued upon exercise of this Warrant at any

 

7

 

time after the consummation of the applicable Fundamental Transaction, in lieu of the shares of Common Stock (or other securities, cash, assets or other property (except such items still issuable under Sections 3 and 4(a) above, which shall continue to be receivable thereafter)) issuable upon the exercise of this Warrant prior to the applicable Fundamental Transaction, such shares of publicly traded common stock (or its equivalent) of the Successor Entity (including its Parent Entity) which the Holder would
have been entitled to receive upon the happening of the applicable Fundamental Transaction had this Warrant been exercised immediately prior to the applicable Fundamental Transaction (without regard to any limitations on the exercise of this Warrant), as adjusted in accordance with the provisions of this Warrant.  Provision made pursuant to the preceding sentences shall be in a form and substance reasonably satisfactory to the Holder.

 

(c) Black Scholes Value. Without limiting the obligations of the
Company or a Successor Entity under Section 4(b) above, in the event of a Fundamental Transaction (including, without limitation, a Fundamental Transaction occurring prior to the Initial Exercise Date), if (i) the Holder has not exercised this Warrant in full prior to the consummation of such Fundamental Transaction, (ii) the Successor Entity has not agreed to assume this Warrant pursuant to, and in accordance with, the provisions Section 4(b) and (iii) the Company has not complied with all of its obligations
under Section 4(b)(iii) above, then at the request of the Holder delivered before the ninetieth (90th) day after the consummation of such Fundamental Transaction, the Company or the Successor Entity (as the case may be) shall purchase this Warrant from the Holder on the date of such request by paying to the Holder cash in an amount equal to the Black Scholes Value of the unexercised portion of this Warrant that remained on the date
of the consummation of such Fundamental Transaction. The foregoing right in this Section 4(c) shall not be exercisable by the Holder with respect to a Fundamental Transaction constituting solely the sale of substantially all of the properties or assets of the Company to another Person so long as the Company together with its Subsidiaries continues to have bona fide, substantial and continuing business operations and activities at all times after the consummation of such Fundamental Transaction (it being understood
and agreed that (i) the foregoing right shall become immediately exercisable by the Holder with respect to such Fundamental Transaction for a period of thirty (30) days commencing on the date that the Company together with its Subsidiaries ceases to have bona fide, substantial and continuing business operations and activities at any time after such Fundamental Transaction occurs, (ii) the Company shall provide the Holder with prompt written notice of such cessation and (iii) Black Scholes Value with respect to
such Fundamental Transaction shall always be determined as of the day of consummation of such Fundamental Transaction but (1) the remaining option time shall be equal to (I) the time between the date of the public announcement of such Fundamental Transaction and the Expiration Date if such cessation occurs on or prior to the one (1) year anniversary of the consummation of such Fundamental Transaction or (II) the time between the date of such cessation and the Expiration Date if such cessation occurs after the
one (1) year anniversary of the consummation of such Fundamental Transaction (as applicable) and (2) the risk-free interest rate shall be equal to (III) a risk-free interest rate corresponding to the U.S. Treasury rate for a period equal to the time between the date of the public announcement of such Fundamental Transaction and the Expiration Date if such cessation occurs on or prior to the one (1) year anniversary of the consummation of such Fundamental Transaction or (IV) a risk-free interest rate corresponding
to the U.S. Treasury rate for a period equal to the time between the date of such cessation and the Expiration Date if such cessation occurs after the one (1) year anniversary of the consummation of such Fundamental Transaction (as applicable)).

 

 

8

 

 

(d) Application. The provisions of this Section 4 shall apply similarly and equally to successive Fundamental Transactions and Corporate Events and
shall be applied as if this Warrant (and any such subsequent warrants) were fully exercisable and without regard to any limitations on the exercise of this Warrant (provided that the Holder shall continue to be entitled to the benefit of the Maximum Percentage, applied however with respect to shares of capital stock registered under the 1934 Act and thereafter receivable upon exercise of this Warrant (or any such other warrant)).

