Document:

Exhibit 10.20

 

NEITHER THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE EXERCISABLE HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS.  THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL IN A FORM REASONABLY SATISFACTORY TO THE COMPANY, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID ACT.

 

Warrant No. W-    

 

COMMON STOCK PURCHASE WARRANT

 

To Purchase        Class A Membership Interests of

DIPEXIUM PHARMACEUTICALS, LLC

 

THIS IS TO CERTIFY THAT                              or registered assigns (the “Holder”), is entitled, during the Exercise Period (as hereinafter defined), to purchase from Dipexium Pharmaceuticals, LLC, a limited liability company organized under the laws of the State of Delaware (the “Company”), the Warrant Units (as hereinafter defined and subject to adjustment as provided herein), in whole or in part, at a purchase price of $60 per share (the “Warrant Price”), all on and subject to the terms and conditions hereinafter set forth.

 

1.                                      Definitions.  As used in this Warrant, the following terms have the respective meanings set forth below:

 

“Affiliate” means any person or entity that, directly or indirectly through one or more intermediaries, controls or is controlled by or is under common control with a person or entity, as such terms are used in and construed under Rule 144 under the Securities Act. With respect to a Holder of Warrants, any investment fund or managed account that is managed on a discretionary basis by the same investment manager as such Holder will be deemed to be an Affiliate of such Holder.

 

“Bloomberg” means Bloomberg Financial Markets.

 

“Business Day” means any day except Saturday, Sunday and any day which shall be a legal holiday or a day on which banking institutions in the State of New York generally are authorized or required by law or other government actions to close.

 

“Closing Date” means July 12, 2013, or such later date as the Holder executed the Purchase Agreement.

 

“Commission” means the Securities and Exchange Commission or any other federal agency then administering the Securities Act and other federal securities laws.

 

 

“Class A Membership Interests” means the Class A Membership Interests of the Company as outstanding at any time or from time to time.

 

“Exercise Period” means the period during which this Warrant is exercisable pursuant to Section 2.1(a).

 

“Expiration Date” means July 12, 2018.

 

“Person” means any individual, sole proprietorship, partnership, joint venture, trust, incorporated organization, association, corporation, limited liability company, institution, public benefit corporation, entity or government (whether federal, state, county, city, municipal or otherwise, including, without limitation, any instrumentality, division, agency, body or department thereof).

 

“Purchase Agreement” means that certain Securities Purchase Agreement, dated as of July 12, 2013, among the Company and the other parties named therein or who may in the future become a party thereof, and as the same may be amended, pursuant to which this Warrant was originally issued.

 

“Securities Act” means the Securities Act of 1933, as amended, or any similar federal statute, and the rules and regulations of the Commission thereunder, all as the same shall be in effect at the time.

 

“Transfer” means any disposition of any Warrant or Warrant Units or of any interest in either thereof, which would constitute a sale thereof within the meaning of the Securities Act.

 

“Warrants” means this Warrant and all warrants issued upon transfer, division or combination of, or in substitution for, any thereof. All Warrants shall at all times be identical as to terms and conditions and date, except as to the number of Class A Membership Interests for which they may be exercised.

 

“Warrant Price” has the meaning set forth in the preamble.

 

“Warrant Units” means the        Class A Membership Interests to be purchased upon the exercise hereof, subject to adjustment as provided herein.

 

2.                                      Exercise of Warrant.

 

2.1.                            Manner of Exercise.

 

(a)                                 From and after the Closing Date, and until 5:00 P.M., New York time, on the Expiration Date (the “Exercise Period”), the Holder may exercise this Warrant, on any Business Day, for all or any part of the number of shares of Warrant Units purchasable hereunder.

 

(b)                                 In order to exercise this Warrant, in whole or in part, the Holder shall deliver to the Company at its principal office or at the office or agency designated by the Company pursuant to Section 9, (i) a written notice of Holder’s election to exercise this Warrant, which notice shall specify the number of Warrant Units to be purchased and (ii) payment of the Warrant

 

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Price as provided herein. Such notice shall be substantially in the form of the exercise notice appearing at the end of this Warrant as Exhibit A, duly executed by the Holder or its agent or attorney (the “Exercise Notice”). The Holder shall not be required to deliver the original Warrant in order to effect an exercise hereunder unless this Warrant is being exercised in full to purchase (or acquire by Cashless Exercise as described below) the total number of shares of Warrant Units issuable upon exercise of this Warrant. Upon receipt thereof, the Company shall, as promptly as practicable, and in any event within five (5) Business Days thereafter deliver to the address as specified in the Exercise Notice, a certificate, registered in the Company’s share register in the name of the Holder or its designee, for the number of Warrant Units to which the Holder is entitled pursuant to such exercise. No fractional Class A Membership Interests are to be issued upon the exercise of this Warrant, but rather the Company shall pay cash in lieu of any fraction of an interest, as provided in Section 2.2. The stock certificate or certificates so delivered shall be, to the extent possible, in such denomination or denominations as the Holder shall request in the notice and shall be registered in the name of the Holder or if permitted pursuant to the terms of this Warrant such other name as shall be designated in the notice. This Warrant shall be deemed to have been exercised and such certificate or certificates shall be deemed to have been issued, and the Holder or any other Person so designated to be named therein shall be deemed to have become a Holder of record of such shares for all purposes, as of the date when the notice, together with the payment of the Warrant Price and this Warrant, is received by the Company as described above. If this Warrant shall have been exercised in part, the Company shall, at the time of delivery of the certificate or certificates representing Warrant Units, deliver to the Holder a new Warrant evidencing the rights of the Holder to purchase the unpurchased Class A Membership Interests called for by this Warrant, which new Warrant shall in all other respects be identical with this Warrant, or at the request of the Holder, appropriate notation may be made on this Warrant and the same returned to the Holder.

