GridAI Technologies Corp 8-K, filed Jan 4, 2021
GridAI Technologies Corp. (GRDX)
8-K
2021-01-04
For: 2020-12-31
View Original
Added on
April 11, 2026
About this 8-K
GridAI Technologies Corp filed this 8-K on January 4, 2021, reporting on events of December 31, 2020.
Items reported
- Item 1.01: Entered into a material agreement
- Item 3.02: Unregistered sale of equity
- Item 7.01: Regulation FD disclosure
- Item 8.01: Other events
- Item 9.01: Financial statements and exhibits
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of report (Date of earliest event
reported):
December 31, 2020
Commission
File Number: 001-37853
AzurRx BioPharma, Inc.
(Exact
name of registrant as specified in its charter.)
Delaware
(State
or other jurisdiction of incorporation or
organization)
46-4993860
(IRS
Employer Identification No.)
1615 South Congress Avenue, Suite 103
Delray Beach, Florida 33445
(Address
of principal executive offices)
646-699-7855
(Registrant's
Telephone number)
Not Applicable
(Former
Name or Former Address, if Changed Since Last Report)
Check
the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant
under any of the following provisions:
[ ]
Written communications pursuant to Rule 425 under the Securities
Act (17 CFR 230.425)
[X]
Soliciting material pursuant to Rule 14a-12 under the Exchange Act
(17 CFR 240.14a-12)
[ ]
Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
[ ]
Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
Indicate
by check mark whether the registrant is an emerging growth company
as defined in Rule 405 of the Securities Act of 1933 (17 CFR
230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17
CFR 240.12b-2)
Emerging
growth company [X]
If an
emerging growth company, indicate by check mark if the registrant
has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided
pursuant to Section 13(a) of the Exchange Act. [ ]
Securities
registered pursuant to Section 12(b) of the Act:
|
Title of each class
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Trading Symbol(s)
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Name of exchange on which registered
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Common
Stock, par value $0.0001 per share
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AZRX
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Nasdaq
Capital Market
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Item 1.01 Entry into a Definitive Material Agreement.
License Agreement with First Wave Bio, Inc.
On December 31, 2020, AzurRx BioPharma, Inc. (the
“Company”) entered into a License Agreement (the
“License Agreement”) with First Wave Bio, Inc.
(“First Wave”), a privately-held Delaware corporation.
Pursuant to the License Agreement, First Wave granted the Company a
worldwide, exclusive right to develop, manufacture, and
commercialize First Wave’s proprietary immediate release and
enema formulations of niclosamide for the fields of treating Immune
Checkpoint Inhibitor-Associated Colitis (“ICI-AC”) and
Severe Acute Respiratory Syndrome Coronavirus 2
(“COVID”) gastrointestinal infections (“GI”)
in humans (the “Product”). The Product uses
First Wave’s proprietary formulations of niclosamide, a
pro-inflammatory pathway inhibitor. The Company plans to commence
in 2021 both a Phase 2 trial of the Product for COVID in GI and a
Phase 1b/2a trial for ICI-AC.
In consideration of the license and other rights granted by First
Wave, AzurRx will pay First Wave a $9.0 million upfront cash
payment and an additional payment of $1.25 million due on June 30,
2021. In addition, AzurRx is obligated to pay potential milestone
payments to First Wave totaling up to $37.0 million for each
indication, based upon the achievement of specified development and
regulatory milestones. The Company is also obligated to pay First
Wave royalties as a mid-single digit percentage of net sales of the
Product, subject to specified reductions. The Company is also
obligated to issue to First Wave junior convertible preferred
stock, initially convertible into $3.0 million worth of common
stock, par value $0.0001 per share (the “Common Stock”)
of the Company, based upon the volume weighted average price of the
Common Stock for the five-day period immediately preceding the date
of the License Agreement, or $0.9118 per share. The preferred stock
will convert automatically into Common Stock upon the Stockholder
Approval (as defined and further described below). The purchase
agreement pursuant to which the preferred stock is issued will
contain customary demand and piggyback registration rights with
respect to the Common Stock issuable upon conversion.
The Company is now solely responsible, and has agreed to use
commercially reasonable efforts, for all development, regulatory
and commercial activities related to the Products in the ICI-AC and
COVID fields. The Company may sublicense its rights under the
License Agreement and, if it does so, will be obligated to pay
milestone payments and royalties to First Wave based on the
sublicensee’s development and commercialization of the
Licensed Products.