 

5. NONCIRCUMVENTION. The Company hereby covenants and agrees that the Company will not, by amendment of its Charter (as defined in the Purchase Agreement),
Bylaws (as defined in the Purchase Agreement) or through any reorganization, transfer of assets, consolidation, merger, scheme of arrangement, dissolution, issue or sale of securities, or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this Warrant, and will at all times in good faith carry out all the provisions of this Warrant and take all action as may be required to protect the rights of the Holder. Without limiting the generality of the foregoing, the
Company (i) shall not increase the par value of any shares of Common Stock receivable upon the exercise of this Warrant above the Exercise Price then in effect, (ii) shall take all such actions as may be necessary or appropriate in order that the Company may validly and legally issue fully paid and nonassessable shares of Common Stock upon the exercise of this Warrant, and (iii) shall, so long as this Warrant is outstanding, take all action necessary to reserve and keep available out of its authorized
and unissued shares of Common Stock, solely for the purpose of effecting the exercise of this Warrant, no less than the maximum number of shares of Common Stock as shall from time to time be necessary to effect the exercise of this Warrant (without regard to any limitations on exercise).

 

6. WARRANT HOLDER NOT DEEMED A STOCKHOLDER. Except as otherwise specifically provided herein, the Holder, solely in its capacity as a holder of this
Warrant, shall not be entitled to vote or receive dividends or be deemed the holder of share capital of the Company for any purpose, nor shall anything contained in this Warrant be construed to confer upon the Holder, solely in its capacity as the Holder of this Warrant, any of the rights of a stockholder of the Company or any right to vote, give or withhold consent to any corporate action (whether any reorganization, issue of stock, reclassification of stock, consolidation, merger, conveyance or otherwise),
receive notice of meetings, receive dividends or subscription rights, or otherwise, prior to the issuance to the Holder of the Warrant Shares which it is then entitled to receive upon the due exercise of this Warrant.  In addition, nothing contained in this Warrant shall be construed as imposing any liabilities on the Holder to purchase any securities (upon exercise of this Warrant or otherwise) or as a stockholder of the Company, whether such liabilities are asserted by the Company or by creditors
of the Company. Notwithstanding this Section 6, the Company shall provide the Holder with copies of the same notices and other information given to the stockholders of the Company generally, contemporaneously with the giving thereof to the stockholders.

 

 

9

 

 

7. REISSUANCE OF WARRANTS.

 

(a) Transfer of Warrant. This Warrant may not be offered for sale,
sold, transferred or assigned without the consent of the Company, in whole or in part, to any Person other than an affiliate of the Holder. If this Warrant is to be sold, transferred or assigned in accordance with the foregoing, the Holder shall deliver a written notice to the Company, substantially in the form of the Assignment attached hereto as Exhibit B, indicating the affiliate(s) to whom this Warrant shall be sold, transferred or assigned
and the respective number of Warrant Shares to be covered by the warrants to be so sold, transferred or assigned to such affiliate(s), and the Holder shall surrender this Warrant to the Company, whereupon the Company will forthwith issue and deliver a new Warrant or Warrants (in accordance with Section 7(d)), registered in the name of such affiliate(s), representing the right to purchase the number of Warrant Shares being transferred by the Holder and, if less than the total number of Warrant Shares then underlying
this Warrant is being transferred, a new Warrant (in accordance with Section 7(d)) to the Holder representing the right to purchase the number of Warrant Shares not being transferred.

 

(b) Lost, Stolen or Mutilated Warrant. Upon receipt by the Company
of evidence reasonably satisfactory to the Company of the loss, theft, destruction or mutilation of this Warrant (as to which a written certification and the indemnification contemplated below shall suffice as such evidence), and, in the case of loss, theft or destruction, of any indemnification undertaking by the Holder to the Company in customary and reasonable form and, in the case of mutilation, upon surrender and cancellation of this Warrant, the Company shall execute and deliver to the Holder a new Warrant
(in accordance with Section 7(d)) representing the right to purchase the Warrant Shares then underlying this Warrant.

 

(c) Exchangeable for Multiple Warrants. This Warrant is exchangeable,
upon the surrender hereof by the Holder at the principal office of the Company, for a new Warrant or Warrants (in accordance with Section 7(d)) representing in the aggregate the right to purchase the number of Warrant Shares then underlying this Warrant, and each such new Warrant will represent the right to purchase such portion of such Warrant Shares as is designated by the Holder at the time of such surrender; provided, however, that no warrants for fractional shares of Common Stock shall be given.