 

(c)                                  Payment of the Warrant Price may be made at the option of the Holder: (i) by certified or official bank check payable to the order of the Company, (ii) by wire transfer of immediately available funds to the account of the Company or (iii) in lieu of making the cash payment otherwise contemplated to be made to the Company upon such exercise in payment of the Warrant Price, elect instead to receive upon such exercise the “Net Number” of Class A Membership Interests determined according to the following formula (a “Cashless Exercise”):

 

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

 

B

 

For purposes of the foregoing formula:

 

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

 

B= the “Fair Market Value” (as defined below) of the Class A Membership Interests on the date immediately preceding the date of the Exercise Notice.

 

C= the Warrant Price for the Warrant Units at the time of such exercise.

 

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For purposes of this Warrant, “Fair Market Value” shall mean a value per unit of each Class A Membership Interest as proscribed by the Company’s board of directors in good faith taking into account, among other things, industry standards for similarly situated companies and/or the most-recent offering price of any of the Company’s securities and/or other factors reasonably believed to relate, directly or indirectly, to the value of the Class A Membership Interests.

 

(d)                                 All Class A Membership Interests issuable upon the exercise of this Warrant pursuant to the terms hereof shall be validly issued and, upon payment of the Warrant Price, shall be fully paid and nonassessable and not subject to any preemptive rights.

 

2.2.                            Fractional Units. The Company shall not be required to issue a fractional units of Class A Membership Interests upon exercise of any Warrant. As to any fraction of a share which the Holder of one or more Warrants, the rights under which are exercised in the same transaction, would otherwise be entitled to purchase upon such exercise, the Company shall pay an amount in cash equal to the Fair Market Value per Unit of Class A Membership Interests on the date of exercise multiplied by such fraction.

 

2.3.                            Restrictions on Exercise Amount.  The Holder of the Warrant shall be required to exercise at least one-half of the aggregate number of warrants held by such Holder (and his Affiliates) in each instance such Holder desires to effect an exercise under this Warrant until such time as any such Holder’s remaining Warrant Units (Class A Membership Interests underlying his Warrant) are less than 1% of the total Class A Membership Interests then outstanding; from and after which such Holder shall be required to exercise all remaining warrants in any one exercise.

 

3.                                      Transfer, Division and Combination.

 

3.1.                            Transfer. The Warrants and the Warrant Units shall be freely transferable, subject to compliance with this Section 3.1 and all applicable laws, including, but not limited to the Securities Act.  If, at the time of the surrender of this Warrant in connection with any transfer of this Warrant or the resale of the Warrant Units, this Warrant or the Warrant Units, as applicable, shall not be registered under the Securities Act or are not eligible to be sold pursuant to Rule 144, the Company may require, as a condition of allowing such transfer (i) that the Holder or transferee of this Warrant or the Warrant Units as the case may be, furnish to the Company a written opinion of counsel that is reasonably acceptable to the Company to the effect that such transfer may be made without registration under the Securities Act, (ii) that the Holder or transferee execute and deliver to the Company an investment representation letter in form and substance acceptable to the Company and substantially in the form attached as Exhibit C hereto and (iii) that the transferee be an “accredited investor” as defined in Rule 501(a) promulgated under the Securities Act. Transfer of this Warrant and all rights hereunder, in whole or in part, in accordance with the foregoing provisions, shall be registered on the books of the Company to be maintained for such purpose, upon surrender of this Warrant at the principal office of the Company referred to in Section 2.1 or the office or agency designated by the Company pursuant to Section 12, together with a written assignment of this Warrant substantially in the form of Exhibit B hereto duly executed by the Holder or its agent or attorney and funds sufficient to pay any transfer taxes payable upon the making of such transfer. Upon such surrender and, if

 

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required, such payment, the Company shall execute and deliver a new Warrant or Warrants in the name of the assignee or assignees and in the denomination specified in such instrument of assignment, and shall issue to the assignor a new Warrant evidencing the portion of this Warrant not so assigned, and this Warrant shall promptly be cancelled. Following a transfer that complies with the requirements of this Section 3.1, the Warrant may be exercised by a new Holder for the purchase of Class A Membership Interests regardless of whether the Company issued or registered a new Warrant on the books of the Company.

 

3.2.                            Restrictive Legends. Each certificate for Warrant Units initially issued upon the exercise of this Warrant, and each certificate for Warrant Units issued to any subsequent transferee of any such certificate, unless, in each case, such Warrant Units is eligible for resale without registration pursuant to Rule 144 (or any successor thereto) promulgated under the Securities Act, shall bear the following legend:

 

“THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (“ACT”), OR APPLICABLE STATE SECURITIES LAWS.  THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE ACT OR (B) AN OPINION OF COUNSEL IN A FORM REASONABLY SATISFACTORY TO THE COMPANY, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID ACT.”

 

In addition, the legend set forth above shall be removed and the Company shall issue a certificate without such legend to the holder of any Warrant Units upon which it is stamped, if, unless otherwise required by applicable state securities laws, such Warrant Units is registered for sale under an effective registration statement filed under the Securities Act.

 

3.3.                            Division and Combination; Expenses; Books. This Warrant may be divided or combined with other Warrants upon presentation hereof at the aforesaid office or agency of the Company, together with a written notice specifying the names and denominations in which new Warrants are to be issued, signed by the Holder or its agent or attorney. Subject to compliance with Section 3.1 as to any transfer which may be involved in such division or combination, the Company shall execute and deliver a new Warrant or Warrants in exchange for the Warrant or Warrants to be divided or combined in accordance with such notice. The Company shall prepare, issue and deliver at its own expense the new Warrant or Warrants under this Section 3. The Company agrees to maintain, at its aforesaid office or agency, books for the registration and the registration of transfer of the Warrants.