Pursuant to the License Agreement, First Wave retains rights to
develop and commercialize the licensed niclosamide formulations
outside the ICI-AC and COVID fields, and to develop and
commercialize other niclosamide formulations that are not licensed
to Company. However, if prior to April 30, 2021, First Wave seeks
to outlicense, sell to or otherwise grant rights to a third party
related to any products containing niclosamide for use outside the
ICI-AC or COVID fields to develop or commercialize a product
containing niclosamide for use outside of the Field then First Wave
shall provide to AzurRx written notice of such proposal, in
reasonable detail and AzurRx shall have the right and option to
negotiate with First Wave with respect to a definitive agreement
for the acquisition of First Wave. Pursuant to the License
Agreement, the Company grants First Wave a worldwide,
non-exclusive, royalty-free, perpetual, irrevocable license for use
outside the ICI-AC and COVID fields, with the right to grant
sublicenses, under any Program IP and other intellectual property
owned by the Company and incorporated into the
Product.
The License Agreement terminates on a country-by-country basis and
product-by-product basis upon the expiration of the royalty term
for such product in such country. Each royalty term begins on the
date of the first commercial sale of the licensed product in the
applicable country and ends on date of expiration of the last to
expire royalty term with respect to the country. The License
Agreement may be terminated earlier in specified situations,
including termination for uncured material breach of the License
Agreement by either party, termination by AzurRx in specified
circumstances, termination by First Wave in specified
circumstances, termination by AzurRx for convenience with advance
notice, and termination upon a party’s insolvency or
bankruptcy. After expiration of the royalty term, AzurRx shall have
a non-exclusive, fully-paid, perpetual, royalty-free right and
irrevocable license with respect to any Product in any country
within the Territory.
In certain circumstances set forth in the License Agreement, in the
event that First Wave seeks to outlicense, sell or otherwise grant
to a third party rights relating to its proprietary formulations of
niclosamide (or any products containing niclosamide) for use
outside the ICI-AC and the COVID field, then First Wave must
provide the Company written notice and engage in good faith
negotiations with the Company for a period of time to try to reach
agreement on the terms of an acquisition of First Wave by the
Company. In the event that First Wave and the Company fail to reach
an agreement, then First Wave shall be free to negotiate a
transaction, and the right of first refusal shall be of no further
force or effect.
The License Agreement also contains customary representations,
warranties and covenants by both parties, as well as customary
provisions relating to indemnification, confidentiality and other
matters.
A copy of the License Agreement will be filed as an exhibit in an
amendment to this Current Report on Form 8-K or in a subsequent
periodic report to be filed under the Securities Exchange Act of
1934, as amended (the “Exchange Act”).
Registered
Direct Offering and Concurrent Private Placement
On December 31, 2020, the Company entered into a securities
purchase agreement (the “Purchase Agreement”) with a
single institutional investor, pursuant to which the Company agreed
to sell in a registered direct offering (the “Registered
Direct Offering”) 5,333.3333 shares of Series C 9.00%
Convertible Junior Preferred Stock, par value $0.0001 per share
(the “Series C Preferred Stock”), at a price of $0.75
per share, initially convertible into an aggregate of 5,333,334
shares of Common Stock, which is equivalent to the Issuable Maximum
(as defined below), at an initial stated value of $750.00 per share
and a conversion price of $0.75 per share.
The investor is anticipated to convert all of its Series C
Preferred Stock issued in the Registered Direct Offering, effective
immediately upon the closing. Upon such conversion, in lieu of the
issuance of shares of Common Stock, the Certificate of Designations
of the Series C Preferred Stock (the “Series C Certificate of
Designations”) provides for the issuance of pre-funded
warrants (the “Pre-funded Warrants”) to purchase Common
Stock, with an exercise price of $0.001 per share and no expiration
term, if necessary to comply with the Beneficial Ownership
Limitation contained therein (as defined and further described
below). Accordingly, the investor is expected to receive upon the
closing of the Registered Direct Offering an aggregate of 3,400,000
shares of Common Stock and Pre-funded Warrants to purchase up to
1,933,334 shares of Common Stock.
Concurrently with the sale of the Series C Preferred Stock in the
Registered Direct Offering, in a private placement offering
pursuant to the Purchase Agreement (the “Private
Placement” and, together with the Registered Direct Offering,
the “Offerings”), the Company also agreed to sell to
the investor an additional 5,333.3333 shares of Series C Preferred
Stock at the same price as the Series C Preferred Stock offered in
the Registered Direct Offering, which share are convertible into an
aggregate of 5,333,334 shares of the Company’s Common Stock,
together with warrants (the “Private Placement
Warrants”) to purchase up to an aggregate of 10,666,668
shares of Common Stock, with an exercise price of $0.80 per share
and an expiration term of five and one-half years from the date of
issuance.