 

(d) Issuance of New Warrants. Whenever the Company is required to
issue a new Warrant pursuant to the terms of this Warrant, such new Warrant (i) shall be of like tenor with this Warrant, (ii) shall represent, as indicated on the face of such new Warrant, the right to purchase the Warrant Shares then underlying this Warrant (or in the case of a new Warrant being issued pursuant to Section 7(a) or Section 7(c), the Warrant Shares designated by the Holder which, when added to the number of shares of Common Stock underlying the other new Warrants issued in connection with such
issuance, does not exceed the number of Warrant Shares then underlying this Warrant), (iii) shall have an issuance date, as indicated on the face of such new Warrant which is the same as the Issuance Date, and (iv) shall have the same rights and conditions as this Warrant.

 

8. NOTICES.  Whenever notice is required to be given under this Warrant, unless otherwise provided herein, such notice shall be given in accordance
with Section 9.4 of the Purchase Agreement. The Company shall provide the Holder with prompt written notice of all actions taken pursuant to this Warrant, including in reasonable detail a description of such action and the

 

10

 

reason therefor. Without limiting the generality of the foregoing, the Company will give written notice to the Holder (i) immediately upon each adjustment of the Exercise Price and the number of Warrant Shares, setting forth in reasonable detail, and certifying, the calculation of such adjustment(s) and (ii) at least fifteen (15) days prior to the date on which the Company closes its books or takes a record (A) with respect to any dividend or distribution upon the shares of Common Stock, (B) with respect
to any grants, issuances or sales of any Options, Convertible Securities or rights to purchase stock, warrants, securities or other property to holders of shares of Common Stock or (C) for determining rights to vote with respect to any Fundamental Transaction, dissolution or liquidation, provided in each case that such information shall be made known to the public prior to or in conjunction with such notice being provided to the Holder and (iii) at least ten (10) Trading Days prior to the consummation of any
Fundamental Transaction.  To the extent that any notice provided hereunder constitutes, or contains, material, non-public information regarding the Company or any of its subsidiaries, the Company shall simultaneously file such notice with the SEC (as defined below) pursuant to a Current Report on Form 8-K.

 

9. AMENDMENT AND WAIVER.  Except as otherwise provided herein, the provisions of this Warrant (other than Section 1(f) may be amended and the
Company may take any action herein prohibited, or omit to perform any act herein required to be performed by it, only if the Company has obtained the written consent of the Holder. No waiver shall be effective unless it is in writing and signed by an authorized representative of the waiving party.

 

10. SEVERABILITY.  If any provision of this Warrant or the application thereof becomes or is declared by a court of competent jurisdiction
to be illegal, void or unenforceable, the remainder of the terms of this Warrant will continue in full force and effect.

 

11. GOVERNING LAW. This Warrant shall be governed by and construed and enforced in accor­dance with, and all questions concerning the construction,
validity, interpretation and performance of this Warrant shall be governed by, the internal laws of the State of New York, without giving effect to any choice of law or conflict of law provision or rule (whether of the State of New York or any other jurisdictions) that would cause the application of the laws of any jurisdictions other than the State of New York.

 

12. CONSTRUCTION; HEADINGS. This Warrant shall be deemed to be jointly drafted by the Company and the Holder and shall not be construed against any Person
as the drafter hereof.  The headings of this Warrant are for convenience of reference and shall not form part of, or affect the interpretation of, this Warrant.

 

13. DISPUTE RESOLUTION. In the case of a dispute as to the determination of the Exercise Price, the Closing Sale Price, the Bid Price or fair market
value or the arithmetic calculation of the Warrant Shares (as the case may be), the Company or the Holder (as the case may be) shall submit the disputed determinations or arithmetic calculations (as the case may be) via facsimile within two (2) Business Days of receipt of the applicable notice giving rise to such dispute to the Company or the Holder (as the case may be). If the Holder and the Company are unable to agree upon such determination or calculation (as the case may be) of the Exercise Price, the Closing
Sale Price, the Bid Price or fair market value or the number of Warrant Shares (as the case may be) within three (3) Business Days of such disputed determination or arithmetic calculation being submitted to the Company or the Holder (as the case may be), then the Company shall, within two (2) Business Days submit via facsimile (a) the disputed determination of the Exercise Price,

 

11

 

 

the Closing Sale Price, the Bid Price or fair market value (as the case may be) to an independent, reputable investment bank selected by the Company and approved by the Holder or (b) the disputed arithmetic calculation of the Warrant Shares to the Company’s independent, outside accountant. The Company shall cause at its expense the investment bank or the accountant (as the case may be) to perform the determinations or calculations (as
the case may be) and notify the Company and the Holder of the results no later than ten (10) Business Days from the time it receives such disputed determinations or calculations (as the case may be). Such investment bank’s or accountant’s determination or calculation (as the case may be) shall be binding upon all parties absent demonstrable error. 

