Document:

reph-ex1038_282.htm

Exhibit 10.38

COMMON STOCK PURCHASE AGREEMENT 

COMMON STOCK PURCHASE AGREEMENT (the “Agreement”), dated as of March 2, 2018, by and between RECRO PHARMA, INC., a Pennsylvania corporation (the “Company”), and ASPIRE CAPITAL FUND, LLC, an Illinois limited liability company (the “Buyer”). Capitalized terms used herein and not otherwise defined herein are defined in Section 10 hereof. 

WHEREAS: 

Subject to the terms and conditions set forth in this Agreement, the Company wishes to sell to the Buyer, and the Buyer wishes to buy from the Company, up to Twenty Million Dollars ($20,000,000) of the Company’s common stock, par value $0.01 per share (the “Common Stock”). The shares of Common Stock to be purchased hereunder are referred to herein as the “Purchase Shares.” 

NOW THEREFORE, the Company and the Buyer hereby agree as follows: 

1.PURCHASE OF COMMON STOCK.

Subject to the terms and conditions set forth in this Agreement, the Company has the right to sell to the Buyer, and the Buyer has the obligation to purchase from the Company, Purchase Shares as follows: 

(a) Commencement of Purchases of Common Stock. Immediately upon Commencement (as defined below), the purchase and sale of Purchase Shares hereunder shall occur from time to time upon written notices by the Company to the Buyer on the terms and conditions as set forth herein following the satisfaction of the conditions (the “Commencement”) as set forth in Sections 6 and 7 below (the date of satisfaction of such conditions, the “Commencement Date”). 

(b) The Company’s Right to Require Regular Purchases. Subject to the terms and conditions of this Agreement, on any given Business Day after the Commencement Date, the Company shall have the right but not the obligation to direct the Buyer by its delivery to the Buyer of a Purchase Notice from time to time, and the Buyer thereupon shall have the obligation, to buy the number of Purchase Shares specified in such notice, up to a maximum of 75,000 Purchase Shares, on such Business Day (as long as such notice is delivered on or before 5:00 p.m. Eastern time on such Business Day) (each such purchase, a “Regular Purchase”) at the Purchase Price on the Purchase Date; however, in no event shall the Purchase Amount of a Regular Purchase exceed Five Hundred Thousand Dollars ($500,000) per Business Day, unless the Buyer and the Company mutually agree.  The Company and the Buyer may mutually agree to increase the number of Purchase Shares that may be sold per a Regular Purchase to as much as an additional 2,000,000 Purchase Shares per Business Day. The Company may deliver additional Purchase Notices to the Buyer from time to time so long as the most recent purchase has been completed. The share amounts in the first sentence of this Section 1(b) shall be appropriately adjusted for any reorganization, recapitalization, stock dividend, stock split, reverse stock split, or other similar transaction. 

(c) VWAP Purchases. Subject to the terms and conditions of this Agreement, in addition to purchases of Purchase Shares as described in Section 1(b) above, with one Business Day’s prior written notice (as long as such notice is delivered on or before 5:00 p.m. Eastern time on the Business Day immediately preceding the VWAP Purchase Date), the Company shall also have the right but not the obligation to direct the Buyer by the Company’s delivery to the Buyer of a VWAP Purchase Notice from time to time, and the Buyer thereupon shall have the obligation, to buy the VWAP Purchase Share Percentage of the trading volume of the Common Stock on the VWAP Purchase Date up to the VWAP Purchase Share Volume Maximum on the VWAP Purchase Date (each such purchase, a “VWAP Purchase”) at the VWAP Purchase Price. The Company may deliver a VWAP Purchase Notice to the Buyer on or before 5:00 p.m. Eastern time on a date on which the Company also submitted a Purchase Notice for a Regular Purchase of at least 75,000 Purchase Shares to the Buyer. The share amount in the prior sentence shall be appropriately adjusted for any reorganization, recapitalization, stock dividend, stock split, reverse stock split, or other similar transaction. A VWAP Purchase shall automatically be deemed completed at such time on the VWAP Purchase Date that the Sale Price falls below the VWAP Minimum Price Threshold; in such circumstance, the VWAP Purchase Amount shall be calculated using (i) the VWAP Purchase Share Percentage of the aggregate shares traded on the Principal Market for such portion of the VWAP Purchase Date prior to the time that the Sale Price fell below the VWAP Minimum Price Threshold and (ii) a VWAP Purchase Price calculated using the volume weighted average price of Common Stock sold during such portion of the VWAP Purchase Date prior to the time that the Sale Price fell below the VWAP Minimum Price Threshold. Each VWAP Purchase Notice must be accompanied by instructions to the Company’s Transfer Agent to immediately issue to the Buyer an amount of Common Stock equal to the VWAP Purchase Share Estimate, a good faith estimate by the Company of the number of Purchase Shares that the Buyer shall have the obligation to buy pursuant to the VWAP Purchase Notice. In no event shall the 

 

 

Buyer, pursuant to any VWAP Purchase, purchase a number of Purchase Shares that exceeds the VWAP Purchase Share Estimate issued on the VWAP Purchase Date in connection with such VWAP Purchase Notice; however, the Buyer will immediately return to the Company any amount of Common Stock issued pursuant to the VWAP Purchase Share Estimate that exceeds the number of Purchase Shares the Buyer actually purchases in connection with such VWAP Purchase. Upon completion of each VWAP Purchase Date, the Buyer shall submit to the Company a confirmation of the VWAP Purchase in form and substance reasonably acceptable to the Company. The Company may deliver additional VWAP Purchase Notices to the Buyer from time to time so long as the most recent purchase has been completed. The Company may, by written notice to the Buyer, in its sole discretion at any time after the date of this Agreement, irrevocably terminate this Section 1(c) and its right to direct the Buyer to make VWAP Purchases. 

(d) Payment for Purchase Shares. For each Regular Purchase, the Buyer shall pay to the Company an amount equal to the Purchase Amount as full payment for such Purchase Shares via wire transfer of immediately available funds on the same Business Day that the Buyer receives such Purchase Shares. For each VWAP Purchase, the Buyer shall pay to the Company an amount equal to the VWAP Purchase Amount as full payment for such Purchase Shares via wire transfer of immediately available funds on the second Business Day following the VWAP Purchase Date. All payments made under this Agreement shall be made in lawful money of the United States of America via wire transfer of immediately available funds to such account as the Company may from time to time designate by written notice in accordance with the provisions of this Agreement. Whenever any amount expressed to be due by the terms of this Agreement is due on any day that is not a Business Day, the same shall instead be due on the next succeeding day that is a Business Day. 

(e) Purchase Price Floor. The Company and the Buyer shall not effect any sales under this Agreement on any Purchase Date where the Closing Sale Price is less than the Floor Price. “Floor Price” means $0.50 per share of Common Stock, which shall be appropriately adjusted for any reorganization, recapitalization, stock dividend, stock split, reverse stock split or other similar transaction. 

(f) Records of Purchases. The Buyer and the Company shall each maintain records showing the remaining Available Amount at any given time and the dates and Purchase Amounts for each purchase, or shall use such other method reasonably satisfactory to the Buyer and the Company to reconcile the remaining Available Amount. 

 

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

(h) Compliance with Principal Market Rules. Notwithstanding anything in this Agreement to the contrary, and in addition to the limitations set forth in Section 1(e), the total number of shares of Common Stock that may be issued under this Agreement, including the Commitment Shares (as defined in Section 4(e) hereof), shall be limited to 3,829,455 shares of Common Stock (the “Exchange Cap”), which equals 19.99% of the Company’s outstanding shares of Common Stock as of the date hereof, unless shareholder approval is obtained to issue more than such 19.99%. The Exchange Cap shall be appropriately adjusted for any reorganization, recapitalization, stock dividend, stock split, reverse stock split or similar transaction. The foregoing limitation shall not apply if shareholder approval has not been obtained and at any time the Exchange Cap is reached and at all times thereafter the average price paid for all shares of Common Stock issued under this Agreement is equal to or greater than $9.98 (the “Minimum Price”), a price equal to the consolidated closing bid price on the Business Day prior to the date hereof (in such circumstance, for purposes of the Principal Market, the transaction contemplated hereby would not be “below market” and the Exchange Cap would not apply). The Minimum Price shall be appropriately adjusted for any reorganization, recapitalization, stock dividend, stock split, reverse stock split or other similar transaction. Notwithstanding anything to the contrary in this Agreement or otherwise, the Company shall not be required or permitted to issue, and the Buyer shall not be required to purchase, any shares of Common Stock under this Agreement if such issuance would breach the Company’s obligations under the rules or regulations of the Principal Market.  The Company may, in its sole discretion, determine whether to obtain shareholder approval to issue more than 19.99% of its outstanding shares of Common Stock hereunder if such issuance would require shareholder approval under the rules or regulations of the Principal Market.

(i) Beneficial Ownership Limitation. The Company shall not issue and the Buyer shall not purchase any shares of Common Stock under this Agreement if such shares proposed to be issued and sold, when aggregated with all other shares of Common Stock then owned beneficially (as calculated pursuant to Section 13(d) of the Securities Exchange Act of 1934, as amended (the “1934 Act”) and Rule 13d-3 promulgated thereunder) by the Buyer and its affiliates would result in the beneficial ownership by the Buyer and its affiliates of more than 19.99% of the then issued and outstanding shares of Common Stock of the Company. 

 

 

2.BUYER’S REPRESENTATIONS AND WARRANTIES.

The Buyer represents and warrants to the Company that as of the date hereof and as of the Commencement Date: 

(a) Investment Purpose. The Buyer is entering into this Agreement and acquiring the Commitment Shares and the Purchase Shares (the Purchase Shares and the Commitment Shares are collectively referred to herein as the “Securities”), for its own account for investment only and not with a view towards, or for resale in connection with, the public sale or distribution thereof; provided however, by making the representations herein, the Buyer does not agree to hold any of the Securities for any minimum or other specific term. 

(b) Accredited Investor Status. The Buyer is an “accredited investor” as that term is defined in Rule 501(a)(3) of Regulation D under the 1933 Act. 

(c) [Intentionally Omitted.] 

 

(d) Information. The Buyer has been furnished with all materials relating to the business, finances and operations of the Company and materials relating to the offer and sale of the Securities that have been reasonably requested by the Buyer, including, without limitation, the SEC Documents (as defined in Section 3(f) hereof). The Buyer understands that its investment in the Securities involves a high degree of risk. The Buyer (i) is able to bear the economic risk of an investment in the Securities including a total loss, (ii) has such knowledge and experience in financial and business matters that it is capable of evaluating the merits and risks of the proposed investment in the Securities and (iii) has had an opportunity to ask questions of and receive answers from the officers of the Company concerning the financial condition and business of the Company and other matters related to an investment in the Securities. Neither such inquiries nor any other due diligence investigations conducted by the Buyer or its representatives shall modify, amend or affect the Buyer’s right to rely on the Company’s representations and warranties contained in Section 3 below. The Buyer has sought such accounting, legal and tax advice as it has considered necessary to make an informed investment decision with respect to its acquisition of the Securities. 

(e) No Governmental Review. The Buyer understands that no United States federal or state agency or any other government or governmental agency has passed on or made any recommendation or endorsement of the Securities or the fairness or suitability of the investment in the Securities nor have such authorities passed upon or endorsed the merits of the offering of the Securities. 

(f) [Intentionally Omitted.]

(g) Organization. The Buyer is a limited liability company duly organized and validly existing in good standing under the laws of the jurisdiction in which it is organized, and has the requisite organizational power and authority to own its properties and to carry on its business as now being conducted. 

(h) Validity; Enforcement. This Agreement has been duly and validly authorized, executed and delivered on behalf of the Buyer and is a valid and binding agreement of the Buyer enforceable against the Buyer in accordance with its terms, subject as to enforceability to (i) general principles of equity and to applicable bankruptcy, insolvency, reorganization, moratorium, liquidation and other similar laws relating to, or affecting generally, the enforcement of applicable creditors’ rights and remedies and (ii) public policy underlying any law, rule or regulation (including any federal or state securities law, rule or regulation) with regards to indemnification, contribution or exculpation. The execution and delivery of the Transaction Documents (as defined in Section 3(b) hereof) by the Buyer and the consummation by it of the transactions contemplated hereby and thereby do not conflict with the Buyer’s certificate of organization or operating agreement or similar documents, and do not require further consent or authorization by the Buyer, its managers or its members. 

 

(i) Residency. The Buyer is a resident of the State of Illinois. 

(j) No Prior Short Selling. The Buyer represents and warrants to the Company that at no time prior to the date of this Agreement has any of the Buyer, its agents, representatives or affiliates engaged in or effected, in any manner whatsoever, directly or indirectly, any (i) “short sale” (as such term is defined in Section 242.200 of Regulation SHO of the 1934 Act) of the Common Stock or (ii) hedging transaction, which establishes a net short position with respect to the Common Stock. 

 

 

3.REPRESENTATIONS AND WARRANTIES OF THE COMPANY.

The Company represents and warrants to the Buyer that as of the date hereof and as of the Commencement Date: 

(a) Organization and Qualification. The Company and its “Subsidiaries” (which for purposes of this Agreement means any entity in which the Company, directly or indirectly, owns more than 50% of the voting stock or capital stock or other similar equity interests) are corporations or limited liability companies duly organized and validly existing in good standing under the laws of the jurisdiction in which they are incorporated or organized, and have the requisite corporate or organizational power and authority to own their properties and to carry on their business as now being conducted. Each of the Company and its Subsidiaries is duly qualified as a foreign corporation or limited liability company to do business and is in good standing in every jurisdiction in which its ownership of property or the nature of the business conducted by it makes such qualification necessary, except to the extent that the failure to be so qualified or be in good standing could not reasonably be expected to have a Material Adverse Effect. As used in this Agreement, “Material Adverse Effect” means any material adverse effect on any of: (i) the business, properties, assets, operations, results of operations or financial condition of the Company and its Subsidiaries, if any, taken as a whole, or (ii) the authority or ability of the Company to perform its obligations under the Transaction Documents (as defined in Section 3(b) hereof). The Company has no material Subsidiaries except as set forth on Section 3(a) of the disclosure letter delivered by the Company to Buyer pursuant to this Agreement (the “Disclosure Letter”). 

