Document:

ptn_ex101.htm

	
  

	
EXHIBIT 10.1

 

SECURITIES PURCHASE AGREEMENT

 

This Securities Purchase Agreement (this “Agreement”) is dated as of July 2, 2015, between Palatin Technologies, Inc., a Delaware corporation (the “Company”), and each purchaser identified on the signature pages hereto (each, including its successors and assigns, a “Purchaser” and collectively the “Purchasers”).

 

WHEREAS, subject to the terms and conditions set forth in this Agreement and pursuant to Section 4(a)(2) of the Securities Act of 1933, as amended (the “Securities Act”), the Company desires to issue and sell to each Purchaser, and each Purchaser, severally and not jointly, desires to purchase from the Company, securities of the Company as more fully described in this Agreement.

 

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

 

ARTICLE I.

 

DEFINITIONS

 

1.1 Definitions.  In addition to the terms defined elsewhere in this Agreement, for all purposes of this Agreement, the following terms have the meanings set forth in this Section 1.1:

 

"2012 Offering" means the offering in connection with the 2012 Offering Documentation.

 

"2012 Offering Documentation" means the Securities Purchase Agreement dated as of July 2, 2012 between the Company and the purchasers named therein (the "2012 Offering SPA"), the 2012 Warrants issued pursuant thereto, and the registration rights agreement related thereto.

 

“2012 Offering SPA” shall have the meaning ascribed to such term in the definition of “2012 Offering Documentation.”

 

"2012 Securities" means the 2012 Shares, the 2012 Warrants and the 2012 Warrant Shares (assuming the exercise in full of the 2012 Warrants without regard to any limitations on exercise of the 2012 Warrants).

 

"2012 Shares" means the shares of Common Stock issued in the 2012 Offering.

 

"2012 Warrants" means the warrants issued in the 2012 Offering.

 

"2012 Warrant Shares" means the shares of Common Stock issuable upon exercise of the 2012 Warrants.

 

  

  

  

 

"2014 Offering" means the offering in connection with the 2014 Offering Documentation.

 

"2014 Offering Documentation" means the Securities Purchase Agreement dated as of December 23, 2014 between the Company and the purchasers named therein (the "2014 Offering SPA"), the 2014 Warrants issued pursuant thereto, and the registration rights agreement related thereto.

 

“2014 Offering SPA” shall have the meaning ascribed to such term in the definition of “2014 Offering Documentation.”

 

"2014 Securities" means the 2014 Shares, the 2014 Warrants and the 2014 Warrant Shares (assuming the exercise in full of the 2014 Warrants without regard to any limitations on exercise of the 2014 Warrants).

 

"2014 Shares" means the shares of Common Stock issued in the 2014 Offering.

 

"2014 Warrants" means the warrants issued in the 2014 Offering.

 

"2014 Warrant Shares" means the shares of Common Stock issuable upon exercise of the 2014 Warrants.

 

“Action” shall have the meaning ascribed to such term in Section 3.1(j).

 

“Affiliate” means any Person that, directly or indirectly through one or more intermediaries, controls or is controlled by or is under common control with a Person as such terms are used in and construed under Rule 405 and Rule 144 under the Securities Act (and includes, without limitation, any investment manager or advisor of any Person, any fund under management or advised by any Person, and any funds with a common investment manager or advisor).

 

“Agreement” shall have the meaning set forth in the preamble of this Agreement.

 

“Approved Stock Plan” means any existing or hereafter adopted, entered into, amended or amended and restated employee benefit plan, employment agreement or any other agreement, plan or arrangement which has been approved by a majority of the non-employee members of the Board of Directors (as defined below) or a majority of the members of a committee of non-employee directors established for such purpose, pursuant to which the Company’s securities may be issued to any employee, consultant, officer or director for services provided to the Company; provided, that after the date hereof the Company shall not increase the number of shares of Common Stock reserved for issuance, or securities convertible, exercisable or exchangeable for a number of shares of Common Stock or instruments that derive value by reference to a number of shares of Common Stock, under any Approved Stock Plan without the prior written consent of the Initial Purchasers (as defined below), for so long as the Initial Purchasers together with Affiliates thereof in the aggregate beneficially own Common Stock or Common Stock Equivalents equal to or convertible or exercisable, as the case may be, into at least 20% of the Company’s outstanding shares of Common Stock (calculated as if the Warrants, the Series F 2015 Warrants, the 2012 Warrants and the 2014 Warrants were exercised in full without regard to any limitations on exercise of the Warrants, the Series F 2015 Warrants, the 2012 Warrants or the 2014 Warrants).

 

  

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“Attribution Parties” shall have the meaning ascribed to such term in the Series E 2015 Warrants and the Series F 2015 Warrants, respectively.

 

"Baker Brothers Purchasers" means 667, L.P. (Account #1), 667, L.P. (Account #2) and Baker Brothers Life Sciences, L.P.

 

“Basic Amount” shall have the meaning ascribed to such term in Section 4.18(a)(ii).

 

“Board of Directors” means the board of directors of the Company.

 

“Business Day” means any day except any Saturday, any Sunday, any day which is a federal legal holiday in the United States, or any day on which banking institutions in the State of New York are authorized or required by law or other governmental action to close.

 

“Buy-In” shall have the meaning ascribed to such term in Section 4.1(c).

 

“Buy-In Price” shall have the meaning ascribed to such term in Section 4.1(c).

 

“Closing” means the closing of the purchase and sale of the Securities pursuant to Section 2.1.

 

“Closing Date” means the Trading Day on which all of the Transaction Documents have been executed and delivered by the applicable parties thereto, and all conditions precedent to (i) the Purchasers’ obligations to pay the Subscription Amount and (ii) the Company’s obligations to deliver the Securities, in each case, have been satisfied or waived.

 

“Commission” means the United States Securities and Exchange Commission.

 

“Common Stock” means the common stock of the Company, par value $0.01 per share, and any other class of securities into which such securities may hereafter be reclassified or changed.

 

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

 

“Company” shall have the meaning set forth in the preamble of this Agreement.

 

  

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“Company Controlled Fundamental Transaction” shall have the meaning ascribed to such term in the Series E 2015 Warrants.

 

“Company Counsel” means Thompson Hine LLP, with offices located at, among other places, 335 Madison Avenue, 12th Floor, New York, New York 10017.

 

"Down-Round Financing" means any Subsequent Equity Placement other than an Up-Round Financing.

 

“DRS” shall have the meaning ascribed to such term in Section 2.2(a)(iii).

 

“DTC” shall have the meaning ascribed to such term in Section 2.2(a)(iii).

 

“DWAC” shall have the meaning ascribed to such term in Section 2.2(a)(iii).

“Effective Date” means the earliest of the date that (a) the Initial Registration Statement (as defined in the Registration Rights Agreement) has been declared effective by the Commission or (b) all of the Shares and the Warrant Shares required to be registered for resale have been sold pursuant to Rule 144 or may be sold pursuant to Rule 144, without the requirement for the Company to be in compliance with the current public information required under Rule 144 and without volume or manner-of-sale restrictions.

“Evaluation Date” shall have the meaning ascribed to such term in Section 3.1(r).

 

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

“Excluded Securities” means any shares of Common Stock issued or issuable: (i) in connection with any Approved Stock Plan; (ii) upon exercise of warrants issued pursuant to a plan or arrangement which has been approved by a majority of the non-employee members of the Board of Directors or a majority of the members of a committee of non-employee directors established for such purpose, pursuant to which the Company’s securities may be issued to any Person in connection with services provided to the Company, provided that the Company shall not issue warrants exercisable in the aggregate on an annual basis for more than 250,000 shares of Common Stock, and shall not issue warrants with an exercise price that is less than the market price of the Common Stock at the time of issuance of such warrants; (iii) upon exercise of the 2012 Warrants, the 2014 Warrants, the Warrants, the Series F 2015 Warrants, the Series D 2014 Warrants and the Series G 2015 Warrants, provided that the terms of such 2012 Warrants, the 2014 Warrants, the Warrants, the Series F 2015 Warrants, the Series D 2014 Warrants and the Series G 2015 Warrants are not amended, modified or changed on or after the date hereof; (iv) upon conversion or exercise of any Common Stock Equivalents which are outstanding on the day immediately preceding the date hereof, provided that the terms of such Common Stock Equivalents are not amended, modified or changed on or after the date hereof; and (v) prior to the one (1) year anniversary of the Closing Date, pursuant to any Post-Closing Registration Statement.

 

  

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“FAST Program” shall have the meaning ascribed to such term in Section 2.2(a)(iii).

“FDA” shall have the meaning ascribed to such term in Section 3.1(ee).

 

“FDCA” shall have the meaning ascribed to such term in Section 3.1(ee).

 

“Fundamental Transaction” shall have the meaning ascribed to such term in the Warrants.

 

“GAAP” shall have the meaning ascribed to such term in Section 3.1(h).

 

“Holder” shall have the meaning ascribed to such term in Section 4.19.

 

“Indebtedness” of any Person means (i) any individual indebtedness or series of related indebtedness for borrowed money, including all obligations evidenced by notes, bonds, debentures or similar instruments, in excess of five hundred thousand dollars ($500,000.00), (ii) all debt securities convertible into or exchangeable or exercisable for Common Stock or Common Stock Equivalents, and (iii) any other instrument or transaction (such as a sale lease back or factoring transaction) structured in a manner to circumvent the intent of this definition and Section 4.17 or Section 4.18 in which case this definition shall be construed and implemented in a manner otherwise than in strict conformity with the terms hereof to the extent necessary to correct this definition or any portion hereof which may be defective or inconsistent with the intended treatment of such instrument or transaction under Section 4.17 and Section 4.18.

 

“Initial Purchasers” means the Baker Brothers Purchasers and the QVT Purchasers.

 

“Intellectual Property Rights” shall have the meaning ascribed to such term in Section 3.1(o).

 

“Legend Removal Date” shall have the meaning ascribed to such term in Section 4.1(c).

 

“Liens” means a mortgage, lien, charge, pledge, security interest, encumbrance, right of first refusal, preemptive right or other restriction.

 

“Material Adverse Effect” shall have the meaning assigned to such term in Section 3.1(b).

 

“Material Permits” shall have the meaning ascribed to such term in Section 3.1(m).

 

“Money Laundering Laws” shall have the meaning ascribed to such term in Section 3.1(gg).

 

  

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“Notice of Acceptance” shall have the meaning ascribed to such term in Section 4.18(a)(iii).

 

“Offer” shall have the meaning ascribed to such term in Section 4.18(a)(ii).

 

“Offer Notice” shall have the meaning ascribed to such term in Section 4.18(a)(ii).

 

“Offer Period” shall have the meaning ascribed to such term in Section 4.18(a)(iii).

 

“Offered Placement” shall have the meaning ascribed to such term in Section 4.18(a)(ii).

 

“Permitted Liens” means (i) any Lien for taxes not yet due or delinquent or being contested in good faith by appropriate proceedings for which adequate reserves have been established in accordance with GAAP, (ii) any statutory Lien arising in the ordinary course of business by operation of law with respect to a liability that is not yet due or delinquent, (iii) any Lien created by operation of law, such as materialmen’s liens, mechanics’ liens and other similar liens, arising in the ordinary course of business with respect to a liability that is not yet due or delinquent or that are being contested in good faith by appropriate proceedings, (iv) Liens (A) upon or in any equipment acquired or held by the Company or its Subsidiary to secure the purchase price of such equipment or indebtedness incurred solely for the purpose of financing the acquisition or lease of such equipment, or (B) existing on such equipment at the time of its acquisition, provided that the Lien is confined solely to the property so acquired and improvements thereon, and the proceeds of such equipment, (v) Liens incurred in connection with the extension, renewal or refinancing of the indebtedness secured by Liens of the type described in clause (iv) above, provided that any extension, renewal or replacement Lien shall be limited to the property encumbered by the existing Lien and the principal amount of the Indebtedness being extended, renewed or refinanced does not increase, (vi) leases or subleases and licenses and sublicenses granted to others in the ordinary course of the Company’s business, not interfering in any material respect with the business of the Company and its Subsidiary taken as a whole, and (vii) Liens in favor of customs and revenue authorities arising as a matter of law to secure payments of custom duties in connection with the importation of goods.

 

“Person” means an individual or corporation, partnership, limited partnership, trust, incorporated or unincorporated association, joint venture, limited liability company, joint stock company, government (or an agency or subdivision thereof) or other entity of any kind.

 

“Pharmaceutical Product” shall have the meaning ascribed to such term in Section 3.1(ee).

 

"Post-Closing Registration Statement" means any registration statement filed or amended by the Company, or declared effective by the Commission, after the Closing Date pursuant to the Securities Act relating to the issuance by the Company of Common Stock or Common Stock Equivalents.

 

  

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“Preferred Stock” shall have the meaning ascribed to such term in Section 3.1(g)(i).

 

“Proceeding” means an action, claim, suit, investigation or proceeding (including, without limitation, an informal investigation or partial proceeding, such as a deposition), whether commenced or threatened in writing.

 

“Public Information Failure” shall have the meaning ascribed to such term in Section 4.16.

 

“Public Information Failure Payments” shall have the meaning ascribed to such term in Section 4.16.

 

"Purchase Price" means $0.91.

 

“Purchaser(s)” shall have the meaning set forth in the preamble of this Agreement.

 

“Purchaser Amount” shall have the meaning ascribed to such term in Section 4.18(a)(ii).

 

“Purchaser Condition” means the satisfaction of either of the following: (i) the Maximum Percentage not being in excess of 9.99%, or (ii) such Purchaser has delivered to the Company an opinion of counsel in a form reasonably satisfactory to the Company that the Purchaser is not an Affiliate of the Company.

 

“Purchaser Party” shall have the meaning ascribed to such term in Section 4.9.

 

"QVT Purchasers" means QVT Fund IV LP, QVT Fund V LP and Quintessence Fund L.P.

 

“Refused Placement” shall have the meaning ascribed to such term in Section 4.18(a)(iv).

 

“Registration Rights Agreement” means the Registration Rights Agreement, dated the date hereof, among the Company and the Purchasers, in the form of Exhibit A attached hereto.

 

“Registration Statement” means a registration statement meeting the requirements set forth in the Registration Rights Agreement.

 

“Requisite Percentage” means (x) as to any Down-Round Financing, 100%, allocated as follows: (i) in the case of the QVT Purchasers, 63.35% in each instance allocated among such QVT Purchasers as indicated by the QVT Purchasers, and (ii) in the case of the Baker Brothers Purchasers, any percentage not subscribed for in such Down-Round Financing by the QVT Purchasers, in each instance allocated among such Baker Brothers Purchasers as indicated by the Baker Brothers Purchasers; and (y) as to any Up-Round Financing, as follows: (i) in the case of the QVT Purchasers, 63.35% in each instance allocated among such QVT Purchasers as indicated by the QVT Purchasers, and (ii) in the case of the Baker Brothers Purchasers, 20.13%, in each instance allocated among such Baker Brothers Purchasers as indicated by the Baker Brothers Purchasers.

 

  

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“Required Approvals” shall have the meaning ascribed to such term in Section 3.1(e).

 

"Required Holders" means (i) all of the Initial Purchasers for so long as each Initial Purchaser together with its respective Affiliates beneficially own in the aggregate Common Stock and/or Common Stock Equivalents (without regard to any limitations on exercise of the Warrants, the Series F 2015 Warrants, the 2012 Warrants or the 2014 Warrants) equal to or convertible or exercisable, as the case may be, into at least 5% of the Company’s outstanding shares of Common Stock (calculated as if the Warrants, the Series F 2015 Warrants, the 2014 Warrants and the 2012 Warrants were exercised in full without regard to any limitations on exercise of the Warrants, the Series F 2015 Warrants, the 2014 Warrants or the 2012 Warrants) or (ii) otherwise, Purchasers holding together with their Affiliates a majority amount of the aggregate of the Securities, the 2012 Securities and the 2014 Securities then outstanding.

 

“Required Reserve Amount” shall have the meaning ascribed to such term in Section 4.10.

 

"Right of Participation End Date" means the earlier of (x) the date the Company obtains the approval of the FDA for bremelanotide and (y) the four (4) year anniversary of the Closing Date.

 

“Rule 144” means Rule 144 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended or interpreted from time to time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same purpose and effect as such Rule.

 

“SEC Reports” shall have the meaning ascribed to such term in Section 3.1(h).

 

“Securities” means the Shares, the Warrants, the Series F 2015 Warrants and the Warrant Shares.

 

“Securities Act” shall have the meaning ascribed to such term in the preamble of this Agreement.

 

“Series D 2014 Warrants” means the warrants issued in connection with that certain venture loan and security agreement, dated as of December 23, 2014, by and among the Company, Horizon Technology Finance Corporation and Fortress Credit Co LLC.

 

  

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“Series E 2015 Warrants” means the warrants required to be delivered to the Purchasers at the Closing in accordance with Section 2.2(a) hereof, in substantially the form of Exhibit B attached hereto (with any changes thereto being acceptable to the Purchasers).

 

“Series F 2015 Warrants” means the warrants required to be delivered to the Purchasers at the Closing in accordance with Section 2.2(a) hereof, in substantially the form of Exhibit C attached hereto (with any changes thereto being acceptable to the Purchasers).

 

“Series G 2015 Documentation” means that certain venture loan and security agreement, dated as of July 2, 2015, by and among the Company, Horizon Technology Finance Corporation and Fortress Credit Co LLC and the accompanying note, Series G 2015 Warrants and Registration Rights agreement, in the forms attached hereto as Exhibit A.

 

“Series G 2015 Warrants” means the warrants required to be delivered pursuant to the Series G 2015 Documentation.

 

“Shares” means the shares of Common Stock issued or issuable to each Purchaser pursuant to this Agreement, but excluding the Warrant Shares.

 

“Short Sales” means all “short sales” as defined in Rule 200 of Regulation SHO under the Exchange Act (but shall not be deemed to include the location and/or reservation of borrowable shares of Common Stock). 

 

“Subscription Amount” means, as to each Purchaser, the aggregate amount to be paid for the Shares, the Warrants and the Series F 2015 Warrants purchased hereunder, as specified below such Purchaser’s name on the signature page of this Agreement and next to the heading “Subscription Amount,” in United States dollars and in immediately available funds.

 

“Subsequent Equity Placement” means, the Company or any Subsidiary thereof shall, either directly or indirectly, offer, sell, grant any option to purchase, or otherwise dispose of (or announce any offer, sale, grant or any option to purchase or other disposition of or enter into any discussions or negotiations as to) any of the Company’s or its Subsidiaries’ equity or equity equivalent securities, including preferred stock or other instrument or security (including any debt security) that is convertible into or exchangeable or exercisable for Common Stock or Common Stock Equivalents and any Indebtedness that is (i) issued in connection with any Subsequent Equity Placement, (ii) issued in conjunction with or related to any issuance or potential issuance of Common Stock or Common Stock Equivalents or (iii) convertible into or exchangeable or exercisable for Common Stock or Common Stock Equivalents (other than Excluded Securities), including, without limitation, any other transaction whereby the Company raises or could receive any consideration and any other instrument or transaction structured in a manner to circumvent the intent of this definition and Section 4.17 or Section 4.18 in which case this definition shall be construed and implemented in a manner otherwise than in strict conformity with the terms hereof to the extent necessary to correct this definition or any portion hereof which may be defective or inconsistent with the intended treatment of such instrument or transaction under Section 4.17 and Section 4.18.

 

  

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“Subsequent Placement Agreement” shall have the meaning ascribed to such term in Section 4.18(a)(iv).

 

“Subsequent Placement Documents” shall have the meaning ascribed to such term in Section 4.18(a)(vii).

 

“Subsidiary” means RhoMed Incorporated, a New Mexico corporation.

 

“Successor Entity” shall have the meaning ascribed to such term in the Warrants.

 

“Trading Day” means a day on which the principal Trading Market is open for trading.

 

“Trading Market” means any of the following markets or exchanges on which the Common Stock is listed or quoted for trading on the date in question: the NYSE MKT, the Nasdaq Stock Market, the New York Stock Exchange, the OTC Bulletin Board, or the OTC Markets (or any successors to any of the foregoing).

 

“Transaction Documents” means this Agreement, the Warrants, the Series F 2015 Warrants, the Registration Rights Agreement, all exhibits and schedules thereto and hereto and any other documents or agreements executed in connection with the transactions contemplated hereunder.

 

“Transfer Agent” means American Stock Transfer & Trust Company, LLC, the current transfer agent of the Company, with a mailing address of 6201 15th Avenue, Brooklyn, New York 11219 and a facsimile number of (718) 765-8718, and any successor transfer agent of the Company.

 

"Up-Round Financing" offering means any Subsequent Equity Placement with a purchase price per share, or with a conversion, exercise or exchange price per share, in each case, that, after giving effect to any adjustments to such price to account for value attributable to other instruments such as warrants or options, is equal to, or exceeds, the Purchase Price (as adjusted for any stock dividend, stock split, stock combination, reclassification or similar transaction occurring after signing definitive documents) or any offering of Common Stock sold as a unit in conjunction with any Common Stock Equivalents with an exercise or conversion price greater than 150% of the Purchase Price (as adjusted for any stock dividend, stock split, stock combination, reclassification or similar transaction occurring after signing definitive documents).

 

“Warrants” means the Series E 2015 Warrants required to be delivered to the Purchasers at the Closing in accordance with Section 2.2(a) hereof.

 

“Warrant Shares” means the shares of Common Stock issuable upon exercise of the Warrants and the Series F 2015 Warrants.

 

  

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ARTICLE II.

 

PURCHASE AND SALE

 

2.1 Closing.  On the Closing Date, upon the terms and subject to the conditions set forth herein, substantially concurrent with the execution and delivery of this Agreement by the parties hereto, the Company agrees to sell, and the Purchasers, severally and not jointly, agree to purchase hereunder, (i) that aggregate number of Shares set forth on such Purchaser’s signature page hereto, (ii) Series E 2015 Warrants to purchase that number of shares of Common Stock set forth on such Purchaser’s signature page hereto and (iii) Series F 2015 Warrants to purchase that number of shares of Common Stock set forth on such Purchaser’s signature page hereto, at the aggregate Subscription Amount set forth on such Purchaser’s signature page hereto.  Each Purchaser shall deliver to the Company, via wire transfer or a certified check of immediately available funds in an amount equal to such Purchaser’s Subscription Amount as set forth on its signature page hereto, and the Company shall deliver to each Purchaser its respective Shares, Warrants and Series F 2015 Warrants being purchased hereunder, and the Company and each Purchaser shall deliver the other items set forth in Section 2.2 deliverable at the Closing.  Upon satisfaction of the covenants and conditions set forth in Sections 2.2 and 2.3, the Closing shall occur at the offices of the Company Counsel or such other location as the parties shall mutually agree.  For all purposes of this Agreement, the Shares, the Warrants and Series F 2015 Warrants shall be deemed to be issued in all respects simultaneously and under no circumstance shall any of the Shares, the Warrants or the Series F 2015 Warrants be deemed to be issued prior to or after any other Shares, Warrants or Series F 2015 Warrants.

 

2.2 Deliveries.

 

(a) On or prior to the Closing Date, the Company shall deliver or cause to be delivered to each Purchaser the following:

 

(i) this Agreement duly executed by the Company;

 

(ii) a legal opinion of Company Counsel reasonably satisfactory to the Purchasers;

 

(iii) the number of Shares set forth on such Purchaser’s signature page to this Agreement, via (X) upon the request of the Purchaser, credit to the Purchaser’s or its designee’s balance account with The Depository Trust Company (“DTC”) through its Deposit Withdrawal At Custodian system (“DWAC”), or to the Purchaser’s or its designee’s direct registration account, provided that the Transfer Agent is participating in the Direct Registration System (“DRS”) or The DTC Fast Automated Securities Transfer Program (the “FAST Program”), or (Y) if the Transfer Agent is not participating in either the DRS or FAST Program, a certificate registered in the Company’s share register in the name of the Purchaser;

 

  

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(iv) a Series E 2015 Warrant certificate, in a form acceptable to the Purchasers, registered in the name of such Purchaser to purchase such number of shares of Common Stock as is set forth on the Purchaser’s signature page to this Agreement, with an exercise price equal to $0.01 per share, subject to adjustment therein;

 

(v) a Series F 2015 Warrant certificate, in a form acceptable to the Purchasers, registered in the name of such Purchaser to purchase such number of shares of Common Stock as is set forth on the Purchaser’s signature page to this Agreement, with an exercise price equal to the Purchase Price, subject to adjustment therein;

 

(vi) a copy of the Irrevocable Transfer Agent Instructions, in the form of Exhibit E attached hereto, which instructions shall have been delivered to and acknowledged in writing by the Company’s Transfer Agent;

 

(vii) the Registration Rights Agreement duly executed by the Company, in a form acceptable to the Purchasers;

 

(viii) the Schedules to this Agreement shall be in a form acceptable to the Purchasers; and

 

(ix) a certificate, executed by the Secretary of the Company and dated as of the Closing Date, as to the resolutions consistent with the first sentence of Section 3.1(hh) as adopted by the Company’s Board of Directors in a form reasonably acceptable to such Purchaser.