 

14. REMEDIES, CHARACTERIZATION, OTHER OBLIGATIONS, BREACHES AND INJUNCTIVE RELIEF.  The remedies provided in this Warrant shall be cumulative
and in addition to all other remedies available under this Warrant and the other Transaction Documents, at law or in equity (including a decree of specific performance and/or other injunctive relief), and nothing herein shall limit the right of the Holder to pursue actual damages for any failure by the Company to comply with the terms of this Warrant. The Company covenants to the Holder that there shall be no characterization concerning this instrument other than as expressly provided herein. Amounts set forth
or provided for herein with respect to payments, exercises and the like (and the computation thereof) shall be the amounts to be received by the Holder and shall not, except as expressly provided herein, be subject to any other obligation of the Company (or the performance thereof). The Company acknowledges that a breach by it of its obligations hereunder will cause irreparable harm to the Holder and that the remedy at law for any such breach may be inadequate. The Company therefore agrees that, in the event
of any such breach or threatened breach, the holder of this Warrant 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. The issuance of shares as contemplated hereby upon the exercise of this Warrant shall be made without charge to the Holder or such shares for any issuance tax or other costs in respect thereof.

 

15. CERTAIN DEFINITIONS.  For purposes of this Warrant, the following terms shall have the following meanings:

 

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

 

(b) “Bid Price” means, for any security as of the particular time of determination, the bid price for such security on the Principal Market
as reported by Bloomberg as of such time of determination, or, if the Principal Market is not the principal securities exchange or trading market for such security, the bid price of such security on the principal securities exchange or trading market where such security is listed or traded as reported by Bloomberg as of such time of determination, or if the foregoing does not apply, the bid price of such security in the over-the-counter market on the electronic bulletin board for such security as reported by
Bloomberg as of such time of determination, or, if no bid price is reported for such security by Bloomberg as of such time of determination, the average of the bid prices of any market makers for such security as reported in the “pink sheets” by Pink Sheets LLC (formerly the National Quotation Bureau, Inc.) as of such time of determination. If the Bid Price cannot be calculated for a security as of the particular time of determination on any of the foregoing bases, the Bid Price of such security as
of such time of determination shall be the fair market value as mutually determined by the

 

12

 

Company and the Holder. If the Company and the Holder are unable to agree upon the fair market value of such security, then such dispute shall be resolved in accordance with the procedures in Section 13. All such determinations shall be appropriately adjusted for any stock dividend, stock split, stock combination or other similar transaction during such period.

 

(c) “Black Scholes Value” means the value of this Warrant based on the Black and Scholes Option Pricing Model obtained from the “OV”
function on Bloomberg determined as of the day of consummation of the applicable Fundamental Transaction for pricing purposes and reflecting (i) a risk-free interest rate corresponding to the U.S. Treasury rate for a period equal to the remaining term of this Warrant as of the date of the Holder’s request pursuant to Section 4(c), (ii) an expected volatility equal to the 100 day volatility obtained from the HVT function on Bloomberg as of the Trading Day immediately following the public announcement
of the applicable Fundamental Transaction and, if applicable, (iii) the underlying price per share used in such calculation shall be the sum of the price per share being offered in cash, if any, plus the value of any non-cash consideration, if any, being offered in the applicable Fundamental Transaction.

 

(d) “Bloomberg” means Bloomberg, L.P.

 

(e) “Business Day” means any day other than Saturday, Sunday or other day on which commercial banks in The City of New York are authorized
or required by law to remain closed.