(b) Authorization; Enforcement; Validity. (i) The Company has the requisite corporate power and authority to enter into and perform its obligations under this Agreement, the Registration Rights Agreement (as defined in Section 4(a) hereof) and each of the other agreements entered into by the parties on the Commencement Date and attached hereto as exhibits to this Agreement (collectively, the “Transaction Documents”), and to issue the Securities in accordance with the terms hereof and thereof, (ii) the execution and delivery of the Transaction Documents by the Company and the consummation by it of the transactions contemplated hereby and thereby, including without limitation, the issuance of the Commitment Shares and the reservation for issuance and the issuance of the Purchase Shares issuable under this Agreement, have been duly authorized by the Company’s Board of Directors or duly authorized committee thereof, do not conflict with the Company’s Articles of Incorporation or Bylaws (as defined below), and do not require further consent or authorization by the Company, its Board of Directors, except as set forth in this Agreement, or its shareholders (other than as contemplated by Section 1(h) hereof), (iii) this Agreement has been, and each other Transaction Document shall be on the Commencement Date, duly executed and delivered by the Company and (iv) this Agreement constitutes, and each other Transaction Document upon its execution on behalf of the Company, shall constitute, the valid and binding obligations of the Company enforceable against the Company in accordance with their terms, except as such enforceability may be limited by (y) general principles of equity or applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or similar laws relating to, or affecting generally, the enforcement of creditors’ rights and remedies and (z) public policy underlying any law, rule or regulation (including any federal or state securities law, rule or regulation) with regards to indemnification, contribution or exculpation. The Board of Directors of the Company or duly authorized committee thereof has approved the resolutions (the “Signing Resolutions”) substantially in the form as set forth as Exhibit B attached hereto to authorize this Agreement and the transactions contemplated hereby. The Signing Resolutions are valid, in full force and effect and have not been modified or supplemented in any material respect. The Company has delivered to the Buyer a true and correct copy of the Signing Resolutions as approved by the Board of Directors of the Company. 

(c) Capitalization. As of the date hereof, the authorized capital stock of the Company consists of (i) 50,000,000 shares of Common Stock, par value $0.01, of which as of the date hereof, 19,156,851 shares are issued and outstanding, zero shares are held as treasury shares, 4,184,358 shares are issuable upon the exercise of stock options outstanding, 486,598 shares are issuable upon the vesting and settlement of restricted stock units outstanding; 509,985 shares of Common Stock are reserved and available for future issuance under the Company’s Amended and Restated Equity Incentive Plan and its 2008 Stock Option Plan; and 1,133,592 shares of Common Stock are issuable upon the exercise of outstanding warrants, and (ii) 10,000,000 shares of preferred stock, of which as of the date hereof zero shares are issued and outstanding. All of such outstanding shares have been, or upon issuance will be, validly issued and are fully paid and non-assessable. Except as disclosed in Section 3(c) of the Disclosure Letter, (i) no shares of the Company’s capital stock are subject to preemptive rights or any other similar rights or any liens or encumbrances suffered or permitted by the Company, (ii) there are no outstanding debt securities of the Company or any of its Subsidiaries, (iii) there are no outstanding options, warrants, scrip, rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities or rights convertible into, any shares of capital stock of the Company or any of its Subsidiaries, or contracts, commitments, understandings or arrangements by which the Company or any of its Subsidiaries is or may become bound to issue additional shares of capital stock of the Company or any of its Subsidiaries or options, warrants, scrip, rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities or rights convertible into, any shares of capital stock of the Company or any of its Subsidiaries, (iv) there are no material agreements or arrangements under which the Company or any of its Subsidiaries is obligated to register the sale of any of their securities under the 1933 Act (except the Registration Rights Agreement), (v) there are no outstanding securities or instruments of the Company 

 

 

or any of its Subsidiaries which contain any redemption or similar provisions, and there are no contracts, commitments, understandings or arrangements by which the Company or any of its Subsidiaries is or may become bound to redeem a security of the Company or any of its Subsidiaries, (vi) there are no securities or instruments containing anti-dilution or similar provisions that will be triggered by the issuance of the Securities as described in this Agreement and (vii) the Company does not have any stock appreciation rights or “phantom stock” plans or agreements or any similar plan or agreement. The Company has furnished or made available to the Buyer true and correct copies of the Company’s Second Amended and Restated Articles of Incorporation, as in effect on the date hereof (the “Articles of Incorporation”), and the Company’s Third Amended and Restated Bylaws, as in effect on the date hereof (the “Bylaws”). 

 

(d) Issuance of Securities. The Commitment Shares have been duly authorized and, upon issuance in accordance with the terms hereof, the Commitment Shares shall be (i) validly issued, fully paid and non-assessable and (ii) free from all taxes, liens and charges with respect to the issuance thereof. Upon issuance and payment therefore in accordance with the terms and conditions of this Agreement, the Purchase Shares shall be validly issued, fully paid and non-assessable and free from all taxes, liens and charges with respect to the issue thereof, with the holders being entitled to all rights accorded to a holder of Common Stock. 

(e) No Conflicts. The execution, delivery and performance of the Transaction Documents by the Company and the consummation by the Company of the transactions contemplated hereby and thereby (including, without limitation, the reservation for issuance and issuance of the Purchase Shares) will not (i) result in a violation of the Articles of Incorporation, any Certificate of Designations, Preferences and Rights of any outstanding series of preferred stock of the Company, or the Bylaws or (ii) conflict with, or constitute a default (or an event which with notice or lapse of time or both would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation of, any agreement, indenture or instrument to which the Company or any of its Subsidiaries is a party, or result, to the Company’s knowledge, in a violation of any law, rule, regulation, order, judgment or decree (including federal and state securities laws and regulations and the rules and regulations of the Principal Market applicable to the Company or any of its Subsidiaries) or by which any property or asset of the Company or any of its Subsidiaries is bound or affected, except in the case of conflicts, defaults, terminations, amendments, accelerations, cancellations and violations under clause (ii), which could not reasonably be expected to result in a Material Adverse Effect. Neither the Company nor its Subsidiaries is in violation of any term of or in default under its Articles of Incorporation, including any Certificate of Designation, Preferences and Rights of any outstanding series of preferred stock of the Company, or Bylaws or their organizational charter or bylaws, respectively. Neither the Company nor any of its Subsidiaries is in violation of any term of or is in default under any material contract, agreement, mortgage, indebtedness, indenture, instrument, judgment, decree or order or any statute, rule or regulation applicable to the Company or its Subsidiaries, except for possible violations, defaults, terminations or amendments that could not reasonably be expected to have a Material Adverse Effect. The business of the Company and its Subsidiaries is not being conducted, and shall not be conducted, in violation of any law, ordinance, or regulation of any governmental entity, except for possible violations, the sanctions for which either individually or in the aggregate could not reasonably be expected to have a Material Adverse Effect. Except as specifically contemplated by this Agreement, reporting obligations under the 1934 Act or as required under the 1933 Act or applicable state securities laws or the filing of a Listing of Additional Shares Notification Form with the Principal Market, the Company is not required to obtain any consent, authorization or order of, or make any filing or registration with, any court or governmental agency or any regulatory or self-regulatory agency in order for it to execute, deliver or perform any of its obligations under or contemplated by the Transaction Documents in accordance with the terms hereof or thereof. Except for reporting obligations under the 1934 Act, all consents, authorizations, orders, filings and registrations which the Company is required to obtain pursuant to the preceding sentence shall be obtained or effected on or prior to the Commencement Date. The Company is not subject to any notices or actions from or to the Principal Market, other than routine matters incident to listing on the Principal Market and not involving a violation of the rules of the Principal Market. To the Company’s knowledge, the Principal Market has not commenced any delisting proceedings against the Company. 

 

(f) SEC Documents; Financial Statements. Since September 30, 2016, the Company has filed all reports, schedules, forms, statements and other documents required to be filed by it with the SEC pursuant to the reporting requirements of the 1934 Act (all of the foregoing filed prior to the date hereof and all exhibits included therein and financial statements and schedules thereto and documents incorporated by reference therein being hereinafter referred to as the “SEC Documents”). As of their respective dates (except as they have been correctly amended), the SEC Documents complied in all material respects with the requirements of the 1934 Act and the rules and regulations of the SEC promulgated thereunder applicable to the SEC Documents, and none of the SEC Documents, at the time they were filed with the SEC (except as they may have been properly amended), 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 light of the circumstances under which they were made, not misleading. As of their respective dates (except as they have been properly amended), the financial statements of the Company included in the SEC Documents complied as to form in all material respects with applicable accounting requirements and the published rules and regulations of the SEC with respect thereto. Such financial statements have been prepared in accordance with generally 

 

 

accepted accounting principles, consistently applied, during the periods involved (except (i) as may be otherwise indicated in such financial statements or the notes thereto or (ii) in the case of unaudited interim statements, to the extent they may exclude footnotes or may be condensed or summary statements) and fairly present in all material respects the financial position of the Company as of the dates thereof and the results of its operations and cash flows for the periods then ended (subject, in the case of unaudited statements, to normal year-end audit adjustments). Except for routine correspondence, such as comment letters and notices of effectiveness in connection with previously filed registration statements or periodic reports publicly available on EDGAR, to the Company’s knowledge, the Company or any of its Subsidiaries are not presently the subject of any inquiry, investigation or action by the SEC. 

(g) Absence of Certain Changes. Since September 30, 2017, there has been no material adverse change in the business, properties, operations, financial condition or results of operations of the Company or its Subsidiaries taken as a whole. For purposes of this Agreement, neither a decrease in cash or cash equivalents or in the market price of the Common Stock nor losses incurred in the ordinary course of the Company’s business shall be deemed or considered a material adverse change. The Company has not taken any steps, and does not currently expect to take any steps, to seek protection pursuant to any Bankruptcy Law nor does the Company or any of its Subsidiaries have any knowledge or reason to believe that its creditors intend to initiate involuntary bankruptcy or insolvency proceedings. The Company is financially solvent and is generally able to pay its debts as they become due.  

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

(i) Acknowledgment Regarding Buyer’s Status. The Company acknowledges and agrees that the Buyer is acting solely in the capacity of arm’s length purchaser with respect to the Transaction Documents and the transactions contemplated hereby and thereby. The Company further acknowledges that the Buyer is not acting as a financial advisor or fiduciary of the Company (or in any similar capacity) with respect to the Transaction Documents and the transactions contemplated hereby and thereby and any advice given by the Buyer or any of its representatives or agents in connection with the Transaction Documents and the transactions contemplated hereby and thereby is merely incidental to the Buyer’s purchase of the Securities. The Company further represents to the Buyer that the Company’s decision to enter into the Transaction Documents has been based solely on the independent evaluation by the Company and its representatives and advisors. 

(j) Intellectual Property Rights. To the Company’s knowledge, the Company and its Subsidiaries own or possess adequate rights or licenses to use all material trademarks, trade names, service marks, service mark registrations, service names, patents, patent rights, copyrights, inventions, licenses, approvals, governmental authorizations, trade secrets and other intellectual property rights (collectively, “Intellectual Property”) necessary to conduct their respective businesses as now conducted, except to the extent that the failure to own, possess, license or otherwise hold adequate rights to use Intellectual Property would not, individually or in the aggregate, have a Material Adverse Effect. To the Company’s knowledge, none of the Company’s active and registered Intellectual Property have expired or terminated, or, by the terms and conditions thereof, will expire or terminate within two years from the date of this Agreement, except as would not reasonably be expected to have a Material Adverse Effect. The Company and its Subsidiaries do not have any knowledge of any infringement by the Company or its Subsidiaries of any Intellectual Property of others, or of any such development of similar or identical trade secrets or technical information by others with respect to the Company’s or its Subsidiaries’ Intellectual Property and, there is no claim, action or proceeding being made or brought against, or to the Company’s knowledge, being threatened against, the Company or its Subsidiaries regarding Intellectual Property, which could reasonably be expected to have a Material Adverse Effect. 

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

(l) Title. The Company and its Subsidiaries have good and marketable title to all personal property owned by them that is material to the business of the Company and its Subsidiaries, in each case free and clear of all liens, encumbrances and defects except such as are described in Section 3(l) of the Disclosure Letter or such as do not materially affect the value of such property and do not interfere with the use made and proposed to be made of such property by the Company and any of its 

 

 

Subsidiaries or could not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect. Any real property and facilities held under lease by the Company and any of its Subsidiaries, to the Company’s knowledge, are held by them under valid, subsisting and enforceable leases with such exceptions as are not material and do not interfere with the use made and proposed to be made of such property and buildings by the Company and its Subsidiaries. 

(m) Insurance. The Company and each of its Subsidiaries are insured by insurers of recognized financial responsibility against such losses and risks and in such amounts as management of the Company believes to be reasonable and customary in the businesses in which the Company and its Subsidiaries are engaged. To the Company’s knowledge, since December 31, 2015, neither the Company nor any such Subsidiary has been refused any insurance coverage sought or applied for and neither the Company nor any such Subsidiary, to the Company’s knowledge, will be unable to renew its existing insurance coverage as and when such coverage expires or to obtain similar coverage from similar insurers as may be necessary to continue its business at a cost that would not reasonably be expected to have a Material Adverse Effect. 