 

(b) On or prior to the Closing Date, each Purchaser shall deliver or cause to be delivered to the Company the following:

 

(i) this Agreement duly executed by such Purchaser;

 

(ii) such Purchaser’s Subscription Amount by wire transfer to the account as specified in writing by the Company or a certified check of immediately available funds; and

 

(iii) the Registration Rights Agreement duly executed by such Purchaser.

 

2.3 Closing Conditions.

 

(a) The obligations of the Company hereunder in connection with the Closing are subject to the following conditions being met:

 

(i) the accuracy in all material respects when made and on the Closing Date of the representations and warranties of the Purchasers contained herein (unless as of a specific date therein in which case they shall be accurate as of such date);

 

  

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(ii) all obligations, covenants and agreements of each Purchaser required to be performed at or prior to the Closing Date shall have been performed; and

 

(iii) the delivery by each Purchaser of the items set forth in Section 2.2(b) of this Agreement.

 

(b) The respective obligations of the Purchasers hereunder in connection with the Closing are subject to the following conditions being met:

 

(i) the accuracy in all material respects (except for those representations and warranties that are qualified by materiality or Material Adverse Effect, which shall be true and correct in all respects) when made and on the Closing Date of the representations and warranties of the Company contained herein (unless as of a specific date therein, in which case they shall be accurate as of such date);

 

(ii) all obligations, covenants and agreements of the Company required to be performed at or prior to the Closing Date shall have been performed;

 

(iii) the delivery by the Company of the items set forth in Section 2.2(a) of this Agreement;

 

(iv) there shall have been no Material Adverse Effect with respect to the Company since the date hereof;

 

(v) from the date hereof to the Closing Date, trading in the Common Stock shall not have been suspended by the Commission or the Company’s principal Trading Market (except for any suspension of trading of limited duration agreed to by the Company, which suspension shall be terminated prior to the Closing), and, at any time prior to the Closing Date, trading in securities generally as reported by Bloomberg L.P. shall not have been suspended or limited, or minimum prices shall not have been established on securities whose trades are reported by such service, or on any Trading Market, 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 of such magnitude in its effect on, or any material adverse change in, any financial market which, in each case, in the reasonable judgment of such Purchaser, makes it impracticable or inadvisable to purchase the Securities at the Closing;

 

(vi) from the date hereof to the Closing Date: (i) the Company shall not have taken any of the actions set forth in Section 3(a) of the Warrants, declared or made any Distribution (as defined in the Warrants) or granted, issued or sold any Purchase Rights (as defined in the Warrants); and (ii) no Fundamental Transaction shall have occurred; and

 

(vii) the Company shall simultaneously receive gross proceeds of at least $10 million with  net proceeds of at least $9.9 million by incurring Indebtedness pursuant to the Series G 2015 Documentation and reasonably satisfactory to the Purchasers.

 

  

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ARTICLE III.

 

REPRESENTATIONS AND WARRANTIES

 

3.1 Representations and Warranties of the Company.  Except as described in the SEC Reports or any information contained or incorporated therein, the Company hereby makes the following representations and warranties as of the date hereof and as of the Closing Date to each Purchaser (unless as of a specific date therein) and as set forth herein covenants and agrees:

 

(a) Subsidiary.  The Subsidiary of the Company is described in the SEC Reports.  The Company owns, directly or indirectly, all of the capital stock or other equity interests of the Subsidiary free and clear of any Liens, and all of the issued and outstanding shares of capital stock of the Subsidiary are validly issued and are fully paid, non-assessable and free of preemptive and similar rights to subscribe for or purchase securities.  The Subsidiary is inactive, and has no employees, liabilities or assets other than certain patents not material to the business of the Company.

 

(b) Organization and Qualification.  Each of the Company and the Subsidiary is an entity duly incorporated or otherwise organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation or organization, with the requisite power and authority to own and use its properties and assets and to carry on its business as currently conducted.  Neither the Company nor the Subsidiary is in violation nor default of any of the provisions of its respective certificate or articles of incorporation, bylaws or other organizational or charter documents, except to the extent that any such default, could not have or reasonably be expected to result in: (i) a material adverse effect on the legality, validity or enforceability of any Transaction Document, (ii) a material adverse effect on the operations, results of operations, assets, business, prospects or condition (financial or otherwise) of the Company and the Subsidiary, individually or taken as a whole, or (iii) a material adverse effect on the Company’s ability to perform in any material respect on a timely basis its obligations under any Transaction Document (any of (i), (ii) or (iii), a “Material Adverse Effect”) provided, that none of the following alone shall be deemed, in and of itself, to constitute a Material Adverse Effect: (i) a change in the market price or trading volume of the Common Stock or (ii) changes in general economic conditions or changes affecting the industry in which the Company operates generally (as opposed to Company-specific changes) so long as such changes do not have a materially disproportionate effect on the Company.  Each of the Company and the Subsidiary is duly qualified to conduct business and is in good standing as a foreign corporation or other entity in each jurisdiction in which the nature of the business conducted or property owned by it makes such qualification necessary, except where the failure to be so qualified or in good standing, as the case may be, could not have or reasonably be expected to result in a Material Adverse Effect and no Proceeding has been instituted in any such jurisdiction revoking, limiting or curtailing or seeking to revoke, limit or curtail such power and authority or qualification.

 

  

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(c) Authorization; Enforcement.  The Company has the requisite corporate power and authority to enter into and to consummate the transactions contemplated by this Agreement and each of the other Transaction Documents and otherwise to carry out its obligations hereunder and thereunder.  The execution and delivery of each of this Agreement and the other Transaction Documents by the Company and the consummation by it of the transactions contemplated hereby and thereby have been duly authorized by all necessary action on the part of the Company and no further action is required by the Company, the Board of Directors or the Company’s stockholders in connection herewith or therewith other than in connection with the Required Approvals.  This Agreement and each other Transaction Document to which it is a party has been (or upon delivery will have been) duly executed by the Company and, when delivered in accordance with the terms hereof and thereof, will constitute the valid and binding obligation of the Company enforceable against the Company in accordance with its terms (assuming due execution and delivery by all other parties thereto), except (i) as limited by general equitable principles and applicable bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting enforcement of creditors’ rights generally, (ii) as limited by laws relating to the availability of specific performance, injunctive relief or other equitable remedies and (iii) insofar as indemnification and contribution provisions may be limited by applicable law.

 

(d) No Conflicts.  The execution, delivery and performance by the Company of this Agreement and the other Transaction Documents to which it is a party, the issuance and sale of the Securities (assuming the exercise in full of the Warrants, the Series F 2015 Warrants, the 2012 Warrants and the 2014 Warrants without regard to any limitations on exercise of the Warrants, the Series F 2015 Warrants, the 2012 Warrants or the 2014 Warrants) and  the performance by the Company of its obligations hereunder, will not: (i) conflict with or violate any provision of the Company’s or the Subsidiary’s certificate or articles of incorporation or bylaws, (ii) except as waived by named purchasers with respect to their certain of their rights under the 2012 Offering Documentation and the 2014 Offering Documentation between the Company and said named purchasers and the warrants issued pursuant thereto, conflict with, or constitute a default (or an event that with notice or lapse of time or both would become a default) under, result in the creation of any Lien upon any of the properties or assets of the Company, or give to others any rights of termination, amendment, acceleration or cancellation (with or without notice, lapse of time or both) of, or require the Company to make any payment (of cash or otherwise) or adjustment or issue any shares of Common Stock or other securities under, any agreement (including, without limitation, any employment or similar agreement), security (including, without limitation, any option or warrant to purchase Common Stock), credit facility, debt or any other instrument (evidencing a Company debt or otherwise) or other understanding to which the Company is a party or by which any property or asset of the Company is bound or affected, or (iii) subject to the Required Approvals, conflict with or result in a violation of any law, rule, regulation, order, judgment, injunction, decree or other restriction of any court or governmental authority to which the Company is subject (including federal and state securities laws and regulations), or by which any property or asset of the Company is bound or affected; except in the case of clauses (ii) and (iii), such as could not have or reasonably be expected to result in a Material Adverse Effect.

 

  

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(e) Filings, Consents and Approvals.  The Company is not required to obtain any consent, waiver, authorization or order of, give any notice to, or make any filing or registration with, any court or other federal, state, local or other governmental authority or other Person in connection with the execution, delivery and performance by the Company of this Agreement or the other Transaction Documents, other than: (i) the filings required pursuant to Section 4.6 of this Agreement, (ii) the filing with the Commission of the Registration Statements in accordance with the terms of the Registration Rights Agreement, (iii) the notice and/or application(s) to each applicable Trading Market for the issuance and sale of the Securities and the listing of the Shares and Warrant Shares for trading thereon in the time and manner required thereby, (iv) the filing of Form D with the Commission and such filings as are required to be made under applicable state securities laws, and (v) the waiver by named purchasers of certain of their rights under the 2012 Offering Documentation and the 2014 Offering Documentation between the Company and said named purchasers (collectively, the “Required Approvals”).  Except for any reduction required by the Securities and Exchange Commission to the number of Registrable Securities permitted to be registered for resale on a Registration Statement (as such terms are defined in the Registration Rights Agreement), the Company is unaware of any facts or circumstances that might prevent the Company from obtaining or effecting any of the registration, application or filings pursuant to the preceding sentence.  The Company is not in violation of the listing requirements of its principal Trading Market and has no knowledge of any facts that would reasonably lead to delisting or suspension of the Common Stock in the foreseeable future.  The issuance by the Company of the Securities shall not have the effect of delisting or suspending the Common Stock from the Company’s principal Trading Market.

 

(f) Issuance of the Securities.  The Securities are duly authorized and, when issued and paid for in accordance with this Agreement and the other applicable Transaction Documents, will be duly and validly issued, fully paid and non-assessable, free and clear of all Liens imposed by the Company other than restrictions on transfer provided for in this Agreement or the other Transaction Documents.  The Warrant Shares, when issued in accordance with the terms of the Transaction Documents, will be validly issued, fully paid and non-assessable, free and clear of all Liens imposed by the Company other than restrictions on transfer provided for in this Agreement or the other Transaction Documents.  The Company has or will have, prior to issuance, reserved from its duly authorized capital stock solely for the benefit of the Purchasers and any other holders of Warrants and Series F 2015 Warrants, the maximum number of shares of Common Stock issuable pursuant to this Agreement and the Warrants and the Series F 2015 Warrants.

 

(g) Capitalization.

 

(i)           The authorized capital stock of the Company consists of 300,000,000 shares of Common Stock, par value $0.01 per share and 10,000,000 shares of preferred stock, par value $0.01 per share (“Preferred Stock”).  There are 57,128,433 shares of Common Stock and 4,697 shares of Preferred Stock, all of which are Series A Convertible Preferred Stock (which converts into 62,531 shares of Common Stock), outstanding as of the Closing Date.

 

  

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(ii)           There are options to purchase 5,083,956 shares of Common Stock outstanding as of the Closing Date.

 

(iii)           There are restricted stock units to acquire 1,028,017 shares of Common Stock outstanding as of the Closing Date.

 

(iv)           There are warrants to purchase 101,402,579 shares of Common Stock outstanding as of the Closing Date with the exercise prices and expiration dates as set forth on Schedule 3.1(g)(iv).

 

(v)           There are 3,294,140 shares reserved for future issuance under the Company’s 2011 Stock Incentive Plan, as amended and restated through the date hereof.

 

(vi)           Except as set forth in the Securities Purchase Agreement, dated as of July 2, 2012, and the Securities Purchase Agreement dated as of December 23, 2014, both between the Company and the purchasers named therein and the warrants issued pursuant thereto, no Person has any right of first refusal, preemptive right, right of participation, or any similar right to participate in the transactions contemplated by the Transaction Documents.  Except as set forth on Schedule 3.1(g)(vi) and except as to the Purchasers, there are no outstanding options, warrants, scrip rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities, rights or obligations convertible into or exercisable or exchangeable for, or giving any Person any right to subscribe for or acquire, any shares of Common Stock, or contracts, commitments, understandings or arrangements by which the Company is or may become bound to issue additional shares of Common Stock or Common Stock Equivalents.  Except as set forth on Schedule 3.1(g)(vi), the issuance and sale of the Securities will not obligate the Company to issue shares of Common Stock or other securities to any Person (other than the Purchasers) and will not result in a right of any holder of Company securities to adjust the exercise, conversion, exchange or reset price under any of such securities.  All of the outstanding shares of capital stock of the Company are duly authorized, validly issued, fully paid and non-assessable, have been issued in compliance with all federal and state securities laws, and none of such outstanding shares was issued in violation of any preemptive rights or similar rights to subscribe for or purchase securities.  Except for the Required Approvals, no further approval or authorization of any stockholder, the Board of Directors or others is required for the issuance and sale of the Securities.  Except as disclosed in the SEC Reports or in any exhibit thereto, there are no stockholders agreements, voting agreements or other similar agreements with respect to the Company’s capital stock to which the Company is a party or, to the knowledge of the Company, between or among any of the Company’s stockholders.

 

(vii)           As of the Closing Date, the Company will have reserved 24,109,589 shares of Common Stock for the purpose of enabling the Company to issue Shares pursuant to this Agreement and Warrant Shares pursuant to any exercise of the Warrants or Series F 2015 Warrants.

 

  

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(viii)           Other than as set forth on Schedule 3.1(g)(vi), there are no rights or liabilities outstanding under any agreement to issue any Common Stock Equivalents, including no rights or liabilities outstanding under the Company’s March 1, 2011 Warrant Agreement (including pursuant to the $2,000,000 Series A Warrant, the $21,000,000 Series B Warrant or any other Series A Warrant or Series B Warrants issued pursuant thereto) by and between the Company and American Stock Transfer & Trust Company (including the $2,000,000 Series A Warrant, the $21,000,000 Series B Warrant or any other Series A Warrant or Series B Warrants issued pursuant thereto, the “2011 Warrant Agreement”).  All such rights and liabilities not set forth on such schedule have expired in accordance with its terms.  No acceleration or redemption right of (or any payment under) the 2011 Warrant Agreement or any warrant or right thereunder has been made or can be made in the future.

 

(h) SEC Reports; Financial Statements.  The Company has filed all reports, schedules, forms, statements and other documents required to be filed by the Company under the Securities Act and the Exchange Act, including pursuant to Section 13(a) or 15(d) thereof, for the two years preceding the date hereof (or such shorter period as the Company was required by law or regulation to file such material) (the foregoing materials, including the exhibits thereto and documents incorporated by reference therein, being collectively referred to herein as the “SEC Reports”) on a timely basis or has received a valid extension of such time of filing and has filed any such SEC Reports prior to the expiration of any such extension.  As of their respective dates, the SEC Reports complied as to form in all material respects, when filed, with the requirements of the Securities Act and the Exchange Act, as applicable, and none of the SEC Reports, when filed, contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading.  The historical financial statements of the Company included in the SEC Reports complied in all material respects with applicable accounting requirements and the rules and regulations of the Commission with respect thereto as in effect at the time of filing.  Such financial statements have been prepared in accordance with United States generally accepted accounting principles applied on a consistent basis during the periods involved (“GAAP”), except as may be otherwise specified in such financial statements or the notes thereto and except that unaudited financial statements may not contain all footnotes required by GAAP, and fairly present in all material respects the financial position of the Company and its Subsidiary as of and for the dates thereof and the results of operations and cash flows for the periods then ended, subject, in the case of unaudited statements, to normal, immaterial, year-end audit adjustments.

 

(i) Material Changes; Undisclosed Events, Liabilities or Developments.  Since the date of the latest audited financial statements included within the SEC Reports, except as specifically disclosed in a subsequent SEC Report filed or furnished with the Commission prior to the date hereof, (i) there has been no event, occurrence or development that has had or that could reasonably be expected to result in a Material Adverse Effect, (ii) the Company has not incurred any liabilities (contingent or otherwise) other than (A) trade payables and accrued expenses incurred in the ordinary course of business consistent with past practice and (B) liabilities not required to be reflected in the Company’s financial statements pursuant to GAAP or disclosed in filings made with the Commission, (iii) the Company has not altered its method of accounting, (iv) the Company has not declared or made any dividend or distribution of cash or other property to its stockholders or purchased, redeemed or made any agreements to purchase or redeem any shares of its capital stock, and (v) the Company has not issued any equity securities to any officer, director or Affiliate, except pursuant to existing Company equity plans.  The Company does not have pending before the Commission any request for confidential treatment of information.  Except for the issuance of the Securities contemplated by this Agreement or as disclosed in the SEC Reports, no event, liability, fact, circumstance, occurrence or development (including, without limitation, any fundamental transaction, change of control or similar event under any agreement (including, without limitation, any employment agreement)) has occurred or exists, or is reasonably expected to occur or exist, with respect to the Company or its business, properties, operations, assets or financial condition that, but for the passage of time, would be required to be disclosed by the Company under applicable securities laws at the time this representation is made that has not been publicly disclosed at least one (1) Trading Day prior to the date that this representation is made.

 

  

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(j) Litigation.  There is no action, suit, written notice of an inquiry or investigation, notice of violation or proceeding pending or, to the knowledge of the Company, threatened against or affecting the Company, the Subsidiary or any of their respective properties before or by any court, arbitrator, governmental or administrative agency, trading market or regulatory authority (federal, state, county, local or foreign) (collectively, an “Action”) which (i) adversely affects or challenges the legality, validity or enforceability of any of the Transaction Documents or the Securities or (ii) could, if there were an unfavorable decision, have or reasonably be expected to result in a Material Adverse Effect.  Neither the Company nor the Subsidiary is or has been the subject of any Action involving a claim of violation of or liability under federal or state securities laws or a claim of breach of fiduciary duty.  To the knowledge of the Company, no director or officer of the Company or the Subsidiary is the subject of any Action involving a claim of violation of or liability under federal or state securities laws or a claim of breach of fiduciary duty.  The Commission has not issued any stop order or other order suspending the effectiveness of any registration statement filed by the Company under the Exchange Act or the Securities Act.

 

(k) Labor Relations.  No material labor dispute exists or, to the knowledge of the Company, is imminent with respect to any of the employees of the Company, which could reasonably be expected to result in a Material Adverse Effect.  None of the Company’s employees is a member of a union that relates to such employee’s relationship with the Company, the Company is not a party to a collective bargaining agreement, and the Company believes that its relationship with its employees is good.  No executive officer, to the knowledge of the Company, is, or is now expected to be, in violation of any material term of any employment contract, confidentiality, disclosure or proprietary information agreement or non-competition agreement, or any other contract or agreement or any restrictive covenant in favor of any third party, and the continued employment of each such executive officer does not subject the Company to any liability with respect to any of the foregoing matters.  The Company is in compliance with all material U.S. federal, state, local and foreign laws and regulations relating to employment and employment practices, terms and conditions of employment and wages and hours, except where the failure to be in compliance could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

 

  

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(l) Compliance.  Neither the Company nor the Subsidiary (i) is in default under or in violation of (and no event has occurred that has not been waived that, with notice or lapse of time or both, would constitute a default by the Company under), nor has the Company or the Subsidiary received written notice of a claim that it is in default under or that it is in violation of, any indenture, loan or credit agreement or any other agreement or instrument to which it is a party or by which it or any of its properties is bound (whether or not such default or violation has been waived), (ii) is in violation of any judgment, decree or order of any court, arbitrator or governmental authority, and (iii) is in violation of any statute, rule, ordinance or regulation of any governmental authority, including without limitation all foreign, federal, state and local laws applicable to its business and all such laws that affect the environment, except in each case as could not have or would not reasonably be expected to result in a Material Adverse Effect.

 

(m) Regulatory Permits.  The Company possesses all certificates, authorizations and permits issued by the appropriate federal, state, local or foreign regulatory authorities necessary to conduct its business as currently conducted as described in the SEC Reports, except where the failure to possess such permits could not reasonably be expected to result in a Material Adverse Effect (“Material Permits”), and the Company has not received any notice of proceedings relating to the revocation or modification of any Material Permit.

 

(n) Title to Assets.  The Company has good and marketable title in fee simple to all real property and good and marketable title in all personal property owned by it that is material to the business of the Company, in each case free and clear of all Liens, except for (i) Liens that do not materially affect the value of such property and do not materially interfere with the use made and proposed to be made of such property by the Company and (ii) Liens for the payment of federal, state or other taxes, for which appropriate reserves have been made therefor in accordance with GAAP and the payment of which is neither delinquent nor subject to penalties.  Any real property and facilities held under lease by the Company are held by it under valid, subsisting and enforceable leases with which the Company is in compliance except where the failure to be in compliance would not reasonably be expected to have a Material Adverse Effect.

 

(o) Patents and Trademarks.  The Company and its Subsidiary own or possess adequate rights or licenses to use, all patents, patent rights, patent applications, trademarks, trademark applications, service marks, trade names, trade secrets, inventions, copyrights, licenses, approvals, government authorizations, trade secrets and other intellectual property rights and similar rights necessary or required for use in connection with their respective businesses (collectively, the “Intellectual Property Rights”).  None of the Company’s or the Subsidiary’s material Intellectual Property Rights have expired or terminated or have been abandoned or are expected to expire or terminate or are expected to be abandoned, within three years from the date of this Agreement.  Neither the Company nor its Subsidiary has received a notice (written or otherwise) that any of the Intellectual Property Rights used by the Company or its Subsidiary violates or infringes upon the rights of any Person.  To the knowledge of the Company, all such Intellectual Property Rights are enforceable.  There is no existing infringement by another Person of any of the Intellectual Property Rights which would reasonably be expected to have a Material Adverse Effect.  Neither the Company nor the Subsidiary is aware of any facts or circumstances which might give rise to any of the foregoing infringements or claims, actions or proceedings.  The Company and its Subsidiary have taken reasonable security measures to protect the secrecy, confidentiality and value of all of their intellectual properties, except where failure to do so could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

 

  

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(p) Insurance.  The Company is insured by insurers of recognized financial responsibility against such losses and risks and in such amounts as are prudent and customary in the business in which the Company is engaged.  The Company has no reason to believe that it will not be able to renew its existing insurance coverage as and when such coverage expires or to obtain similar coverage from similar insurers as may be necessary to continue its business without a significant increase in cost.

 

(q) Transactions With Affiliates and Employees.  None of the officers or directors of the Company and, to the knowledge of the Company, none of the employees of the Company is presently a party to any transaction with the Company or its Subsidiary (other than for services as employees, officers and directors), including any contract, agreement or other arrangement providing for the furnishing of services to or by, providing for rental of real or personal property to or from, providing for the borrowing of money from or lending of money to or otherwise requiring payments to or from any officer, director or such employee or, to the knowledge of the Company, any entity in which any officer, director, or any such employee has a substantial interest or is an officer, director, trustee or partner, in each case in excess of $120,000 other than for: (i) payment of salary or consulting fees for services rendered, (ii) reimbursement for expenses incurred on behalf of the Company and (iii) other employee benefits, including stock option, restricted stock, restricted stock units or other compensation-related agreements under any equity plan of the Company.

 

(r) Sarbanes-Oxley; Internal Accounting Controls.  The Company is in material compliance with all applicable requirements of the Sarbanes-Oxley Act of 2002 that are effective as of the date hereof, and any and all applicable rules and regulations promulgated by the Commission thereunder that are effective as of the date hereof and as of the Closing Date.  The Company maintains a system of internal accounting controls sufficient to provide reasonable assurance that: (i) transactions are executed in accordance with management’s general or specific authorizations, (ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with GAAP and to maintain asset accountability, (iii) access to assets is permitted only in accordance with management’s general or specific authorization, and (iv) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences.  The Company has established disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the Company and designed such disclosure controls and procedures to ensure that information required to be disclosed by the Company in the reports it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Commission’s rules and forms.  The Company’s certifying officers have evaluated the effectiveness of the Company’s disclosure controls and procedures as of the end of the period covered by the Company’s most recently filed periodic report under the Exchange Act (such date, the “Evaluation Date”).  Since the Evaluation Date, there have been no changes in the Company’s internal control over financial reporting (as such term is defined in the Exchange Act) that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

 

  

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(s) Certain Fees.  Except as set forth on Schedule 3.1(s), no brokerage or finder’s fees or commissions are or will be payable by the Company to any broker, financial advisor or consultant, finder, placement agent, investment banker, bank or other Person with respect to the transactions contemplated by the Transaction Documents.  The Purchasers shall have no obligation with respect to any fees or with respect to any claims made by or on behalf of other Persons for fees of a type contemplated in this Section that may be due in connection with the transactions contemplated by the Transaction Documents.