 

(f) “Closing Sale Price” means, for any security as of any date, the last closing trade price for such security on the Principal Market,
as reported by Bloomberg, or, if the Principal Market begins to operate on an extended hours basis and does not designate the closing trade price, then the last trade price of such security prior to 4:00 p.m., New York City time, as reported by Bloomberg, or, if the Principal Market is not the principal securities exchange or trading market for such security, the last trade price of such security on the principal securities exchange or trading market where such security is listed or traded as reported by Bloomberg,
or if the foregoing does not apply, the last trade price of such security in the over-the-counter market on the electronic bulletin board for such security as reported by Bloomberg, or, if no last trade price is reported for such security by Bloomberg, the average of the ask prices of any market makers for such security as reported in the “pink sheets” by Pink Sheets LLC (formerly the National Quotation Bureau, Inc.). If the Closing Sale Price cannot be calculated for a security on a particular date
on any of the foregoing bases, the Closing Sale Price of such security on such date shall be the fair market value as mutually determined by the Company and the Holder. If the Company and the Holder are unable to agree upon the fair market value of such security, then such dispute shall be resolved in accordance with the procedures in Section 13. All such determinations shall be appropriately adjusted for any stock dividend, stock split, stock combination or other similar transaction during such period.

 

(g) “Common Stock” means (i) the Company’s shares of common stock, no par value, and (ii) any capital stock into which such common
stock shall have been changed or any share capital resulting from a reclassification of such common stock.

 

 

13

 

 

(h) “Convertible Securities” means any stock or securities (other than Options) directly or indirectly convertible into or exercisable or
exchangeable for shares of Common Stock.

 

(i) “Eligible Market” means The New York Stock Exchange, Inc., the Nasdaq Global Select Market, the Nasdaq Capital Market or the Principal
Market.

 

(j) “Equity Conditions” means: (i) on each day during the period beginning one month prior to the applicable date of determination and ending
on and including the applicable date of determination either (x) the Registration Statement shall be effective (and the Prospectus contained therein shall be available for use by the Holder) or (y) there is an effective registration statement permitting the resale by the Holder of all of the Warrant Shares; (ii) on each day during the period beginning three months prior to the applicable date of determination and ending and including the applicable date of determination (the “Equity
Conditions Measuring Period”), the Common Stock (including all Warrant Shares) is listed or designated for quotation on an Eligible Market and shall not have been suspended from trading on an Eligible Market (other than suspensions of not more than two (2) days and occurring prior to the applicable date of determination due to business announcements by the Company) nor shall delisting or suspension by an Eligible Market have been threatened (with a reasonable prospect of delisting occurring) or pending
either (A) in writing by such Eligible Market or (B) by falling below the minimum listing maintenance requirements of the Eligible Market on which the Common Stock is then listed; (iii) on each day during the Equity Conditions Measuring Period, the Company shall have delivered Common Stock upon exercise of this Warrant on a timely basis as set forth in Section 1(a) hereof and all other shares of Common Stock required to be delivered by the Company on a timely basis as set forth in the Purchase Agreement; (iv)
any Common Stock to be issued in connection with the event requiring determination may be issued in full without violating Section 1(f) hereof or the rules or regulations of the Eligible Market on which the Common Stock is then listed; (v) on each day during the Equity Conditions Measuring Period, no public announcement of a pending, proposed or intended Fundamental Transaction shall have occurred which has not been abandoned, terminated or consummated; (vi) the Company shall have no knowledge of any fact that
would reasonably be expected to cause (1) the Registration Statement not to be effective or the Prospectus contained therein not to be available for use by the Holder or (2) if applicable, any other registration statement permitting the resale of all of the Warrant Shares not to be effective or the Prospectus contained therein not to be available for use by the Holder; (vii) the Holder shall not be in possession of any material, non-public information provided to any of them by the Company or any of its affiliates;
(viii) on each day during the Equity Conditions Measuring Period, the Company otherwise shall have been in material compliance with and shall not have breached any provision, covenant, representation or warranty of this Warrant or the Purchase Agreement; and (ix) no Common Stock trades at a price less than the Trigger Price (as defined below) (as adjusted for stock splits, combinations and the like).

 

(k) “Expiration Date” means the date that is the fifth (5th)
anniversary of the Initial Exercise Date or, if such date falls on a day other than a Business Day or on which trading does not take place on the Principal Market (a “Holiday”), the next date that is not a Holiday.