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

(o) Tax Status. The Company and each of its Subsidiaries has made or filed all federal and state income and all other material tax returns, reports and declarations required by any jurisdiction to which it is subject (unless and only to the extent that the Company and each of its Subsidiaries has set aside on its books reserves reasonably adequate for the payment of all unpaid and unreported taxes or filed valid extensions) and has paid all taxes and other governmental assessments and charges that are material in amount, shown or determined to be due on such returns, reports and declarations, except those being contested in good faith and has set aside on its books reserves reasonably adequate for the payment of all taxes for periods subsequent to the periods to which such returns, reports or declarations apply. To the Company’s knowledge, there are no unpaid taxes in any material amount claimed to be due by the taxing authority of any jurisdiction. 

(p) Transactions With Affiliates. Other than the grant or exercise of stock options or any other equity securities offered pursuant to duly adopted stock or incentive compensation plans identified in Section 3(c), none of the officers, directors or employees of the Company is presently a party to any transaction with the Company or any of its Subsidiaries (other than for services as employees, officers and directors and reimbursement for expenses incurred on behalf of the Company), including any contract, agreement or other arrangement providing for the furnishing of services to or by, providing for rental of real or personal property to or from, or otherwise requiring payments to or from any officer, director or such employee or, to the knowledge of the Company, any corporation, partnership, trust or other entity in which any officer, director, or any such employee has a material interest or is an officer, director, trustee or general partner. 

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

(r) Registration Statement.  The Shelf Registration Statement (as defined in Section 4(a) hereof) has been declared effective by the SEC, and no stop order has been issued or is pending or, to the knowledge of the Company, threatened by the SEC with respect thereto.  As of the date hereof, the Company has a dollar amount of securities registered and unsold under the Shelf Registration Statement, which is not less than the sum of (i) the Available Amount and (ii) the market value of the Commitment Shares on the date hereof.

4.COVENANTS.

(a) Filing of Form 8-K and Prospectus Supplement. The Company agrees that it shall, within the time required under the 1934 Act, file a Current Report on Form 8-K disclosing this Agreement and the transaction contemplated hereby or the Company may, in its discretion, disclose this Agreement and the transactions contemplated hereby in its Annual Report on Form 10-K if filed within four Business Days after the date of the execution of this Agreement.  The Company shall file within two (2) Business Days from the date hereof a prospectus supplement to the prospectus dated June 12, 2017 forming a part of the Company’s existing shelf registration statement on Form S-3 (File No. 333-218487, the “Shelf Registration Statement”) covering the sale of the Commitment Shares and Purchase Shares (the “Prospectus Supplement”) in accordance with the terms of the Registration Rights Agreement between the Company and the Buyer, dated as of the date hereof (the “Registration Rights 

 

 

Agreement”).  The Company shall use its reasonable best efforts to keep the Shelf Registration Statement and any New Registration Statement (as defined in the Registration Rights Agreement) effective pursuant to Rule 415 promulgated under the 1933 Act and available for sales of all Securities to the Buyer until such time as (i) it no longer qualifies to make sales under the Shelf Registration Statement (which shall be understood to include the inability of the Company to immediately register sales of Securities to the Buyer under the Shelf Registration Statement or any New Registration Statement pursuant to General Instruction I.B.6 of Form S-3), (ii) the date on which all the Securities have been sold under this Agreement and no Available Amount remains thereunder, or (iii) the Agreement has been terminated.  The Shelf Registration Statement (including any amendments or supplements thereto and prospectuses or prospectus supplements, including the Prospectus Supplement, contained therein) shall not contain any 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 in which they were made, not misleading.

(b) Blue Sky. The Company shall take such action, if any, as is reasonably necessary in order to obtain an exemption for or to qualify (i) the initial sale of the Securities to the Buyer under this Agreement and (ii) any subsequent sale of the Securities by the Buyer, in each case, under applicable securities or “Blue Sky” laws of the states of the United States in such states as is reasonably requested by the Buyer from time to time, and shall provide evidence of any such action so taken to the Buyer at its written request; provided, however, that the Company shall not be obligated to file any general consent to service of process or to qualify as a foreign corporation or as a dealer in securities in any jurisdiction in which it is not so qualified or to subject itself to taxation in respect of doing business in any jurisdiction in which it is not otherwise so subject. 

(c) Listing. The Company shall promptly secure the listing of all of the Securities upon each national securities exchange and automated quotation system that requires an application by the Company for listing, if any, upon which shares of Common Stock are then listed (subject to official notice of issuance) and shall maintain such listing, so long as any other shares of Common Stock shall be so listed. The Company shall use its commercially reasonable efforts to maintain the Common Stock’s listing on the Principal Market. Neither the Company nor any of its Subsidiaries shall take any action that would be reasonably expected to result in the delisting or suspension of the Common Stock on the Principal Market, unless the Common Stock is immediately thereafter traded on the New York Stock Exchange, the NYSE MKT, the Nasdaq Global Select Market, the Nasdaq Global Market, the Nasdaq Capital Market, or the OTCQB or OTCQX market places of the OTC Markets. The Company shall pay all fees and expenses in connection with satisfying its obligations under this Section. 

(d) Limitation on Short Sales and Hedging Transactions. The Buyer agrees that beginning on the date of this Agreement and ending on the date of termination of this Agreement as provided in Section 11(k), the Buyer and its agents, representatives and affiliates shall not in any manner whatsoever enter into or effect, directly or indirectly, any (i) “short sale” (as such term is defined in Section 242.200 of Regulation SHO of the 1934 Act) of the Common Stock or (ii) hedging transaction, which establishes a net short position with respect to the Common Stock. 

(e) Issuance of Commitment Shares. In connection with the Commencement, the Company shall issue to the Buyer as consideration for the Buyer entering into this Agreement 33,040 shares of Common Stock (the “Commitment Shares”).  The Commitment Shares shall be issued without any restrictive legend whatsoever or prior sale requirement. 

(f) Due Diligence. The Buyer shall have the right, from time to time as the Buyer may reasonably deem appropriate, to perform reasonable due diligence on the Company during normal business hours and subject to reasonable prior notice to the Company.  The Company and its officers and employees shall provide information and reasonably cooperate with the Buyer in connection with any reasonable request by the Buyer related to the Buyer’s due diligence of the Company, including, but not limited to, any such request made by the Buyer in connection with (i) the filing of the prospectus supplement described in Section 4(a) hereof and (ii) the Commencement; provided, however, that at no time is the Company required to disclose material nonpublic information to the Buyer or breach any obligation of confidentiality or non-disclosure to a third party or make any disclosure that could cause a waiver of attorney-client privilege.  Except as may be required by law, court order or governmental authority, each party hereto agrees not to disclose any Confidential Information of the other party to any third party and shall not use the Confidential Information of such other party for any purpose other than in connection with, or in furtherance of, the transactions contemplated hereby; provided, that to the extent such disclosure is required by law, court order or governmental authority, the receiving party shall provide the disclosing party with reasonable prior written notice of such disclosure and make a reasonable effort to assist the disclosing party in obtaining a protective order preventing or limiting the disclosure and/or requiring that the Confidential Information so disclosed be used only for the purposes for which the law, court order or governmental authority requires.  Each party hereto acknowledges that the Confidential Information shall remain the property of the disclosing party and agrees that it shall take all reasonable measures to protect the secrecy of any Confidential Information disclosed by the other party. 

 

 

5.TRANSFER AGENT INSTRUCTIONS.

All of the Purchase Shares to be issued under this Agreement shall be issued without any restrictive legend unless the Buyer expressly consents otherwise. The Company shall issue irrevocable instructions to the Transfer Agent, and any subsequent transfer agent, to issue Common Stock in the name of the Buyer for the Purchase Shares (the “Irrevocable Transfer Agent Instructions”). The Company warrants to the Buyer that no instruction other than the Irrevocable Transfer Agent Instructions referred to in this Section 5, will be given by the Company to the Transfer Agent with respect to the Purchase Shares and that the Commitment Shares and the Purchase Shares shall otherwise be freely transferable on the books and records of the Company as and to the extent provided in this Agreement and the Registration Rights Agreement. 

 

	
6.
	
CONDITIONS TO THE COMPANY’S RIGHT TO COMMENCE SALES OF SHARES OF COMMON STOCK UNDER THIS AGREEMENT.

The right of the Company hereunder to commence sales of the Purchase Shares is subject to the satisfaction of each of the following conditions on or before the Commencement Date (the date that the Company may begin sales of Purchase Shares): 

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

(b) The representations and warranties of the Buyer shall be true and correct as of the Commencement Date as though made at that time (except for representations and warranties that speak as of a specific date, which shall be true and correct in all material respects as of such specific date) and the Buyer shall have performed, satisfied and complied in all material respects with the covenants and agreements required by this Agreement to be performed, satisfied or complied with by the Buyer at or prior to the Commencement Date; and 

(c) The Prospectus Supplement shall have been delivered to the Buyer and no stop order with respect to the registration statement covering the sale of shares to the Buyer shall be pending or threatened by the SEC. 

	
7.
	
CONDITIONS TO THE BUYER’S OBLIGATION TO MAKE PURCHASES OF SHARES OF COMMON STOCK.

The obligation of the Buyer to buy Purchase Shares under this Agreement is subject to the satisfaction of each of the following conditions on or before the Commencement Date (the date that the Company may begin sales of Purchase Shares) and once such conditions have been initially satisfied, there shall not be any ongoing obligation to satisfy such conditions after the Commencement has occurred: 

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

(b) The Company shall have issued to the Buyer the Commitment Shares; 

(c) The Common Stock shall be authorized for quotation on the Principal Market, trading in the Common Stock shall not have been within the last 365 days suspended by the SEC or the Principal Market, other than a general halt in trading in the Common Stock by the Principal Market under halt codes indicating pending or released material news, and the Securities shall be approved for listing upon the Principal Market; 

(d) The Buyer shall have received the opinion of the Company’s legal counsel dated as of the Commencement Date in customary form and substance; 

(e) The representations and warranties of the Company shall be true and correct in all material respects (except to the extent that any of such representations and warranties is already qualified as to materiality in Section 3 above, in which case, such representations and warranties shall be true and correct without further qualification) as of the date of this Agreement and as of the Commencement Date as though made at that time (except for representations and warranties that speak as of a specific date, which shall be true and correct in all material respects as of such specific date) and the Company shall have performed, satisfied and complied in all material respects with the covenants, agreements and conditions required by the Transaction Documents to be performed, satisfied or complied with by the Company at or prior to the Commencement Date. The Buyer shall have received a certificate, executed by the CEO, President or CFO of the Company, dated as of the Commencement Date, to the foregoing effect in the form attached hereto as Exhibit A; 

(f) The Board of Directors of the Company or a duly authorized committee thereof shall have adopted resolutions substantially in the form attached hereto as Exhibit B, which shall be in full force and effect without any amendment or supplement thereto as of the Commencement Date; 

 

 

(g) As of the Commencement Date, the Company shall have reserved out of its authorized and unissued Common Stock, solely for the purpose of effecting future purchases of Purchase Shares hereunder, 4,000,000 shares of Common Stock; 

(h) The Irrevocable Transfer Agent Instructions, in form acceptable to the Buyer shall have been delivered to and acknowledged in writing by the Company and the Buyer and have been delivered to the Transfer Agent; 

(i) The Company shall have delivered to the Buyer a certificate evidencing the incorporation and good standing of the Company in the Commonwealth of Pennsylvania issued by the Secretary of Commonwealth of the Commonwealth of Pennsylvania as of a date within ten (10) Business Days of the Commencement Date; 

(j) [Intentionally Omitted]; 

(k) The Company shall have delivered to the Buyer a secretary’s certificate executed by the Secretary of the Company, dated as of the Commencement Date, in the form attached hereto as Exhibit C; 

(l) No stop order with respect to the Shelf Registration Letter shall be pending or threatened by the SEC. The Company shall have prepared and delivered to the Buyer a final and complete form of prospectus supplement, dated and current as of the Commencement Date, to be used in connection with any issuances of any Commitment Shares or any Purchase Shares to the Buyer, and to be filed by the Company within two (2) Business Days after the Commencement Date pursuant to Rule 424(b). The Company shall have made all filings under all applicable federal and state securities laws necessary to consummate the issuance of the Commitment Shares and the Purchase Shares pursuant to this Agreement in compliance with such laws; 

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

(n) On or prior to the Commencement Date, the Company shall take all necessary action, if any, and such actions as reasonably requested by the Buyer, in order to render inapplicable any control share acquisition, business combination, shareholder rights plan or poison pill (including any distribution under a rights agreement) or other similar anti-takeover provision under the Articles of Incorporation or the laws of the Commonwealth of Pennsylvania that is or could become applicable to the Buyer as a result of the transactions contemplated by this Agreement, including, without limitation, the Company’s issuance of the Securities and the Buyer’s ownership of the Securities; and 

(o) The Company shall have provided the Buyer with the information reasonably requested by the Buyer in connection with its due diligence requests made prior to, or in connection with, the Commencement, in accordance with the terms of Section 4(f) hereof. 

8.INDEMNIFICATION.