 

(t) Private Placement.  Assuming the accuracy of the Purchasers’ representations and warranties set forth in Section 3.2, no registration under the Securities Act is required for the offer and sale of the Securities by the Company to the Purchasers as contemplated hereby.

 

(u) Investment Company.  The Company is not, and immediately after receipt of payment for the Securities, and for so long as any Purchaser holds any Securities, will not be, an “investment company” within the meaning of the Investment Company Act of 1940, as amended.  The Company shall conduct its business in a manner so that it will not become an “investment company” subject to registration under the Investment Company Act of 1940, as amended.  The Company is not controlled by an “investment company” and shall not take any actions that would cause the Company to be controlled by an “investment company”.

 

(v) Registration Rights.  Except as set forth in the Series G 2015 Documentation or on Schedule 3.1(v), other than each of the Purchasers pursuant to the Registration Rights Agreement, no Person has any right to cause the Company to effect the registration under the Securities Act of any securities of the Company.

 

(w) Listing and Maintenance Requirements.  The Common Stock is registered pursuant to Section 12(b) or 12(g) of the Exchange Act, and the Company has taken no action designed to, or which to its knowledge is likely to have the effect of, terminating the registration of the Common Stock under the Exchange Act nor has the Company received any notification that the Commission is contemplating terminating such registration.  Except as described in the SEC Reports, the Company has not, in the 12 months preceding the date hereof, received notice from any Trading Market on which the Common Stock is or has been listed or quoted to the effect that the Company is not in compliance with the listing or maintenance requirements of such Trading Market.

 

  

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(x) Disclosure.  Except with respect to the material terms and conditions of the transactions contemplated by the Transaction Documents, the Company confirms that neither it nor any other Person acting on its behalf has provided any of the Purchasers or their agents or counsel with any information that it believes constitutes material, non-public information.  The Company understands and confirms that the Purchasers will rely on the foregoing representation in effecting transactions in securities of the Company.  The disclosure furnished by or on behalf of the Company to the Purchasers regarding the Company, the Subsidiary, their respective businesses and the transactions contemplated hereby does not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements made therein, in light of the circumstances under which they were made, not misleading.  The Company acknowledges and agrees that no Purchaser makes or has made any representations or warranties with respect to the transactions contemplated hereby other than those specifically set forth in the Transaction Documents.

 

(y) No Integrated Offering.  Assuming the accuracy of the Purchasers’ representations and warranties set forth in Section 3.2, neither the Company, nor the Subsidiary, nor any of their respective Affiliates, nor any Person acting on its or their behalf has, directly or indirectly, made any offers or sales of any security or solicited any offers to buy any security, under circumstances that would reasonably cause this offering of the Securities to be integrated with prior offerings by the Company for purposes of (i) the Securities Act, which would require the registration of any such securities under the Securities Act, or (ii) any applicable stockholder approval provisions, including, without limitation, of any Trading Market on which any of the securities of the Company are listed or designated.

 

(z) Tax Status.  Except for matters that would not, individually or in the aggregate, have or reasonably be expected to result in a Material Adverse Effect, the Company and its Subsidiary has filed all necessary federal, state and foreign income and franchise tax returns and has paid or accrued all taxes shown as due thereon, and the Company has no knowledge of a tax deficiency which has been asserted or threatened against the Company or its Subsidiary.

 

(aa) [Reserved]

 

(bb) Foreign Corrupt Practices.  Neither the Company, nor to the knowledge of the Company, any agent or other person acting on behalf of the Company, has (i) directly or indirectly, used any funds for unlawful contributions, gifts, entertainment or other unlawful expenses related to foreign or domestic political activity, (ii) directly or indirectly, offered, paid, promised to pay, or authorized the giving of money or anything of value or any favor to any person in order to compel improper performance of such person’s duties or in order to improperly influence such person, (iii) made any unlawful payment to foreign or domestic government officials or employees or to any foreign or domestic political parties or campaigns from corporate funds, (iv) failed to disclose fully any contribution made by the Company (or made by any person acting on its behalf of which the Company is aware) which is in violation of law, (v) violated or is in violation of any provision of the U.S. Foreign Corrupt Practices Act of 1977, as amended; or (vi) been prosecuted, investigated or subjected to an inquiry for an offence, under the UK Bribery Act of 2010 or under applicable anti-corruption laws or regulations of any jurisdiction and there are no circumstances known to the Company likely to give rise to any such prosecution, investigation or enquiry.

 

  

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(cc) Accountants.  The Company’s registered public accounting firm is KPMG LLP.  To the Company’s knowledge, such accounting firm (i) is a registered public accounting firm as required by the Exchange Act and (ii) has expressed its opinion with respect to the financial statements included in the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2014.

 

(dd) Regulation M Compliance.  Except as set forth in Schedule 3.1(s), the Company has not, and to its knowledge no one acting on its behalf has, (i) taken, directly or indirectly, any action designed to cause or to result in the stabilization or manipulation of the price of any security of the Company to facilitate the sale or resale of any of the Securities, (ii) sold, bid for, purchased, or, paid any compensation for soliciting purchases of, any of the Securities, or (iii) paid or agreed to pay to any Person any compensation for soliciting another to purchase any other securities of the Company.

 

(ee) FDA.  As to each product subject to the jurisdiction of the U.S. Food and Drug Administration (“FDA”) under the Federal Food, Drug and Cosmetic Act, as amended, and the regulations thereunder (“FDCA”) that is being studied by the Company (each such product, a “Pharmaceutical Product”), such Pharmaceutical Product is being manufactured, packaged, labeled, and tested by the Company, or to the Company’s knowledge on behalf of the Company, in  compliance with all applicable requirements under the FDCA relating to registration, investigational use, good manufacturing practices, good laboratory practices, good clinical practices, labeling, record keeping and filing of reports, except where the failure to be in compliance would not have a Material Adverse Effect.  There is no pending, completed or, to the Company’s knowledge, threatened, action (including any lawsuit, arbitration, or legal or administrative or regulatory proceeding, charge, complaint, or investigation) relating to the Pharmaceutical Products against the Company or the Subsidiary, and neither the Company nor the Subsidiary has received any written notice, warning letter or other written communication from the FDA or any other governmental entity, which (i) imposes a clinical hold on any clinical investigation by the Company,  (ii) enters or proposes to enter into a consent decree of permanent injunction with the Company, or (iii) otherwise alleges any violation of the FDCA and the related rules or regulations by the Company or the Subsidiary, and which, either individually or in the aggregate, would have a Material Adverse Effect.  The properties, business and operations of the Company have been and are being conducted in all material respects in accordance with all applicable laws, rules and regulations of the FDA.  The Company has not been informed by the FDA that the FDA will prohibit the marketing, sale, license or use in the United States of any product proposed to be developed, produced or marketed by the Company nor has the FDA expressed any concern as to approving or clearing for marketing any product being developed or proposed to be developed by the Company.

 

  

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(ff) Office of Foreign Assets Control.  Neither the Company nor, to the Company’s knowledge, any director, officer, agent, employee or Affiliate of the Company is currently subject to any U.S. sanctions administered by the Office of Foreign Assets Control of the U.S. Treasury Department.

 

(gg) Money Laundering.  The operations of the Company are and have been conducted at all times in compliance with applicable financial record-keeping and reporting requirements of the Currency and Foreign Transactions Reporting Act of 1970, as amended, applicable money laundering statutes and applicable rules and regulations thereunder (collectively, the “Money Laundering Laws”), and no action, suit or proceeding by or before any court or governmental agency, authority or body or any arbitrator involving the Company with respect to the Money Laundering Laws is pending or, to the knowledge of the Company, threatened.

 

(hh) Application of Takeover Protections.  The Company and its Board of Directors have taken all necessary action, if any, in order to render inapplicable any control share acquisition, business combination, poison pill (including any distribution under a rights agreement) or other similar anti-takeover provision under the Company’s certificate of incorporation or bylaws or the restrictions on business combinations set forth in Section 203 of the Delaware General Corporation Law and any other similar applicable anti-takeover law that is or could become applicable to each Purchaser as a result of such Purchaser, any other Attribution Party and the Company fulfilling their obligations or exercising their rights under the Transaction Documents, including without limitation as a result of the Company’s issuance of the Shares, Warrants, Series F 2015 Warrants or Warrant Shares and such Purchaser’s ownership of any of, or rights to, any such Securities and the 2012 Securities and 2014 Securities including upon any exercise of any and all of the Warrants, Series F 2015 Warrants, the 2012 Warrants and the 2014 Warrants (assuming the exercise in full of the Warrants, Series F 2015 Warrants, the 2012 Warrants and the 2014 Warrants without regard to any limitations on exercise of the Warrants, the Series F 2015 Warrants, the 2012 Warrants or the 2014 Warrants).  The Company hereby represents that the Board has approved the transactions contemplated under the Transaction Documents for purposes of Section 203 of the Delaware General Corporation Law.  The Company hereby represents and warrants that there will be no consequence under Section 203 of the Delaware General Corporation Law to any Purchaser or any other Attribution Party by virtue of such Purchaser becoming an “Interested Stockholder” or an “Affiliate” or “Associate” of an “Interested Stockholder” (as such terms are defined in Section 203 of the Delaware General Corporation Law) as a result of the Company’s issuance of the Shares, Warrants, Series F 2015 Warrants or Warrant Shares and such Purchaser’s ownership of any of, or rights to, any such Securities and the 2012 Securities including upon any exercise of any and all of the Warrants, the Series F 2015 Warrants, the 2012 Warrants and the 2014 Warrants (assuming the exercise in full of the Warrants, the Series F 2015 Warrants, the 2012 Warrants and the 2014 Warrants without regard to any limitations on exercise of the Warrants, the Series F 2015 Warrants, the 2012 Warrants or the 2014 Warrants).  For the 

 

  

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avoidance of doubt, such Purchaser’s ownership of any or all of such Securities, the 2012 Securities and the 2014 Securities shall not be taken into account when calculating such Purchaser’s percentage ownership in the Company and shall not count towards any ownership threshold for purposes of any control share acquisition, business combination, poison pill (including any distribution under a rights agreement), or other similar anti-takeover provision under the Company’s certificate of incorporation or bylaws or the laws of its state of incorporation (including Section 203 of the Delaware General Corporation Law).  The Company has no control share acquisition, business combination, poison pill or similar anti-takeover provision under any agreement (other than the letter agreement, dated October 7, 2011, between the Company and Biotechnology Value Fund, L.P. filed with the Current Report on Form 8-K filed by the Company with the Commission on October 7, 2011) or the Company’s certificate of incorporation or bylaws.  The Company has no fundamental transaction, change of control or similar provision under any agreement (including, without limitation, any employment agreement), outstanding security (including, without limitation, any option or warrant to purchase Common Stock) or other instrument (other than as set forth on Schedule 3.1(hh)(i)).  The execution, delivery and performance by the Company of this Agreement and the other Transaction Documents to which it is a party, and the issuance of the Shares, Warrants and Series F 2015 Warrants on the Closing Date do not and will not result in any fundamental transaction, change of control or similar event, the requirement to make any payment or adjustment or issue any shares of Common Stock or other securities with respect to any fundamental transaction, change of control or similar event, or an event that with the passage of time could result in a fundamental transaction, change of control or similar event under any agreement (including, without limitation, any employment agreement), outstanding security (including, without limitation, any option or warrant to purchase Common Stock) or other instrument.  Other than as set forth on Schedule 3.1(hh)(ii), the exercise in full of the Warrants and the Series F 2015 Warrants (without regard to any limitations on exercise of the Warrants or Series F 2015 Warrants) will not result in any fundamental transaction, change of control or similar event, the requirement to make any payment (whether of cash or otherwise) or adjustment or issue any shares of Common Stock or other securities with respect to any fundamental transaction, change of control or similar event, or an event that with the passage of time could result in a fundamental transaction, change of control or similar event under any agreement (including, without limitation, any employment agreement), outstanding security (including, without limitation, any option or warrant to purchase Common Stock) or other instrument.

 

(ii) Shell Company Status.  The Company is not and has never been, prior to the date hereof, an issuer subject to Rule 144(i) under the Securities Act.

 

(jj) Acknowledgment Regarding Purchaser’s Purchase of Securities.  The Company acknowledges and agrees that each Purchaser is acting solely in the capacity of an arm’s length purchaser with respect to the Transaction Documents and the transactions contemplated hereby and thereby and that no Purchaser, together with its other Attribution Parties, is (i) an officer or director of the Company or the Subsidiary, (ii) assuming the accuracy of the Purchasers’ representation set forth in Section 3.2(g), an Affiliate of the Company or the Subsidiary or (iii) assuming the accuracy of the Purchasers’ representations and warranties set forth in Section 3.2(g), to the knowledge of the Company, a “beneficial owner” (as defined for purposes of Rule 13d-3 of the 1934 Act) of more than 10% of the aggregate number of shares of Common Stock currently outstanding.  The Company further acknowledges that no Purchaser is acting as a financial advisor or fiduciary of the Company or the Subsidiary (or in any similar capacity) with respect to the Transaction Documents and the transactions contemplated hereby and thereby, and any advice given by a Purchaser or any of its representatives or agents in connection with the Transaction Documents and the transactions contemplated hereby and thereby is merely incidental to such Purchaser’s purchase of the Securities.  The Company further represents to each Purchaser that the Company’s decision to enter into the Transaction Documents has been based solely on the independent evaluation by the Company and its representatives.

 

  

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(kk) U.S. Real Property Holding Corporation.  The Company is not, has never been, and so long as any Securities remain outstanding, shall not become, a U.S. real property holding corporation within the meaning of Section 897 of the Internal Revenue Code of 1986, as amended, and the Company shall so certify upon any Purchaser’s request.

 

(ll) Acknowledgement Regarding Buyers’ Trading Activity.  The Company acknowledges and agrees that, other than as specifically set forth in Section 4.13, none of the Purchasers have been asked to agree, nor has any Purchaser agreed, to desist from purchasing or selling, long and/or short, securities of the Company, or “derivative” securities based on securities issued by the Company.  The Company further understands and acknowledges that one or more Purchasers may engage in hedging and/or trading activities (including long and short sales) at various times during the period that the Securities are outstanding.  The Company acknowledges that such aforementioned hedging and/or trading activities (including long and short sales) do not constitute a breach of this Agreement, the Securities or any of the documents executed in connection herewith.

 

(mm) No Disqualification Events. None of the Company, any of its predecessors, any affiliated issuer, any director, executive officer, other officer of the Company participating in the offering hereunder, any beneficial owner of 20% or more of the Company's outstanding voting equity securities, calculated on the basis of voting power, nor any promoter (as that term is defined in Rule 405 under the Securities Act) connected with the Company in any capacity at the time of sale (each, an "Issuer Covered Person" and, together, "Issuer Covered Persons") is subject to any of the "Bad Actor" disqualifications described in Rule 506(d)(1)(i) to (viii) under the Securities Act (a "Disqualification Event"). The Company has exercised reasonable care to determine whether any Issuer Covered Person is subject to a Disqualification Event.

 

(nn) Series G 2015  Documentation.  No provision of any of the Series G 2015 Documentation or any other agreement relating thereto, restricts (x) any issuance, payment, the availability of any right or application of any obligation pursuant to this Agreement or any Transaction Document or (y) any issuance of Common Stock or Common Stock Equivalents.

 

  

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3.2 Representations and Warranties of the Purchasers.  Each Purchaser, for itself and for no other Purchaser, hereby represents and warrants as of the date hereof and as of the Closing Date (unless as of a specific date therein) to the Company as follows:

 

(a) Organization; Authority.  Such Purchaser is an entity duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization with full right, corporate, partnership, limited partnership, limited liability company or similar power and authority to enter into and to consummate the transactions contemplated by this Agreement and the other Transaction Documents and otherwise to carry out its obligations hereunder and thereunder.  The execution and delivery of this Agreement and the other Transaction Documents and performance by such Purchaser of the transactions contemplated by this Agreement and the other Transaction Documents have been duly authorized by all necessary corporate, partnership, limited partnership, limited liability company or similar action, as applicable, on the part of such Purchaser.  Each Transaction Document to which it is a party has been duly executed by such Purchaser, and when delivered by such Purchaser in accordance with the terms hereof, will constitute the valid and legally binding obligation of such Purchaser, enforceable against it in accordance with its terms, except: (i) as limited by general equitable principles and applicable bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting enforcement of creditors’ rights generally, (ii) as limited by laws relating to the availability of specific performance, injunctive relief or other equitable remedies and (iii) insofar as indemnification and contribution provisions may be limited by applicable law.

 

(b) Own Account.  Such Purchaser (i) understands that the Securities are “restricted securities” and have not been registered under the Securities Act or any applicable state securities law and is acquiring the Securities as principal for its own account and not with a view to or for distributing or reselling such Securities or any part thereof in violation of the Securities Act or any applicable state securities law, (ii) has no present intention of distributing any of such Securities in violation of the Securities Act or any applicable state securities law, and (iii) has no direct or indirect arrangement or understandings with any other persons to distribute or regarding the distribution of such Securities in violation of the Securities Act or any applicable state securities law (this representation and warranty not limiting such Purchaser’s right to sell the Securities pursuant to the Registration Statement or otherwise in compliance with applicable federal and state securities laws).  Such Purchaser is acquiring the Securities hereunder in the ordinary course of its business.

 

(c) Purchaser Status.  At the time such Purchaser was offered the Securities, it was, and as of the date hereof it is, and on each date on which it exercises any Warrants or Series F 2015 Warrants it will be, (i) an “accredited investor” as defined in Rule 501 under the Securities Act or (ii) either a “qualified institutional buyer” as defined in Rule 144A under the Securities Act or a “large institutional accredited investor”.  Such Purchaser is not required to be registered as a broker-dealer under the Exchange Act.

 

(d) Experience of Such Purchaser.  Such Purchaser, either alone or together with its representatives, has such knowledge, sophistication and experience in business and financial matters so as to be capable of evaluating the merits and risks of the prospective investment in the Securities, and has so evaluated the merits and risks of such investment.  Such Purchaser is able to bear the economic risk of an investment in the Securities and, at the present time, is able to afford a complete loss of such investment.

 

  

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(e) No Tax or Legal Advice.  Such Purchaser understands that nothing in this Agreement, any other Transaction Document or any other materials presented to such Purchaser in connection with the purchase and sale of the Securities constitutes legal, tax or investment advice.  Such Purchaser has consulted such legal, tax and investment advisors as it, in its sole discretion, has deemed necessary or appropriate in connection with its purchase of the Securities.

 

(f) General Solicitation.  Such Purchaser is not purchasing the Securities as a result of any advertisement, article, notice or other communication regarding the Securities published in any newspaper, magazine or similar media or broadcast over television or radio or presented at any seminar or any other general solicitation or general advertisement.  Such Purchaser has had a pre-existing relationship with the Company prior to contemplating an investment contemplated under these Transaction Documents.

 

(g) Condition of the Company; Independent Investigation.  Such Purchaser acknowledges that it has concluded to its satisfaction its own independent investigation of the Company, its business and its assets and acknowledges that such Purchaser has been provided access to the personnel, properties, assets, premises, books and records and other documents and data of the Company for such purpose, including, without limitation, access to the SEC Reports.  Such Purchaser acknowledges that it has made its own decision to consummate the transactions contemplated herein based on its independent review.

 

(h) Certain Transactions and Confidentiality.  Other than consummating the transactions contemplated hereunder, such Purchaser has not, nor has any Person acting on behalf of or pursuant to any understanding with such Purchaser, directly or indirectly executed any purchases or sales, including Short Sales, of the securities of the Company during the period commencing as of the time that such Purchaser first received a term sheet (written or oral) from the Company or any other Person representing the Company setting forth the material terms of the transactions contemplated hereunder and ending immediately prior to the execution hereof.  Notwithstanding the foregoing, in the case of a Purchaser that is a multi-managed investment vehicle whereby separate portfolio managers manage separate portions of such Purchaser’s assets and the portfolio managers have no direct knowledge of the investment decisions made by the portfolio managers managing other portions of such Purchaser’s assets, the representation set forth above shall only apply with respect to the portion of assets managed by the portfolio manager that made the investment decision to purchase the Securities covered by this Agreement.  Other than to other Persons party to this Agreement and the Purchaser’s employees, representatives and agents, such Purchaser has maintained the confidentiality of all disclosures made to it in connection with this transaction (including the existence and terms of this transaction).  Notwithstanding the foregoing, for avoidance of doubt, nothing contained herein shall constitute a representation or warranty, or preclude any actions, with respect to the identification of the availability of, or securing of, available shares to borrow in order to effect Short Sales or similar transactions in the future.

 

The Company acknowledges and agrees that the representations contained in Section 3.2 shall not modify, amend or affect such Purchaser’s right to rely on the Company’s representations and warranties contained in this Agreement or any representations and warranties contained in any other Transaction Document or any other document or instrument executed and/or delivered in connection with this Agreement or the consummation of the transaction contemplated hereby.

 

  

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ARTICLE IV.

OTHER AGREEMENTS OF THE PARTIES

 

4.1 Transfer Restrictions.

 

(a) The Securities may only be disposed of in compliance with state and federal securities laws.  In connection with any transfer of Securities other than pursuant to an effective registration statement or Rule 144 (in connection with which the Company may require the Purchaser to provide reasonable assurance that such Securities can be sold, assigned or transferred pursuant to Rule 144), the Company may require the transferor thereof to provide to the Company an opinion of counsel selected by the transferor and reasonably acceptable to the Company, the form and substance of which opinion shall be reasonably satisfactory to the Company, to the effect that such transfer does not require registration of such transferred Securities under the Securities Act.  Notwithstanding the foregoing, the Securities may be pledged in connection with a bona fide margin account or other loan or financing arrangement secured by the Securities and such pledge of Securities shall not be deemed to be a transfer, sale or assignment of the Securities hereunder, and no Purchaser effecting a pledge of Securities shall be required to provide the Company with any notice thereof or otherwise make any delivery to the Company pursuant to this Agreement or any other Transaction Document.

 

(b) The Purchasers agree to the imprinting, so long as is required by this Section 4.1, of a legend on any of the Securities in the following form:

 

[NEITHER THE SECURITY EVIDENCED HEREBY NOR THE SHARES OF COMMON STOCK UNDERLYING SUCH SECURITY HAVE BEEN][THIS SECURITY HAS NOT BEEN]  REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT (A) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, OR (B) PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY. IN ADDITION, THIS SECURITY MAY BE OFFERED AND SOLD IN AN OFFSHARE TRANSACTION COMPLYING WITH RULE 903 OR RULE 904 OF REGULATION S UNDER THE SECURITIES ACT.  NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES.