 

4.                                      Adjustments. The number of Class A Membership Interests for which this Warrant is exercisable, and the price at which such shares may be purchased upon exercise of this Warrant, shall be subject to adjustment from time to time as set forth in this Section 4. The Company shall give the Holder notice of any event described below which requires an adjustment pursuant to this Section 4 in accordance with Sections 5.1 and 5.2.

 

4.1.                            Stock Dividends, Subdivisions and Combinations. If at any time while this Warrant is outstanding the Company shall:

 

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(i)                                     declare a dividend or make a distribution on its outstanding Class A Membership Interests in Class A Membership Interests,

 

(ii)                                  subdivide its outstanding Class A Membership Interests into a larger number of Class A Membership Interests, or

 

(iii)                               combine its outstanding Class A Membership Interests into a smaller number of Class A Membership Interests, then:

 

(1)                                 the number of Class A Membership Interests acquirable upon exercise of this Warrant immediately after the occurrence of any such event shall be adjusted to equal the number of Class A Membership Interests which a record holder of the same number of Class A Membership Interests that would have been acquirable under this Warrant immediately prior to the record date for such dividend or distribution or the effective date of such subdivision or combination would own or be entitled to receive after such record date or the effective date of such subdivision or combination, as applicable, and

 

(2)                                 the Warrant Price shall be adjusted to equal:

 

(A)                               the Warrant Price in effect at the time of the record date for such dividend or distribution or of the effective date of such subdivision or combination, multiplied by the number of Class A Membership Interests into which this Warrant is exercisable immediately prior to the adjustment, divided by

 

(B)                               the number of Class A Membership Interests into which this Warrant is exercisable immediately after such adjustment.

 

Any adjustment made pursuant to clause (i) of this paragraph shall become effective immediately after the record date for the determination of stockholders entitled to receive such dividend or distribution, and any adjustment pursuant to clauses (ii) or (iii) of this paragraph shall become effective immediately after the effective date of such subdivision or combination.

 

4.2                               Other Provisions Applicable to Adjustments. The following provisions shall be applicable to the making of adjustments of the number of Class A Membership Interests into which this Warrant is exercisable and the Warrant Price provided for in Section 4:

 

(b)  Fractional Interests. In computing adjustments under this Section 4, fractional interests in Class A Membership Interests shall be taken into account to the nearest 1/100th of a share.

 

4.3                               Stock Transfer Taxes. The issue of stock certificates upon exercise of this Warrant shall be made without charge to the holder for any tax in respect of such issue. The Company shall not, however, be required to pay any tax which may be payable in respect of any transfer involved in the issue and delivery of shares in any name other than that of the holder of this Warrant, and the Company shall not be required to issue or deliver any such stock certificate unless and until the person or persons requesting the issue thereof shall have paid to the Company the amount of such tax or shall have established to the satisfaction of the Company that such tax has been paid.

 

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5.                                      Notices to Warrant Holders.

 

5.1.                            Certificate as to Adjustments. Upon the occurrence of each adjustment or readjustment of the Warrant Price, the Company, at its expense, shall promptly compute such adjustment or readjustment in accordance with the terms hereof and prepare and furnish to the Holder of this Warrant a certificate setting forth such adjustment or readjustment and showing in detail the facts upon which such adjustment or readjustment is based. The Company shall, upon the written request at any time of the Holder of this Warrant, furnish or cause to be furnished to such Holder a like certificate setting forth (i) such adjustments and readjustments, (ii) the Warrant Price at the time in effect and (iii) the number of Class A Membership Interests and the amount, if any, which at the time would be received upon the exercise of Warrants owned by such Holder.

 

5.2.                            Notice of Corporate Action. The Company shall promptly notify each Holder if and to the extent any of the following occur:

 

(a)                                 there shall be any capital reorganization of the Company, any reclassification or recapitalization of any class of membership interests of the Company or any consolidation or merger of the Company with, or any sale, transfer or other disposition of all or substantially all the property, assets or business of the Company to, another corporation, or

 

(c)                                  there shall be a voluntary or involuntary dissolution, liquidation or winding up of the Company.

 

Such notice shall set forth the nature and timing of any such action or occurrence in reasonable detail and shall be delivered no more than fifteen (15) days prior to any such action or occurrence.

 

5.3.                            No Rights as Stockholder. This Warrant does not entitle the Holder to any voting or other rights as a stockholder of the Company prior to exercise and payment for the Warrant Price in accordance with the terms hereof.

 

6.                                      No Impairment. The Company shall not by any action, including, without limitation, amending its certificate of formation or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this Warrant, but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such actions as may be necessary or appropriate to protect the rights of the Holder against impairment.

 

7.                                      Registration Rights. The resale of the Warrant Units shall have the piggy-back registration rights in accordance with the terms and conditions contained in that certain Investor Rights Agreement dated of even date hereof, among the Holder, the Company and the other parties named therein (the “Investor Rights Agreement”).

 

8.                                      Loss or Mutilation. Upon receipt by the Company from the Holder of evidence reasonably satisfactory to it of the ownership of and the loss, theft, destruction or mutilation of this Warrant and indemnity or security reasonably satisfactory to it and reimbursement to the Company of all reasonable expenses incidental thereto and in case of mutilation upon surrender

 

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and cancellation hereof, the Company will execute and deliver in lieu hereof a new Warrant of like tenor to the Holder; provided, however, that in the case of mutilation, no indemnity shall be required if this Warrant in identifiable form is surrendered to the Company for cancellation.

 

9.                                      Office of the Company. As long as any of the Warrants remain outstanding, the Company shall maintain an office or agency (which may be the principal executive offices of the Company) where the Warrants may be presented for exercise, registration of transfer, division or combination as provided in this Warrant.

 

10.                               Limitation of Liability. No provision hereof, in the absence of affirmative action by the Holder to purchase Class A Membership Interests, and no enumeration herein of the rights or privileges of the Holder hereof, shall give rise to any liability of the Holder for the purchase price of any Class A Membership Interests, whether such liability is asserted by the Company or by creditors of the Company.