In consideration of the Buyer’s execution and delivery of the Transaction Documents and acquiring the Securities hereunder and in addition to all of the Company’s other obligations under the Transaction Documents, the Company shall defend, protect, indemnify and hold harmless the Buyer and all of its affiliates, members, officers, directors, and employees, and any of the foregoing person’s agents or other representatives (including, without limitation, those retained in connection with the transactions contemplated by this Agreement) (collectively, the “Indemnitees”) from and against any and all third party actions, causes of action, suits, claims, losses, costs, penalties, fees, liabilities and damages, and expenses in connection therewith (irrespective of whether any such Indemnitee is a party to the action for which indemnification hereunder is sought), and including reasonable attorneys’ fees and disbursements (the “Indemnified Liabilities”), incurred by any Indemnitee as a result of, or arising out of, or relating to (a) any misrepresentation or breach of any representation or warranty made by the Company in the Transaction Documents or any other certificate, instrument or document contemplated hereby or thereby, (b) any breach of any covenant, agreement or obligation of the Company contained in the Transaction Documents or any other certificate, instrument or document contemplated hereby or thereby, or (c) any cause of action, suit or claim brought or made against such Indemnitee and arising out of or resulting from the execution, delivery, performance or enforcement of the Transaction Documents or any other certificate, instrument or document contemplated hereby or thereby, other than with respect to Indemnified Liabilities which directly and primarily result from (A) a breach of any of the Buyer’s representations and warranties, covenants or agreements contained in this Agreement, or (B) the gross negligence, bad faith or willful misconduct of the Buyer or any other Indemnitee. To the extent that the foregoing undertaking by the Company may be unenforceable for any reason, the Company shall make the maximum contribution to the payment and satisfaction of each of the Indemnified Liabilities which is permissible under applicable law. 

 

 

9.EVENTS OF DEFAULT.

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

(a) during any period in which the effectiveness of any registration statement is required to be maintained pursuant to the terms of the Registration Rights Agreement, the effectiveness of such registration statement lapses for any reason (including, without limitation, the issuance of a stop order) or is unavailable to the Company for sale of all of the Registrable Securities (as defined in the Registration Rights Agreement) to the Buyer in accordance with the terms of the Registration Rights Agreement, and such lapse or unavailability continues for a period of ten (10) consecutive Business Days or for more than an aggregate of thirty (30) Business Days in any 365-day period, which is not in connection with a post-effective amendment to any such registration statement or the filing of a new registration statement; provided, however, that in connection with any post-effective amendment to such registration statement or filing of a new registration statement that is required to be declared effective by the SEC, such lapse or unavailability may continue for a period of no more than thirty (30) consecutive Business Days, which such period shall be extended for an additional thirty (30) Business Days if the Company receives a comment letter from the SEC in connection therewith; 

(b) the suspension from trading or failure of the Common Stock to be listed on a Principal Market for a period of three (3) consecutive Business Days; 

(c) the delisting of the Common Stock from the Principal Market, and the Common Stock is not immediately thereafter trading on the New York Stock Exchange, the NYSE MKT, the Nasdaq Global Select Market, the Nasdaq Global Market, the Nasdaq Capital Market, the OTC Bulletin Board or the OTCQB marketplace or OTCQX marketplace of the OTC Markets Group, Inc.; 

(d) the failure for any reason by the Transfer Agent to issue Purchase Shares to the Buyer within five (5) Business Days after the applicable Purchase Date that the Buyer is entitled to receive; 

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

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

(g) if the Company pursuant to or within the meaning of any Bankruptcy Law; (A) commences a voluntary case, (B) consents to the entry of an order for relief against it in an involuntary case, (C) consents to the appointment of a Custodian of it or for all or substantially all of its property, (D) makes a general assignment for the benefit of its creditors or (E) becomes insolvent; 

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

(i) if at any time after the Commencement Date, the Exchange Cap is reached unless and until shareholder approval is obtained pursuant to Section 1(h) hereof. The Exchange Cap shall be deemed to be reached at such time if, upon submission of a Purchase Notice or VWAP Purchase Notice under this Agreement, the issuance of such shares of Common Stock would exceed the number of shares of Common Stock which the Company may issue under this Agreement without breaching the Company’s obligations under the rules or regulations of the Principal Market. 

In addition to any other rights and remedies under applicable law and this Agreement, including the Buyer termination rights under Section 11(k) hereof, so long as an Event of Default has occurred and is continuing, or if any event which, after notice and/or lapse of time, would become an Event of Default, has occurred and is continuing, or so long as the Closing Sale Price is below the Floor Price, the Company may not require and the Buyer shall not be obligated to purchase any shares of Common Stock under this Agreement. If pursuant to or within the meaning of any Bankruptcy Law, the Company commences a voluntary case or any Person commences a proceeding against the Company, a Custodian is appointed for the Company or for all or substantially all of its property, or the Company makes a general assignment for the benefit of its creditors, (any of which would be an Event of Default as described in Sections 9(f), 9(g) and 9(h) hereof) this Agreement shall automatically terminate without any liability or payment to the Company without further action or notice by any Person. No such termination of this Agreement under Section 11(k)(i) shall affect the Company’s or the Buyer’s obligations under this Agreement with respect to 

 

 

pending purchases and the Company and the Buyer shall complete their respective obligations with respect to any pending purchases under this Agreement. 

10.CERTAIN DEFINED TERMS.

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

(a) “1933 Act” means the Securities Act of 1933, as amended. 

(b) “Available Amount” means initially Twenty Million Dollars ($20,000,000) in the aggregate which amount shall be reduced by the Purchase Amount each time the Buyer purchases shares of Common Stock pursuant to Section 1 hereof. 

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

(d) “Business Day” means any day on which the Principal Market is open for trading during normal trading hours (i.e., 9:30 a.m. to 4:00 p.m. Eastern Time), including any day on which the Principal Market is open for trading for a period of time less than the customary time. 

(e) “Closing Sale Price” means the last closing trade price for the Common Stock on the Principal Market as reported by the Principal Market. 

(f) “Confidential Information” means any information disclosed by either party to the other party, either directly or indirectly, in writing, orally or by inspection of tangible objects (including, without limitation, documents, prototypes, samples, plant and equipment), which is designated as “Confidential,” “Proprietary” or some similar designation. Information communicated orally shall be considered Confidential Information if such information is confirmed in writing as being Confidential Information within ten (10) Business Days after the initial disclosure. Confidential Information may also include information disclosed to a disclosing party by third parties. Confidential Information shall not, however, include any information which (i) was publicly known and made generally available in the public domain prior to the time of disclosure by the disclosing party; (ii) becomes publicly known and made generally available after disclosure by the disclosing party to the receiving party through no action or inaction of the receiving party; (iii) is already in the possession of the receiving party at the time of disclosure by the disclosing party as shown by the receiving party’s files and records immediately prior to the time of disclosure; (iv) is obtained by the receiving party from a third party without a breach of such third party’s obligations of confidentiality; (v) is independently developed by the receiving party without use of or reference to the disclosing party’s Confidential Information, as shown by documents and other competent evidence in the receiving party’s possession; or (vi) is required by law to be disclosed by the receiving party, provided that the receiving party gives the disclosing party prompt written notice of such requirement prior to such disclosure and assistance in obtaining an order protecting the information from public disclosure. 

 

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

(h) “Maturity Date” means the date that is thirty (30) months from the Commencement Date. 

(i) “Person” means an individual or entity including any limited liability company, a partnership, a joint venture, a corporation, a trust, an unincorporated organization and a government or any department or agency thereof. 

(j) “Principal Market” means the Nasdaq Capital Market; provided however, that in the event the Company’s Common Stock is ever listed or traded on the New York Stock Exchange, the NYSE MKT, the Nasdaq Global Select Market, the Nasdaq Global Market, the Nasdaq Capital Market, the OTC Bulletin Board or either of the OTCQB Marketplace or the OTCQX Marketplace of the OTC Markets Group, then the “Principal Market” shall mean such other market or exchange on which the Company’s Common Stock is then listed or traded. 

(k) “Purchase Amount” means, with respect to any particular purchase made hereunder, the portion of the Available Amount to be purchased by the Buyer pursuant to Section 1 hereof as set forth in a valid Purchase Notice or VWAP Purchase Notice which the Company delivers to the Buyer. 

(l) “Purchase Date” means with respect to any Regular Purchase made hereunder, the Business Day of receipt by the Buyer of a valid Purchase Notice that the Buyer is to buy Purchase Shares pursuant to Section 1(b) hereof. 

 

 

(m) “Purchase Notice” shall mean an irrevocable written notice from the Company to the Buyer directing the Buyer to buy Purchase Shares pursuant to Section 1(b) hereof as specified by the Company therein at the applicable Purchase Price on the Purchase Date. 

(n) “Purchase Price” means the lesser of (i) the lowest Sale Price of the Common Stock on the Purchase Date or (ii) the arithmetic average of the three (3) lowest Closing Sale Prices for the Common Stock during the ten (10) consecutive Business Days ending on the Business Day immediately preceding such Purchase Date (to be appropriately adjusted for any reorganization, recapitalization, stock dividend, stock split, reverse stock split or other similar transaction). 

(o) “Sale Price” means any trade price for the shares of Common Stock on the Principal Market during normal trading hours, as reported by the Principal Market. 

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

(q) “Transfer Agent” means the transfer agent of the Company as set forth in Section 11(f) hereof or such other person who is then serving as the transfer agent for the Company in respect of the Common Stock. 

(r) “VWAP Minimum Price Threshold” means, with respect to any particular VWAP Purchase Notice, the Sale Price on the VWAP Purchase Date equal to the greater of (i) 80% of the Closing Sale Price on the Business Day immediately preceding the VWAP Purchase Date or (ii) such higher price as set forth by the Company in the VWAP Purchase Notice. 

 

(s) “VWAP Purchase Amount” means, with respect to any particular VWAP Purchase Notice, the portion of the Available Amount to be purchased by the Buyer pursuant to Section 1(c) hereof pursuant to a valid VWAP Purchase Notice which requires the Buyer to buy the VWAP Purchase Share Percentage of the aggregate shares traded on the Principal Market during normal trading hours on the VWAP Purchase Date up to the VWAP Purchase Share Volume Maximum, subject to the VWAP Minimum Price Threshold. 

(t) “VWAP Purchase Date” means, with respect to any VWAP Purchase made hereunder, the Business Day following the receipt by the Buyer of a valid VWAP Purchase Notice that the Buyer is to buy Purchase Shares pursuant to Section 1(c) hereof. 

(u) “VWAP Purchase Notice” shall mean an irrevocable written notice from the Company to the Buyer directing the Buyer to buy Purchase Shares on the VWAP Purchase Date pursuant to Section 1(c) hereof as specified by the Company therein at the applicable VWAP Purchase Price with the applicable VWAP Purchase Share Percentage specified therein. 

(v) “VWAP Purchase Share Percentage” means, with respect to any particular VWAP Purchase Notice pursuant to Section 1(c) hereof, the percentage set forth in the VWAP Purchase Notice which the Buyer will be required to buy as a specified percentage of the aggregate shares traded on the Principal Market during normal trading hours up to the VWAP Purchase Share Volume Maximum on the VWAP Purchase Date subject to Section 1(c) hereof but in no event shall this percentage exceed thirty percent (30%) of such VWAP Purchase Date’s share trading volume of the Common Stock on the Principal Market during normal trading hours. 

(w) “VWAP Purchase Price” means the lesser of (i) the Closing Sale Price on the VWAP Purchase Date; or (ii) ninety-seven percent (97%) of volume weighted average price for the Common Stock traded on the Principal Market during normal trading hours on (A) the VWAP Purchase Date if the aggregate shares traded on the Principal Market on the VWAP Purchase Date have not exceeded the VWAP Purchase Share Volume Maximum and the Sale Price of Common Stock has not fallen below the VWAP Minimum Price Threshold (to be appropriately adjusted for any reorganization, recapitalization, stock dividend, stock split, reverse stock split or other similar transaction), or (B) the portion of the VWAP Purchase Date until such time as the sooner to occur of (1) the time at which the aggregate shares traded on the Principal Market has exceeded the VWAP Purchase Share Volume Maximum, or (2) the time at which the Sale Price of Common Stock falls below the VWAP Minimum Price Threshold (to be appropriately adjusted for any reorganization, recapitalization, stock dividend, stock split, reverse stock split or other similar transaction). 

(x) “VWAP Purchase Share Estimate” means the number of shares of Common Stock that the Company has in its sole discretion irrevocably instructed its Transfer Agent to issue to the Buyer via the Depository Trust Company (“DTC”) Fast Automated Securities Transfer Program in connection with a VWAP Purchase Notice pursuant to Section 1(c) hereof and issued to the Buyer’s or its designee’s balance account with DTC through its Deposit Withdrawal At Custodian (DWAC) system on the VWAP Purchase Date (to be appropriately adjusted for any reorganization, recapitalization, stock dividend, stock split, reverse stock split or other similar transaction). 

 

 

 

(y) “VWAP Purchase Share Volume Maximum” means a number of shares of Common Stock traded on the Principal Market during normal trading hours on the VWAP Purchase Date equal to: (i) the VWAP Purchase Share Estimate, divided by (ii) the VWAP Purchase Share Percentage (to be appropriately adjusted for any reorganization, recapitalization, stock dividend, stock split, reverse stock split or other similar transaction). 

11.MISCELLANEOUS.

(a) Governing Law; Jurisdiction; Jury Trial. The corporate laws of the Commonwealth of Pennsylvania shall govern all issues concerning the relative rights of the Company and its shareholders. All other questions concerning the construction, validity, enforcement and interpretation of this Agreement and the other Transaction Documents shall be governed by the internal laws of the State of Illinois, without giving effect to any choice of law or conflict of law provision or rule (whether of the State of Illinois or any other jurisdictions) that would cause the application of the laws of any jurisdictions other than the State of Illinois. Each party hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in the City of Chicago, Illinois, for the adjudication of any dispute hereunder or under the other Transaction Documents or in connection herewith or therewith, or with any transaction contemplated hereby or discussed herein, and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is brought in an inconvenient forum or that the venue of such suit, action or proceeding is improper. Each party hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof to such party at the address for such notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION HEREWITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY. 

(b) Counterparts. This Agreement may be executed in two or more identical counterparts, all of which shall be considered one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to the other party; provided that a facsimile or pdf (or other electronic reproduction) signature shall be considered due execution and shall be binding upon the signatory thereto with the same force and effect as if the signature were an original, not a facsimile or PDF (or other electronic reproduction) signature. 