 

  

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(c) Certificates evidencing the Shares and Warrant Shares, or the applicable portion thereof, shall not contain any legend (including the legend set forth in Section 4.1(b) hereof), (i) once a registration statement (including the Registration Statement) covering the resale of such Shares and the Warrant Shares is effective under the Securities Act, (ii) following any sale of such Shares or Warrant Shares pursuant to Rule 144, or (iii) if such Shares or Warrant Shares are eligible for sale under Rule 144, without the requirement for the Company to be in compliance with the current public information required under Rule 144 as to such Shares and Warrant Shares and without volume or manner-of-sale restrictions.  At the Purchaser’s request, for the applicable portion of the Shares and Warrant Shares, the Company shall cause its counsel to issue a legal opinion to the Transfer Agent within two (2) Trading Days after the Effective Date if required by the Transfer Agent to effect the removal of the legend hereunder.  When the Shares or Warrant Shares may be sold under Rule 144 without the requirement for the Company to be in compliance with the current public information required under Rule 144 as to such Shares or Warrant Shares and without volume or manner-of-sale restrictions, then such Warrant Shares shall be issued free of all legends.  The Company agrees that following the Effective Date of a Registration Statement with respect to the Shares and Warrant Shares registered on such Registration Statement, or at such time as such legend is no longer required under this Section 4.1(c), it will, no later than three (3) Trading Days following the delivery by a Purchaser to the Company or the Transfer Agent of (A) a certificate representing the applicable portion of the Shares or Warrant Shares, as the case may be, issued with a restrictive legend and (B) to the extent the Purchaser is an Affiliate of the Company (it being agreed and acknowledged that the Purchaser shall not be deemed to be an Affiliate of the Company at any time that the Purchaser Condition is satisfied) any documentation reasonably requested by the Company demonstrating such Purchaser’s compliance with all of the applicable requirements of Rule 144 (such third (3rd) Trading Day, the “Legend Removal Date”), deliver or cause to be delivered to such Purchaser a certificate representing such shares that is free from all restrictive and other legends.  If the Company shall fail for any reason or for no reason to issue to such Purchaser of the Securities on or before the Legend Removal Date a certificate without such legend or to issue such Securities to such Purchaser by electronic delivery at the applicable balance account at DTC, and if on or after such Trading Day the Purchaser purchases (in an open market transaction or otherwise) shares of Common Stock to deliver in satisfaction of a sale by the Purchaser of such Securities that the Purchaser anticipated receiving without legend from the Company (a “Buy-In”), then the Company shall, within three (3) Trading Days after the Purchaser’s request and in the Purchaser’s discretion, either (i) pay cash to the Purchaser in an amount equal to the Purchaser’s total purchase price (including brokerage commissions and other out-of-pocket expenses, if any) for the shares of Common Stock so purchased (the “Buy-In Price”), at which point the Company’s obligation to deliver such unlegended Securities shall terminate, or (ii) promptly honor its obligation to deliver to the Purchaser such unlegended Securities or to issue such Securities to such Purchaser by electronic delivery at the applicable balance account at DTC as provided above and pay cash to the Purchaser 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 Weighted Average Price (as defined in the Warrants) of the Common Stock on the Legend Removal Date.  The Company may not make any notation on its records or give instructions to the Transfer Agent that enlarge the restrictions on transfer set forth in this Section 4.  Certificates for Securities subject to legend removal hereunder shall be transmitted by the Transfer Agent to the Purchaser by (X) upon the request of the Purchaser, crediting the Purchaser’s or its designee’s balance account with the DTC through DWAC, or to the Purchaser’s or its designee’s direct registration account, provided that the Transfer Agent is participating in the DRS or FAST Program, or (Y) if the Transfer Agent is not participating in either the DRS or FAST Program, issuing and dispatching by overnight courier to the address as specified in the notice section hereof, a certificate registered in the Company’s share register in the name of the Purchaser.

 

  

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(d) Each Purchaser, severally and not jointly with the other Purchasers, agrees with the Company that such Purchaser will sell any Securities pursuant to either the registration requirements of the Securities Act, including any applicable prospectus delivery requirements, or an exemption therefrom, and that if Securities are sold pursuant to a registration statement (including the Registration Statement), they will be sold in compliance with the plan of distribution set forth therein, and acknowledges that the removal of the restrictive legend from certificates representing Securities as set forth in this Section 4.1 is predicated upon the Company’s reliance upon this understanding.

 

4.2 Continued Registration; Public Information.  Until such time that the Purchaser owns no Securities, the Company covenants to use reasonable best efforts to maintain the registration of the Common Stock under Section 12(b) or 12(g) of the Exchange Act and to timely file (or obtain extensions in respect thereof and file within the applicable grace period) all reports required to be filed by the Company after the date hereof pursuant to the Exchange Act even if the Company is not then subject to the reporting requirements of the Exchange Act, and if the Company is not required to file reports pursuant to the Exchange Act, it will prepare and furnish to the Purchasers and make publicly available in accordance with Rule 144(c) such information as is required for the Purchasers to sell the Securities, including without limitation, under Rule 144.

 

4.3 Integration.  The Company shall not sell, offer for sale or solicit offers to buy or otherwise negotiate in respect of any security (as defined in Section 2 of the Securities Act) that would be integrated with the offer or sale of the Securities in a manner that would require the registration under the Securities Act of the sale of the Securities or that would be integrated with the offer or sale of the Securities such that it would require stockholder approval for purposes of the rules and regulations of any Trading Market or otherwise unless stockholder approval is obtained before the closing of such subsequent transaction.

 

4.4 Warrants.  The Company hereby covenants and agrees to comply with each and every one of its obligations and other terms set forth in the Warrants, including, without limitation, Section 3(d) of the Warrants and the Series F 2015 Warrants, for so long as any such Warrants and Series F 2015 Warrants, as the case may be, remain outstanding.

 

  

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4.5 Shareholder Rights Plan and Anti-Takeover Plans.  Assuming that the Purchaser does not beneficially own any Common Stock or Common Stock Equivalents not purchased from the Company immediately prior to the execution of this Agreement, at no time following the Company’s issuance of the Shares, Warrants, Series F 2015 Warrants or Warrant Shares (assuming the exercise in full of the Warrants and Series F 2015 Warrants without regard to any limitations on exercise of the Warrants or Series F 2015 Warrants) will any claim be raised or enforced by the Company or, with the consent of or without the opposition of the Company, any other Person, that (i) any Purchaser is an “Acquiring Person” or functionally equivalent Person under any control share acquisition, business combination, poison pill (including any distribution under a rights agreement), or similar anti-takeover plan or arrangement in effect or hereafter adopted by the Company or other similar anti-takeover provision under the Company’s certificate of incorporation or the laws of its state of incorporation, (ii) any Purchaser could be deemed to trigger the provisions of any such plan or arrangement or other anti-takeover provision, in whole or in part, by virtue of receiving Shares, Warrants or Series F 2015 Warrants under this Agreement or Warrant Shares upon exercise of any such Warrants or Series F 2015 Warrants or under any other agreement between the Company and the Purchasers, assuming that the facts and circumstances that exist as of the Closing Date are not materially changed by a Purchaser (it being agreed and acknowledged by the Company that neither an exercise of any or all of the Warrants and Series F 2015 Warrants (assuming the exercise in full of the Warrants and Series F 2015 Warrants without regard to any limitations on exercise of the Warrants or  Series F 2015 Warrants) nor any waiver of Section 2(d) of the Warrants in accordance with the terms thereof shall be deemed to be a material change in the facts and circumstances that exist as of the Closing Date), or (iii) any Purchaser is an “Interested Stockholder” or an “Affiliate” or “Associate” of an “Interested Stockholder” (as such terms are defined in Section 203 of the Delaware General Corporation Law).  For the avoidance of doubt, no Purchaser’s ownership of any or all of the Securities, the 2012 Securities or the 2014 Securities shall be taken into account when calculating such Purchaser’s percentage ownership in the Company and shall not count towards any ownership threshold for purposes of any control share acquisition, business combination, poison pill (including any distribution under a rights agreement), or other similar anti-takeover provision under the Company’s certificate of incorporation or bylaws or the laws of its state of incorporation (including Section 203 of the Delaware General Corporation Law).

 

4.6 Securities Laws Disclosure; Publicity.  The Company shall (a) by 9:00 a.m. (New York City time) on July 6, 2015, issue a press release disclosing all material terms of the transactions contemplated hereby, and (b) file a Current Report on Form 8-K, including the Transaction Documents as exhibits thereto, with the Commission within the time required by the Exchange Act.  From and after the issuance of such press release, the Company shall have publicly disclosed all material, non-public information delivered to any of the Purchasers (or any of their respective Affiliates or any of their or their Affiliates’ respective officers, directors, employees, advisors, representatives or agents) by the Company, the Subsidiary or any of their respective Affiliates or any of their officers, directors, employees, shareholders, advisors, representatives or agents (collectively, the “Company Group”). The Company acknowledges and agrees that the Purchasers (and their respective Affiliates) do not owe the Company Group or any other Person any duty of confidentiality, duty to not use or duty to not trade (or any similar duty or obligation) with respect to any information of, about, regarding, or related to the Company and that the Purchasers shall be unrestricted from trading the Common Stock of the Company.  Except as required to be disclosed in any SEC Reports pursuant to applicable law and regulation (provided that the Purchasers shall be consulted by the Company in connection with any such disclosure prior to its release or use), without the prior written consent of any applicable Buyer, neither the Company nor any of its Subsidiaries or affiliates shall disclose the name of such Buyer in any filing, announcement, release or otherwise.

 

  

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4.7 Non-Public Information.  From and after the filing of the press release contemplated  by Section 4.6, the Company covenants and agrees that neither it, the Subsidiary, nor any other Person acting on its or their behalf, will provide any Purchaser or its agents or counsel with any material non-public information, unless prior thereto such Purchaser shall have entered into a written agreement with the Company regarding the confidentiality and use of such information.  The Company understands and confirms that each Purchaser shall be relying on the foregoing covenant in effecting transactions in the securities of the Company.  If a Purchaser has, or believes it has, received any material, nonpublic information regarding the Company or the Subsidiary from the Company, the Subsidiary or any of their respective officers, directors, Affiliates or agents, it may provide the Company with written notice thereof.  The Company shall, within two (2) Trading Days of receipt of such notice, make public disclosure of such material, nonpublic information.  To the extent that the Company delivers any material, non-public information to a Purchaser without such Purchaser’s consent, the Company hereby covenants and agrees that such Purchaser shall not have any duty of confidentiality with respect to, or a duty not to trade on the basis of or otherwise not to use, such material, non-public information.  The Company understands and confirms that the Purchasers are in the business of trading public securities such as the Common Stock of the Company and will rely on the provisions of Sections 4.6 and 4.7 and the other representation, warranties and provisions in this Agreement and the other Transaction Documents in effecting transactions in Common Stock of the Company.

 

4.8 Use of Proceeds.  The Company shall use the net proceeds from the sale of the Securities hereunder primarily for the ongoing development of bremelanotide for treatment of female sexual dysfunction, preclinical and clinical development of its melanocortin receptor-1 peptide program, preclinical and clinical development of its PL-3994 product and preclinical and clinical development of other portfolio products, and for working capital and general corporate purposes.

 

4.9 Indemnification of Purchasers.  Subject to the provisions of this Section 4.9, the Company will indemnify and hold each Purchaser and its Affiliates, investment manager, directors, officers, stockholders, members, partners, employees and agents (and any other Persons with a functionally equivalent role of a Person holding such titles notwithstanding a lack of such title or any other title), each Person who controls such Purchaser (within the meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act), and the Affiliates, directors, officers, stockholders, agents, members, partners or employees (and any other Persons with a functionally equivalent role of a Person holding such titles notwithstanding a lack of such title or any other title) of such controlling persons (each, a “Purchaser Party”) harmless from any and all losses, liabilities, obligations, claims, contingencies, damages, costs and expenses, including all judgments, amounts paid in settlements, court costs and reasonable attorneys’ fees and costs of investigation that any such Purchaser Party may suffer or incur as a result of or relating to (a) any breach of, failure to comply with or adhere to, misrepresentation with respect to or relating to, or any act or omission inconsistent with, any of the representations, warranties,

 

  

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 covenants or agreements made by the Company in this Agreement or in the other Transaction Documents, including, without limitation, and for purposes of clarification, any claims any Purchaser Party may have against the Company for any such breach, failure misrepresentation, act or omission pursuant to any provision of any Transaction Document, including, without limitation, Sections 4.4, 4.5 and 4.17 through 4.24 of this Agreement, or (b) any action instituted against the Purchaser Parties in any capacity, or any of them or their respective Affiliates, by any stockholder of the Company who is not an Affiliate of such Purchaser Parties, with respect to any of the transactions contemplated by the Transaction Documents (unless such action is based upon a breach of such Purchaser Party’s representations, warranties or covenants under the Transaction Documents or any agreements or understandings such Purchaser Parties may have with any such stockholder or any violations by such Purchaser Parties of state or federal securities laws or any conduct by such Purchaser Parties which constitutes fraud, gross negligence, willful misconduct or willful malfeasance).  If any action shall be brought against any Purchaser Party in respect of which indemnity may be sought pursuant to this Agreement, such Purchaser Party shall promptly notify the Company in writing, and the Company shall have the right to assume the defense thereof with counsel of its own choosing reasonably acceptable to the Purchaser Party.  Any Purchaser Party shall have the right to employ separate counsel in any such action and participate in the defense thereof, but the fees and expenses of such counsel shall be at the expense of such Purchaser Party except to the extent that (i) the employment thereof has been specifically authorized by the Company in writing, (ii) the Company has failed after a reasonable period of time to assume such defense and to employ counsel or (iii) in such action there is, in the reasonable written opinion of counsel to the Purchasers furnished to the Company, a material conflict on any material issue between the position of the Company and the position of such Purchaser Party, in which case the Company shall be responsible for the reasonable fees and expenses of no more than one such separate counsel.  The Company will not be liable to any Purchaser Party under this Agreement (y) for any settlement by a Purchaser Party effected without the Company’s prior written consent, which shall not be unreasonably withheld or delayed; or (z) to the extent, but only to the extent, that a loss, claim, damage or liability is attributable to any Purchaser Party’s breach of any of the representations, warranties, covenants or agreements made by such Purchaser Party in this Agreement or in the other Transaction Documents or any agreements or understandings such Purchaser Parties may have with any such stockholder or any violations by such Purchaser Parties of state or federal securities laws or any conduct by such Purchaser Parties which constitutes fraud, gross negligence, willful misconduct or willful malfeasance.  Except as otherwise set forth herein, the mechanics and procedures with respect to the rights and obligations under this Section 4.9 shall be the same as those set forth in Section 5 of the Registration Rights Agreement.

 

4.10 Reservation of Common Stock.  As of the date hereof, the Company has reserved and the Company shall continue to reserve and keep available at all times, free of preemptive rights, a sufficient number of shares of Common Stock for the purpose of enabling the Company to issue Shares pursuant to this Agreement and Warrant Shares pursuant to any exercise of the Warrants and Series F 2015 Warrants.  The Company shall reserve and so long as any Securities are outstanding, the Company shall continue to reserve and keep available at all times, free of preemptive rights, a number of shares of Common Stock equal to the maximum number of Shares issuable pursuant to this Agreement and Warrant Shares issuable pursuant to any exercise of the Warrants and Series F 2015 Warrants (without regard to any restrictions on exercise thereof) (the “Required Reserve Amount”).

 

  

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4.11 Listing of Common Stock. The Company hereby agrees to use commercially reasonable efforts to maintain the listing or quotation of the Common Stock on the Trading Market on which it is currently listed, and the Company shall apply to list or quote the Shares and Warrant Shares on such Trading Market and use commercially reasonable efforts to secure the listing of the Shares and Warrant Shares on such Trading Market in the time and manner required thereby.  The Company further agrees, if the Company applies to have the Common Stock traded on any other Trading Market, it will then include in such application the Shares and Warrant Shares, and will take such other action as is necessary to cause the Shares and Warrant Shares to be listed or quoted on such other Trading Market in the time and manner required thereby.  The Company will then take all action reasonably necessary to continue the listing and trading of its Common Stock on a Trading Market and will comply in all respects with the Company’s reporting, filing and other obligations under the bylaws or rules of the Trading Market.

 

4.12 Equal Treatment of Purchasers.  No consideration (including any modification of any Transaction Document) shall be offered or paid to any Purchaser (or any Affiliate of a Purchaser) to amend or consent to a waiver or modification of any provision of any of the Transaction Documents unless the same consideration is also offered to all of the parties to the Transaction Documents.  For clarification purposes, this provision constitutes a separate right granted to each Purchaser by the Company and negotiated separately by each Purchaser, and is intended for the Company to treat the Purchasers as a class and shall not in any way be construed as the Purchasers acting in concert or as a group with respect to the purchase, disposition or voting of securities or otherwise.

 

4.13 Certain Transactions and Confidentiality.  Each Purchaser, severally and not jointly with the other Purchasers, covenants that neither it nor any Affiliate acting on its behalf or pursuant to any understanding with it will execute any purchases or sales, including Short Sales of any of the Company’s securities during the period commencing with the execution of this Agreement and ending at such time that the transactions contemplated by this Agreement are first publicly announced pursuant to the initial press release as described in Section 4.6.  Each Purchaser, severally and not jointly with the other Purchasers, covenants that until such time as the transactions contemplated by this Agreement are publicly disclosed by the Company pursuant to the initial press release as described in Section 4.6, such Purchaser will maintain the confidentiality of the existence and terms of this transaction and the information included in the Transaction Documents.  Notwithstanding the foregoing, any Purchaser may disclose the existence and terms of this transaction and the information included in the Transaction Documents if it reasonably believes it is required to make such disclosure in order to comply with applicable law, regulation or rule (including, without limitation, any rule, regulation or policy statement of (i) any organized securities exchange, market or automated quotation system on which the Company’s securities are listed or quoted, (ii) any self-regulatory organization of which a party is a member, or (iii) any legal or judicial process) or as part of any audit or regulatory examination.  Notwithstanding the foregoing and notwithstanding anything contained in this Agreement to the contrary, the Company expressly acknowledges and agrees that (i) no Purchaser nor any other Attribution Party makes any representation, warranty or covenant hereby that it or any other Attribution Party will not engage in effecting transactions in any securities of the Company after the time that the transactions contemplated by this Agreement are first publicly announced pursuant to the initial press release as described in Section 4.6, (ii) no Purchaser nor any other Attribution Party shall be restricted or prohibited from effecting any transactions in any securities of the Company in accordance with applicable securities laws from and after the time that the transactions contemplated by this Agreement are first publicly announced pursuant to the initial press release as described in Section 4.6, and (iii) no Purchaser nor any other Attribution Party shall have any duty of confidentiality to the Company after the issuance of the initial press release as described in Section 4.6.  Notwithstanding the foregoing, in the case of a Purchaser that is a multi-managed investment vehicle whereby separate portfolio managers manage separate portions of such Purchaser’s assets and the portfolio managers have no direct knowledge of the investment decisions made by the portfolio managers managing other portions of such Purchaser’s assets, the covenant set forth above shall only apply with respect to the portion of assets managed by the portfolio manager that made the investment decision to purchase the Securities covered by this Agreement.

 

  

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4.14 Blue Sky Filings; Violation of Law.  (i)  The Company shall take such action as the Company shall reasonably determine is necessary in order to obtain an exemption for, or to qualify the Securities for, sale to the Purchasers at the Closing under applicable securities or “Blue Sky” laws of the states of the United States, and shall provide evidence of such actions promptly upon request of any Purchaser.  (ii)  Neither the Company, nor any of its Subsidiaries, nor any director, officer, agent, employee or other Person acting on behalf of the Company or any of its Subsidiaries will undertake any action that would be reasonably likely to constitute a breach of the representations and warranties provided in Sections 3.1(l) or 3.1(bb) hereof if such action had been taken on or prior to the Closing Date.

 

4.15 Acknowledgment of Dilution.  The Company and each of the Purchasers acknowledges that the issuance of the Securities may result in dilution of the outstanding shares of Common Stock, which dilution may be substantial under certain market conditions.  The Company further acknowledges that its obligations under the Transaction Documents, including, without limitation, its obligation to issue the Shares and Warrant Shares pursuant to the Transaction Documents, are not subject to any right of set off, counterclaim, delay or reduction, regardless of the effect of any such dilution or any claim the Company may have against any Purchaser and regardless of the dilutive effect that such issuance may have on the ownership of the other stockholders of the Company.

 

4.16 Public Information.  At any time during the period commencing on the six (6) month anniversary of the Closing Date and ending at such time that all of the Securities, if a registration statement is not available for the resale of all of the Securities, may be sold without restriction or limitation pursuant to Rule 144 and without the requirement to be in compliance with Rule 144(c)(1), if the Company shall (i) fail to use its best efforts to satisfy the requirements of Rule 144(c)(1), including, without limitation, the failure to satisfy the current public information requirement under Rule 144(c) or (ii) if the Company has ever been an issuer described in Rule 144(i)(1)(i) or becomes such an issuer in the future, and the Company shall fail to use its best efforts to satisfy any condition set forth in Rule 144(i)(2) (a “Public Information Failure”) then, as partial relief for the damages to any Purchaser or other holder of Securities by reason of any such delay in or reduction of its ability to sell the Securities (which remedy shall not be exclusive of any other remedies available at law or in equity), the Company shall pay to each such Purchaser and holder an amount in cash equal to one percent (1.0%) of the aggregate Subscription Amount of such Purchaser or holder’s Securities on the day of a Public Information Failure and on every thirtieth (30th) day (pro rated for periods totaling less than thirty (30) days) thereafter until the earlier of (i) the date such Public Information Failure is cured and (ii) such time that such public information is no longer required pursuant to Rule 144.  The payments to which a Purchaser and other holders shall be entitled pursuant to this Section 4.16 are referred to herein as “Public Information Failure Payments.”  Public Information Failure Payments shall be paid on the earlier of (I) the last day of the calendar month during which such Public Information Failure Payments are incurred and (II) the third Business Day after the event or failure giving rise to the Public Information Failure Payments is cured.  In the event the Company fails to make Public Information Failure Payments in a timely manner, such Public Information Failure Payments shall bear interest at the rate of 1.5% per month (prorated for partial months) until paid in full.  The Company shall be liable for all payments to each Purchaser pursuant to this Section 4.16 and such payments shall be a liability and debt obligation of the Company, and each Purchaser shall be a creditor of the Company with respect to such obligation, that is immediately due and payable pursuant to and in accordance with this Section 4.16.

 

  

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4.17 Additional Issuances of Securities.  Prior to the one (1) year anniversary of the Closing Date the Company shall not issue any securities pursuant to any Post-Closing Registration Statement.  So long as the Initial Purchasers beneficially own in the aggregate Common Stock or Common Stock Equivalents equal to or convertible or exercisable, as the case may be, into at least 5% of the Company’s outstanding shares of Common Stock (calculated as if the Warrants, the Series F 2015 Warrants, the 2014 Warrants and the 2012 Warrants were exercised in full without regard to any limitations on exercise of the Warrants, the Series F 2015 Warrants, the 2014 Warrants or the 2012 Warrants), the Company shall not without the written consent of the Initial Purchasers, and the Company shall not permit its Subsidiary to, directly or indirectly, (i) issue a number of shares of Common Stock (including shares underlying any Common Stock Equivalents) in excess of (I) during calendar year 2015, fifteen percent (15%) (as adjusted for reverse and forward stock splits, stock dividends, stock combinations and other similar transactions of the Common Stock that occur after the date of this Agreement) of the aggregate number of shares of Common Stock and Common Stock Equivalents outstanding after the Closing, and (II) in any calendar year thereafter, ten percent 10% (as adjusted for reverse and forward stock splits, stock dividends, stock combinations and other similar transactions of the Common Stock that occur after the date of this Agreement) of the aggregate number of shares of Common Stock and Common Stock Equivalents outstanding after Closing; provided that this clause (i) (subject to the first sentence of this Section 4.17) shall not apply to Excluded Securities, or (ii) authorize or grant, or otherwise increase or modify any authorization or grant or existing right under, any option to purchase any of the Company’s or its Subsidiaries’ equity or equity equivalent securities, including restricted stock units and options to purchase Common Stock pursuant to the Company’s 2011 Stock Incentive Plan or any other Approved Stock Plan; provided that the Company may take the foregoing actions in this clause (ii) in an amount that does not exceed in the aggregate the number of shares of Common Stock and Common Stock Equivalents permissibly issuable pursuant to an Approved Stock Plan.

 

4.18 Right of Participation.  (a)  From and after the Closing Date until the Right of Participation End Date, the Company shall not, and the Company shall not permit its Subsidiary to, directly or indirectly, effect any Subsequent Equity Placement unless the Company shall have first complied with this Section 4.18.

 

  

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(i) Prior to entering into any Subsequent Equity Placement with any Person other than the Purchasers, the Company shall deliver to each Purchaser an irrevocable written notice (the “Offer Notice”) of any proposed or intended issuance or sale or exchange (the “Offer”) of the securities being offered (the “Offered Placement”) in a Subsequent Equity Placement, which Offer Notice shall (w) offer to issue and sell to or exchange with such Purchasers their respective Requisite Percentages of the Offered Placement (the “Purchaser Amount”), in each instance allocated among such Purchasers as indicated by the Purchasers, (x) identify and describe the Offered Placement, (y) describe whether the Offered Placement is at the market or provide a range (such range not to exceed fifteen percent (15%) above or below market) of the anticipated discount to market, including warrant coverage, and describe other material terms upon which they are to be issued, sold or exchanged (to the extent known), and the approximate number or amount of the securities or Indebtedness expected to comprise the Offered Placement to be issued, sold or exchanged and (z) identify the persons or entities (if known) to which or with which the securities or Indebtedness comprising the Offered Placement are to be offered, issued, sold or exchanged (the “Basic Amount”).