 

11.                               Miscellaneous.

 

11.1.                     Nonwaiver and Expenses. No course of dealing or any delay or failure to exercise any right hereunder on the part of the Holder shall operate as a waiver of such right or otherwise prejudice the Holder’s rights, powers or remedies. If the Company fails to make, when due, any payments provided for hereunder, or fails to comply with any other material provision of this Warrant, the Company shall pay to the Holder such amounts as shall be sufficient to cover any third party costs and expenses including, but not limited to, reasonable attorneys’ fees, including those of appellate proceedings, incurred by the Holder in collecting any amounts due pursuant hereto or in otherwise enforcing any of its rights, powers or remedies hereunder.

 

11.2.                     Notice Generally. All notices, requests, demands or other communications provided for herein shall be in writing and shall be given in the manner and to the addresses set forth in the Purchase Agreement.

 

11.3.                     Successors and Assigns. This Warrant and the rights evidenced hereby shall inure to the benefit of and be binding upon the successors of the Company and the successors and assigns of the Holder. The provisions of this Warrant are intended to be for the benefit of all Holders from time to time of this Warrant, and shall be enforceable by any such Holder.

 

11.4.                     Amendment. This Warrant may be modified or amended or the provisions of this Warrant waived with the written consent of the Company and at least a majority in interest of the Warrant(s) then outstanding.

 

11.5.                     Severability. If any provision of this Warrant is prohibited by law or otherwise determined to be invalid or unenforceable by a court of competent jurisdiction, the provision that would otherwise be prohibited, invalid or unenforceable shall be deemed amended to apply to the broadest extent that it would be valid and enforceable, and the invalidity or unenforceability of such provision shall not affect the validity of the remaining provisions of this Warrant so long as this Warrant as so modified continues to express, without material change, the original intentions of the parties as to the subject matter hereof and the prohibited nature, invalidity or unenforceability of the provision(s) in question does not substantially impair the respective expectations or reciprocal obligations of the parties or the practical realization of the benefits that

 

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would otherwise be conferred upon the parties.  The parties will endeavor in good faith negotiations to replace the prohibited, invalid or unenforceable provision(s) with a valid provision(s), the effect of which comes as close as possible to that of the prohibited, invalid or unenforceable provision(s).

 

11.6.                     Headings. The headings used in this Warrant are for the convenience of reference only and shall not, for any purpose, be deemed a part of this Warrant.

 

11.7.                     Governing Law. This Warrant and the transactions contemplated hereby shall be deemed to be consummated in the State of New York and shall be governed by and interpreted in accordance with the local laws of the State of New York without regard to the provisions thereof relating to conflicts of laws. The Company and each Holder, respectively, hereby irrevocably consent to the exclusive jurisdiction of the State and Federal courts located in New York City, New York in connection with any action or proceeding arising out of or relating to this Warrant.

 

11.8                        Dispute Resolution.  In the case of a dispute as to the determination of the revised Warrant Price or the arithmetic calculation of the number of Warrant Units, the Company shall submit the disputed determinations or arithmetic calculations via facsimile within ten (10) Business Days of receipt of the Exercise Notice giving rise to such dispute, as the case may be, to the Holder.  If the Holder and the Company are unable to agree upon such determination or calculation of the revised Warrant Price or the Warrant Units within ten (10) Business Days of such disputed determination or arithmetic calculation being submitted to the Holder, then the Company shall, within five (5) Business Days submit via facsimile the disputed determination of the revised Warrant Price and/or revised number of Warrant Units, as the case may be, to an independent, reputable investment bank or independent accounting firm, in either case, selected by the Company and approved by the Holder in Holder’s reasonable discretion (not to be unreasonably withheld or delayed).  The Company shall cause at its expense the investment bank or the accountant, as the case may be, to perform the determinations or calculations and notify the Company and the Holder of the results no later than ten (10) Business Days from the time it receives the disputed determinations or calculations.  Such investment bank’s or accountant’s determination or calculation, as the case may be, shall be binding upon all parties absent demonstrable error.  Under no circumstances will the Company be required to perform this exercise more than once for different Holders based on the same action or transaction giving rise to any revision to the Warrant Price or number of Warrant Units subject to this Warrant.

 

[Signature Page Follows]

 

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IN WITNESS WHEREOF, Dipexium Pharmaceuticals, LLC has caused this Warrant to be executed by its duly authorized officer and attested by its Secretary.

 

	
Dated: July 12, 2013
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
DIPEXIUM PHARMACEUTICALS, LLC
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ David P. Luci
    
	
 
    	
Name:
    	
David P. Luci
    
	
 
    	
Title:
    	
Managing Partner
    

 

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EXHIBIT A

 

EXERCISE NOTICE

 

[To be executed only upon exercise of Warrant]

 

1.                                      The undersigned hereby elects to purchase              Class A Membership Interests of Dipexium Pharmaceuticals, LLC pursuant to the terms of the attached Warrant, and tenders herewith payment of the purchase price of such shares in full.

 

2.                                      The undersigned hereby elects to convert the attached Warrant into Class A Membership Interests of Dipexium Pharmaceuticals, LLC through “cashless exercise” in the manner specified in the Warrant.  This conversion is exercised with respect to                                of the Class A Membership Interests covered by the Warrant.

 

3.                                      Please issue a certificate or certificates representing said shares in the name of the undersigned or in such other name as is specified below:

 

 

	
 
    	
 
    
	
 
    	
(Name)
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
(Address)
    

 

[and, if such Class A Membership Interests shall not include all of the Class A Membership Interests issuable as provided in this Warrant, that a new Warrant of like tenor and date for the balance of the Class A Membership Interests issuable hereunder be delivered to the undersigned.]