 

(l) “Fundamental Transaction” means that (i) the Company shall, directly or indirectly, in one or more related transactions, (1) consolidate
or merge with or into (whether or not the Company is the surviving corporation) another Person, or (2) sell, lease, license, assign,

 

14

 

transfer, convey or otherwise dispose of all or substantially all of the properties or assets of the Company to another Person, or (3) allow another Person to make a purchase, tender or exchange offer that is accepted by the holders of more than 50% of the outstanding shares of Common Stock (not including any shares of Common Stock held by the Person or Persons making or party to, or associated or affiliated with the Persons making or party to, such purchase, tender or exchange offer), or (4) consummate
a stock or share purchase agreement or other business combination (including, without limitation, a reorganization, recapitalization, spin-off or scheme of arrangement) with another Person whereby such other Person acquires more than 50% of the outstanding shares of Common Stock (not including any shares of Common Stock held by the other Person or other Persons making or party to, or associated or affiliated with the other Persons making or party to, such stock or share purchase agreement or other business combination),
or (5) reorganize, recapitalize or reclassify its Common Stock, or (ii) any “person” or “group” (as these terms are used for purposes of Sections 13(d) and 14(d) of the 1934 Act) is or shall become the “beneficial owner” (as defined in Rule 13d-3 under the 1934 Act), directly or indirectly, of 50% of the aggregate ordinary voting power represented by issued and outstanding Common Stock.

 

(m) “Options” means any rights, warrants or options to subscribe for or purchase shares of Common Stock or Convertible Securities.

 

(n) “Parent Entity” of a Person means an entity that, directly or indirectly, controls the applicable Person and whose common stock or equivalent
equity security is quoted or listed on an Eligible Market, or, if there is more than one such Person or Parent Entity, the Person or Parent Entity with the largest public market capitalization as of the date of consummation of the Fundamental Transaction.

 

(o) “Person” means any person or entity, whether a natural person, trustee, corporation, partnership, limited partnership, limited liability
company, trust, unincorporated organization, business association, firm, joint venture, governmental agency or authority.

 

(p) “Principal Market” means the Nasdaq Global Market.

 

(q) “SEC” means the United States Securities and Exchange Commission.

 

(r) “Successor Entity” means the Person (or, if so elected by the Holder, the Parent Entity) formed by, resulting from or surviving any
Fundamental Transaction or the Person (or, if so elected by the Holder, the Parent Entity) with which such Fundamental Transaction shall have been entered into.

 

(s) “Trading Day” means any day on which the Common Stock is traded on the Principal Market, or, if the Principal Market is not the principal
trading market for the Common Stock, then on the principal securities exchange or securities market on which the Common Stock is then traded, provided that “Trading Day” shall not include any day on which the Common Stock is scheduled to trade on such exchange or market for less than 4.5 hours or any day that the Common Stock is suspended from trading during the final hour of trading on such exchange or market (or if such exchange or market does not designate in advance the closing time of trading
on such exchange or market, then during the hour ending at 4:00 p.m., New York City time) unless such day is otherwise designated as a Trading Day in writing by the Holder.

 

 

15

 

 

16. MANDATORY EXERCISE.  If at any time from and after the Initial Exercise Date (the “Mandatory
Exercise Eligibility Date”), (i) the Common Stock trades at a price equal to or greater than $____ per share (the “Trigger Price”) (as adjusted for stock splits, combinations and the like) for a period of ten (10) consecutive Trading Days following the Mandatory Exercise Eligibility Date (the “Mandatory Exercise Measuring Period”) and (ii) the Equity
Conditions shall have been satisfied or waived in writing by the Holder on each day during the period commencing on the Mandatory Exercise Notice Date (as defined below) and ending on the Mandatory Exercise Date (as defined below), the Company shall have the right (but not the obligation) to require the Holder to exercise this Warrant, in whole or in part, into fully paid, validly issued and nonassessable shares of Common Stock in accordance with Section 1(a) hereof at the Exercise Price in effect on the Mandatory
Exercise Date (a “Mandatory Exercise”). The Company may exercise its right to require exercise under this Section 16 on one occasion by delivering, within not more than ten (10) days following the date of the satisfaction of the condition set forth in clause (i) above, a written notice thereof by facsimile and overnight courier to the Holder (the “Mandatory Exercise Notice”
and the date the Holder received such notice by facsimile is referred to as the “Mandatory Exercise Notice Date”). The Mandatory Exercise Notice shall be irrevocable. The Mandatory Exercise Notice shall state (i) the Trading Day selected for the Mandatory Exercise in accordance with this Section 16, which Trading Day shall be at least twenty (20) Trading Days but not more than sixty (60) Trading Days following the Mandatory Exercise
Notice Date (the “Mandatory Exercise Date”), (ii) the portion of this Warrant subject to the Mandatory Exercise and (iii) the number of shares of Common Stock to be issued to the Holder on the Mandatory Exercise Date. Any portion of this Warrant exercised by the Holder after the Mandatory Exercise Notice Date shall reduce the portion of this Warrant required to be exercised on the Mandatory Exercise Date. If the Company has elected a
Mandatory Exercise, the mechanics of exercise set forth in Section 1(a) shall apply, to the extent applicable, as if the Company had received from the Holder on the Mandatory Exercise Date an Exercise Notice with respect to the portion of this Warrant being exercised pursuant to the Mandatory Exercise. Nothing contained in this Section 16 shall limit any rights of the Holder under Section 4(c). Any failure by the Company to elect to exercise its right to require exercise under this Section 16 at any time it is
entitled to do so shall not in any way restrict its right to elect to require exercise under this Section 16 in the future if it is entitled to do so at such time pursuant to the terms of this Section 16.