 

(ii) To accept an Offer, whether of the entirety of the Purchaser Amount or a portion thereof, such Purchaser must deliver a written notice to the Company prior to the end of the fifth (5th) Business Day after such Purchaser’s receipt of the Offer Notice (the “Offer Period”), setting forth the portion of such Purchaser’s Purchaser Amount, which may be all or any portion of such Purchaser’s Purchaser Amount, that such Purchaser elects to purchase (the “Notice of Acceptance”).  Notwithstanding anything to the contrary contained herein, if the Company desires to modify or amend the terms and conditions of the Offer prior to the expiration of the Offer Period, the Company may deliver to the Purchasers a new Offer Notice and the Offer Period shall expire on the fifth (5th) Business Day after such Purchaser’s receipt of such new Offer Notice.

 

(iii) The Company shall have ten (10) Business Days from the expiration of the Offer Period above to consummate the Subsequent Equity Placement with respect to all or any part of such Offered Placement as to which a Notice of Acceptance has not been given by the Purchasers (the “Refused Placement”) pursuant to a definitive agreement (the “Subsequent Placement Agreement”) but only upon terms and conditions (including, without limitation, unit prices and interest rates (or within such range)) that are not more favorable to the acquiring Person or Persons or less favorable to the Company than those set forth in the Offer Notice.

 

(iv) In the event the Company shall propose to sell less than 80% of all the securities or Indebtedness comprising the Refused Placement (any such sale to be in the manner and on the terms specified in Section 4.18(a)(iv) above), then prior to the end of the fifth (5th) Business Day after such Purchaser’s receipt of written notice of the Company’s proposal to sell such reduced amount of securities or Indebtedness comprising the Refused Placement, each Purchaser may, at its sole option and in its sole discretion, reduce the number or amount of the securities or Indebtedness comprising the Offered Placement specified in its Notice of Acceptance or revoke its Notice of Acceptance.  In the event the Company shall propose to sell less than 100% but 80% or more of all the securities or Indebtedness comprising the Refused Placement (any such sale to be in the manner and on the terms specified in Section 4.18(a)(iv) above), then prior to the end of the fifth (5th) Business Day after such Purchaser’s receipt of written notice of the Company’s proposal to sell such reduced amount of securities or Indebtedness comprising the Refused Placement, each Purchaser may, at its sole option and in its sole discretion, proportionally reduce the number or amount of the securities or Indebtedness comprising the Offered Placement specified in its Notice of Acceptance.  In the event that any Purchaser so elects to reduce the number or amount of securities or Indebtedness comprising the Offered Placement specified in its Notice of Acceptance or revoke its Notice of Acceptance, the Company may not issue, sell or exchange more than the reduced number or amount of the Offered Placement unless and until such securities have again been offered to the Purchasers in accordance with Section 4.18(a)(ii) above.

 

  

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(v) Any securities or Indebtedness comprising the Offered Placement not acquired by the Purchasers or other Persons in accordance with Section 4.18(a)(iv) above may not be issued, sold or exchanged until they are again offered to the Purchasers under the procedures specified in this Agreement.

 

(vi) The purchase by the Purchasers of any securities comprising the Offered Placement is subject in all cases to the preparation, execution and delivery by the Company and the Purchasers of a purchase agreement relating to such Offered Placement reasonably satisfactory in form and substance to the Purchasers and their respective counsel.  The Company and the Purchasers agree that if any Purchaser elects to participate in the Offer, neither the Subsequent Placement Agreement with respect to such Offer nor any other transaction documents related thereto (collectively, the “Subsequent Placement Documents”) shall include any term or provisions whereby any Purchaser shall be required to agree to any restrictions in trading as to any securities of the Company owned by such Purchaser prior to such Subsequent Equity Placement.

 

(vii) Notwithstanding anything to the contrary in this Section 4.18 and unless otherwise agreed to by the Purchasers, the Company shall either confirm in writing to the Purchasers that the transaction with respect to the proposed Subsequent Equity Placement has been abandoned or shall publicly disclose its intention to consummate the transactions contemplated by the proposed Subsequent Equity Placement, in either case in a manner such that the Purchasers will not be in possession of material non-public information, by the twentieth (20th) Business Day following delivery of any Offer Notice.  If by the twentieth (20th) Business Day following delivery of any Offer Notice no public disclosure regarding a transaction with respect to the proposed Subsequent Equity Placement has been made, and no notice regarding the abandonment of such transaction has been received by the Purchasers, such transaction shall be deemed to have been abandoned and the Purchasers shall not be deemed to be in possession of any material, non-public information with respect to the Company.  Should the Company decide to pursue such transaction with respect to the proposed Subsequent Equity Placement, the Company shall provide each Purchaser with another Offer Notice and each Purchaser will again have the right of participation set forth in this Section 4.18(a).  The Company shall not be permitted to deliver more than one Offer Notice to the Purchasers in any forty (40) Business Day period.

 

  

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(b)           The restrictions contained in this Section 4.18 shall not apply in connection with the issuance of any Excluded Securities.  Notwithstanding anything to the contrary contained herein, all rights of any Purchaser set forth in this Section 4.18 shall be assignable at the election of any Purchaser to one or more of any Purchaser’s Affiliates, but not otherwise.  For purposes of clarification, the provisions of this Section 4.18 are to apply to any Subsequent Equity Placement, including multiple Subsequent Equity Placements, whether related or unrelated, during the period covered hereby.

 

(c)           If and to the extent that any Purchaser, including Affiliates and Attribution Parties of the Purchaser, has a right to participate in any offering of securities of the Company under any other agreement, including without limitation a right to participate arising under Section 4.18 of the 2012 Offering SPA or Section 4.18 of the 2014 Offering SPA (collectively, the "Prior Rights"), none of the rights hereunder shall modify, limit or supersede such Prior Rights; provided, however, that the securities that such Purchaser may purchase hereunder and pursuant to the Prior Rights shall not be aggregated.

 

4.19 Fundamental Transactions.  The Company covenants and agrees while any Warrants are outstanding, it (i) will not permit (to the extent within its control), (ii) will take all necessary action to prevent both the occurrence or consummation of (including, without limitation, adopting a poison pill or other similar anti-takeover provision or method) and the requirement to make any payment or adjustment or issue any shares of Common Stock or other securities with respect to, and (iii) will not be party to, any fundamental transaction, change of control or similar event, or an event that with the passage of time could result in a fundamental transaction, change of control or similar event under any agreement (including, without limitation, any employment agreement), outstanding security (including, without limitation, any option or warrant to purchase Common Stock) or other instrument or make any announcement of any of the foregoing.  In furtherance of the foregoing and without limiting in any manner any other rights of the Purchasers or obligations of the Company set forth in any of the Transaction Documents, in the event the Company learns of any third party attempting or seeking to take action to cause a fundamental transaction, change of control or similar event (including, without limitation, through a tender or exchange offer), or an event that with the passage of time could result in a fundamental transaction, change of control or similar event (including, without limitation, through a tender or exchange offer) under any agreement (including, without limitation, any employment agreement), outstanding security (including, without limitation, any option or warrant to purchase Common Stock) or other instrument, that does not conform to the requirements of the Transaction Documents and that does not afford or grant the Purchasers all of the rights and payments they would receive in a Company Controlled Fundamental Transaction (including, without limitation, any payments they would receive if they were holders of the shares of Common Stock issuable upon exercise of the Warrants (without regard to any limitation on the exercise of the Warrants)), subject to the exercise by the Board of Directors of the Company of its fiduciary duties in accordance with applicable law, the Company covenants and agrees to take all reasonable efforts to adopt a poison pill, and to the extent that any previously adopted poison pill ceases to be effective, to re-adopt a poison pill, or any other anti-takeover provision or method necessary to prevent such fundamental transaction, change of control or similar event (including, without limitation, through a tender or exchange offer), or event that with the passage of time could result in a fundamental transaction, change of control or similar event (including, without limitation, through a tender or exchange offer) under any agreement or other instrument, that does not conform to the requirements of the Transaction Documents and that does not afford or grant the Purchasers all of the rights and payments they would receive in a Company Controlled Fundamental Transaction (including, without limitation, any payments they would receive if they were holders

 

  

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of the shares of Common Stock issuable upon exercise of the Warrants (without regard to any limitation on the exercise of the Warrants)).  The Company covenants and agrees while any Warrants are outstanding, that it will not permit, will take all necessary action to prevent (including, without limitation, adopting a poison pill or other similar anti-takeover provision), and will not be party to, any Fundamental Transaction unless the Company and each applicable acquirer or beneficial owner of securities that is directly or indirectly party to or associated with any applicable Fundamental Transaction, including each Successor Entity or Successor Entities, jointly and severally agrees (x) to the requirements and other provisions set forth in the Warrants, including, without limitation, Section 3(d) thereto and all requirements to issue cash, securities (including, without limitation any options or warrants to purchase Common Stock) or other assets thereunder, and (y) to treat each holder of the Warrants (each, a “Holder”) in all respects no worse than as if such Holder was a holder of Warrant Shares and no worse (and, other than in connection with a Company Controlled Fundamental Transaction (as defined in the Warrants), no better) than its treatment of any other holder of shares of Common Stock.  For purposes of clarification, the foregoing shall mean that no Fundamental Transaction shall occur or be consummated unless (i) to the extent set forth in the Warrants, each Holder shall have the right to require the Company and/or the Successor Entity and/or Successor Entities, jointly and severally, to deliver upon the occurrence or consummation, and it shall be a required condition to such occurrence or consummation, of the Fundamental Transaction or at any time thereafter, in satisfaction of the Warrants, such shares of stock, securities, cash, assets or any other property whatsoever (including warrants or other purchase or subscription rights and any shares of Common Stock) which each Holder would have been entitled to receive upon the happening of such Fundamental Transaction or the record, eligibility or other determination date for the event resulting in such Fundamental Transaction, had the Warrants been exercised in full (without regard to any limitations on exercise of the Warrants) with such Holder becoming a holder of such shares of Common Stock issuable upon such exercise immediately prior to such Fundamental Transaction or the record, eligibility or other determination date for the event resulting in such Fundamental Transaction; (ii) it is recognized that the purpose of this Section 4.19 is to assure that in all circumstances of any Fundamental Transaction or similar corporate type transaction, each Holder will have rights pursuant to the terms of the Warrants no worse (and, other than in connection with a Company Controlled Fundamental Transaction, no better) in any way than or adversely affected relative to or in any manner not as advantageous (or, other than in connection with a Company Controlled Fundamental Transaction, disadvantageous) as those of a holder of the number of shares of Common Stock issuable upon exercise of the Warrants (without regard to any limitations on exercise of the Warrants) as if the Warrants had already been exercised into Common Stock (without regard to any limitations on exercise of the Warrants) prior to such Fundamental Transaction or the record, eligibility or other determination date for the event resulting in such Fundamental Transaction and shall not receive worse (or, other than in connection with a Company Controlled Fundamental Transaction pursuant to the terms of the Warrants, better) treatment, be prejudiced or adversely affected relative to (or treated in any manner not as advantageous or, other than in connection with a Company Controlled Fundamental Transaction, disadvantageous) as the treatment afforded to any holders of shares of Common Stock in such Fundamental Transaction or similar corporate type transaction by virtue of the fact that a Holder holds a Warrant rather than the shares of 

 

  

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Common Stock issuable upon exercise of the Warrant (without regard to any limitations on exercise of the Warrant); (iii) it is specifically intended that no Person attempt to structure a transaction in any manner to circumvent the intent of this Section 4.19 and therefore the provisions of this Section 4.19 shall be construed and implemented in a manner otherwise than in strict conformity with the terms of this Section 4.19 and pursuant to the terms of the Warrants to the extent necessary to correct this paragraph or any portion hereof which may be defective or inconsistent with the intended treatment of each Holder, or to make changes or supplements necessary or desirable to properly give effect to such treatment, as no worse (or, other than in connection with a Company Controlled Fundamental Transaction, no better) in any way than or adversely effected relative to or in any manner not as advantageous (or, other than in connection with a Company Controlled Fundamental Transaction, disadvantageous) as a holder of the number of shares of Common Stock issuable upon exercise of the Warrants (without regard to any limitations on exercise of the Warrants) in any Fundamental Transaction or similar corporate type transaction as herein contained; (iv) it is specifically intended, among other events and transactions, that any tender offer or similar transaction made with respect to the Company or 50% or more of the Common Stock is deemed a Fundamental Transaction under the Warrants; (v) it is acknowledged that notwithstanding any provision that may be interpreted to the contrary, as provided in the Warrants each Holder has an express right to receive at least the same proportion and amount of cash, if any, per Warrant Share (provided, that the foregoing shall in no way limit the rights of the Holder to get any Fundamental Transaction Warrant Early Termination Price (as defined in the Warrants) entirely in cash) that each holder of a share of Common Stock is entitled to receive from the Company or any Successor Entity or Successor Entities, upon any Fundamental Transaction (such as a cash merger or cash tender offer) where cash comprises any portion of the applicable consideration or payment, that they would have been entitled to receive had they exercised their Warrants prior to the Fundamental Transaction or the record, eligibility or other determination date for the event resulting in such Fundamental Transaction (without regard to any limitations on the exercise of this Warrant); (vi) it is acknowledged that the provisions of this Section 4.19 may not be waived, modified or otherwise implemented otherwise than in strict conformity with the intention hereof and shall apply to a successor holder of the Warrants and any Successor Entity or Successor Entities, and (vii) notwithstanding any provision of this Agreement, the Warrants or any other agreement or contract that could in any way be read to limit the right of any Holder to elect and receive at any time in perpetuity any payments pursuant to the Warrants, no provision of this Agreement, the Warrants or any other agreement or contract shall limit the rights of any Holder (including, without limitation, the right to receive any Redemption Price (as defined in the Warrants)) to receive at any time in perpetuity any payments pursuant to the Warrants.  The Purchasers shall be third party beneficiaries to any agreements between the Company and any applicable Successor Entity in order to give effect to this Section 4.19.

 

  

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4.20 Subdivisions.  So long as any Warrants are outstanding, the Company shall not subdivide (by any stock split, stock dividend, recapitalization or otherwise) one or more classes of its outstanding shares of Common Stock into a greater number of shares or take any other action or otherwise allow the Exercise Price (as defined in the Warrants) of the Warrants to be less than the par value of the Common Stock.

 

4.21 Contrary Positions.  The Company covenants and agrees not to take any position contrary to (x) the representations set forth in Section 3.1(hh) and Section 3.1(jj), as if each such representation was made on any date from and after the Closing Date assuming (i) the facts and circumstances that exist as of the Closing Date are not materially changed by a Purchaser and (ii) with respect to the representation in clause (ii) of the first sentence of Section 3.1(jj), the Purchaser Condition is satisfied or (y) any of its other representations set forth herein, as if each such representation was made on the Closing Date, assuming the facts and circumstances that exist as of the Closing Date with respect to such representations are not materially changed.  The Company acknowledges and agrees that, with respect to Section 3.1(hh) neither an exercise of any or all of the Warrants, the Series F 2015 Warrants, the 2012 Warrants or the 2014 Warrants (assuming the exercise in full of the Warrants, the Series F 2015 Warrants, the 2012 Warrants and the 2014 Warrants without regard to any limitations on exercise of the Warrants, the Series F 2015 Warrants, the 2012 Warrants or the 2014 Warrants) nor any waiver of Section 2(d) of the Warrants in accordance with the terms thereof shall be deemed to be a material change in the facts and circumstances that exist as of the Closing Date.

 

4.22 No Stock Buy-Backs, Dividends or Purchase Rights.  So long as any Purchaser holds any of the Securities, the Company shall not redeem, repurchase or otherwise reduce the number of outstanding shares of Common Stock (except for stock repurchases in the ordinary course of business in connection with tax withholding obligations upon vesting of restricted stock or restricted stock units issued under an Approved Stock Plan in the amount not to exceed fifty percent (50%) of the vested amount of the restricted stock and restricted stock units).  So long as the Purchasers in the aggregate beneficially own Common Stock or Common Stock Equivalents equal to or convertible or exercisable, as the case may be, into at least 20% of the Company’s outstanding shares of Common Stock (calculated as if the Warrants, the Series F 2015 Warrants, the 2012 Warrants and the 2014 Warrants were exercised in full without regard to any limitations on exercise of the Warrants, the Series F 2015 Warrants, the 2012 Warrants or the 2014 Warrants), the Company shall not, and the Company shall not permit its Subsidiary to, directly or indirectly, (x) declare or make any dividend or other distributions of its assets (or rights to acquire its assets) to any or all holders of its Common Stock, capital stock or Common Stock Equivalents, 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) or (y) grant, issue or sell any Common Stock Equivalents or rights to purchase stock, warrants, securities or other property pro rata to the record holders of any class of its capital stock or Common Stock Equivalents.

 

  

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4.23 Existence of Liens.  So long as the Purchasers in the aggregate beneficially own Common Stock or Common Stock Equivalents equal to or convertible or exercisable, as the case may be, into at least 20% of the Company’s outstanding shares of Common Stock (calculated as if the Warrants, the Series F 2015 Warrants, the 2014 Warrants and the 2012 Warrants were exercised in full without regard to any limitations on exercise of the Warrants, the Series F 2015 Warrants, the 2014 Warrants or the 2012 Warrants), the Company shall not, and the Company shall not permit its Subsidiary to, directly or indirectly, allow or suffer to exist any Lien other than Permitted Liens.

 

4.24 Amendments and Future Agreements.  So long as any Purchaser holds any of the Warrants, the Company shall not (i) amend, waive, modify or terminate any provision of any outstanding securities (including, without limitation, any warrants) or (ii) be party to any transaction (including any contract, agreement or other arrangement) or issue any security (including, without limitation, any option or warrant to purchase Common Stock) or other instrument, with a provision or term (including, without limitation, any fundamental transaction, change of control or similar event provision) which in any way (I) restricts the Company’s ability to issue any shares of Common Stock or other securities as a result of, the Company’s issuance of, any of the Securities, Warrants, Series F 2015 Warrants, 2014 Securities, 2014 Warrants, 2012 Securities or 2012 Warrants or (II) restricts the Company’s ability to make any payment in full or any adjustment under any of the Securities, Warrants, Series F 2015 Warrants, 2014 Securities, 2014 Warrants, 2012 Securities or 2012 Warrants or (III) is triggered by, or could require the Company to make any payment or adjustment or issue any shares of Common Stock or other securities as a result of, the Company’s issuance of, any of the Securities, Warrants, Series F 2015 Warrants, 2014 Securities, 2014 Warrants, 2012 Securities or 2012 Warrants.

 

4.25 2012 Offering and 2014 Offering.  Notwithstanding any provision of this Agreement or any Transaction Document that could or may be construed to the contrary, nothing in this Agreement or any Transaction Document shall in any manner whatsoever (i) modify, limit, or supersede any provision of any agreement entered into or any right of the purchasers in the 2012 Offering or the 2014 Offering or obligation of the Company relating to or arising from the 2012 Offering or 2014 Offering or (ii) require or allow for any payment or issuance to be made in connection with the offering contemplated hereby (including the Warrants) unless a payment or issuance obligation is triggered and made in connection with the 2012 Offering Documentation and the 2014 Offering Documentation (including the 2012 Warrants and 2014 Warrants) such that if any event triggers a payment under a Transaction Document (including the Warrants), such event shall also be deemed to trigger a payment under the 2012 Offering Documentation (including the 2012 Warrants) and the 2014 Offering Documentation (including the 2014 Warrants).

 

ARTICLE V.

MISCELLANEOUS

 

5.1 Survival. Other than as specifically set forth herein, this Agreement, the representations and warranties contained herein and the obligations contained herein, including, without limitation, the covenants and indemnification obligations contained herein, and other terms hereunder shall survive indefinitely.

 

  

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5.2 Fees and Expenses.  At Closing, the Company shall reimburse the Purchasers or their designee(s) for all reasonable costs and expenses, in the aggregate, incurred in connection with the transactions contemplated by the Transaction Documents (including all reasonable legal fees and disbursements in connection therewith, documentation and implementation of the transactions contemplated by the Transaction Documents and due diligence in connection therewith), which amount may be withheld by each Purchaser from its Subscription Amount at the Closing.  Except as expressly set forth in herein and in the other Transaction Documents to the contrary, each party shall pay the fees and expenses of its advisers, counsel, accountants and other experts, if any, and all other expenses incurred by such party incident to the negotiation, preparation, execution, delivery and performance of this Agreement.  The Company shall pay all Transfer Agent fees, stamp taxes and other taxes and duties levied in connection with the delivery of any Securities to the Purchasers.

 

5.3 Entire Agreement.  The Transaction Documents, together with the exhibits and schedules thereto, contain the entire understanding of the parties with respect to the subject matter hereof and thereof and supersede all prior agreements and understandings, oral or written, with respect to such matters, which the parties acknowledge have been merged into such documents, exhibits and schedules, other than any prior agreements relating to issuances of securities by the Company to any Purchaser or any of its Affiliates (including, without limitation, relating to the 2014 Offering, the 2014 Offering SPA, the 2014 Warrants, the 2012 Offering, the 2012 Offering SPA and the 2012 Warrant).

 

5.4 Notices.  Any and all notices or other communications or deliveries required or permitted to be provided hereunder shall be in writing and shall be deemed given and effective on the earliest of: (a) the date of transmission, if such notice or communication is delivered via facsimile or email delivery at the facsimile number or email address set forth on the signature pages attached hereto at or prior to 5:30 p.m. (New York City time) on a Trading Day, (b) the next Trading Day after the date of transmission, if such notice or communication is delivered via facsimile or email delivery at the facsimile number or email address set forth on the signature pages attached hereto on a day that is not a Trading Day or later than 5:30 p.m. (New York City time) on any Trading Day, (c) the second (2nd) Trading Day following the date of mailing, if sent by U.S. nationally recognized overnight courier service, or (d) upon actual receipt by the party to whom such notice is required to be given.  The address for such notices and communications shall be as set forth on the signature pages attached hereto.

 

5.5 Amendments; Waivers.  No provision of this Agreement may be waived, modified, supplemented or amended except in a written instrument signed by the Company and the Required Holders; provided that notwithstanding the foregoing, any such amendment or waiver that disproportionately, materially and adversely affects the rights and obligations of any Purchaser relative to the comparable rights and obligations of the other Purchasers shall require the prior written consent of such adversely affected Purchaser.  No such amendment shall be effective to the extent that it applies to fewer than all of the Purchasers or holders of Securities.  No waiver 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 subsequent default or a waiver of any other provision, 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. No consideration shall be offered or paid to any Person to amend or consent to a waiver or modification of any provision of any of the Transaction Documents unless the same consideration (other than the reimbursement of legal fees) also is offered to all of the Purchasers and their applicable Affiliates.  The Company has not, directly or indirectly, made any agreements with any Purchasers relating to the terms or conditions of the transactions contemplated by the Transaction Documents except as set forth in the Transaction Documents. 

 

  

46

  

 

5.6 Headings.  The headings herein are for convenience only, do not constitute a part of this Agreement and shall not be deemed to limit or affect any of the provisions hereof.

 

5.7 Successors and Assigns.  This Agreement shall be binding upon and inure to the benefit of the parties and their successors and permitted assigns.  The Company may not assign this Agreement or any rights or obligations hereunder without the prior written consent of each Purchaser (other than by merger or otherwise by operation of law).  Any Purchaser may assign any or all of its rights under this Agreement to any Person to whom such Purchaser assigns or transfers any Securities, provided that such transferee agrees in writing to be bound, with respect to the transferred Securities, by the provisions of the Transaction Documents that apply to the “Purchasers”.

 

5.8 No Third-Party Beneficiaries.  This Agreement is intended for the benefit of the parties hereto and their respective successors and permitted assigns and is not for the benefit of, nor may any provision hereof be enforced by, any other Person, except as otherwise set forth in Section 4.9.

 

5.9 Governing Law and Jurisdiction.  All questions concerning the construction, validity, enforcement and interpretation of the Transaction Documents shall be governed by and construed and enforced in accordance with the internal laws of the State of New York, without regard to the principles of conflicts of law thereof.  Each party agrees that all legal proceedings concerning the interpretations, enforcement and defense of the transactions contemplated by this Agreement and any other Transaction Documents (whether brought against a party hereto or its respective Affiliates, directors, officers, stockholders, partners, members, employees or agents) shall be commenced exclusively in the state and federal courts sitting in the City of New York.  Each party hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in the City of New York, Borough of Manhattan for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein (including with respect to the enforcement of any of the Transaction Documents), and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is improper or is an inconvenient venue for such proceeding.  Each party hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) 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 contained herein shall be deemed to limit in any way any right to serve process in any other manner permitted by law.