 

 

	
 
    	
 
    
	
(Name of Registered Owner)
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
(Signature of Registered Owner)
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
(Street Address)
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
(State) (Zip Code)
    	
 
    

 

NOTICE: The signature on this subscription must correspond with the name as written upon the face of the Warrant in every particular, without alteration or enlargement or any change whatsoever.

 

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EXHIBIT B

 

ASSIGNMENT FORM

 

FOR VALUE RECEIVED the undersigned registered owner of this Warrant for the purchase of Class A Membership Interests of Dipexium Pharmaceuticals, LLC hereby sells, assigns and transfers unto the Assignee named below all of the rights of the undersigned under this Warrant, with respect to the number of Class A Membership Interests set forth below:

 

 

	
 
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
(Name and Address of Assignee)
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
(Number of Class A Membership Interests)
    	
 
    

 

 

and does hereby irrevocably constitute and appoint                          attorney-in-fact to register such transfer on the books of the Company, maintained for the purpose, with full power of substitution in the premises.

 

 

	
Dated:
    	
 
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
(Print Name and Title)
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
(Signature)
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
(Witness)
    	
 
    

 

NOTICE: The signature on this assignment must correspond with the name as written upon the face of the Warrant in every particular, without alteration or enlargement or any change whatsoever.

 

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EXHIBIT C

 

FORM OF INVESTMENT REPRESENTATION LETTER

 

In connection with the acquisition of [warrants (the “Warrants”) to purchase          Class A Membership Interests of Dipexium Pharmaceuticals, LLC (the “Company”) (the “Class A Membership Interests”) upon the exercise of warrants by                 ], by                                (the “Holder”) from                           , the Holder hereby represents and warrants to the Company as follows:

 

The Holder (i) is an “Accredited Investor” as that term is defined in Rule 501(a) of Regulation D promulgated under the Securities Act of 1933, as amended (the “Act”); and (ii) has the ability to bear the economic risks of such Holder’s prospective investment, including a complete loss of Holder’s investment in the Warrants and the Class A Membership Interests issuable upon the exercise thereof (collectively, the “Securities”).

 

The Holder, by acceptance of the Warrants, represents and warrants to the Company that the Warrants and all securities acquired upon any and all exercises of the Warrants (other than pursuant to a Cashless Exercise) are purchased for the Holder’s own account, and not with view to distribution of either the Warrants or any securities purchasable upon exercise thereof in violation of applicable securities laws.

 

The Holder acknowledges that (i) the Securities have not been registered under the Act, (ii) the Securities are “restricted securities” and the certificate(s) representing the Securities shall bear the following legend, or a similar legend to the same effect, until (i) such Securities are registered for resale under the Act, (ii) in connection with a sale, assignment or other transfer, such holder provides the Company with an opinion of counsel reasonably satisfactory to the Company to the effect that such sale, assignment or transfer of the Securities may be made without registration under the applicable requirements of the Act and that such legend is no longer required, or (iii) such holder provides the Company with reasonable assurance that the Securities can be sold, assigned or transferred pursuant to Rule 144 or Rule 144A:

 

“[NEITHER THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE EXERCISABLE HAVE BEEN][THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN] REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (“ACT”), OR APPLICABLE STATE SECURITIES LAWS.  THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE ACT OR (B) AN OPINION OF COUNSEL IN A FORM REASONABLY SATISFACTORY TO THE COMPANY, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID ACT.*

 

* Bracketed language to be inserted if applicable.

 

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IN WITNESS WHEREOF, the Holder has caused this Investment Representation Letter to be executed this      day of                      20      .

 

	
[Name]
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
By:
    	
 
    	
 
    
	
Name:
    	
 
    
	
Title:
    	
 
    
			

 

14Exhibit 10.21

 

INVESTOR RIGHTS AGREEMENT

 

This Investor Rights Agreement (this “Agreement”) is made and entered into as of July 23, 2010 among Dipexium Pharmaceuticals, LLC, a limited liability company organized under the laws of the State of Delaware (the “Company”), and each of the purchasers executing this Agreement and listed on Schedule 1 attached hereto as of the date hereof (collectively, the “Initial Purchasers”).

 

This Agreement is being entered into pursuant to the Securities Purchase Agreement, dated as of July 23, 2010, by and among the Company and the Purchasers (the “Initial Purchase Agreement”).

 

The Company and the Purchasers hereby agree as follows:

 

1.             Definitions.

 

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

 

“Additional Closing” means a closing by the Company under the Initial Purchase Agreement with Additional Buyers as provided in the Initial Purchase Agreement.

 

“Business Day” means any day except Saturday, Sunday and any day which shall be a legal holiday or a day on which banking institutions in the State of New York generally are authorized or required by law or other government actions to close.

 

“Class A Membership Interests” means the Company’s Class A Membership Interests.

 

“Commission” means the Securities and Exchange Commission.

 

“Exchange Act” means the Securities Exchange Act of 1934, as amended.

 

“Holder” or “Holders” means the holder or holders, as the case may be, from time to time of Registrable Securities, including without limitation the Purchasers and their assignees.  For purposes of this Agreement, the holder or holders of Warrants shall be deemed to be holders of that number of shares of Registrable Securities into which such Warrants are convertible at the applicable time.

 

“Indemnified Party” shall have the meaning set forth in Section 4(c).

 

“Indemnifying Party” shall have the meaning set forth in Section 4(c).

 

“Losses” shall have the meaning set forth in Section 4(a).

 

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

 

 

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

 

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

 

“Purchase Agreement” means, collectively, the Initial Purchase Agreement and any Class A Membership Interest and Warrant Purchase Agreement, by and between the Company and any Additional Buyer or Additional Buyers with respect to any Additional Closing.

 

“Purchased Units” means the Class A Membership Interests purchased by the Purchasers pursuant to the Purchase Agreement.