(c) Headings. The headings of this Agreement are for convenience of reference and shall not form part of, or affect the interpretation of, this Agreement. 

(d) Severability. If any provision of this Agreement shall be invalid or unenforceable in any jurisdiction, such invalidity or unenforceability shall not affect the validity or enforceability of the remainder of this Agreement in that jurisdiction or the validity or enforceability of any provision of this Agreement in any other jurisdiction. 

(e) Entire Agreement. This Agreement and the Registration Rights Agreement supersede all other prior oral or written agreements between the Buyer, the Company, their affiliates and persons acting on their behalf with respect to the matters discussed herein, and this Agreement, the other Transaction Documents and the instruments referenced herein contain the entire understanding of the parties with respect to the matters covered herein and therein and, except as specifically set forth herein or therein, neither the Company nor the Buyer makes any representation, warranty, covenant or undertaking with respect to such matters. Each of the Company and the Buyer acknowledge and agree that it has not relied on, in any manner whatsoever, any representations or statements, written or oral, other than as expressly set forth in this Agreement.

(f) Notices. Any notices, consents or other communications required or permitted to be given under the terms of this Agreement must be in writing and will be deemed to have been delivered: (i) upon receipt when delivered personally; (ii) upon receipt when sent by facsimile (provided confirmation of transmission is mechanically or electronically generated and kept on file by the sending party); (iii) upon receipt, when sent by electronic message (provided the recipient responds to the message and confirmation of both electronic messages are kept on file by the sending party); or (iv) one (1) Business Day after timely deposit with a nationally recognized overnight delivery service, in each case properly addressed to the party to receive the same. The addresses and facsimile numbers for such communications shall be: 

If to the Company: 

Recro Pharma, Inc. 

490 Lapp Road 

Malvern, PA 19355 

Telephone: 484-395-2470 

 

 

Facsimile: 484-395-2471 

Attention: Michael Celano 

Email: mcelano@recropharma.com 

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

Pepper Hamilton LLP 

3000 Two Logan Square

Eighteenth and Arch Streets

Philadelphia, PA 19103 

Telephone: 215-981-4331 

Facsimile: 215-981-4750 

Attention: Rachael M. Bushey

Email: busheyr@pepperlaw.com

If to the Buyer: 

Aspire Capital Fund, LLC 

155 North Wacker Drive, Suite 1600 

Chicago, IL 60606 

Telephone: 312-658-0400 

Facsimile: 312-658-4005 

Attention: Steven G. Martin 

Email: smartin@aspirecapital.com 

With a copy to (which shall not constitute delivery to the Buyer): 

Morrison & Foerster LLP 

2000 Pennsylvania Avenue, NW, Suite 6000 

Washington, DC 20006 

Telephone: 202-778-1611 

Facsimile: 202-887-0763 

Attention: Martin P. Dunn, Esq. 

Email: mdunn@mofo.com 

 

If to the Transfer Agent: 

Broadridge Corporate Issuer Solutions, Inc. 

2 Journal Square, 7th Floor 

Jersey City, NJ 07306 

Telephone: 201-714-3800 

Facsimile: 201-714-8862 

Attention: Jennifer A. Whitney, Broadridge Relationship Manager 

Email: Jennifer.Whitney@broadridge.com 

or at such other address and/or facsimile number and/or to the attention of such other person as the recipient party has specified by written notice given to each other party at least one (1) Business Day prior to the effectiveness of such change. Written confirmation of receipt (A) given by the recipient of such notice, consent or other communication, (B) mechanically or electronically generated by the sender’s facsimile machine containing the time, date, and recipient facsimile number, (C) electronically generated by the sender’s electronic mail containing the time, date and recipient email address or (D) provided by a nationally recognized overnight delivery service, shall be rebuttable evidence of receipt in accordance with clause (i), (ii), (iii) or (iv) above, respectively. 

(g) Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties and their respective successors and assigns. The Company shall not assign this Agreement or any rights or obligations hereunder without the prior written consent of the Buyer, including by merger or consolidation; provided, however, that any transaction, whether by merger, reorganization, restructuring, consolidation, financing or otherwise, whereby the Company remains the surviving entity immediately after such transaction shall not be deemed a succession or assignment. The Buyer may not assign its rights or obligations under this Agreement. 

 

 

(h) No Third Party Beneficiaries. This Agreement is intended for the benefit of the parties hereto and their respective permitted successors and assigns, and is not for the benefit of, nor may any provision hereof be enforced by, any other person. 

(i) Publicity. The Buyer shall have the right to approve before issuance any press release, SEC filing or any other public disclosure made by or on behalf of the Company whatsoever with respect to, in any manner, the Buyer, its purchases hereunder or any aspect of this Agreement or the transactions contemplated hereby; provided, however, that the Company shall be entitled, without the prior approval of the Buyer, to make any press release or other public disclosure (including any filings with the SEC) with respect to such transactions as is required by applicable law and regulations so long as the Company and its counsel consult with the Buyer in connection with any such press release or other public disclosure at least one (1) Business Day prior to its release; provided, however, that the Company’s obligations pursuant to this Section 11(i) shall not apply if the material provisions of such press release, SEC filing, or other public disclosure previously has been publicly disclosed by the Company in accordance with this Section 11(i). The Buyer must be provided with a copy thereof at least one (1) Business Day prior to any release or use by the Company thereof. 

(j) Further Assurances. Each party shall do and perform, or cause to be done and performed, all such further acts and things, and shall execute and deliver all such other agreements, certificates, instruments and documents, as the other party may reasonably request in order to carry out the intent and accomplish the purposes of this Agreement and the consummation of the transactions contemplated hereby. 

 

(k) Termination. This Agreement may be terminated only as follows: 

(i) By the Buyer any time an Event of Default exists without any liability or payment to the Company. However, if pursuant to or within the meaning of any Bankruptcy Law, the Company commences a voluntary case or any Person commences a proceeding against the Company, a Custodian is appointed for the Company or for all or substantially all of its property, or the Company makes a general assignment for the benefit of its creditors, (any of which would be an Event of Default as described in Sections 9(f), 9(g) and 9(h) hereof) this Agreement shall automatically terminate without any liability or payment to the Company without further action or notice by any Person. No such termination of this Agreement under this Section 11(k)(i) shall affect the Company’s or the Buyer’s obligations under this Agreement with respect to pending purchases and the Company and the Buyer shall complete their respective obligations with respect to any pending purchases under this Agreement. 

(ii) In the event that the Commencement shall not have occurred, the Company shall have the option to terminate this Agreement for any reason or for no reason without any liability whatsoever of either party to the other party under this Agreement except as set forth in Section 11(k)(viii) hereof. 

(iii) In the event that the Commencement shall not have occurred within ten (10) Business Days, due to the failure to satisfy any of the conditions set forth in Sections 6 and 7 above with respect to the Commencement, either party shall have the option to terminate this Agreement at the close of business on such date or thereafter without liability of either party to any other party; provided, however, that the right to terminate this Agreement under this Section 11(k)(iii) shall not be available to either party if such failure to satisfy any of the conditions set forth in Sections 6 and 7 is the result of a breach of this Agreement by such party or the failure of any representation or warranty of such party included in this Agreement to be true and correct in all material respects. 

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

(v) This Agreement shall automatically terminate on the date that the Company sells and the Buyer purchases the full Available Amount as provided herein, without any action or notice on the part of any party and without any liability whatsoever of any party to any other party under this Agreement except as set forth in Section 11(k)(viii) hereof. 

(vi) If by the Maturity Date for any reason or for no reason the full Available Amount under this Agreement has not been purchased as provided for in Section 1 of this Agreement, this Agreement shall automatically terminate on the Maturity Date, without any action or notice on the part of any party and without any liability whatsoever of any party to any other party under this Agreement except as set forth in Section 11(k)(viii) hereof. 

 

(vii) Except as set forth in Sections 11(k)(i) (in respect of an Event of Default under Sections 9(f), 9(g) and 9(h)), 11(k)(v) and 11(k)(vi), any termination of this Agreement pursuant to this Section 11(k) shall be effected by written notice from the Company to the Buyer, or the Buyer to the Company, as the case may be, setting forth the basis for the termination hereof. 

 

 

(viii) The representations and warranties of the Company and the Buyer contained in Sections 2, 3 and 5 hereof, the indemnification provisions set forth in Section 8 hereof and the agreements and covenants set forth in Sections 4(e) and 11, shall survive the Commencement and any termination of this Agreement. No termination of this Agreement shall affect the Company’s or the Buyer’s rights or obligations (A) under the Registration Rights Agreement, which shall survive any such termination in accordance with its terms, or (B) under this Agreement with respect to pending purchases and the Company and the Buyer shall complete their respective obligations with respect to any pending purchases under this Agreement. 

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

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

(n) Failure or Indulgence Not Waiver. No failure or delay in the exercise of any power, right or privilege hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such power, right or privilege preclude other or further exercise thereof or of any other right, power or privilege. 

* * * * * 

 

 

 

 

IN WITNESS WHEREOF, the Buyer and the Company have caused this Common Stock Purchase Agreement to be duly executed as of the date first written above. 

 

			
	
 
	
 
	
 

	
THE COMPANY:

	
 

	
RECRO PHARMA, INC.

	
 
	
 

	
By:
	
 
	
 /s/ Geraldine A. Henwood

	
Name:
	
 
	
Geraldine A. Henwood

	
Title:
	
 
	
Chief Executive Officer

	
 

	
BUYER:

	
 

	
ASPIRE CAPITAL FUND, LLC

	
BY:
	
 
	
ASPIRE CAPITAL PARTNERS, LLC

	
BY:
	
 
	
Chrisko Investors Inc.

	
 
	
 

	
By:
	
 
	
 /s/ Christos Komissopoulos

	
Name:
	
 
	
Christos Komissopoulos

	
Title:
	
 
	
President

 

 

 

 

 

EXHIBITS 

 

			
	
 
	
 
	
 

	
Exhibit A
	
 
	
Form of Officer’s Certificate

	
Exhibit B
	
 
	
Form of Resolutions of Board of Directors of the Company

	
Exhibit C
	
 
	
Form of Secretary’s Certificate

 

 

EXHIBIT A 

FORM OF OFFICER’S CERTIFICATE 

This Officer’s Certificate (“Certificate”) is being delivered pursuant to Section 7(e) of that certain Common Stock Purchase Agreement dated as of March 2, 2018 (the “Common Stock Purchase Agreement”), by and between RECRO PHARMA, a Pennsylvania corporation (the “Company”), and ASPIRE CAPITAL FUND, LLC, an Illinois limited liability company (the “Buyer”). Terms used herein and not otherwise defined shall have the meanings ascribed to them in the Common Stock Purchase Agreement. 

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

1. I am the   of the Company and make the statements contained in this Certificate in my capacity as such; 

2. The representations and warranties of the Company are true and correct in all material respects (except to the extent that any of such representations and warranties is already qualified as to materiality in Section 3 of the Common Stock Purchase Agreement, in which case, such representations and warranties are true and correct without further qualification) as of the date when made and as of the Commencement Date as though made at that time (except for representations and warranties that speak as of a specific date); 

3. The Company has performed, satisfied and complied in all material respects with covenants, agreements and conditions required by the Transaction Documents to be performed, satisfied or complied with by the Company at or prior to the Commencement Date. 

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

IN WITNESS WHEREOF, I have hereunder signed my name on this            day of March, 2018. 

 

 

 

The undersigned as Secretary of RECRO PHARMA, INC., a Pennsylvania corporation, hereby certifies that   is the duly elected, appointed, qualified and acting   of RECRO PHARMA, INC. and that the signature appearing above is his genuine signature. 

 

, Secretary 

 

 

EXHIBIT B

FORM OF COMPANY RESOLUTIONS 

FOR SIGNING PURCHASE AGREEMENT 

WHEREAS, management has reviewed with the Board of Directors the background, terms and conditions of the transactions subject to the Common Stock Purchase Agreement (the “Purchase Agreement”) by and between the Company and Aspire Capital Fund, LLC (“Aspire”), including all materials terms and conditions of the transactions subject thereto, providing for the purchase by Aspire of up to Twenty Million Dollars ($20,000,000) of the Company’s common stock, par value $0.01 per share (the “Common Stock”); and 

WHEREAS, after careful consideration of the Purchase Agreement, the documents incident thereto and other factors deemed relevant by the Board of Directors, the Board of Directors has determined that it is advisable and in the best interests of the Company to engage in the transactions contemplated by the Purchase Agreement, including, but not limited to, the issuance of   shares of Common Stock to Aspire as a commitment fee (the “Commitment Shares”) and the sale of shares of Common Stock to Aspire up to the available amount under the Purchase Agreement (the “Purchase Shares,” and together with the Commitment Shares, the “Aspire Shares”). 