 

  

47

  

 

5.10 Execution.  This Agreement may be executed in two or more counterparts, all of which when taken together shall be considered one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to each other party, it being understood that the parties need not sign the same counterpart.  In the event that any signature is delivered by facsimile transmission or by e-mail delivery of a “.pdf” format data file, such signature shall create a valid and binding obligation of the party executing (or on whose behalf such signature is executed) with the same force and effect as if such facsimile or “.pdf” signature page were an original thereof.

 

5.11 Severability.  If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction to be invalid, illegal, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions set forth herein shall remain in full force and effect and shall in no way be affected, impaired or invalidated, and the parties hereto shall use their commercially reasonable efforts to find and employ an alternative means to achieve the same or substantially the same result as that contemplated by such term, provision, covenant or restriction.  It is hereby stipulated and declared to be the intention of the parties that they would have executed the remaining terms, provisions, covenants and restrictions without including any of such that may be hereafter declared invalid, illegal, void or unenforceable.

 

5.12 Replacement of Securities.  If any certificate or instrument evidencing any Securities is mutilated, lost, stolen or destroyed, the Company shall issue or cause to be issued in exchange and substitution for and upon cancellation thereof (in the case of mutilation), or in lieu of and substitution therefor, a new certificate or instrument, but only upon receipt of evidence reasonably satisfactory to the Company of such loss, theft or destruction, and, if requested by the Company, the posting of a customary bond.  The applicant for a new certificate or instrument under such circumstances shall also pay any reasonable third-party costs (including customary indemnity) associated with the issuance of such replacement Securities.

 

5.13 Remedies.  In addition to being entitled to exercise all rights provided herein or granted by law, including recovery of damages, each of the Purchasers and the Company will be entitled to specific performance under the Transaction Documents.  The parties agree that monetary damages may not be adequate compensation for any loss incurred by reason of any breach of obligations contained in the Transaction Documents and hereby agree to waive and not to assert in any action for specific performance of any such obligation the defense that a remedy at law would be adequate.  The Company therefore agrees that the Holders shall be entitled to seek temporary and permanent injunctive relief in any such case without the necessity of proving actual damages and without posting a bond or other security.  In the event that the Purchaser delivers a Fundamental Transaction Early Termination Notice (as defined in the Warrants) pursuant to a Clause C Fundamental Transaction (as defined in the Warrants) and the Company pays in full to the Purchaser, pursuant to and in accordance with the terms of Section 3(d) of the Warrants, the related Fundamental Transaction Warrant Early Termination Price (as defined in the Warrants), the Purchaser shall not be entitled to any other payment for damages hereunder with respect to such redeemed Warrants solely in connection with such Clause C Fundamental Transaction.

 

5.14 Independent Nature of Purchasers’ Obligations and Rights.  The obligations of each Purchaser under any Transaction Document are several and not joint with the obligations of any other Purchaser, and no Purchaser shall be responsible in any way for the performance or non-performance of the obligations of any other Purchaser under any Transaction Document.  Nothing contained herein or in any other Transaction Document, and no action taken by any Purchaser pursuant hereof or thereto, shall be deemed to constitute the Purchasers, and the Company acknowledges that the Purchasers do not so constitute, a partnership, an association, a joint venture or any other kind of entity, or create a presumption that the Purchasers are in any way acting in concert or as a group with respect to such obligations, the transactions contemplated by the Transaction Documents, the Company or its Common Stock.  Each Purchaser shall be entitled, at its own expense, to independently protect and enforce its rights including, without limitation, the rights arising out of this Agreement or out of the other Transaction Documents, and it shall not be necessary for any other Purchaser to be joined as an additional party in any proceeding for such purpose.  Each Purchaser has been represented by its own separate legal counsel in its review and negotiation of the Transaction Documents.

 

  

48

  

 

5.15 Saturdays, Sundays, Holidays, etc.  If the last or appointed day for the taking of any action or the expiration of any right required or granted herein shall not be a Business Day, then such action may be taken or such right may be exercised on the next succeeding Business Day.

 

5.16 Construction.  The parties agree that each of them and/or their respective counsel have reviewed and had an opportunity to revise the Transaction Documents and, therefore, the normal rule of construction to the effect that any ambiguities are to be resolved against the drafting party shall not be employed in the interpretation of the Transaction Documents or any amendments thereto.  In addition, each and every reference to share prices and shares of Common Stock in any Transaction Document shall be subject to adjustment for reverse and forward stock splits, stock dividends, stock combinations and other similar transactions of the Common Stock that occur after the date of this Agreement.

 

WAIVER OF JURY TRIAL.  IN ANY ACTION, SUIT, OR PROCEEDING IN ANY JURISDICTION BROUGHT BY ANY PARTY AGAINST ANY OTHER PARTY, THE PARTIES EACH KNOWINGLY AND INTENTIONALLY, TO THE GREATEST EXTENT PERMITTED BY APPLICABLE LAW, HEREBY ABSOLUTELY, UNCONDITIONALLY, IRREVOCABLY AND EXPRESSLY WAIVES FOREVER TRIAL BY JURY.

(Signature Pages Follow)

 

  

49

  

 

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

 

	
PALATIN TECHNOLOGIES, INC.

 

 

	  
	
By:   /s/ Stephen T. Wills                                                                                     

 

     Name:  Stephen T. Wills

     Title: Executive Vice President, Chief Financial Officer and

               Chief Operating Officer

 

 

Address for Notice:

 

Palatin Technologies, Inc.

4-B Cedar Brook Drive

Cedar Brook Corporate Center

Cranbury, NJ 08512

Attention: Stephen A. Slusher, Chief Legal Officer

Facsimile number: (609) 495-2202

Electronic mail: sslusher@palatin.com

 

 

With a copy to (which shall not constitute notice):

 

	  
	
Faith L. Charles, Esq.

Thompson Hine LLP

335 Madison Avenue

12th Floor

New York, NY 10017

Facsimile number: (212) 344-6101

Electronic mail: Faith.Charles@thompsonhine.com

 

 

	  

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK

SIGNATURE PAGE FOR PURCHASER FOLLOWS]

 

  

50

  

 

[PURCHASER SIGNATURE PAGES TO PTN SECURITIES PURCHASE AGREEMENT]

IN WITNESS WHEREOF, the undersigned have caused this Securities Purchase Agreement to be duly executed by their respective authorized signatories as of the date first indicated above.

 

Name of Purchaser: QVT FUND V LP, by its general partner QVT Associates GP LLC

Signature of Authorized Signatory of Purchaser:    /s/ Tracy Fu                                                                                                                                          

Name of Authorized Signatory: Tracy Fu

Title of Authorized Signatory: Managing Member

Email Address of Authorized Signatory: legalnotices@qvt.com

Facsimile Number of Authorized Signatory: (212) 705-8620

Address for Notice to Purchaser:

QVT Fund V LP

c/o QVT Financial LP

1177 Avenue of the Americas, 9th Floor

New York, NY 10036

Attention: Oren Eisner and Keith Manchester

Email: legalnotices@qvt.com; oren.eisner@qvt.com; keith.manchester@qvt.com

With a copy to (which shall not constitute notice):

Schulte Roth & Zabel LLP

919 Third Avenue

New York, NY 10022

Attention: Eleazer Klein, Esq.

Fes: (212)593-5955

Email: eleazer.klein@srz.com

Address for Delivery of Securities to Purchaser (if not same as address for notice):

Schulte Roth & Zabel LLP

919 Third Avenue

New York, NY 10022

Attention: Eleazer Klein, Esq.

Email: eleazer.klein@srz.com

Subscription Amount: $3,680,000.00

0 Shares,

 

  

51

  

 

Series E 2015 Warrants to purchase 4,032,877 shares of Common Stock, and

Series F 2015 Warrants to purchase 403,288 shares of Common Stock (equal to ten percent (10%) of the aggregate of Shares purchased and shares purchasable upon exercise in full of the Series E 2015 Warrants without regard to any limitations on exercise of the Series E 2015 Warrants)

EIN Number:  [PROVIDED UNDER SEPARATE COVER]

 

  

52

  

 

IN WITNESS WHEREOF, the undersigned have caused this Securities Purchase Agreement to be duly executed by their respective authorized signatories as of the date first indicated above.

 

Name of Purchaser: QUINTESSENCE FUND L.P., by its general partner QVT Associates GP LLC

Signature of Authorized Signatory of Purchaser:    /s/ Tracy Fu                                                                                                                                          

Name of Authorized Signatory: Tracy Fu

Title of Authorized Signatory: Managing Member

Email Address of Authorized Signatory: legalnotices@qvt.com

Facsimile Number of Authorized Signatory: (212) 705-8820

Address for Notice to Purchaser:

Quintessence Fund L.P.

c/o QVT Financial LP

1177 Avenue of the Americas, 9th Floor

New York, NY 10036

Attention: Oren Eisner and Keith Manchester

Email: legalnotices@qvt.com; oren.eisner@qvt.com; keith.manchester@qvt.com

With a copy to (which shall not constitute notice):

Schulte Roth & Zabel LLP

919 Third Avenue

New York, NY 10022

Attention: Eleazer Klein, Esq.

Fes: (212)593-5955

Email: eleazer.klein@srz.com

Address for Delivery of Securities to Purchaser (if not same as address for notice):

Schulte Roth & Zabel LLP

919 Third Avenue

New York, NY 10022

Attention: Eleazer Klein, Esq.

Email: eleazer.klein@srz.com

Subscription Amount: $475,000.00

0 Shares,

Series E 2015 Warrants to purchase 520,548 shares of Common Stock, and

 

  

53

  

 

Series F 2015 Warrants to purchase 52,054 shares of Common Stock (equal to ten percent (10%) of the aggregate of Shares purchased and shares purchasable upon exercise in full of the Series E 2015 Warrants without regard to any limitations on exercise of the Series E 2015 Warrants)

EIN Number: [PROVIDED UNDER SEPARATE COVER]

 

  

54

  

 

IN WITNESS WHEREOF, the undersigned have caused this Securities Purchase Agreement to be duly executed by their respective authorized signatories as of the date first indicated above.

 

Name of Purchaser: QVT FUND IV LP, by its general partner QVT Associates GP LLC

Signature of Authorized Signatory of Purchaser:    /s/ Tracy Fu                                                                                                                                          

Name of Authorized Signatory: Tracy Fu

Title of Authorized Signatory: Managing Member

Email Address of Authorized Signatory: legalnotices@qvt.com

Facsimile Number of Authorized Signatory: (212) 705-8820

Address for Notice to Purchaser:

QVT Fund IV LP

c/o QVT Financial LP

1177 Avenue of the Americas, 9th Floor

New York, NY 10036

Attention: Oren Eisner and Keith Manchester

Email: legalnotices@qvt.com; oren.eisner@qvt.com; keith.manchester@qvt.com

With a copy to (which shall not constitute notice):

Schulte Roth & Zabel LLP

919 Third Avenue

New York, NY 10022

Attention: Eleazer Klein, Esq.

Fes: (212)593-5955

Email: eleazer.klein@srz.com

Address for Delivery of Securities to Purchaser (if not same as address for notice):

Schulte Roth & Zabel LLP

919 Third Avenue

New York, NY 10022

Attention: Eleazer Klein, Esq.

Email: eleazer.klein@srz.com

Subscription Amount: $845,000.00

0 Shares,

 

  

55

  

 

Series E 2015 Warrants to purchase 926,027 shares of Common Stock, and

Series F 2015 Warrants to purchase 92,603 shares of Common Stock (equal to ten percent (10%) of the aggregate of Shares purchased and shares purchasable upon exercise in full of the Series E 2015 Warrants without regard to any limitations on exercise of the Series E 2015 Warrants)

EIN Number: [PROVIDED UNDER SEPARATE COVER]

  

56

  

 

IN WITNESS WHEREOF, the undersigned have caused this Securities Purchase Agreement to be duly executed by their respective authorized signatories as of the date first indicated above.

 

667, L.P.

By:  BAKER BROS. ADVISORS LP, management company and investment adviser to 667, L.P., pursuant to authority granted to it by Baker Biotech Capital, L.P., general partner  to 667, L.P., and not as the general partner.

By:     /s/ Scott Lessing                                                      

Name: Scott Lessing

Title: President

Address for Notice to Purchaser:

Baker Brothers Investments

667 Madison Avenue, 21st Floor

New York, NY 10065

Subscription Amount: $1,018,155.00

0 Shares,

Series E 2015 Warrants to purchase 1,115,786 shares of Common Stock, and

Series F 2015 Warrants to purchase 111,579 shares of Common Stock (equal to ten percent (10%) of the aggregate of Shares purchased and shares purchasable upon exercise in full of the Series E 2015 Warrants without regard to any limitations on exercise of the Series E 2015 Warrants)

EIN Number:  [PROVIDED UNDER SEPARATE COVER]

 

  

57

  

 

IN WITNESS WHEREOF, the undersigned have caused this Securities Purchase Agreement to be duly executed by their respective authorized signatories as of the date first indicated above.

 

BAKER BROTHERS LIFE SCIENCES, L.P.

By:  BAKER BROS. ADVISORS LP, management company and investment adviser to Baker Brothers Life Sciences, L.P., pursuant to authority granted to it by Baker Brothers Life Sciences Capital, L.P., general partner  to Baker Brothers Life Sciences, L.P., and not as the general partner.

By:     /s/ Scott Lessing                                                      

Name: Scott Lessing

Title: President

Address for Notice to Purchaser:

Baker Brothers Investments

667 Madison Avenue, 21st Floor

New York, NY 10065

Subscription Amount: $13,981,845.00

0 Shares,

Series E 2015 Warrants to purchase 15,322,570 shares of Common Stock, and

Series F 2015 Warrants to purchase 1,532,257 shares of Common Stock (equal to ten percent (10%) of the aggregate of Shares purchased and shares purchasable upon exercise in full of the Series E 2015 Warrants without regard to any limitations on exercise of the Series E 2015 Warrants)

EIN Number:  [PROVIDED UNDER SEPARATE COVER]

 

58ptn_ex102.htm

Exhibit 10.2

 

REGISTRATION RIGHTS AGREEMENT

 

This Registration Rights Agreement (this “Agreement”) is made and entered into as of July 2, 2015, between Palatin Technologies, Inc., a Delaware corporation (the “Company”), and each of the additional parties signatory hereto (each such additional party, a “Purchaser” and, collectively, the “Purchasers”).

 

This Agreement is made pursuant to the Securities Purchase Agreement, dated as of the date hereof, between the Company and certain purchasers named therein (the “Purchase Agreement”) and the Series G 2015 Documentation.

 

The Company and each Purchaser hereby agrees as follows:

 

1. Definitions.

 

Capitalized terms used and not otherwise defined herein that are defined in the Purchase Agreement shall have the meanings given such terms in the Purchase Agreement.  As used in this Agreement, the following terms shall have the following meanings:

 

“Additional Registration Statement” means the Registration Statement filed pursuant to this Agreement covering the resale of all Registrable Securities not included in all Registration Statements previously declared effective as a result of a limitation on the maximum number of shares of Common Stock of the Company permitted to be registered by the staff of the Commission pursuant to Rule 415.

 

“Advice” shall have the meaning set forth in Section 7(c).

 

This “Agreement” shall have the meaning set forth in the preamble of this Agreement.

 

“Company” shall have the meaning set forth in the preamble of this Agreement.

 

“Demand Date” shall have the meaning set forth in Section 2.

 

“Demand Registrable Securities” means as of any date of determination, to the extent not then covered by and salable pursuant to an effective Registration Statement, (a) all Shares, (b) all shares of Common Stock issuable upon exercise of the Series E 2015 Warrants, without regard to any limitations on exercise of the Series E 2015 Warrants, (c) all shares of Common Stock issuable upon exercise of the Series F 2015 Warrants, without regard to any limitations on exercise of the Series F 2015 Warrants, (d) all shares of Common Stock issuable upon exercise of the Series G 2015 Warrants, without regard to any limitation on exercise of the Series G 2015 Warrants and (e) any securities issued or then issuable upon any stock split, dividend or other distribution, recapitalization or similar event with respect to the foregoing.

 

“Demand Registration Statement” means the Registration Statement filed pursuant to this Agreement covering the Demand Registrable Securities.

 

“Effectiveness Date” means (i) with respect to the Initial Registration Statement required to be filed hereunder, the one hundred forty-fifth (145th) calendar day following the date hereof, and (ii) with respect to any Additional Registration Statement required to be filed hereunder, the ninetieth (90th) calendar day following the earlier of (x) the date on which such Registration Statement is filed and (y) the date on which such Registration Statement is required to have been filed; provided, however, that in the event the Company is notified by the Commission that one or more of the above Registration Statements will not be reviewed or is no longer subject to further review and comments, the Effectiveness Date as to such Registration Statement shall be the fifth (5th) Trading Day following the date on which the Company is so notified if such date precedes the dates otherwise required above.

 

  

  

  

 

“Effectiveness Failure” shall have the meaning set forth in Section 3(m).

 

"Effectiveness Period" shall have the meaning set forth in Section 2.

 

“Filing Date” means (i) with respect to the Initial Registration Statement required hereunder, the thirtieth (30th) calendar day following the date hereof, (ii) with respect to the Demand Registration Statement required to be filed hereunder, the sixtieth (60th) calendar day following the Demand Date and (iii) with respect to any Additional Registration Statement, the later of (x) the date sixty (60) days after the date substantially all of the Registrable Securities registered under the immediately preceding Registration Statement are sold and (y) the date six (6) months from the immediately preceding Registration Statement has been declared effective.

 

“Filing Failure” shall have the meaning set forth in Section 3(m).

 

“Grace Period” shall have the meaning set forth in Section 3(j).

 

“Holder” or “Holders” means any Purchaser or Purchasers, and their permitted successors and assigns, that is or are a holder or holders, as the case may be, from time to time of Registrable Securities.

 

“Indemnified Party” shall have the meaning set forth in Section 5(c).

 

“Indemnifying Party” shall have the meaning set forth in Section 5(c).

 

“Initial Registrable Securities” means, as of any date of determination, (I) (a) all Shares, (b) all shares of Common Stock issuable upon exercise of the Series E 2015 Warrants, without regard to any limitations on exercise of the Series E 2015 Warrants, (c) all shares of Common Stock issuable upon exercise of the Series F 2015 Warrants, without regard to any limitations on exercise of the Series F 2015 Warrants, (d) all shares of Common Stock issuable upon exercise of the Series G 2015 Warrants, without regard to any limitations on exercise of the Series G 2015 Warrants and (e) any securities issued or then issuable upon any stock split, dividend or other distribution, recapitalization or similar event with respect to the foregoing or (II) such other amount as may be required by the staff of the Commission pursuant to Rule 415 with any cutback applied pro rata to all Holders and with each Holder entitled to elect the portion of its Shares, Series E 2015 Warrant Shares, Series F 2015 Warrant Shares and/or Series G 2015 Warrant Shares that are to be cut back; provided, however, that any such Initial Registrable Securities shall cease to be Initial Registrable Securities (and the Company shall not be required to maintain the effectiveness of any, or file another, Registration Statement hereunder with respect thereto other than as set forth below) as soon as (a) a Registration Statement with respect to the sale of all Initial Registrable Securities is declared effective by the Commission under the Securities Act and all such Initial Registrable Securities have been disposed of by the Holders in accordance with such effective Registration Statement, (b) such Initial Registrable Securities have been previously sold in accordance with Rule 144, or (c) such securities become eligible for resale without volume or manner-of-sale restrictions pursuant to Rule 144 and without current public information pursuant to Rule 144(c)(1) under the Securities Act.  For the avoidance of doubt, the fact that Initial Registrable Securities may at times cease to be Initial Registrable Securities does not prevent them from again becoming Initial Registrable Securities in the future.

 

  

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“Initial Registration Statement” means the Registration Statement filed pursuant to this Agreement covering the Initial Registrable Securities.

 

“Losses” shall have the meaning set forth in Section 5(a).

 

“Maintenance Failure” shall have the meaning set forth in Section 3(m).

 

“Plan of Distribution” shall have the meaning set forth in Section 2.

 

“Prospectus” means the prospectus included in a Registration Statement (including, without limitation, a prospectus that includes any information previously omitted from a prospectus filed as part of an effective registration statement in reliance upon Rule 430A promulgated by the Commission pursuant to the Securities Act), as amended or supplemented by any prospectus supplement, with respect to the terms of the offering of any portion of the Registrable Securities covered by a Registration Statement, and all other amendments and supplements to the Prospectus, including post-effective amendments, and all material incorporated by reference or deemed to be incorporated by reference in such Prospectus.

 

“Purchaser(s)” shall have the meaning ascribed to such term in the preamble of this Agreement.

 

“Purchase Agreement” shall have the meaning ascribed to such term in the preamble of this Agreement.

 

“Registrable Securities” means the Initial Registrable Securities and the Demand Registrable Securities.

 

“Registration Delay Payment” shall have the meaning set forth in Section 3(m).

 

“Registration Statement” means any registration statement required to be filed hereunder pursuant to Section 2, including (in each case) the Prospectus, amendments and supplements to any such registration statement or Prospectus, including pre- and post-effective amendments, all exhibits thereto, and all material incorporated by reference or deemed to be incorporated by reference in any such registration statement.

 

“Rule 144” shall have the meaning set forth in Section 6.

 

“Rule 415” means Rule 415 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended or interpreted from time to time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same purpose and effect as such Rule.

 

  

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“Rule 424” means Rule 424 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended or interpreted from time to time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same purpose and effect as such Rule.

 

“Selling Stockholder Questionnaire” shall have the meaning set forth in Section 3(a).

 

2. Shelf Registration.  On or prior to the applicable Filing Date, the Company shall prepare and file with the Commission an Initial Registration Statement covering the resale of all Initial Registrable Securities (determined without regard to clause (II) of the definition of Registrable Securities) on an effective Registration Statement for an offering to be made on a continuous basis pursuant to Rule 415.  Any Holder that becomes an Affiliate of the Company may at any time and from time to time request in writing (the date of such request, the “Demand Date”) that the Company prepare and file on or prior to the applicable Filing Date with the Commission a Demand Registration Statement covering the resale of all Demand Registrable Securities (determined without regard to clause (II) of the definition of Demand Registrable Securities) on an effective Registration Statement for an offering to be made on a continuous basis pursuant to Rule 415.  On or prior to the applicable Filing Date, the Company shall prepare and file with the Commission one or more Additional Registration Statement(s) covering the resale of all Registrable Securities not included in all Registration Statements previously declared effective as a result of a limitation on the maximum number of shares of Common Stock of the Company permitted to be registered by the staff of the Commission pursuant to Rule 415, on an effective Registration Statement for an offering to be made on a continuous basis pursuant to Rule 415.  Each Registration Statement filed hereunder shall be on Form S-3 (except if the Company is not then eligible to register for resale the Registrable Securities on Form S-3, in which case such registration shall be on Form S-1 or on another appropriate form in accordance herewith and the Company shall undertake to register the Registrable Securities on Form S-3 as soon as such form is available; provided, that the Company shall use reasonable best efforts to maintain the effectiveness of the Registration Statement then in effect until such time as a Registration Statement on Form S-3 covering the Registrable Securities has been declared effective by the Commission).  Each Registration Statement shall contain (unless otherwise directed by the Required Holders (as defined in the Purchase Agreement) substantially the “Plan of Distribution” attached hereto as Annex A, with which each Holder agrees to comply when selling Registrable Securities pursuant to a Registration Statement.  Subject to the terms of this Agreement, the Company shall use its reasonable best efforts to cause a Registration Statement filed hereunder to be declared effective under the Securities Act as promptly as possible after the filing thereof, but in any event prior to the applicable Effectiveness Date, and shall use its reasonable best efforts to keep such Registration Statement continuously effective under the Securities Act until all Registrable Securities covered by such Registration Statement (i) have been sold thereunder or pursuant to Rule 144, or (ii) (A) may be sold without volume or manner-of-sale restrictions pursuant to Rule 144 and (B) may be sold without the requirement for the Company to be in compliance with the current public information requirement under Rule 144(c)(1) (such period of time, the “Effectiveness Period”).  The Company shall telephonically request effectiveness of a Registration Statement as of 5:00 p.m. New York City time on a Trading Day.  The Company shall promptly notify the Holders via facsimile or by e-mail of the effectiveness of a Registration Statement on the same Trading Day that the Company confirms effectiveness with the Commission, which shall be the date requested for effectiveness of such Registration Statement.  The Company shall, by 9:30 a.m. New York City time on the Trading Day after the effective date of such Registration Statement, file a final Prospectus with the Commission as required by Rule 424.