 

“Purchaser” means, collectively, the Initial Purchasers and any Additional Buyers.

 

“Registrable Securities” means (a) the Purchased Units and the Warrant Units (without regard to any limitations on beneficial ownership contained in the Warrants) or other securities issued or issuable to each Purchaser or its transferee or designee (i) upon exercise of the Warrants, or (ii) upon any dividend or distribution with respect to, any exchange for or any replacement of such Purchased Units, Warrants or Warrant Units or (iii) upon any conversion, exercise or exchange of any securities issued in connection with any such distribution, exchange or replacement.

 

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

 

“Required Holders” means the holders of at least a majority of the Registrable Securities.

 

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

 

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

 

“Warrants” means the Class A Membership Interest purchase warrants issued pursuant to the Purchase Agreement.

 

“Warrant Units” means the Class A Membership Interests upon the exercise of the

 

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Warrants issued or to be issued to the Purchasers or their assignees or designees in connection with the offering consummated under the Purchase Agreement.

 

2.             Piggy-Back Registration. If at any time when there is not an effective Registration Statement covering all of the Registrable Securities, the Company shall determine to prepare and file with the Commission a registration statement relating to an offering for its own account or the account of others under the Securities Act of any of its equity securities, other than on Form S-4 or Form S-8 (each as promulgated under the Securities Act) or their then equivalents relating to equity securities to be issued solely in connection with any acquisition of any entity or business or equity securities issuable in connection with stock option or other employee benefit plans, the Company shall send to each Holder of Registrable Securities written notice of such determination and, if within seven (7) Business Days after receipt of such notice, any such Holder shall so request in writing (which request shall specify the Registrable Securities intended to be disposed of by the Holder), the Company will cause the registration under the Securities Act of all Registrable Securities which the Company has been so requested to register by the Holder, to the extent required to permit the disposition of the Registrable Securities so to be registered, provided that if at any time after giving written notice of its intention to register any securities and prior to the effective date of the registration statement filed in connection with such registration, the Company shall determine for any reason not to register or to delay registration of such securities, the Company may, at its election, give written notice of such determination to such Holder and, thereupon, (i) in the case of a determination not to register, shall be relieved of its obligation to register any Registrable Securities in connection with such registration, and (ii) in the case of a determination to delay registering, shall be permitted to delay registering any Registrable Securities being registered for the same period as the delay in registering such other securities. The Company shall include in such registration statement all or any part of such Registrable Securities such Holder requests to be registered. In the case of an underwritten public offering, if the managing underwriter(s) or underwriter(s) should reasonably object to the inclusion of the Registrable Securities in such registration statement, then if the Company after consultation with the managing underwriter should reasonably determine that the inclusion of such Registrable Securities, would materially adversely affect the offering contemplated in such registration statement, and based on such determination recommends inclusion in such registration statement of fewer or none of the Registrable Securities of the Holders, then (x) the number of Registrable Securities of the Holders included in such registration statement shall be reduced pro-rata among such Holders (based upon the number of Registrable Securities requested to be included in the registration), if the Company after consultation with the underwriter(s) recommends the inclusion of fewer Registrable Securities, or (y) none of the Registrable Securities of the Holders shall be included in such registration statement, if the Company after consultation with the underwriter(s) recommends the inclusion of none of such Registrable Securities.  Notwithstanding the foregoing, the Company shall have no further obligation to register the Registrable Securities from and after the date upon which such Registrable Securities are salable under Rule 144.

 

3.             Registration Expenses.

 

All fees and expenses incident to the performance of or compliance with this Agreement by the Company shall be borne by the Company whether or not the Registration Statement is filed or becomes effective and whether or not any Registrable Securities are sold pursuant to the

 

3

 

Registration Statement. The fees and expenses referred to in the foregoing sentence shall include, without limitation, (i) all registration and filing fees (including, without limitation, fees and expenses (A) with respect to filings required to be made with each securities exchange, quotation system, market or over-the-counter bulletin board on which Registrable Securities are required hereunder to be listed, if any, (B) with respect to filings required to be made with the Commission, and (C) in compliance with state securities or Blue Sky laws, (ii) printing expenses (including, without limitation, expenses of printing certificates for Registrable Securities and of printing or photocopying prospectuses), (iii) Securities Act liability insurance, if the Company so desires such insurance, and (iv) fees and expenses of all other Persons retained by the Company in connection with the consummation of the transactions contemplated by this Agreement, including, without limitation, the Company’s independent public accountants, if any (including, in the case of an underwritten offering, the expenses of any comfort letters or costs associated with the delivery by independent public accountants of a comfort letter or comfort letters) and legal counsel.  In addition, the Company shall be responsible for all of its internal expenses incurred in connection with the consummation of the transactions contemplated by this Agreement (including, without limitation, all salaries and expenses of its officers and employees performing legal or accounting duties), the expense of any annual audit, the fees and expenses incurred in connection with the listing of the Registrable Securities on any securities exchange as required hereunder.