 

[signature page follows]

 

 

16

 

 

IN WITNESS WHEREOF, the Company has caused this Warrant to Purchase Common Stock to be duly executed as of the Issuance Date set out above.

 

EMCORE CORPORATION

 

                                                            By:____________________________________

Name:

Title:

 

 

17

 

 

EXHIBIT A

 

EXERCISE NOTICE

TO BE EXECUTED BY THE REGISTERED HOLDER TO EXERCISE THIS

WARRANT TO PURCHASE COMMON STOCK

 

EMCORE CORPORATION

 

The undersigned holder hereby exercises the right to purchase _________________ of the shares of Common Stock (“Warrant Shares”) of EMCORE Corporation, a New Jersey corporation (the “Company”),
evidenced by Warrant to Purchase Common Stock No. _______ (the “Warrant”). Capitalized terms used herein and not otherwise defined shall have the respective meanings set forth in the Warrant.

 

1.           Form of Exercise Price.  The Holder intends that payment of the Exercise Price shall be made as:

 

	
  
	
____________
	
a “Cash Exercise” with respect to _________________ Warrant Shares; and/or

 

	
  
	
____________
	
a “Cashless Exercise” with respect to _______________ Warrant Shares.

 

In the event that the Holder has elected a Cashless Exercise with respect to some or all of the Warrant Shares to be issued pursuant hereto, (i) this Exercise Notice was executed by the Holder at __________ [a.m.][p.m.] on the date set forth below and, if applicable, (ii) the Bid Price as of such time of execution was $________.

 

2.           Payment of Exercise Price. In the event that the Holder has elected a Cash Exercise with respect to some or all of the Warrant Shares to be issued pursuant hereto, the Holder shall pay the Aggregate
Exercise Price in the sum of $___________________ to the Company in accordance with the terms of the Warrant.

 

3.           Delivery of Warrant Shares.  The Company shall deliver to Holder, or its designee or agent as specified below, __________ Warrant Shares in accordance with the terms of the Warrant.  Delivery
shall be made to Holder, or for its benefit, to the following address:

 

_______________________

_______________________

_______________________

_______________________

 

Date: _______________ __, ______

 

   Name of Registered Holder

 

By:           

Name:

Title:

 

 

18

 

 

ACKNOWLEDGMENT

 

The Company hereby acknowledges this Exercise Notice and hereby directs ______________ to issue the above indicated number of shares of Common Stock in accordance with the transfer agent instructions dated _________, 20__, from the Company and acknowledged and agreed to by _______________.

 

EMCORE CORPORATION

                                                            By:____________________________________

Name:

Title:

 

 

19

 

EXHIBIT B

ASSIGNMENT

TO BE EXECUTED BY THE REGISTERED HOLDER TO SELL, ASSIGN OR TRANSFER THIS WARRANT TO PURCHASE COMMON STOCK

FOR VALUED RECEIVED, the undersigned hereby sells, assigns and transfers unto the person named below the right to purchase _______________ Warrant Shares evidenced by the attached Warrant and does hereby irrevocably constitute and appoint the Secretary of _______________, a _____________ corporation, as attorney-in-fact for the sole
purpose of transferring the said Warrant on the books of the Company, with full power of substitution in the premises.

Dated:           _____________________

[________________________]

By:____________________

Its:____________________

New warrant holder:

Name:

Address:

20

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