 

  

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3. Registration Procedures.  In connection with the Company’s registration obligations hereunder, the Company shall:

 

(a) Not less than three (3) Trading Days prior to the filing of each Registration Statement and not less than one (1) Trading Day prior to the filing of any related Prospectus or any amendment or supplement thereto, the Company shall (i) furnish to each Holder copies of all such documents proposed to be filed (and, promptly upon request of such Holder, copies of documents to be incorporated or deemed to be incorporated by reference therein), and (ii) cause its officers and directors, counsel and independent registered public accountants to respond to such inquiries as shall be necessary, in the reasonable opinion of respective counsel to each Holder, to conduct a reasonable investigation within the meaning of the Securities Act.  The Company shall not (i) file a Registration Statement or any such Prospectus or any amendments or supplements thereto to which the Required Holders shall reasonably object in good faith and (ii) submit a request for acceleration of the effectiveness of a Registration Statement or any amendment or supplement thereto without the prior approval of the Required Holders, which consent shall not be unreasonably withheld or delayed, provided, that, the Company is notified of such objection in writing no later than five (5) Trading Days after the Holders have been so furnished copies of a Registration Statement or two (2) Trading Days after the Holders have been so furnished copies of any related Prospectus or amendments or supplements thereto.  As a condition to having the Holder’s Registration Securities included in a Registration Statement, each Holder agrees to furnish to the Company a completed questionnaire in the form attached to this Agreement as Annex B (a “Selling Stockholder Questionnaire”) on a date that is the earlier of two (2) Trading Days prior to the Filing Date or the second (2nd) Trading Day following the date on which such Holder receives draft materials in accordance with this Section 3(a).

 

(b) (i) Prepare and file with the Commission such amendments, including post-effective amendments, to a Registration Statement and the Prospectus used in connection therewith as may be necessary to keep a Registration Statement continuously effective as to the applicable Registrable Securities for the Effectiveness Period and prepare and file with the Commission such other Registration Statements, if necessary, in order to register for resale under the Securities Act all of the Registrable Securities, (ii) cause the related Prospectus to be amended or supplemented by any required Prospectus supplement (subject to the terms of this Agreement), and, as so supplemented or amended, to be filed pursuant to Rule 424, (iii) respond as promptly as reasonably possible to any comments received from the Commission with respect to a Registration Statement or any amendment thereto and provide as promptly as reasonably possible to the Holders true and complete copies of all correspondence from and to the Commission relating to a Registration Statement (provided, that the Company shall excise any information contained therein which would constitute material non-public information), and (iv) comply in all material respects with the applicable provisions of the Securities Act and the Exchange Act with respect to the disposition of all Registrable Securities covered by a Registration Statement during the applicable period in accordance (subject to the terms of this Agreement) with the intended methods of disposition by the Holders thereof set forth in such Registration Statement as so amended or in such Prospectus as so supplemented.  In the case of amendments and supplements to a Registration Statement which are required to be filed pursuant to this Agreement (including pursuant to this Section 3(b)) by reason of the Company filing a report on Form 10-Q, Form 10-K or any analogous report under the Exchange Act, the Company shall have incorporated such report by reference into such Registration Statement, if applicable, or shall file such amendments or supplements with the Commission on the same day on which the Exchange Act report is filed which created the requirement for the Company to amend or supplement such Registration Statement.

 

  

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(c) Notify the Holders of Registrable Securities to be sold as promptly as reasonably possible (and, in the case of (i)(A) below, not less than one (1) Trading Day prior to such filing) (i)(A) when a Prospectus or any Prospectus supplement or post-effective amendment to a Registration Statement is proposed to be filed, (B) when the Commission notifies the Company whether there will be a “review” of such Registration Statement and whenever the Commission comments in writing on such Registration Statement and (C) with respect to a Registration Statement or any post-effective amendment, when the same has become effective, (ii) of any request by the Commission or any other federal or state governmental authority for amendments or supplements to a Registration Statement or Prospectus or for additional information, (iii) of the issuance by the Commission or any other federal or state governmental authority of any stop order suspending the effectiveness of a Registration Statement covering any or all of the Registrable Securities or the initiation of any Proceedings for that purpose, (iv) of the receipt by the Company of any notification with respect to the suspension of the qualification or exemption from qualification of any of the Registrable Securities for sale in any jurisdiction, or the initiation or threatening of any Proceeding for such purpose, (v) of the occurrence of any event or passage of time that makes the financial statements included in a Registration Statement ineligible for inclusion therein or any statement made in a Registration Statement, or Prospectus or any document incorporated or deemed to be incorporated therein by reference, untrue in any material respect, or that requires any revisions to a Registration Statement, Prospectus or other documents, so that, in the case of a Registration Statement or the Prospectus, as the case may be, it will not contain any untrue statement of a material fact or omit to state any 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, and (vi) of the occurrence or existence of any pending corporate development with respect to the Company that the Company believes may be material and that, in the determination of the Company, makes it not in the best interest of the Company to allow continued availability of a Registration Statement or Prospectus, provided, that any and all of such information shall remain confidential to each Holder until such information otherwise becomes public, unless disclosure by a Holder is required by law or judicial process; provided, further, that notwithstanding each Holder’s agreement to keep such information confidential, the Company and each such Holder makes no acknowledgement that any such information is material, non-public information.

 

(d) Use its reasonable best efforts to avoid the issuance of, or, if issued, obtain the withdrawal of (i) any order stopping or suspending the effectiveness of a Registration Statement, or (ii) any suspension of the qualification (or exemption from qualification) of any of the Registrable Securities for sale in any jurisdiction, at the earliest practicable moment.

 

(e) Furnish to each Holder, without charge, at least one conformed copy of each such Registration Statement and each amendment thereto, including financial statements and schedules, all documents incorporated or deemed to be incorporated therein by reference to the extent requested by such Person, and all exhibits to the extent requested by such Person (including those previously furnished or incorporated by reference) promptly after the filing of such documents with the Commission; provided, that any such item which is available on the Commission’s EDGAR system (or successor thereto) need not be furnished.

 

  

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(f) Subject to the terms of this Agreement, the Company hereby consents to the use of such Prospectus and each amendment or supplement thereto by each of the selling Holders in connection with the offering and sale of the Registrable Securities covered by such Prospectus and any amendment or supplement thereto, except after the giving of any notice pursuant to Section 3(c)(iii) through (vi).

 

(g) The Company shall cooperate with any broker-dealer through which a Holder proposes to resell its Registrable Securities in effecting a filing with the Financial Industry Regulatory Authority (“FINRA”) Corporate Financing Department pursuant to FINRA Rule 5110, as requested by any such Holder.

 

(h) Prior to any resale of Registrable Securities by a Holder, use its reasonable best efforts to cooperate with the selling Holders in connection with the registration or qualification (or exemption from the Registration or qualification) of such Registrable Securities for the resale by the Holder under the securities or “blue sky” laws of all applicable jurisdictions within the United States, to keep each registration or qualification (or exemption therefrom) effective during the Effectiveness Period and to do any and all other acts or things reasonably necessary to enable the disposition in such jurisdictions of the Registrable Securities covered by each Registration Statement; provided, that the Company shall not be required to qualify generally to do business in any jurisdiction where it is not then so qualified, subject the Company to any material tax in any such jurisdiction where it is not then so subject or file a general consent to service of process in any such jurisdiction.

 

(i) If requested by a Holder, cooperate with such Holder to facilitate the timely preparation and delivery of certificates representing Registrable Securities to be delivered to a transferee pursuant to a Registration Statement, which certificates shall be free, to the extent permitted by the Purchase Agreement or the Series G 2015 Documentation, as applicable, of all restrictive legends, and to enable such Registrable Securities to be in such denominations and registered in such names as any such Holder may request.

 

(j) Upon the occurrence of any event contemplated by Section 3(c)(iii) through (vi), as promptly as reasonably possible under the circumstances taking into account the Company’s good faith assessment of any adverse consequences to the Company and its stockholders of the premature disclosure of such event, prepare a supplement or amendment, including a post-effective amendment, to a Registration Statement or a supplement to the related Prospectus or any document incorporated or deemed to be incorporated therein by reference, and file any other required document so that, as thereafter delivered, neither a Registration Statement nor such Prospectus will 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 light of the circumstances under which they were made, not misleading.  If the Company notifies the Holders in accordance with clauses (iii) through (vi) of Section 3(c) above to suspend the use of any Prospectus until the requisite changes to such Prospectus have been made, then the Holders shall suspend use of such Prospectus.  The Company will use its reasonable best efforts to ensure that the use of the Prospectus may be resumed as promptly as is practicable and shall notify the Holders in writing of the date on which the Grace Period ends.  The Company shall be entitled to exercise its right under this Section 3(j) to suspend the availability of a Registration Statement and Prospectus for a period or periods (each, a “Grace Period”) not to exceed forty-five (45) calendar days (which need not be consecutive days) in any twelve (12)-month period and any such Grace Period shall not exceed an aggregate of twenty (20) consecutive days and the first day of any such period must be at least five (5) days after the last day of any such prior Grace Period.  For purposes of determining the length of a Grace Period above, the Grace Period shall begin on and include the date the Holders receive the notice referred to in Section 3(c)(iii) through (vi) and shall end on and include the later of the date the Holders receive the notice referred to in this Section 3(j) and the date referred to in such notice.  Notwithstanding anything to the contrary, the Company shall cause its transfer agent to deliver unlegended shares of Common Stock to a transferee of a Holder in accordance with the terms of the Securities Purchase Agreement in connection with any sale of Registrable Securities with respect to which a Holder has entered into a contract for sale, prior to the Holder’s receipt of the notice of a Grace Period and for which the Holder has not yet settled.

 

  

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(k) Comply with all applicable rules and regulations of the Commission.

 

(l) The Company may require each selling Holder to furnish to the Company a certified statement as to the number of shares of Common Stock and other securities beneficially owned by such Holder and the natural persons thereof that have voting and dispositive control over the shares.  During any periods that the Company is unable to meet its obligations hereunder with respect to the registration of the Registrable Securities solely because any Holder fails to furnish such information within two (2) Trading Days of the Company’s request, any liquidated damages that are accruing at such time as to such Holder only shall be tolled until such information is delivered to the Company.

 

(m) If (i) the Initial Registration Statement when declared effective fails to register all of the Initial Registrable Securities (subject to the maximum number of shares of Common Stock of the Company permitted to be registered by the staff of the Commission pursuant to Rule 415), (ii) a Registration Statement covering all of the Registrable Securities (determined without regard to clause (II) of the definition of Initial Registrable Securities) required to be covered thereby and required to be filed by the Company pursuant to this Agreement is (A) not filed with the Commission on or before the applicable Filing Date (a “Filing  Failure”) or (B) not declared effective by the Commission on or before the applicable Effectiveness Date (subject to the maximum number of shares of Common Stock of the Company permitted to be registered by the staff of the Commission pursuant to Rule 415), (an “Effectiveness Failure”) or (iii) on any day after the date a Registration Statement has been declared effective sales of all of the Registrable Securities required to be included on such Registration Statement cannot be made (other than during a Grace Period pursuant to such Registration Statement or otherwise) (including, without limitation, because of the suspension of trading or any other limitation imposed by the Trading Market, a failure to keep such Registration Statement effective, a failure to disclose such information as is necessary for sales to be made pursuant to such Registration Statement, a failure to register a sufficient number of shares of Common Stock or a failure to maintain the listing of the Common Stock) (a “Maintenance Failure”) then, as partial relief for the damages to any Holder by reason of any such delay in or reduction of its ability to sell the underlying shares of Common Stock (which remedy shall not be exclusive of any other remedies available at law or in equity, including, without limitation, specific performance), (A) the Company shall pay to each holder of Registrable Securities relating to such Registration Statement an amount in cash equal to one percent (1.0%) of the aggregate purchase price paid by such Holders pursuant to the terms of the Securities Purchase Agreement of such Holder’s Registrable Securities required to be included in such Registration Statement on each of the following dates:  (i) the day of a Filing Failure; (ii) the day of an Effectiveness Failure; (iii) the initial day of a Maintenance Failure; (iv) on the thirtieth (30th) day after the date of a Filing Failure and every thirtieth (30th) day thereafter (pro-rated for periods totaling less than thirty (30) days) until such Filing Failure is cured; (v) on the thirtieth (30th) day after the date of an Effectiveness Failure and every thirtieth (30th) day thereafter (pro-rated for periods totaling less than thirty (30) days) until such Effectiveness Failure is cured; and (vi) on the thirtieth (30th) day after the date of a Maintenance Failure and every thirtieth (30th) day thereafter (pro-rated for periods totaling less than thirty (30) days) until such Maintenance Failure is cured.  The payments to which a holder shall be entitled pursuant to this Section 3(m) are referred to herein as “Registration Delay Payments.” Registration Delay Payments shall be paid on the earlier of (I) the dates set forth above and (II) the third (3rd) Business Day after the event or failure giving rise to the Registration Delay Payments is cured.  In the event the Company fails to make Registration Delay Payments in a timely manner, such Registration Delay Payments shall bear interest at the rate of one and one-half percent (1.5%) per month (prorated for partial months) until paid in full.

 

  

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(n) The Company shall hold in confidence and not make any disclosure of information concerning a Holder provided to the Company unless (i) disclosure of such information is necessary to comply with federal or state securities laws, (ii) the disclosure of such information is necessary to avoid or correct a misstatement or omission in any Registration Statement, (iii) the release of such information is ordered pursuant to a subpoena or other final, non-appealable order from a court or governmental body of competent jurisdiction, or (iv) such information has been made generally available to the public other than by disclosure in violation of this Agreement or any other agreement.  The Company agrees that it shall, upon learning that disclosure of such information concerning a Holder is sought in or by a court or governmental body of competent jurisdiction or through other means, give prompt written notice to such Holder and allow such Holder, at the Holder’s expense, to undertake appropriate action to prevent disclosure of, or to obtain a protective order for, such information.

 

(o) If reasonably requested by a Holder, the Company shall as soon as practicable (i) incorporate in a prospectus supplement or post-effective amendment such information as a Holder reasonably requests to be included therein relating to the sale and distribution of Registrable Securities, including, without limitation, information with respect to the number of Registrable Securities being offered or sold, the purchase price being paid therefor and any other terms of the offering of the Registrable Securities to be sold in such offering; (ii) make all required filings of such prospectus supplement or post-effective amendment after being notified of the matters to be incorporated in such prospectus supplement or post-effective amendment; and (iii) supplement or make amendments to any Registration Statement if reasonably requested by a Holder holding any Registrable Securities.

 

  

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(p) The Company shall use its reasonable best efforts to cause the Registrable Securities covered by a Registration Statement to be registered with or approved by such other governmental agencies or authorities as may be necessary to consummate the disposition of such Registrable Securities.

 

(q) The Company shall make generally available to its security holders as soon as practical, but not later than ninety (90) days after the close of the period covered by the earning statement referenced immediately hereafter, an earnings statement (in form complying with, and in the manner provided by, the provisions of Rule 158 under the Securities Act) covering a twelve-month period beginning not later than the first (1st) day of the Company’s fiscal quarter next following the date the applicable Registration Statement is declared effective.

 

(r) Within two (2) Business Days after a Registration Statement which covers Registrable Securities is ordered effective by the Commission, the Company shall deliver, and shall cause legal counsel for the Company to deliver, to the transfer agent for such Registrable Securities (with copies to the Holders whose Registrable Securities are included in such Registration Statement) confirmation in writing that such Registration Statement has been declared effective by the Commission.

 

(s) Neither the Company nor any Subsidiary or Affiliate thereof shall identify any Holder as an underwriter in any public disclosure or filing with the Commission or any Trading Market and any Holder being deemed an underwriter by the Commission shall not relieve the Company of any obligations it has under this Agreement or any other Transaction Document; provided, however, that the foregoing shall not prohibit the Company from including the disclosure found in the “Plan of Distribution” Section attached hereto as Annex A in the Registration Statement.

 

(t) The Company shall not file any other registration statements until, or grant registration rights to any Person that can be exercised prior to, the date that is the date (i) all Shares, (ii) all shares of Common Stock issuable upon exercise of the Series E 2015 Warrants (without regard to any limitations on exercise of the Series E 2015 Warrants), (iii) all shares of Common Stock issuable upon exercise of the Series F 2015 Warrants (without regard to any limitations on exercise of the Series F 2015 Warrants), and (iv) all shares of Common Stock issuable upon exercise of the Series G 2015 Warrants (without regard to any limitations on exercise of the Series G 2015 Warrants) either are registered pursuant to a Registration Statement that is declared effective and is effective by the Commission or may be sold without any restriction or limitation pursuant to Rule 144 and without the requirement to be in compliance with Rule 144(c)(1); provided, that this Section 3(t) shall not prohibit the Company from filing amendments (pre-effective and post-effective) to registration statements filed prior to the date of this Agreement; and provided, further, that no such amendment shall increase the number of securities registered on a registration statement.

 

(u) In no event shall the Company include any securities other than Registrable Securities on any Registration Statement without the prior written consent of the Required Holders.  Nothing contained herein or related hereto shall limit, restrict, or modify the obligations of the Company, including registration rights, relating to the 2012 Offering or the 2014 Offering.

 

  

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4. Registration Expenses.  All fees and expenses incident to the performance of or compliance with, this Agreement by the Company shall be borne by the Company whether or not any Registrable Securities are sold pursuant to a Registration Statement.  The fees and expenses referred to in the foregoing sentence shall include, without limitation, (i) all registration and filing fees (including, without limitation, fees and expenses of the Company’s counsel and independent registered public accountants) (A) with respect to filings made with the Commission, (B) with respect to filings required to be made with any Trading Market on which the Common Stock is then listed for trading, and (C) in compliance with applicable state securities or “blue sky” laws reasonably agreed to by the Company in writing, (ii) printing expenses (including, without limitation, expenses of printing certificates for Registrable Securities), (iii) messenger, telephone and delivery expenses, (iv) fees and disbursements of counsel for the Company, (v) Securities Act liability insurance, if the Company so desires such insurance, and (vi) fees and expenses of all other Persons retained by the Company in connection with the consummation of the transactions contemplated by this Agreement.  In addition, the Company shall be responsible for all of its internal expenses incurred in connection with the consummation of the transactions contemplated by this Agreement (including, without limitation, all salaries and expenses of its officers and employees performing legal or accounting duties), the expense of any annual audit and the fees and expenses incurred in connection with the listing of the Registrable Securities on any securities exchange as required hereunder.  In no event shall the Company be responsible for any broker or similar commissions of any Holder or, except to the extent provided for in the Transaction Documents, any legal fees or other costs of the Holders.

 

5. Indemnification.

 

(a) Indemnification by the Company.  The Company shall, notwithstanding any termination of this Agreement, indemnify and hold harmless each Holder, the officers, directors, members, partners, agents, brokers, representatives, investment advisors and employees (and any other Persons with a functionally equivalent role of a Person holding such titles, notwithstanding a lack of such title or any other title) of each of them, each Person who controls any such Holder (within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act) and the officers, directors, members, stockholders, partners, agents and employees (and any other Persons with a functionally equivalent role of a Person holding such titles, notwithstanding a lack of such title or any other title) of each such controlling Person, to the fullest extent permitted by applicable law, from and against any and all losses, claims, damages, liabilities, judgments, fines, penalties, charges, costs (including, without limitation, reasonable attorneys’ fees) and expenses, amounts paid in settlement or expenses (collectively, “Losses”), as incurred, arising out of or relating to (1) any untrue or alleged untrue statement of a material fact contained in a Registration Statement, any Prospectus or any form of prospectus or in any amendment or supplement thereto or in any preliminary prospectus or in any final prospectus or in any filing made in connection with the qualification of the offering under the securities or other “blue sky” laws of any jurisdiction in which Registrable Securities are offered, or arising out of or relating to any omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein (in the case of any Prospectus or supplement thereto, in light of the circumstances under which they were made) not misleading or (2) any violation or alleged violation by the Company of the Securities Act, the Exchange Act or any state securities law, or any rule or regulation thereunder, in connection with the performance of its obligations under this Agreement, except to the extent, but only to the extent, that (i) such untrue statements or omissions are based solely upon information regarding such Holder furnished in writing to the Company by such Holder expressly for use therein, or (ii) in the case of an occurrence of an event of the type specified in Section 3(c)(iii)-(vi), the use by such Holder of an outdated, defective or otherwise unavailable Prospectus after the Company has notified such Holder in writing that the Prospectus is outdated, defective or otherwise unavailable for use by such Holder and prior to the receipt by such Holder of the Advice contemplated in Section 7(c).  The Company shall notify the Holders promptly of the institution, threat or assertion of any Proceeding arising from or in connection with the transactions contemplated by this Agreement of which the Company is aware.

 

  

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(b) Indemnification by Holders.  Each Holder shall, severally and not jointly, indemnify and hold harmless the Company, its directors, officers, agents and employees, each Person who controls the Company (within the meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act), to the fullest extent permitted by applicable law, from and against all Losses, as incurred, in each case to the extent, and only to the extent, that such Losses arise solely out of or are based solely upon:  any untrue statement of a material fact contained in any Registration Statement, any Prospectus, or in any amendment or supplement thereto or in any preliminary prospectus, or arising out of or relating to any omission of a material fact required to be stated therein or necessary to make the statements therein not misleading (i) to the extent, but only to the extent, that such untrue statement or omission is contained in any information so furnished in writing by such Holder to the Company specifically for inclusion in such Registration Statement or such Prospectus.  In no event shall the aggregate liability of any selling Holder under this Section 5(b) (together with any liability under Section 5(d)) be greater in amount than the dollar amount of the net proceeds received by such Holder upon the sale of the Registrable Securities giving rise to such indemnification obligation.

 

(c) Conduct of Indemnification Proceedings.  If any Proceeding shall be brought or asserted against any Person entitled to indemnity hereunder (an “Indemnified Party”), such Indemnified Party shall promptly notify the Person from whom indemnity is sought (the “Indemnifying Party”) in writing, and the Indemnifying Party shall have the right to assume the defense thereof, including the employment of counsel reasonably satisfactory to the Indemnified Party and the payment of all fees and expenses incurred in connection with defense thereof; provided, that the failure of any Indemnified Party to give such notice shall not relieve the Indemnifying Party of its obligations or liabilities pursuant to this Agreement, except (and only) to the extent that it shall be finally determined by a court of competent jurisdiction (which determination is not subject to appeal or further review) that such failure shall have prejudiced the Indemnifying Party.

 

An Indemnified Party shall have the right to employ separate counsel in any such Proceeding and to participate in the defense thereof, but the fees and expenses of such counsel shall be at the expense of such Indemnified Party or Parties unless:  (1) the Indemnifying Party has agreed in writing to pay such fees and expenses, (2) the Indemnifying Party shall have failed promptly to assume the defense of such Proceeding and to employ counsel reasonably satisfactory to such Indemnified Party in any such Proceeding, or (3) the named parties to any such Proceeding (including any impleaded parties) include both such Indemnified Party and the Indemnifying Party, and counsel to the Indemnified Party shall reasonably believe that a material conflict of interest is likely to exist if the same counsel were to represent such Indemnified Party and the Indemnifying Party (in which case, if such Indemnified Party notifies the Indemnifying Party in writing that it elects to employ separate counsel at the expense of the Indemnifying Party, the Indemnifying Party shall not have the right to assume the defense thereof and the reasonable fees and expenses of no more than one separate counsel shall be at the expense of the Indemnifying Party).  The Indemnifying Party shall not be liable for any settlement of any such Proceeding effected without its written consent, which consent shall not be unreasonably withheld or delayed.  No Indemnifying Party shall, without the prior written consent of the Indemnified Party, effect any settlement of any pending Proceeding in respect of which any Indemnified Party is a party, unless such settlement includes an unconditional release of such Indemnified Party from all liability on claims that are the subject matter of such Proceeding and such settlement shall not include an admission as to fault on the part of the Indemnified Party.