 

4.             Indemnification.

 

(a)           Indemnification by the Company. The Company shall, notwithstanding any termination of this Agreement, indemnify and hold harmless each Holder, the officers, directors, members, partners, representatives, agents, brokers (including brokers who offer and sell Registrable Securities as principal as a result of a pledge or any failure to perform under a margin call of Common Stock), investment advisors and employees of each of them, each Person who controls any such Holder (within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act) and the officers, directors, agents and employees of each such controlling Person, to the fullest extent permitted by applicable law, from and against any and all losses, claims, damages, liabilities, costs (including, without limitation, costs of preparation and reasonable attorneys’ fees) and expenses (collectively, “Losses”), as incurred, arising out of or relating to (x) any untrue or alleged untrue statement of a material fact contained or incorporated by reference in the Registration Statement, any Prospectus or any form of prospectus or in any amendment or supplement thereto or in any preliminary prospectus, or arising out of or relating to any omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein (in the case of any Prospectus or form of prospectus or amendment or supplement thereto, in the light of the circumstances under which they were made) not misleading (y) any violation or alleged violation by the Company of the Securities Act, the Exchange Act, any other law, including, without limitation, any state securities law, or any rule or regulation thereunder relating to the offer or sale of the Registrable Securities pursuant to a Registration Statement or (z) any violation of this Agreement, except to the extent, but only to the extent, that such untrue statements or omissions are based solely upon information regarding such Holder furnished in writing to the Company by such Holder expressly for use therein, which information was reasonably relied on by the Company for use therein; provided, however, that the indemnity agreement contained in this section shall not apply to amounts paid in settlement of any Losses if such settlement is effected without the prior

 

4

 

written consent of the Company.  The Company shall notify the Holders promptly of the institution, threat or assertion of any Proceeding of which the Company is aware in connection with the transactions contemplated by this Agreement.

 

(b)           Indemnification by Holders. Each Holder shall, severally and not jointly, indemnify and hold harmless the Company, its directors, members, partners, representatives, officers, agents and employees, each Person who controls the Company (within the meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act), and the directors, officers, agents and employees of such controlling Persons, to the fullest extent permitted by applicable law, from and against all Losses, as incurred, arising solely out of or based solely upon any untrue statement of a material fact contained in the Registration Statement, any Prospectus, or any form of prospectus, or in any amendment or supplement thereto, or arising solely out of or based solely upon any omission of a material fact required to be stated therein or necessary to make the statements therein (in the case of any Prospectus or form of prospectus or supplement thereto, in the light of the circumstances under which they were made) not misleading, to the extent that (i) such untrue statement or omission is contained in or omitted from any information so furnished in writing by such Holder to the Company specifically for inclusion in the Registration Statement or such Prospectus and that such information was reasonably relied upon by the Company for use in the Registration Statement, such Prospectus, or in any amendment or supplement thereto; provided, however, that the indemnity agreement contained in this section shall not apply to amounts paid in settlement of any Losses if such settlement is effected without the prior written consent of the Holder, which consent shall not be unreasonably withheld. Notwithstanding anything to the contrary contained herein, the Holder shall be liable under this section for only 200% of the amount that does not exceed the net proceeds to such Holder as a result of the sale of such Registrable Securities pursuant to such Registration Statement.

 

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

 

An Indemnified Party shall have the right to employ separate counsel in any such Proceeding and to participate in the defense thereof, but the fees and expenses of such counsel shall be at the expense of such Indemnified Party.  The Indemnifying Party shall not be liable for any settlement of any such Proceeding effected without its written consent. No Indemnifying Party shall, without the prior written consent of the Indemnified Party, effect any settlement of any pending Proceeding in respect of which any Indemnified Party is a party, unless such settlement includes an unconditional release of such Indemnified Party from all liability on claims that are the subject matter of such Proceeding and does not impose any monetary or other obligation or restriction on the Indemnified Party.

 

5

 

The indemnity agreements contained herein shall be in addition to (i) any cause of action or similar right of the Indemnified Party against the Indemnifying Party or others, and (ii) any liabilities the indemnifying party may be subject to pursuant to the law.

 

(d)           Contribution. If a claim for indemnification under Section 4(a) or 4(b) is unavailable to an Indemnified Party because of a failure or refusal of a governmental authority to enforce such indemnification in accordance with its terms (by reason of public policy or otherwise), then each Indemnifying Party, in lieu of indemnifying such Indemnified Party, shall contribute to the amount paid or payable by such Indemnified Party as a result of such Losses, in such proportion as is appropriate to reflect the relative fault of the Indemnifying Party and Indemnified Party in connection with the actions, statements or omissions that resulted in such Losses as well as any other relevant equitable considerations. The relative fault of such Indemnifying Party and Indemnified Party shall be determined by reference to, among other things, whether any action in question, including any untrue or alleged untrue statement of a material fact or omission or alleged omission of a material fact, has been taken or made by, or relates to information supplied by, such Indemnifying Party or Indemnified Party, and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such action, statement or omission. The amount paid or payable by a party as a result of any Losses shall be deemed to include any reasonable attorneys’ or other reasonable fees or expenses incurred by such party in connection with any Proceeding to the extent such party would have been indemnified for such fees or expenses if the indemnification provided for in this Section was available to such party in accordance with its terms.

 

5.             Miscellaneous.

 

(a)           Remedies. In the event of a breach by the Company or by a Holder, of any of their obligations under this Agreement, each Holder or the Company, as the case may be, in addition to being entitled to exercise all rights granted by law and under this Agreement, including recovery of damages, will be entitled to specific performance of its rights under this Agreement. The Company and each Holder agree that monetary damages would not provide adequate compensation for any losses incurred by reason of a breach by it of any of the provisions of this Agreement and hereby further agrees that, in the event of any action for specific performance in respect of such breach, it shall waive the defense that a remedy at law would be adequate.

 

(b)           No Inconsistent Agreements. Except as otherwise disclosed in the Purchase Agreement, neither the Company nor any of its subsidiaries is a party to an agreement currently in effect, nor shall the Company or any of its subsidiaries, on or after the date of this Agreement, enter into any agreement with respect to its securities that is inconsistent with the rights granted to the Holders in this Agreement or otherwise conflicts with the provisions hereof.

 

(c)           Specific Enforcement, Consent to Jurisdiction.

 

(i)            The Company and the Holders acknowledge and agree that irreparable damage would occur in the event that any of the provisions of this Agreement were not performed in accordance with their specific terms or were otherwise breached. It is accordingly agreed that the parties shall be entitled to an injunction or injunctions to prevent or cure breaches of the provisions of this Agreement and to enforce specifically

 

6

 

the terms and provisions hereof, this being in addition to any other remedy to which any of them may be entitled by law or equity.