Transaction Documents 

NOW, THEREFORE, BE IT RESOLVED, that the transactions described in the Purchase Agreement are hereby approved and the Chief Executive Officer and Chief Financial Officer (the “Authorized Officers”) are severally authorized to execute and deliver the Purchase Agreement, and any other agreements or documents contemplated thereby including, without limitation, a registration rights agreement (the “Registration Rights Agreement”) providing for the registration of the shares of the Company’s Common Stock issuable in respect of the Purchase Agreement on behalf of Aspire, with such amendments, changes, additions and deletions as the Authorized Officers may deem to be appropriate and approve on behalf of, the Company, such approval to be conclusively evidenced by the signature of an Authorized Officer thereon; and 

FURTHER RESOLVED, that the terms and provisions of the Registration Rights Agreement by and among the Company and Aspire are hereby approved and the Authorized Officers are authorized to execute and deliver the Registration Rights Agreement (pursuant to the terms of the Purchase Agreement), with such amendments, changes, additions and deletions as the Authorized Officer may deem appropriate and approve on behalf of, the Company, such approval to be conclusively evidenced by the signature of an Authorized Officer thereon; and 

FURTHER RESOLVED, that the terms and provisions of the Form of Transfer Agent Instructions (the “Instructions”) are hereby approved and the Authorized Officers are authorized to execute and deliver the Instructions (pursuant to the terms of the Purchase Agreement), with such amendments, changes, additions and deletions as the Authorized Officers may deem appropriate and approve on behalf of, the Company, such approval to be conclusively evidenced by the signature of an Authorized Officer thereon; and 

 

Execution of Purchase Agreement 

FURTHER RESOLVED, that the Company be and it hereby is authorized to execute the Purchase Agreement providing for the purchase of common stock of the Company having an aggregate value of up to $20,000,000; and 

Issuance of Common Stock 

FURTHER RESOLVED, that the Company is hereby authorized to issue the Commitment Shares to Aspire as Commitment Shares and that upon issuance of the Commitment Shares pursuant to the Purchase Agreement, the Commitment Shares shall be duly authorized, validly issued, fully paid and non-assessable; and 

FURTHER RESOLVED, that the Company is hereby authorized to issue shares of Common Stock upon the purchase of Purchase Shares up to the available amount under the Purchase Agreement in accordance with the terms of the Purchase Agreement and that, upon issuance of the Purchase Shares pursuant to the Purchase Agreement, the Purchase Shares will be duly authorized, validly issued, fully paid and non-assessable; and 

 

 

FURTHER RESOLVED, that the officers of the Company be, and each of them hereby is, authorized and directed, for and on behalf of the Company, to execute and deliver one or more stock certificates representing any Aspire Shares sold under the Purchase Agreement in such form as may be approved by such officers, or to cause any such Aspire Shares to be delivered through electronic book entry; and 

Listing of Shares on the Nasdaq Capital Market 

FURTHER RESOLVED, that the officers of the Company with the assistance of counsel be, and each of them hereby is, authorized and directed to take all necessary steps and do all other things necessary and appropriate to effect the listing of the Aspire Shares on the Nasdaq Capital Market; and 

Approval of Actions 

FURTHER RESOLVED, that, without limiting the foregoing, the Authorized Officers are, and each of them hereby is, authorized and directed to proceed on behalf of the Company and to take all such steps as deemed necessary or appropriate, with the advice and assistance of counsel, to cause the Company to consummate the agreements referred to herein and to perform its obligations under such agreements; and

FURTHER RESOLVED, that the Authorized Officers be, and each of them hereby is, authorized, empowered and directed on behalf of and in the name of the Company, to take or cause to be taken all such further actions and to execute and deliver or cause to be executed and delivered all such further agreements, amendments, documents, certificates, reports, schedules, applications, notices, letters and undertakings and to incur and pay all such fees and expenses as in their judgment shall be necessary, proper or desirable to carry into effect the purpose and intent of any and all of the foregoing resolutions, and that all actions heretofore taken by any officer or director of the Company in connection with the transactions contemplated by the agreements described herein are hereby approved, ratified and confirmed in all respects.

 

 

EXHIBIT C 

FORM OF SECRETARY’S CERTIFICATE 

This Secretary’s Certificate (the “Certificate”) is being delivered pursuant to Section 7(k) of that certain Common Stock Purchase Agreement dated as of March 2, 2018 (the “Common Stock Purchase Agreement”), by and between RECRO PHARMA, INC., a Pennsylvania corporation (the “Company”) and ASPIRE CAPITAL FUND, LLC, an Illinois limited liability company (the “Buyer”), pursuant to which the Company may sell to the Buyer up to Twenty Million Dollars ($20,000,000) of the Company’s Common Stock, par value $0.01 (the “Common Stock”). Terms used herein and not otherwise defined shall have the meanings ascribed to them in the Common Stock Purchase Agreement. 

The undersigned,  , Secretary of the Company, in his capacity as such, hereby certifies as follows: 

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

2. Attached hereto as Exhibit A and Exhibit B are true, correct and complete copies of the Company’s Third Amended and Restated Bylaws (“Bylaws”) and Second Amended and Restated Articles of Incorporation (“Articles”), in each case, as in effect through the date hereof, and no action has been taken by the Company, its directors, officers or shareholders, in contemplation of the filing of any further amendment relating to or affecting the Bylaws or Articles. 

3. Attached hereto as Exhibit C are true, correct and complete copies of the resolutions duly adopted by the Board of Directors of the Company on _________, 2018 at which a quorum was present and acting throughout. Such resolutions have not been amended, modified or rescinded and remain in full force and effect and such resolutions are the only resolutions adopted by the Company’s Board of Directors, or any committee thereof, or the shareholders of the Company relating to or affecting (i) the entering into and performance of the Common Stock Purchase Agreement, or the issuance, offering and sale of the Purchase Shares and the Commitment Shares and (ii) and the performance of the Company of its obligation under the Transaction Documents as contemplated therein. 

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

IN WITNESS WHEREOF, I have hereunder signed my name on this _________ day of March, 2018. 

 

 

_________, Secretary 

The undersigned as the Chief Executive Officer of RECRO PHARMA, INC., a Pennsylvania corporation, hereby certifies that   is the duly elected, appointed, qualified and acting Secretary of RECRO PHARMA, INC., and that the signature appearing above is his genuine signature.Blueprint

  Exhibit 10.1

 

THIRD AMENDMENT

 

THIS
THIRD AMENDMENT (hereinafter referred to as this
“Amendment”) is made this __27th__ day of _February,
2018_, by and between ICON OWNER POOL 1 SF NON-BUSINESS PARKS, LLC,
a Delaware limited liability company (“Landlord”), and
AEHR TEST SYSTEMS, a California corporation
(“Tenant”).

 

WITNESSETH:

 

WHEREAS, Landlord
(successor in interest to CWCA SCOTT CREEK 28, L.L.C., formerly
known as WALTON CWCA SCOTT CREEK 28, L.L.C., successor in interest
to SCOTT CREEK THREE TRUST) and Tenant are party to that certain
Multi-Tenant Office Triple Net Lease, dated as of July __, 1999
[sic] (the “Original
Lease”), as amended by that certain First Amendment, dated as
of April 1, 2008 (the “First Amendment”), as further
amended by that certain Second Amendment, dated as of November 3,
2014 (the “Second Amendment”, and collectively with the
Original Lease, and the First Amendment, the “Lease”,
as may be further amended or modified from time to time), pursuant
to which Landlord leases to Tenant certain premises consisting of
approximately 51,289 rentable square feet with a common address of
400 Kato Terrace, Fremont, California, as more particularly
described in the Lease (the “Premises”), and located in
the Project commonly known as Scott Creek Business Park.
Capitalized terms used herein but not otherwise defined shall have
the meanings ascribed thereto in the Lease.

 

WHEREAS, the Lease
Term is scheduled to expire on June 30, 2018, and Landlord and
Tenant desire to extend the existing Lease Term for an additional
sixty-one (61) full calendar months from such expiration date and
to amend the terms and conditions of the Lease as hereinafter
provided.

 

AGREEMENT:

 

NOW,
THEREFORE, in consideration of ten dollars ($10.00) and other good
and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged by the parties, and the mutual covenants
set forth herein, the parties hereto agree as follows:

 

1.          
Extension of Lease Term. The Lease Term
is hereby extended for a period of sixty-one (61) full calendar
months, commencing as of July 1, 2018 (the “Third Extended
Lease Term Commencement Date”), and expiring on July 31, 2023
(the “Third Extended Lease Term”). From and after the
date hereof, the “Lease Term” shall be deemed to
include the Third Extended Lease Term.

 

2.    
      Base Rent.

 

(a)         
Base Rent Schedule.
Effective as of the Third Extended Lease Term Commencement Date,
the monthly Base Rent for the Premises payable by Tenant to
Landlord during the Third Extended Lease Term is as
follows:

 

	

From:

	

To:

	

Base
Rent (per month)

	

July
1, 2018

	

June
30, 2019

	

$58,982.35

	

July
1, 2019

	

June
30, 2020

	

$60,751.82

	

July
1, 2020

	

June
30, 2021

	

$62,574.38

	

July
1, 2021

	

June
30, 2022

	

$64,451.61

	

July
1, 2022

	

July
31, 2023

	

$66,385.16

 

Except
as otherwise set forth in this Amendment, all other terms and
conditions with respect to the payment of Base Rent, Direct
Expenses, or any other sums due and payable by Tenant under the
Lease shall remain as set forth thereunder.

 

 

 

 

(b)         
Base Rent Abatement Period.
Notwithstanding the foregoing subsection (a), Tenant’s
obligation to pay Base Rent shall be conditionally abated as
follows (the “Base Rent Abatement
Period”):

 

	

From:

	

To:

	

Base
Rent

(per
month)

	

Base
Rent Abated

(per
month)

	

Base
Rent Due and Payable

(per
month)

	

July
1, 2018

	

July
31, 2018

	

$58,982.35

	

$58,982.35

	

$0.00

 

During
the Base Rent Abatement Period, Tenant’s obligation to pay
Direct Expenses and any and all other charges pursuant to the terms
of the Lease shall continue in full force and effect without
abatement of any kind. The abatement of Base Rent described above
is expressly conditioned on Tenant’s performance of its
obligations under the Lease throughout the Lease Term. If there is
an event of default by Tenant under the Lease and such event of
default leads to the enforcement of any remedies against Tenant
(including the termination of the Lease prior to the expiration of
the Lease Term), then Tenant shall immediately pay to Landlord on
demand, in addition to all other amounts and damages to which
Landlord is entitled, the amount of Base Rent which would otherwise
have been due and payable during any portion of the Base Rent
Abatement Period.

 

3.           
Letter of Credit.

 

3.1.        
Effective as of the
date hereof, Section 8 of the Summary (defined in the Original
Lease), Article 21 of the Original Lease, Section 3 and Section 4
of the First Amendment, and Section 4 of the Second Amendment are
hereby deemed null and void and of no further force and
effect.

 

3.2.        
Concurrently with
Tenant’s execution and delivery of this Amendment, Tenant
shall deliver to Landlord, at Tenant’s sole cost and expense,
an unconditional, irrevocable, standby letter of credit (the
“Second Letter of Credit”) with an expiration date no
earlier than one (1) year after the Third Extended Lease Term
Commencement Date in the amount of Seventy-Nine Thousand Nine
Hundred Ninety-Nine and 5/100ths Dollars ($79,999.05) (the
“Second Letter of Credit Amount”), in the form attached
hereto as Exhibit A
or in such other form as is reasonably acceptable to Landlord.
Tenant shall keep the Second Letter of Credit in place until the
date that is at least ninety (90) days following the expiration or earlier
termination of the Lease. The Second Letter of Credit shall secure
the full and faithful performance of each provision of the Lease to
be performed by Tenant pursuant to the following terms and
conditions.

 

3.2.1. The
Second Letter of Credit shall state on its face that,
notwithstanding the stated expiration date, the term of the Second
Letter of Credit shall be automatically renewed for successive,
additional one (1) year periods unless, at least ninety (90) days
prior to any such date of expiration, the issuing bank shall have
given written notice to Landlord, by certified mail, return receipt
requested at the Landlord’s address for notices under the
Lease, or such other address as Landlord shall have given to the
issuing bank, that the Second Letter of Credit will not be renewed.
The failure of Tenant to cause the Second Letter of Credit to be
renewed or reissued at least sixty (60) days prior to the
expiration thereof shall constitute an event of default by Tenant
under the Lease.

 

3.2.2. The
Second Letter of Credit shall be issued by a financial institution
reasonably acceptable to Landlord, which financial institution
shall be a bank that accepts deposits, maintains accounts, will
negotiate letters of credit, and whose deposits are insured by the
FDIC. The Second Letter of Credit must be presentable in Chicago,
Illinois or such other United States location reasonably acceptable
to Landlord. If the financial institution that issues the Second
Letter of Credit makes a general assignment for the benefit of
creditors, or commences any case, proceeding or other action
seeking to have an order for relief entered on its behalf as a
debtor or to adjudicate it as bankrupt or insolvent, or seeking
reorganization, arrangement, adjustment, liquidation, dissolution
or composition of it or its debts or seeking appointment of a
receiver, trustee, custodian or other similar official for it or
for all or of any substantial part of its property, or loses or has
its charter revoked, goes into receivership, or is otherwise taken
over by any regulatory agency which oversees such issuer, then
Tenant shall, promptly, but in no event later than ten (10) days
after the occurrence of such event, deliver a replacement Second
Letter of Credit to Landlord in the full Second Letter of Credit
Amount and otherwise in accordance with the requirements set forth
in this Section 3.2, and promptly upon Landlord’s receipt of
the replacement Second Letter of Credit, Landlord shall return to
Tenant the Second Letter of Credit being replaced.