 

  

12

  

 

Subject to the terms of this Agreement, all reasonable fees and expenses of the Indemnified Party (including reasonable fees and expenses to the extent incurred in connection with investigating or preparing to defend such Proceeding in a manner not inconsistent with this Section 5(c)) shall be paid to the Indemnified Party, as incurred, within ten (10) Trading Days of written notice thereof to the Indemnifying Party; provided, that the Indemnified Party shall promptly reimburse the Indemnifying Party for that portion of such fees and expenses applicable to such actions for which such Indemnified Party is judicially determined not to be entitled to indemnification hereunder.

 

Such indemnity shall remain in full force and effect regardless of any investigation made by or on behalf of such Indemnified Party and shall survive the transfer of the Registrable Securities by the Holder pursuant to Section 7(o).

 

(d) Contribution.  If the indemnification under Section 5(a) or Section 5(b) is unavailable to an Indemnified Party or insufficient to hold an Indemnified Party harmless for any Losses, then each Indemnifying Party shall contribute to the amount paid or payable by such Indemnified Party, in such proportion as is appropriate to reflect the relative fault of the Indemnifying Party and Indemnified Party in connection with the actions, statements or omissions that resulted in such Losses as well as any other relevant equitable considerations.  The relative fault of such Indemnifying Party and Indemnified Party shall be determined by reference to, among other things, whether any action in question, including any untrue statement of a material fact or omission of a material fact, has been taken or made by, or relates to information supplied by, such Indemnifying Party or Indemnified Party, and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such action, statement or omission.  The amount paid or payable by a party as a result of any Losses shall be deemed to include, subject to the limitations set forth in this Agreement, any reasonable attorneys’ or other fees or expenses incurred by such party in connection with any Proceeding to the extent such party would have been indemnified for such fees or expenses if the indemnification provided for in this Section 5(d) was available to such party in accordance with its terms.  No Person involved in the sale of Registrable Securities, which Person is guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) in connection with such sale, shall be entitled to contribution from any Person involved in such sale of Registrable Securities who was not guilty of fraudulent misrepresentation.

 

  

13

  

 

The parties hereto agree that it would not be just and equitable if contribution pursuant to this Section 5(d) were determined by pro rata allocation or by any other method of allocation that does not take into account the equitable considerations referred to in the immediately preceding paragraph.  Notwithstanding the provisions of Section 5(b) and this Section 5(d), no Holder shall be required to contribute pursuant to this Section 5(d), in the aggregate, any amount in excess of the amount it would otherwise be liable for pursuant to Section 5(b).

 

The aggregate liability of any Holder under Section 5(b) together with the aggregate contribution obligation of any Holder under Section 5(d) shall not exceed the dollar amount of the net proceeds received by such Holder upon the sale of the Registrable Securities giving rise to such indemnification obligation.

 

6. Reports Under the 1934 Act.

 

With a view to making available to the Holders the benefits of Rule 144 promulgated under the Securities Act or any other similar rule or regulation of the Commission that may at any time permit the Holders to sell securities of the Company to the public without registration (“Rule 144”), the Company agrees to:

 

(a) make and keep public information available, as those terms are understood and defined in Rule 144;

 

(b) file with the Commission in a timely manner all reports and other documents required of the Company under the Securities Act and the Exchange Act so long as the Company remains subject to such requirements and the filing of such reports and other documents is required for the applicable provisions of Rule 144; and

 

(c) furnish to each Holder so long as such Holder owns Registrable Securities, promptly upon request, (i) a written statement by the Company, if true, that it has complied with the reporting requirements of Rule 144, the Securities Act and the Exchange Act, (ii) a copy of the most recent annual or quarterly report of the Company and such other reports and documents so filed by the Company, and (iii) such other information as may be reasonably requested to permit the Holders to sell such securities pursuant to Rule 144 without registration.

 

7. Miscellaneous.

 

(a) Remedies.  In the event of a breach by the Company or by a Holder of any of their respective obligations under this Agreement, each Holder or the Company, as the case may be, in addition to being entitled to exercise all rights granted by law and under this Agreement, including recovery of damages, shall be entitled to specific performance of its rights under this Agreement.  Each of the Company and each Holder agrees that monetary damages would not provide adequate compensation for any losses incurred by reason of a breach by it of any of the provisions of this Agreement and hereby further agrees that, in the event of any action for specific performance in respect of such breach, it shall not assert or shall waive the defense that a remedy at law would be adequate.  The Company therefore agrees that the Holders shall be entitled to seek temporary and permanent injunctive relief in any such case without the necessity of proving actual damages and without posting a bond or other security.

 

  

14

  

 

(b) Compliance.  Each Holder covenants and agrees that it will comply with the prospectus delivery requirements of the Securities Act as applicable to it, unless exempted therefrom, in connection with sales of Registrable Securities pursuant to a Registration Statement.

 

(c) Discontinued Disposition.  By its acquisition of Registrable Securities, each Holder agrees that, upon receipt of a notice from the Company of the occurrence of any event of the kind described in Section 3(c)(iii) through (vi), such Holder will forthwith discontinue disposition of such Registrable Securities under a Registration Statement until it is advised in writing (the “Advice”) by the Company that the use of the applicable Prospectus (as it may have been supplemented or amended) may be resumed.  The Company will use its reasonable best efforts to ensure that the use of the Prospectus may be resumed as promptly as is practicable.

 

(d) Piggy-Back Registrations.  Without prejudice to the rights of and obligations to the Holders under Section 3(t), if, at any time when any Registrable Securities are outstanding, there is not an effective Registration Statement covering all of the Registrable Securities and the Company shall determine to prepare and file with the Commission a registration statement relating to an offering for its own account or the account of others under the Securities Act of any of its equity securities, other than on Form S-4 or Form S-8 (each as promulgated under the Securities Act) or their then equivalents relating to equity securities to be issued solely in connection with any acquisition of any entity or business or equity securities issuable in connection with the Company’s stock option or other employee benefit plans, then the Company shall deliver to each Holder a written notice of such determination at least five (5) days before the anticipated date of filing and, if within five (5) Trading Days after the date of the delivery of such notice, any such Holder shall so request in writing, the Company shall include in such registration statement all or any part of such Registrable Securities such Holder requests to be registered; provided, however, that the Company shall not be required to register any Registrable Securities pursuant to this Section 7(d) that are eligible for resale pursuant to Rule 144 promulgated by the Commission pursuant to the Securities Act without any restriction or limitation and without the requirement to be in compliance with Rule 144(c)(1) or that are the subject of a then effective Registration Statement.

 

(e) Amendments and Waivers.  The provisions of this Agreement, including the provisions of this sentence, may not be amended, modified or supplemented, and waivers or consents to departures from the provisions hereof may not be given, unless the same shall be in writing and signed by the Company and the Required Holders.  If a Registration Statement does not register all of the Registrable Securities pursuant to a waiver or amendment done in compliance with the previous sentence, then the number of Registrable Securities to be registered for each Holder shall be reduced pro rata among all Holders and each Holder shall have the right to designate which of its Registrable Securities shall be omitted from such Registration Statement.  Notwithstanding the foregoing, a waiver or consent to depart from the provisions hereof with respect to a matter that relates exclusively to the rights of a Holder or some Holders and that does not directly or indirectly affect the rights of other Holders may be given by such Holder or Holders of all of the Registrable Securities to which such waiver or consent relates; provided, however, that the provisions of this sentence may not be amended, modified, or supplemented except in accordance with the provisions of the first sentence of this Section 7(e).

 

  

15

  

 

(f) Notices.  Any and all notices or other communications or deliveries required or permitted to be provided hereunder shall be delivered as set forth in the Purchase Agreement or the Series G 2015 Documentation, as applicable.

 

(g) Successors and Assigns.  This Agreement shall inure to the benefit of and be binding upon the successors and permitted assigns of each of the parties and shall inure to the benefit of each Holder.  The Company may not assign (except by merger or otherwise by operation by law) its rights or obligations hereunder without the prior written consent of the Required Holders.  Each Holder may assign their respective rights hereunder in the manner and to the Persons as permitted under Section 7(o).

 

(h) No Inconsistent Agreements.  The Company has not entered, as of the date hereof, nor shall the Company, on or after the date of this Agreement, enter into any agreement with respect to its securities, that would have the effect of impairing the rights granted to the Holders in this Agreement or otherwise conflicts with the provisions hereof; it being understood that the Company is entering into the Purchase Agreement and the Series G 2015 Documentation contemporaneously with this Agreement.  Except as disclosed in the SEC Reports or in any exhibit thereto, the Company has not previously entered into any agreement granting any registration rights with respect to any of its securities to any Person that have not been satisfied in full.

 

(i) Execution and Counterparts.  This Agreement may be executed in two or more counterparts, all of which when taken together shall be considered one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to the other party, it being understood that both parties need not sign the same counterpart.  In the event that any signature is delivered by facsimile transmission or by e-mail delivery of a “.pdf’ format data file, such signature shall create a valid and binding obligation of the party executing (or on whose behalf such signature is executed) with the same force and effect as if such facsimile or “.pdf’ signature page were an original thereof.

 

(j) Governing Law.  All questions concerning the governing law, construction, validity, enforcement and interpretation of this Agreement and the courts having jurisdiction over, and the proper venue for, the adjudication of any dispute hereunder, shall be determined in accordance with the provisions of the Purchase Agreement.

 

(k) Cumulative Remedies.  The remedies provided herein are cumulative and not exclusive of any other remedies provided by law.

 

(l) Severability.  If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction to be invalid, illegal, void or unenforceable, the provision that would otherwise be prohibited, invalid or unenforceable shall be deemed amended to apply to the broadest extent that it would be valid and enforceable, and the invalidity or unenforceability of such provision shall not affect the validity of the remainder of the terms, provisions, covenants and restrictions set forth herein shall remain in full force and effect and shall in no way be affected, impaired or invalidated so long as this Agreement as so modified continues to express, without material change, the original intentions of the parties as to the subject matter hereof and the prohibited nature, invalidity or unenforceability of the provision(s) in question does not substantially impair the respective expectations or reciprocal obligations of the parties or the practical realization of the benefits that would otherwise be conferred upon the parties.  The parties hereto shall use their reasonable best efforts to find and employ an alternative means to achieve the same or substantially the same result as that contemplated by such term, provision, covenant or restriction.

 

  

16

  

 

(m) Headings.  The headings in this Agreement are for convenience only, do not constitute a part of the Agreement and shall not be deemed to limit or affect any of the provisions hereof.

 

(n) Independent Nature of Holders’ Obligations and Rights.  The obligations of each Holder hereunder are several and not joint with the obligations of any other Holder hereunder, and no Holder shall be responsible in any way for the performance of the obligations of any other Holder hereunder.  Nothing contained herein or in any other agreement or document delivered at any closing, and no action taken by any Holder pursuant hereto or thereto, shall be deemed to constitute the Holders, and the Company acknowledges that the Holders do not so constitute, as a partnership, an association, a joint venture or any other kind of entity, or create a presumption that the Holders are in any way acting in concert with respect to such obligations or the transactions contemplated by this Agreement.  Each Holder shall be entitled to protect and enforce its rights, including without limitation the rights arising out of this Agreement, and it shall not be necessary for any other Holder to be joined as an additional party in any proceeding for such purpose.

 

(o) Assignment of Registration Rights.  The rights under this Agreement shall be automatically assignable by the Holders to any transferee of all or any portion of such Holder’s Registrable Securities if:  (i) the Holder agrees in writing with the transferee or assignee to assign such rights, and a copy of such agreement is furnished to the Company within a reasonable time after such assignment; (ii) the Company is, within a reasonable time after such transfer or assignment, furnished with written notice of (a) the name and address of such transferee or assignee, and (b) the securities with respect to which such registration rights are being transferred or assigned; (iii) immediately following such transfer or assignment the further disposition of such securities by the transferee or assignee is restricted under the Securities Act or applicable state securities laws; (iv) at or before the time the Company receives the written notice contemplated by clause (ii) of this sentence the transferee or assignee agrees in writing with the Company to be bound by all of the provisions contained herein; and (v) such transfer shall have been made in accordance with the applicable requirements of the Securities Purchase Agreement.

 

********************

 

(Signature Pages Follow)

 

  

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IN WITNESS WHEREOF, the parties have executed this Registration Rights Agreement as of the date first written above.

 

	
PALATIN TECHNOLOGIES, INC.

 

 

	
By:         /s/ Stephen T. Wills                                                                           

 

Name:             Stephen T. Wills

Title:Executive Vice President, Chief Financial Officer and Chief Operating Officer

 

	  

 

 

[SIGNATURE PAGE OF HOLDERS FOLLOWS]

 

  

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[SIGNATURE PAGE OF HOLDERS TO PTN RRA]

 

 

667, L.P.

By: BAKER BROS. ADVISORS LP, management company and investment adviser to 667, L.P., pursuant to authority granted to it by Baker Biotech Capital, L.P., general partner to 667, L.P., and not as the general partner.

By:           /s/ Scott Lessing                                

Name: Scott Lessing

Title: President

 

 

BAKER BROTHERS LIFE SCIENCES, L.P.

By: BAKER BROS. ADVISORS LP, management company and investment adviser to Baker

Brothers Life Sciences, L.P., pursuant to authority granted to it by Baker Brothers Life Sciences Capital, L.P., general partner to Baker Brothers Life Sciences, L.P., and not as the general partner.

By:           /s/ Scott Lessing                                

Name: Scott Lessing

Title: President

 

 

Name of Holder: QVT FUND V LP, by its general partner QVT Associates GP LLC

 

Signature of Authorized Signatory of Holder:  /s/ Tracy Fu                                

 

Name of Authorized Signatory: Tracy Fu

 

Title of Authorized Signatory: Managing Member

 

 

Name of Holder: QVT FUND IV LP, by its general partner QVT Associates GP LLC

 

Signature of Authorized Signatory of Holder: /s/ Tracy Fu                                

 

Name of Authorized Signatory: Tracy Fu

 

Title of Authorized Signatory: Managing Member

 

  

19

  

 

Name of Holder: QUINTESSENCE FUND L.P., by its general partner QVT Associates GP LLC

 

Signature of Authorized Signatory of Holder: /s/ Tracy Fu                                

 

Name of Authorized Signatory: Tracy Fu

 

Title of Authorized Signatory: Managing Member

 

  

20

  

 

Annex A

 

Plan of Distribution

 

Each Selling Stockholder (the “Selling Stockholders”) of the common stock and any of their pledgees, assignees and successors-in-interest may, from time to time, sell any or all of their shares of common stock covered hereby on the principal Trading Market or any other stock exchange, market or trading facility on which the shares are traded or in private transactions from time to time directly or through one or more underwriters, broker-dealers or agents.  These sales may be in one or more transactions at fixed prices, at prevailing market prices at the time of the sale, at varying prices determined at the time of sale or negotiated prices.  A Selling Stockholder may use any one or more of the following methods when selling shares:

 

	
●   

	
on any national securities exchange or quotation service on which the securities may be listed or quoted at the time of sale;

 

	
●   

	
in the over-the-counter market;

 

	
●   

	
in transactions otherwise than on these exchanges or systems or in the over-the-counter market;

 

	
●   

	
ordinary brokerage transactions and transactions in which the broker-dealer solicits purchasers;

 

	
●   

	
block trades in which the broker-dealer will attempt to sell the shares as agent but may position and resell a portion of the block as principal to facilitate the transaction;

 

	
●   

	
purchases by a broker-dealer as principal and resale by the broker-dealer for its account;

 

	
●   

	
an exchange distribution in accordance with the rules of the applicable exchange;

 

	
●   

	
privately negotiated transactions;

 

	
●   

	
short sales;

 

	
●   

	
in transactions through broker-dealers that agree with the Selling Stockholders to sell a specified number of such shares at a stipulated price per share;

 

	
●   

	
through the writing or settlement of options or other hedging transactions, whether through an options exchange or otherwise;

 

	
●   

	
a combination of any such methods of sale; or

 

	
●   

	
any other method permitted pursuant to applicable law.

 

The Selling Stockholders may also sell shares under Rule 144 under the Securities Act of 1933, as amended (the “Securities Act”), if available, rather than under this prospectus.

 

  

21

  

 

Broker-dealers engaged by the Selling Stockholders may arrange for other brokers-dealers to participate in sales.  Broker-dealers may receive commissions or discounts from the Selling Stockholders (or, if any broker-dealer acts as agent for the purchaser of shares, from the purchaser) in amounts to be negotiated, but, except as set forth in a supplement to this Prospectus, in the case of an agency transaction not in excess of a customary brokerage commission in compliance with FINRA Rule 2440; and in the case of a principal transaction a markup or markdown in compliance with FINRA IM-2440.

 

In connection with the sale of the common stock or interests therein, the Selling Stockholders may enter into hedging transactions with broker-dealers or other financial institutions, which may in turn engage in short sales of the common stock in the course of hedging the positions they assume.  The Selling Stockholders may also sell shares of the common stock short and deliver these securities to close out their short positions and to return borrowed shares in connection with such short sales, or loan or pledge the common stock to broker-dealers that in turn may sell these securities.  The Selling Stockholders may also enter into option or other transactions with broker-dealers or other financial institutions or create one or more derivative securities which require the delivery to such broker-dealer or other financial institution of shares offered by this prospectus, which shares such broker-dealer or other financial institution may resell pursuant to this prospectus (as supplemented or amended to reflect such transaction).

 

The Selling Stockholders may pledge or grant a security interest in some or all of the warrants or shares of common stock owned by them and, if they default in the performance of their secured obligations, the pledgees or secured parties may offer and sell the shares of common stock from time to time pursuant to this prospectus or any amendment to this prospectus under Rule 424(b)(3) or other applicable provision of the Securities Act of 1933, as amended, amending, if necessary, the list of Selling Stockholder to include the pledgee, transferee or other successors in interest as selling shareholders under this prospectus.  The Selling Stockholders also may transfer and donate the shares of common stock in other circumstances in which case the transferees, donees, pledgees or other successors in interest will be the selling beneficial owners for purposes of this prospectus.

 

The Selling Stockholders and any broker-dealers or agents that are involved in selling the shares may be deemed to be “underwriters” within the meaning of the Securities Act in connection with such sales.  In such event, any commissions received by such broker-dealers or agents and any profit on the resale of the shares purchased by them may be deemed to be underwriting commissions or discounts under the Securities Act.  Each Selling Stockholder has informed the Company that it does not have any written or oral agreement or understanding, directly or indirectly, with any person to distribute the Common Stock.  In no event shall any broker-dealer receive fees, commissions and markups which, in the aggregate, would exceed eight percent (8%).

 

The Company is required to pay certain fees and expenses incurred by the Company incident to the registration of the shares.  The Company has agreed to indemnify the Selling Stockholders against certain losses, claims, damages and liabilities, including liabilities under the Securities Act.

 

  

22

  

 

The Selling Stockholders have advised us that there is no underwriter or coordinating broker acting in connection with the proposed sale of the resale shares by the Selling Stockholders.

 

We agreed to keep this prospectus effective until the earlier of (i) the date on which the shares may be resold by the Selling Stockholders without registration and without regard to any volume or manner-of-sale limitations by reason of Rule 144, without the requirement for the Company to be in compliance with the current public information under Rule 144 under the Securities Act or any other rule of similar effect or (ii) all of the shares have been sold pursuant to this prospectus or Rule 144 under the Securities Act or any other rule of similar effect.  The resale shares will be sold only through registered or licensed brokers or dealers if required under applicable state securities laws.  In addition, in certain states, the resale shares of Common Stock covered hereby may not be sold unless they have been registered or qualified for sale in the applicable state or an exemption from the registration or qualification requirement is available and is complied with.

 

Under applicable rules and regulations under the Exchange Act, any person engaged in the distribution of the resale shares may not simultaneously engage in market making activities with respect to the common stock for the applicable restricted period, as defined in Regulation M, prior to the commencement of the distribution.  In addition, the Selling Stockholders will be subject to applicable provisions of the Exchange Act and the rules and regulations thereunder, including Regulation M, which may limit the timing of purchases and sales of shares of the common stock by the Selling Stockholders or any other person.  We will make copies of this prospectus available to the Selling Stockholders and have informed them of the need to deliver a copy of this prospectus to each purchaser at or prior to the time of the sale (including by compliance with Rule 172 under the Securities Act).

 

Once sold under the registration statement, of which this prospectus forms a part, the shares of common stock will be freely tradable in the hands of persons other than our affiliates.

 

  

23

  

 

Annex B

 

PALATIN TECHNOLOGIES, INC.

 

Selling Stockholder Notice and Questionnaire

 

The undersigned beneficial owner of common stock (the “Registrable Securities”) of Palatin Technologies, Inc., a Delaware corporation (the “Company”), understands that the Company has filed or intends to file with the Securities and Exchange Commission (the “Commission”) a registration statement (the “Registration Statement”) for the registration and resale under Rule 415 of the Securities Act of 1933, as amended (the “Securities Act”), of the Registrable Securities, in accordance with the terms of the Registration Rights Agreement (the “Registration Rights Agreement”) to which this document is annexed.  A copy of the Registration Rights Agreement is available from the Company upon request.  All capitalized terms not otherwise defined herein shall have the meanings ascribed thereto in the Registration Rights Agreement.

 

Certain legal consequences arise from being named as a selling stockholder in the Registration Statement and the related prospectus.  Accordingly, holders and beneficial owners of Registrable Securities are advised to consult their own securities law counsel regarding the consequences of being named or not being named as a selling stockholder in the Registration Statement and the related prospectus.

 

NOTICE

 

The undersigned beneficial owner (the “Selling Stockholder”) of Registrable Securities hereby elects to include the Registrable Securities owned by it in the Registration Statement.

 

  

24

  

 

The undersigned hereby provides the following information to the Company and represents and warrants that such information is accurate:

 

QUESTIONNAIRE

 

1.           Name.

 

(a)           Full Legal Name of Selling Stockholder

 

	  
	  

(b)           Full Legal Name of Registered Holder (if not the same as (a) above) through which Registrable Securities are held:

 

	  
	  

(c)           Full Legal Name of Natural Control Person (which means a natural person who directly or indirectly alone or with others has power to vote or dispose of the securities covered by this Questionnaire):

 

	  
	  

2.           Address for Notices to Selling Stockholder:

 

	  
	  
	  
	
Telephone:                                                      

	
Fax:                                                      

	
Contact Person:                                                      

	  

3.           Broker-Dealer Status:

 

(a)           Are you a broker-dealer?

 

Yes  o                      No  o

 

(b)           If “yes” to Section 3(a), did you receive your Registrable Securities as compensation for investment banking services to the Company?

 

Yes  o                      No  o

 

Note:           If “yes” to Section 3(b), the Commission’s staff has indicated that you should be identified as an underwriter in the Registration Statement.

 

(c)           Are you an affiliate of a broker-dealer?

 

Yes  o                       No  o

 

  

25

  

 

(d)           If you are an affiliate of a broker-dealer, do you certify that you purchased the Registrable Securities in the ordinary course of business, and at the time of the purchase of the Registrable Securities to be resold, you had no agreements or understandings, directly or indirectly, with any person to distribute the Registrable Securities?

 

Yes  o                       No  o

 

Note:           If “no” to Section 3(d), the Commission’s staff has indicated that you should be identified as an underwriter in the Registration Statement.

 

4.           Beneficial Ownership of Securities of the Company Owned by the Selling Stockholder.

 

Except as set forth below in this Item 4, the undersigned is not the beneficial or registered owner of any securities of the Company other than the securities issuable pursuant to the Purchase Agreement.

 

(a)           Type and Amount of other securities beneficially owned by the Selling Stockholder:

 

	  
	  
	  

5.           Relationships with the Company:

 

Except as set forth below, neither the undersigned nor any of its affiliates, officers, directors or principal equity holders (owners of 5% of more of the equity securities of the undersigned) has held any position or office or has had any other material relationship with the Company (or its predecessors or affiliates) during the past three years.

 

State any exceptions here:

	  
	  
	  

The undersigned agrees to promptly notify the Company of any inaccuracies or changes in the information provided herein that may occur subsequent to the date hereof at any time until the applicable Registration Statement is declared effective.

 

By signing below, the undersigned consents to the disclosure of the information contained herein in its answers to Items 1 through 5 and the inclusion of such information in the Registration Statement and the related prospectus and any amendments or supplements thereto.  The undersigned understands that such information will be relied upon by the Company in connection with the preparation or amendment of the Registration Statement and the related prospectus and any amendments or supplements thereto.

 

  

26

  

IN WITNESS WHEREOF the undersigned, by authority duly given, has caused this Notice and Questionnaire to be executed and delivered either in person or by its duly authorized agent.

 

Date:                                                     Beneficial Owner:                                                                         

 

By:                                                                                  

Name: _____________________________

Title: ______________________________

 

 

27

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