 

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

 

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

 

(g)           Notices. Any and all notices or other communications or deliveries required or permitted to be provided hereunder shall be in writing and shall be deemed given and effective on the earlier of (i) the date of transmission, if such notice or communication is delivered via facsimile at the facsimile telephone number specified for notice prior to 5:00 p.m., New York City time, on a Business Day, (ii) the next Business Day after the date of transmission, if such notice or communication is delivered via facsimile at the facsimile number specified in this Section on a day that is not a Business Day or later than 5:00 p.m., New York City time, on any date and earlier than 11:59 p.m., New York City time, on such date, (iii) the Business Day following the date of mailing, if sent by nationally recognized overnight courier service such as Federal Express or (iv) actual receipt by the party to whom such notice is required to be given. The addresses for such communications shall be with respect to each Holder at its address set forth under its name on Schedule 1 attached hereto, or with respect to the Company, addressed to:

 

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Dipexium Pharmaceuticals, LLC
 Address:

Attention: Managing Partner
 Facsimile No.:

 

or to such other address or addresses or facsimile number or numbers as any such party may most recently have designated in writing to the other parties hereto by such notice. Copies of notices to the Company shall be sent to:

 

David P. Luci

Address:

 

Copies of notices to any Holder shall be sent to the addresses, if any, listed on Schedule 1 attached hereto.

 

(h)           Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties and their successors and permitted assigns and shall inure to the benefit of each Holder and its successors and assigns.  The Company may assign this Agreement or any rights or obligations hereunder without the prior written consent of any of the Required Holders including by way of a Change of Control (as defined in the Warrants).  A Holder may assign some or all of its rights hereunder as set forth below.

 

(i)            Assignment of Registration Rights. The rights of each Holder hereunder, including the right to have the Company register for resale Registrable Securities in accordance with the terms of this Agreement, shall be automatically assignable by each Holder to any transferee of such Holder of all or a portion of the Purchased Units, the Warrants, the Warrant Units or the Registrable Securities if: (i) the Holder agrees in writing with the transferee or assignee to assign such rights, and a copy of such agreement is furnished to the Company within a reasonable time after such assignment, (ii) the Company is, within a reasonable time after such transfer or assignment, furnished with written notice of (a) the name and address of such transferee or assignee, and (b) the securities with respect to which such registration rights are being transferred or assigned, (iii) following such transfer or assignment the further disposition of such securities by the transferee or assignees is restricted under the Securities Act and applicable state securities laws, (iv) at or before the time the Company receives the written notice contemplated by clause (ii) of this section, the transferee or assignee agrees in writing with the Company to be bound by all of the provisions of this Agreement and the Operating Agreement, and (v) such transfer shall have been made in accordance with the applicable requirements of the Purchase Agreement.  The rights to assignment shall apply to the Holders (and to subsequent) successors and assigns.

 

(j)            Counterparts; Facsimile. This Agreement may be executed in any number of counterparts, each of which when so executed shall be deemed to be an original and, all of which taken together shall constitute one and the same Agreement. In the event that any signature is delivered by electronic means or facsimile transmission, such signature shall create a valid binding obligation of the party executing (or on whose behalf such signature is executed) the same with the same force and effect as if such facsimile signature were the original thereof.

 

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(k)           Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of New York, without regard to principles of conflicts of law thereof.

 

(l)            Cumulative Remedies. Unless otherwise provided herein, the remedies provided herein are cumulative and not exclusive of any remedies provided by law.

 

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

 

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

 

(o)           Obligations of Purchasers. The Company acknowledges that the obligations of each Purchaser under this Agreement, are several and not joint with the obligations of any other Purchaser, and no Purchaser shall be responsible in any way for the performance of the obligations of any other Purchaser under this Agreement.  The decision of each Purchaser to enter into to this Agreement has been made by such Purchaser independently of any other Purchaser.

 

(p)           Joinder.  Any Additional Buyer may become a party to this agreement, as a Purchaser, by executing the Investor Rights Joinder Agreement attached hereto as Exhibit A.  Upon the execution of any such Investor Rights Joinder Agreement, Schedule 1 hereto shall automatically be updated to reflect such Purchaser.

 

[signature page follows]

 

9

 

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

 

	
COMPANY:
    	
 
    
	
 
    	
 
    
	
DIPEXIUM   PHARMACEUTICALS, LLC
    	
 
    
	
 
    	
 
    
	
 
    	
 
    	
 
    
	
By:
    	
 
    	
 
    
	
Name:   
    	
David   P. Luci
    	
 
    
	
Title:
    	
Managing   Partner
    	
 
    
				

 

[Omnibus Dipexium Pharmaceuticals, LLC Investor Rights Agreement (2010) Signature Page]

 

 

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

 

 

	
PURCHASERS:
    	
 
    
	
 
    	
 
    
	
Print   Exact Name:
    	
 
    	
 
    
	
 
    
	
 
    	
 
    
	
By:
    	
 
    	
 
    
				

 

[Omnibus Dipexium Pharmaceuticals, LLC  Investor Rights Agreement (2010) Signature Page]

 

 

EXHIBIT A

 

INVESTOR RIGHTS AGREEMENT JOINDER

 

By execution of this Investor Rights Agreement Joinder, the undersigned agrees to become a party to that certain Investor Rights Agreement, dated as of July     , 2010, as may be amended, among Dipexium Pharmaceuticals, LLC, a limited liability company under the laws of the State of Delawareand the parties named therein.  The undersigned shall have all the rights, and shall observe all the obligations, applicable to a Purchaser under such Agreement.

 

	
 
    	
PURCHASER:
    
	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
Name:
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    
	
 
    	
 
    	
 
    
	
 
    	
Date:
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    
	
 
    	
Address   for notices:
    

 

 

D-1

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