 

 

2

 

 

3.2.3. If
Tenant fails to perform fully and timely all or any of
Tenant’s covenants and obligations set forth in the Lease,
including, without limitation, Tenant’s failure to renew the
Second Letter of Credit at least ninety (90) days prior to the
expiration thereof, or if Tenant has filed a voluntary petition
under the federal bankruptcy code or an involuntary petition has
been filed against Tenant under the federal bankruptcy code,
Landlord may, without notice to Tenant, execute one or more drafts
on the Second Letter of Credit and apply all or any portion of the
Second Letter of Credit toward fulfillment of Tenant’s
unperformed covenants and/or obligations, including any Rent
payable by Tenant that is not paid when due; provided, however,
that a failure of Tenant to renew the Second Letter of Credit in
accordance with this Section 3.2 shall entitle Landlord to execute
a draft for the entire amount of the Second Letter of Credit and
such proceeds shall be deemed the property of Landlord until such
time as Tenant delivers a replacement Second Letter of Credit to
Landlord in the full Second Letter of Credit Amount and otherwise
in accordance with the requirements set forth in this Section 3.2,
and promptly upon Landlord’s receipt of the replacement
Second Letter of Credit, Landlord shall apply the amount of
proceeds drawn from the issuing bank upon Tenant’s failure to
renew the Second Letter of Credit against the next due
installment(s) of Base Rent under the Lease. Any proceeds drawn
shall constitute the property of Landlord and need not be
segregated from Landlord’s other assets. If, as a result of
any application or use by Landlord of all or any part of the Second
Letter of Credit, the amount of the Second Letter of Credit shall
be less than the Second Letter of Credit Amount, Tenant shall,
within ten (10) days thereafter, provide Landlord with additional
letter(s) of credit in an amount equal to the deficiency, and any
such additional (or replacement) letter of credit shall comply with
all of the provisions of this section and if Tenant fails to comply
with the foregoing, notwithstanding anything to the contrary
contained in the Lease, the same shall constitute an immediate
event of default by Tenant.

 

3.2.4. Ninety
(90) days after Tenant vacates the Premises, upon the expiration or
sooner termination of the Lease, if Tenant is not then in default,
Landlord shall return to Tenant the Second Letter of Credit (and
any unapplied cash balance of the Second Letter of Credit that had
been previously drawn upon); provided that Landlord may retain the
Second Letter of Credit (or previously drawn proceeds therefrom)
until such time as any Rent and Additional Rent due from Tenant for
known defaults in accordance with the Lease has been determined and
paid in full by Tenant.

 

3.2.5. In
no event or circumstance shall the Second Letter of Credit or any
renewal thereof or any proceeds thereof be deemed to be or treated,
or intended to serve as a “security deposit” within the
meaning of any applicable law or statute. Tenant hereby waives the
provisions of any applicable law, statute, ordinance, or other
governmental rule, regulation or requirement which establishes the
time frame by which Landlord must refund collateral or security for
performance of a tenant’s obligations under a lease. Tenant
agrees and acknowledges that Tenant has no property interest
whatsoever in the Second Letter of Credit or the proceeds thereof
and that, in the event Tenant becomes a debtor under any chapter of
the Federal Bankruptcy Code, neither Tenant, any trustee, nor
Tenant’s bankruptcy estate shall have any right to restrict
or limit Landlord’s claim and/or rights to the Second Letter
of Credit and/or the proceeds thereof by application of Section
502(b)(6) of the federal bankruptcy code or otherwise.

 

3.2.6. Should
the Permitted Use be amended to accommodate a change in the
business of Tenant or to accommodate a subtenant or assignee,
Landlord shall have the right to increase the Second Letter of
Credit to the extent necessary, in Landlord’s reasonable
judgment, to account for any increased risk to the Premises or
increased wear and tear that the Premises may suffer as a result
thereof. If a change in control of Tenant occurs during the Lease
and following such change the financial condition of Tenant is, in
Landlord’s reasonable judgment, materially reduced, Tenant
shall deposit such additional monies with Landlord as shall be
sufficient to cause the Second Letter of Credit to be at a
commercially reasonable level based on said change in financial
condition.

 

3.2.7. Tenant
acknowledges that Landlord has the right to sell, mortgage or
otherwise convey its interests in the Land and the Building and in
the Lease. Tenant agrees that in the event of any such sale,
mortgage or other transfer, Landlord shall have the right to
transfer, assign and/or endorse the Second Letter of Credit to
Landlord’s master lessors, ground lessors, mortgagees or
other transferees or assignees and, so long as such master lessors,
ground lessors, mortgagees or other transferees or assignees are
given physical possession of the Second Letter of Credit and assume
the obligations of Landlord under the Lease with respect to same.
Tenant shall look solely to such parties for the return of the
Second Letter of Credit in accordance with the terms of the Lease.
Tenant agrees further that, upon Landlord’s written request,
it shall have the Second Letter of Credit issued, at Tenant’s
sole cost and expense, in favor of Landlord’s master lessor,
ground lessor, mortgagee or other transferee or assignee to be held
by any such party in accordance with the terms of the
Lease.

 

 

3

 

 

4.           
AS-IS Condition; Tenant’s
Work.

 

(a)           AS-IS
Condition. Tenant hereby acknowledges and agrees that it has
accepted the Premises as of the date hereof, and will continue to
accept the Premises as of the Third Extended Lease Term
Commencement Date, in AS-IS, WHERE-IS condition without any
representation or warranty of any kind made by Landlord in favor of
Tenant.

 

(b)          
Tenant’s Work.
Notwithstanding the foregoing subsection (a), Tenant may complete
the work set forth on Exhibit B attached hereto in
accordance with the terms and conditions set forth on such
exhibit.

 

5.            
Insurance. Effective solely with respect
to the period from and after the Third Extended Lease Term
Commencement Date, the Section 10.3, Section 10.4, and Section 10.5
of the Original Lease are hereby amended and restated in their
entirety as follows:

 

“10.3      
Tenant’s
Insurance. Tenant, at its sole cost and expense, shall
maintain during the Lease Term the following insurance:
(1) commercial general liability insurance applicable to the
Premises and its appurtenances providing, on an occurrence basis, a
minimum combined single limit of $1,000,000 primary per occurrence
and $2,000,000 annual aggregate; and in the event property of
Tenant’s invitees or customers are kept in, or about the,
Premises, Tenant shall maintain warehouser’s legal liability
or bailee customers insurance for the full value of the property of
such invitees or customers as determined by the warehouse contract
between Tenant and its customer; (2) special cause of loss
form property insurance covering the full replacement cost of all
property and improvements installed or placed in the Premises by or
on behalf of Tenant, and shall include coverage for damage or other
loss caused by fire or other peril, including vandalism and
malicious mischief, theft, water damage of any type, including
sprinkler leakage or stoppage of pipes, and explosion, and
providing business interruption coverage for a period of one year;
(3) workers’ compensation insurance as required by the
state in which the Premises is located and in amounts as may be
required by applicable statute and shall include a waiver of
subrogation in favor of Landlord; (4) employers liability
insurance of at least $1,000,000; (5) business automobile
liability insurance having a combined single limit of not less than
$1,000,000 per occurrence insuring Tenant against liability arising
out of the ownership maintenance or use of any owned, hired or
nonowned automobiles; and (6) an umbrella liability policy or
excess liability policy having a limit of not less than $3,000,000,
which policy shall be in “following form” and shall
provide that if the underlying aggregate is exhausted, the excess
coverage will drop down as primary insurance. Such umbrella
liability policy or excess liability policy shall include coverage
for additional insureds.

 

10.4        
Form of
Policies. Any company writing any of Tenant’s
insurance shall have an A.M. Best rating of not less than A-VIII
and provide primary coverage to Landlord (any policy issued to
Landlord providing duplicate or similar coverage shall be deemed
excess over Tenant’s policies). All commercial general
liability and, if applicable, warehouser’s legal liability or
bailee customers insurance policies of Tenant shall (a) name
Tenant as a named insured and Landlord, its property manager, and
other designees of Landlord as the interest of such designees shall
appear, as additional insureds; and (b) be primary insurance
as to all claims thereunder and provide that any insurance carried
by Landlord is excess and non-contributing with Tenant’s
insurance. The limits and types of insurance maintained by Tenant
shall not limit Tenant’s liability under this Lease. Tenant
shall provide Landlord with certificates of such insurance as
required under this Lease prior to or upon the date of
commencement, and thereafter upon renewals prior to the expiration
of the insurance coverage. Such certificates shall be on forms
currently designated “ACORD 25” (Certificate of
Liability Insurance) and “ACORD 28” (Evidence of
Commercial Property Insurance) or the equivalent. Attached to the
ACORD 25 (or equivalent) there shall be an endorsement naming
Landlord, its property manager, and other designees of Landlord as
additional insureds, and attached to the ACORD 28 (or equivalent)
there shall be an endorsement designating Landlord as a loss payee
with respect to Tenant’s property insurance on any
Tenant-insured improvements, and each such endorsement shall be
binding on Tenant’s insurance company. Acceptance by Landlord
of delivery of any certificates of insurance does
not
constitute

 

 

4

 

 

approval or
agreement by Landlord that the insurance requirements of this
section have been met, and failure of Landlord to identify a
deficiency from evidence provided will not be construed as a waiver
of Tenant’s obligation to maintain such insurance. In the
event any of the insurance policies required to be carried by
Tenant under this Lease shall be cancelled prior to the expiration
date of such policy, or if Tenant receives notice of any
cancellation of such insurance policies from the insurer prior to
the expiration date of such policy, Tenant shall:
(i) immediately deliver notice to Landlord that such insurance
has been, or is to be, cancelled, (ii) shall promptly replace
such insurance policy in order to assure no lapse of coverage shall
occur, and (iii) shall deliver to Landlord a certificate of
insurance for such policy.

 

10.5        
Subrogation.
Whenever (1) any loss, cost, damage or expense is incurred by
either Landlord or Tenant or by anyone claiming by, through or
under Landlord or Tenant in connection with the Premises, and
(2) such party is covered in whole or in part by property or
business interruption insurance (or would have been covered but for
such party’s failure to maintain the property or business
interruption coverage required in this Section 9; or would
have been covered but for such party’s election to
self-insure as expressly permitted hereunder, if applicable) with
respect to such loss, cost, damage or expense, then the party so
insured (or so required) hereby waives (on its own behalf and on
behalf of its insurer) any claims against and releases the party
from any liability said other party may have on account of such
loss, cost, damage or expense. All insurance which is carried by
either party to insure against damage or loss to property shall
include provisions denying to each respective insurer rights of
subrogation and recovery against the other
party.”

 

6.            
Landlord’s Notice Address.
Landlord’s address for notices set forth in the Lease is
hereby deleted in its entirety and is replaced with the
following:

 

	
 

	

c/o GLP
US Management LLC

Two
North Riverside Plaza, Suite 2350

Chicago, IL
60606

Attn:
Lease Administration

	
 

	

 

With a
copy to:

 

c/o
GLP US Management LLC

5000
Birch Street, Suite 505

Newport
Beach, CA 92660

Attention:
Regional Director

 

7.            
Address For Rent Payment. The address
for rent payment and wire instructions set forth in the Lease are
hereby deleted in their entirety and are replaced with the
following:

 

	
 

	

US Mail:

ICON
OWNER POOL 1 SF NON-BUSINESS PARKS, LLC

PO BOX
843950

LOS
ANGELES, CA 90084-3950

	
 

	

 

Wire and ACH
Instructions:

BANK NAME: WELLS FARGO BANK

CITY/STATE: SAN FRANCISCO CA

ABA# 121000248

ACCOUNT # 4155756281

ACCOUNT
NAME: ICON OWNER POOL 1 SF

NON-BUSINESS
PARKS, LLC

 

 

5

 

 

8.            
Additional Changes. Effective as of the
date hereof, Section 4.2.6(e) of the Original Lease, and Section 7
of the Second Amendment are hereby deemed null and void and of no
further force and effect.

 

9.            
Roof. Notwithstanding anything to the
contrary in the Lease, Landlord may elect, in its sole discretion
and from time to time, to install (or permit the installation of)
telecommunication equipment, solar equipment and panels, and any
other equipment for any other uses on the roof of the
Premises.

 

10.          
OFAC. Tenant hereby represents and
warrants that, to the best of its knowledge, neither Tenant, nor
any persons or entities holding any legal or beneficial interest
whatsoever in Tenant, are (i) the target of any sanctions
program that is established by Executive Order of the President or
published by the Office of Foreign Assets Control, U.S. Department
of the Treasury (“OFAC”); (ii) designated by the
President or OFAC pursuant to the Trading with the Enemy Act, 50
U.S.C. App. § 5, the International Emergency Economic
Powers Act, 50 U.S.C. §§ 1701-06, the Patriot Act, Public
Law 107-56, Executive Order 13224 (September 23, 2001) or any
Executive Order of the President issued pursuant to such statutes;
or (iii) named on the following list that is published by OFAC:
“List of Specially Designated Nationals and Blocked
Persons.” If the foregoing representation is untrue at any
time during the Lease Term, an event of default will be deemed to
have occurred, without the necessity of notice to the defaulting
party.

 

11.          
California. To allow for compliance with
building performance benchmarking and disclosure laws and
regulations (including, but not limited to, compliance with
California Public Resources Code §25402.10 and similar or
successor laws), Tenant, promptly upon request, shall deliver to
Landlord (or, at Landlord’s option, execute and deliver to
Landlord an instrument enabling Landlord to obtain from such
provider) any data about Tenant’s utility consumption.
To Landlord's actual knowledge, the
Premises has not undergone an inspection by a certified access
specialist. For purposes of the preceding sentence, Landlord's
actual knowledge shall mean and be limited to the actual knowledge
of the person who is Landlord's asset manager (not the Building's
property manager) on the date this Amendment is executed by
Landlord, without any duty of inquiry or investigation, and such
asset manager shall have no personal liability if such
representation is untrue. California Civil Code Section 1938
provides in relevant part as follows: “A Certified
Access Specialist (CASp) can inspect
the subject premises and determine whether the subject premises
comply with all of the applicable construction-related
accessibility standards under state law. Although state law does
not require a CASp inspection of the subject premises, the
commercial property owner or lessor may not prohibit the lessee or
tenant from obtaining a CASp inspection of the subject premises for
the occupancy or potential occupancy of the lessee or tenant, if
requested by the lessee or tenant. The parties shall mutually agree
on the arrangements for the time and manner of the CASp inspection,
the payment of the fee for the CASp inspection, and the cost of
making any repairs necessary to correct violations of
construction-related accessibility standards within the
premises.” Nothing in this paragraph or California Civil Code
Section 1938 shall relieve or modify Tenant’s obligations
with respect to (i) compliance with all applicable laws, statutes,
ordinances, or other governmental rules, regulations or
requirements, including without
limitation, construction-related accessibility standards, as set
forth in the Lease, or (ii) payment of Direct Expenses as set forth
in the Lease. Tenant hereby agrees that any Tenant-initiated CASp
inspection (i) shall be at Tenant’s sole cost and expense,
and (ii) shall take place during normal business hours following
reasonable prior written notice to Landlord. Any information
contained in a CASp report shall be maintained as
confidential.

 

12.          
Tenant’s Broker. Tenant represents
and warrants that it has dealt with no broker, agent or other
person in connection with this transaction and that no broker,
agent or other person brought about this transaction other than
CBRE. Tenant agrees to indemnify and hold Landlord harmless from
and against any claims by any other broker, agent or other person
claiming a commission or other form of compensation by virtue of
having dealt with Tenant with regard to this leasing
transaction.

 

13.          
No Offer. Submission of this Amendment
by Landlord is not an offer to enter into this Amendment, but
rather is a solicitation for such an offer by Tenant. Landlord
shall not be bound by this Amendment until Landlord and Tenant have
fully executed and delivered this Amendment.

 

14.          
Authority. Tenant represents and
warrants to Landlord that Tenant has been and is qualified to do
business in the state in which the Premises is located, that the
entity has the full right and authority to enter into this
Amendment, and that all persons signing on behalf of the entity
were authorized to do so by appropriate actions.

 

 

6

 

 

15.          
Severability. If any clause or provision
of this Amendment is illegal, invalid or unenforceable under
present or future laws, then and in that event, it is the intention
of the parties hereto that the remainder of this Amendment shall
not be affected thereby. It is also the intention of the parties to
this Amendment that in lieu of each clause or provision of this
Amendment that is illegal, invalid or unenforceable, there be
added, as a part of this Amendment, a clause or provision as
similar in terms to such illegal, invalid or unenforceable clause
or provision as may be possible and be legal, valid and
enforceable.

 

16.          
Counterparts and Delivery. This
Amendment may be executed in any number of counterparts, each of
which shall be deemed to be an original, and all of such
counterparts shall constitute one Amendment. Execution copies of
this Amendment may be delivered by facsimile or email, and the
parties hereto agree to accept and be bound by facsimile signatures
or scanned signatures transmitted via email hereto, which
signatures shall be considered as original signatures with the
transmitted Amendment having the binding effect as an original
signature on an original document. Notwithstanding the foregoing,
Tenant shall, upon Landlord’s request, deliver original
copies of this Amendment to Landlord at the address set forth in
such request. Neither party may raise the use of a facsimile
machine or scanned document or the fact that any signature was
transmitted through the use of a facsimile machine or email as a
defense to the enforcement of this Amendment.

 

17.          
Conflict; Ratification. Insofar as the
specific terms and provisions of this Amendment purport to amend or
modify or are in conflict with the specific terms, provisions and
exhibits of the Lease, the terms and provisions of this Amendment
shall govern and control. Landlord and Tenant hereby agree that (a)
this Amendment is incorporated into and made a part of the Lease,
(b) any and all references to the Lease hereinafter shall include
this Amendment, and (c) the Lease, and all terms, conditions and
provisions of the Lease, are in full force and effect as of the
date hereof, except as expressly modified and amended
hereinabove.

 

[THE
REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK; SIGNATURE PAGE
FOLLOWS.]

 

 

 

 

 

 

7

 

 

IN
WITNESS WHEREOF, the parties hereto have caused this Amendment to
be duly authorized, executed and delivered as of
the day and year first set forth above.

	
 

	
 

	
 

	
 

	
 

	
 

	

 

TENANT:

 

AEHR
TEST SYSTEMS,

a
California corporation

 

 

By       
/s/ David
Fucci                                        

Name:  David
Fucci                                             

Title:   
Vice President of
Operations                   

 

By       
________________________________
 

Name: 
________________________________
  
 Title:   
________________________________
 

	

 

LANDLORD:

 

ICON
OWNER POOL 1 SF

NON-BUSINESS PARKS,
LLC,

a
Delaware limited liability company

 

By:                GLP
US Management LLC,

                     
a
Delaware limited liability company,

                     
as
agent for Landlord

 

                     
By:      
/s/ Robert Munson  
                 
      
       

                     
Name:  Robert Munson
                 
             
           

                     
Title:   
SVP-Regional
Director                    

   

	
 

	
 

 

 

 

 

EXHIBIT
A

 

FORM OF LETTER OF CREDIT

 

________________________________

[Name
of Financial Institution]

 

 

	
 

	

Irrevocable
Standby

Letter
of Credit

No.
_________________________

Issuance
Date: ________________

Expiration
Date: _______________

Applicant: AEHR
TEST SYSTEMS

 

Beneficiary

 

ICON
OWNER POOL 1 SF NON-BUSINESS PARKS, LLC

c/o GLP
US Management LLC

Two
North Riverside Plaza, Suite 2350

Chicago,
Illinois 60606

Attention:
Treasury Department

 

cc:

ICON
OWNER POOL 1 SF NON-BUSINESS PARKS, LLC

c/o GLP US Management LLC

5000 Birch Street, Suite 505

Newport Beach, CA 92660

Attention: Regional Director

 

Ladies/Gentlemen:

 

We
hereby establish our Irrevocable Standby Letter of Credit in your
favor for the account of the above referenced Applicant in the
amount of Seventy-Nine Thousand Nine Hundred Ninety-Nine and
5/100ths U.S. Dollars ($79,999.05) available for payment at sight
by your draft drawn on us when accompanied by the following
documents:

 

1.           An
original copy of this Irrevocable Standby Letter of
Credit.

 

2.           Beneficiary’s
dated statement purportedly signed by an authorized signatory or
agent reading: "This draw in the amount of ______________________
U.S. Dollars ($____________) under your Irrevocable Standby Letter
of Credit No. ____________________ represents funds due and owing
to us pursuant to the terms of that certain lease by and between
ICON OWNER POOL 1 SF NON-BUSINESS PARKS, LLC, a Delaware limited
liability company, as landlord, and AEHR TEST SYSTEMS, a California
corporation, as tenant, and/or any amendment to the lease or any
other agreement between such parties related to the
lease."

 

It is a
condition of this Irrevocable Standby Letter of Credit that it will
be considered automatically renewed for a one (1) year period upon
the expiration date set forth above and upon each anniversary of
such date, unless at least ninety (90) days prior to such
expiration date or applicable anniversary thereof, we notify you in
writing, by certified mail return receipt requested or by
recognized overnight courier service at the addresses set forth
above, that we elect not to so renew this Irrevocable Standby
Letter of Credit. In addition to the foregoing, we understand and
agree that you shall be entitled to draw upon this Irrevocable
Standby Letter of Credit in accordance with 1 and 2 above in the
event that we elect not to renew this Irrevocable Standby Letter of
Credit. We further

 

EXHIBIT
A

1

 

 

acknowledge
and agree that: (a) upon receipt of the documentation required
herein, we will honor your draws against this Irrevocable Standby
Letter of Credit without inquiry into the accuracy of
Beneficiary’s signed statement and regardless of whether
Applicant disputes the content of such statement; (b) this
Irrevocable Standby Letter of Credit shall permit partial draws
and, in the event you elect to draw upon less than the full stated
amount hereof, the stated amount of this Irrevocable Standby Letter
of Credit shall be automatically reduced by the amount of such
partial draw; and (c) you shall be entitled to transfer your
interest in this Irrevocable Standby Letter of Credit from time to
time and more than one time without our approval and without
charge. In the event of a transfer, we reserve the right to require
reasonable evidence of such transfer as a condition to any draw
hereunder.

 

Presentation made
under and in compliance with the terms and conditions of this
Letter of Credit received at our office prior to 10:00 a.m. central
time on a banking day will be duly honored on the next banking day.
Presentation made under and in compliance with the terms and
conditions of this Letter of Credit received at our office after
10:00 a.m. central time on a banking day will be duly honored on
the second banking day following presentation.

 

All
charges and fees associated with this Irrevocable Standby Letter of
Credit, including upon any transfer of the Letter of Credit, shall
be for the account of Applicant.

 

This
Irrevocable Standby Letter of Credit is subject to the
International Standby Practices (ISP98) ICC Publication
No. 590.

 

We
hereby engage with you to honor drafts and documents drawn under
and in compliance with the terms of this Irrevocable Standby Letter
of Credit.

 

All
communications to us with respect to this Irrevocable Standby
Letter of Credit must be addressed to our office located at
_________________________________________________________________
to the attention of
__________________________________.

 

	
 

	

Very
truly yours,

 

____________________________

 

       
            
[name]         
  
           

 

                     
[title]                          

 

 

EXHIBIT
A

2

 

 

EXHIBIT B

 

TENANT’S WORK

 

(a)      
   AS-IS Condition. Tenant shall lease the
Premises from Landlord on an “AS-IS” basis, without any
representation or warranty of any kind made by Landlord in favor of
Tenant and without change or modification thereto of any kind other
than the work described in this exhibit.

 

(b)      
   Tenant’s Work. Notwithstanding the
foregoing subsection (a), Landlord shall contribute up to a maximum
amount of $51,289.00 (the “Allowance”) towards
Tenant’s alterations and improvements to the Premises as
specified below (collectively, the “Tenant’s
Work”):

 

1.

Paint the existing
office portion of the Premises.

 

2.

Install flooring
within the office portion of the Premises in lieu of existing
flooring.

 

(c)  
   Landlord’s Approval; Tenant’s
Obligations. The Tenant’s Work shall be subject to the
terms of Article 8 of the Original Lease. In addition to obtaining
Landlord’s consent as and when required pursuant to Article 8
of the Original Lease, Tenant shall obtain Landlord’s prior
written consent for any of the Tenant’s Work for which Tenant
will seek reimbursement from the Allowance. In all cases, Tenant
shall deliver plans and specifications for the Tenant’s Work,
and any other documentation reasonably requested by Landlord, to
Landlord for approval prior to commencing any of the Tenant’s
Work. All of the Tenant’s Work shall be constructed and
undertaken in a good and workmanlike manner and in compliance with
all applicable laws, statutes, ordinances, or other governmental
rules, regulations or requirements, and Tenant shall perform, at
its expense, any alteration or modification required by any
applicable laws as a result of the Tenant’s Work. Landlord
may monitor the construction of the Tenant’s Work, subject to
the obligation to provide prior notice to Tenant of any entry onto
the Premises (except in the case of emergency, in which case no
prior notice is required). In the event the scope of work requested
by Tenant is such that Landlord elects to engage a third-party
architect, engineer, or other similar consultant or professional to
review such proposed work, Tenant shall reimburse Landlord for its
actual, reasonable out-of-pocket costs in reviewing plans and
specifications and in monitoring the construction for compliance
with such approved plans and specifications. Landlord’s right
to approve the Tenant’s Work and to monitor construction
shall be solely for its own benefit, and Landlord shall have no
duty to see that the Tenant’s Work complies with any
applicable law, statute, ordinance, or other governmental rule,
regulation or requirement. In addition, Landlord may collect a
construction management fee in an amount which shall be calculated
based upon the scope of the Tenant’s Work as described herein
and any additional work requested by Tenant and agreed to by
Landlord, taking into account costs generally payable for similar
services within the market area in which the Building is located,
and such fee shall be paid, in part or in whole, from the Allowance
with any amount not covered by the Allowance to be paid by Tenant
directly to Landlord (or, at Landlord’s election, to
Landlord’s property manager). Landlord shall provide Tenant
with a good faith estimated cost of the expected construction
management fee; provided, however, Tenant hereby agrees and
acknowledges that the estimated cost of such fee is an estimate
only and Landlord makes no guaranty or warranty that such estimate
will be accurate.

 

(d)  
  Allowance. The Allowance may be used
only for the hard costs and Eligible Soft Costs (as hereinafter
defined) of construction of the Tenant’s Work pursuant to the
approved plans and specifications. “Eligible Soft
Costs” shall be deemed to be costs and expenses incurred by
Tenant which are directly and primarily related to the
Tenant’s Work and which relate solely to the work of any
architect, space planner, engineer, or similar construction
professional or which are direct payments made to applicable
authorities for permitting and license fees; provided, however,
that in no event shall the Eligible Soft Costs exceed fifteen
percent (15%) of the total Allowance or be used for services
provided in connection with the negotiation of the Lease. For the
avoidance of doubt, Eligible Soft Costs shall expressly exclude any
financing costs, attorneys’ fees, or other costs and expenses
not expressly permitted hereunder. In no event will the Allowance
be used to pay for moving or storage expenses or furniture,
racking, equipment, cabling, telephone systems or any other item of
personal property which is not intended to be permanently affixed
to the Premises. Payment of the Allowance shall be made by Landlord
to Tenant within thirty (30) days following the last to occur of:
(i) completion of the Tenant’s Work, (ii) Landlord’s
receipt of

 

 EXHIBIT
B

1

 

 

Tenant’s
invoice substantiating the costs related thereto, (iii)
Landlord’s receipt of final lien waivers from all contractors
and subcontractors who performed the Tenant’s Work, and (iv)
Landlord’s receipt of a copy of the final permit approved by
the applicable governing authority for any work which requires the
same. Landlord shall be under no obligation to pay for any of the
Tenant’s Work in excess of the Allowance. Further, the
Allowance shall only be available for Tenant’s use for work
performed and submitted for reimbursement in accordance with the
terms of this exhibit on or prior to December 31, 2018, at which
time Tenant hereby waives any and all rights to any unused portion
of the Allowance.

 

 

EXHIBIT
B

2

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