The aggregate gross proceeds from the Offerings, excluding the net
proceeds, if any, from the exercise of the Private Placement
Warrants will be approximately $8.0 million, and the closing is
expected to occur on January 5, 2021 (the “Closing
Date”).
The net proceeds to the Company from the Offerings, after deducting
the placement agent’s fees and expenses and estimated
offering expenses, are expected to be approximately $6.8 million.
The Company intends to use the net proceeds to fund the payment of
cash consideration to First Wave under the License Agreement, and
for other general corporate purposes.
Pursuant to the Purchase Agreement, the Company must hold a meeting
of its stockholders not later than March 31, 2021 (the
“Meeting Deadline”) to seek such approval as may be
required from the stockholders of the Company (the
“Stockholder Approval”), in accordance with applicable
law, the applicable rules and regulations of the Nasdaq Stock
Market, the Company’s certificate of incorporation and bylaws
and the General Corporate Law of the State of Delaware with respect
to the issuance of shares of Common Stock upon conversion or
exercise of the Series C Preferred Stock and the Warrants sold in
the Private Placement and the related transactions described
herein, including (x) an increase in the number of authorized
shares of Common Stock above 150,000,000 and (y) the potential
issuance of shares of Common Stock in excess of the Issuable
Maximum.
The Series C Preferred Stock issuable in the Registered Direct
Offering, together with any Common Stock and/or Pre-Funded Warrants
issuable upon conversion thereof and any Common Stock issuable upon
exercise of the Pre-funded Warrants, are being issued pursuant to
an effective registration statement on Form S-3 (File
No. 333-231954) that the Company filed with the Securities and
Exchange Commission (“SEC”) on June 21, 2019 and that
was declared effective on June 25, 2019 , and a base prospectus
thereunder. The Company will file a prospectus supplement with the
SEC in connection with the sale of such securities.
The Series C Preferred Stock being sold in the Private Placement
and the Private Placement Warrants, together with any Common Stock
and/or Pre-Funded Warrants issuable upon conversion or exercise
thereof, as the case may be, are being sold and issued without
registration under the Securities Act of 1933 (the
“Securities Act”) in reliance on the exemptions
provided by Section 4(a)(2) of the Securities Act as transactions
not involving a public offering and Rule 506 promulgated under the
Securities Act as sales to accredited investors, and in reliance on
similar exemptions under applicable state laws.
In the Purchase Agreement, the Company has agreed not to (i) issue,
enter into any agreement to issue or announce the issuance or
proposed issuance of, any shares of Common Stock or any securities
convertible into or exercisable or exchangeable for shares of
Common Stock or (ii) file any registration statement or any
amendment or supplement thereto, in each case other than as
contemplated pursuant to the Registration Rights Agreement (as
defined below) for a period ending at the later of (a) 30 days
after the resale registration statement has been declared effective
by the SEC or (b) the day of the Stockholder Approval. In addition,
the Company has agreed not to effect or enter into an agreement to
effect any issuance of Common Stock or any securities convertible
into or exercisable or exchangeable for shares of Common Stock
involving a variable rate transaction (as defined in the Purchase
Agreement) until the one-year anniversary of the date of the
Purchase Agreement, subject to certain exceptions.
The Purchase Agreement contains customary representations,
warranties and agreements by the Company, customary conditions to
closing, indemnification obligations of the Company and the
purchaser, including for liabilities arising under the Securities
Act, other obligations of the parties and termination provisions.
The representations, warranties and covenants contained in the
Purchase Agreement were made only for the purposes of such
agreement and as of specific dates, were solely for the benefit of
the parties to such agreement, and may be subject to limitations
agreed upon by the contracting parties.
The form of the Purchase Agreement, including the form of the
Series C Certificate of Designations, is filed as Exhibit 10.1 to
this Current Report on Form 8-K. The summaries of the terms of
these documents herein are subject to, and qualified in their
entirety by, such documents, which are incorporated herein by
reference.
Placement Agent Compensation
H.C. Wainwright & Co., LLC (“Wainwright”) acted as
exclusive placement agent for the Offerings pursuant to an
engagement letter dated as of October 13, 2020 (the
“Engagement Letter”). The Company has agreed to pay
Wainwright a cash fee equal to 8.0% and a management fee equal to
1.0% of the aggregate gross proceeds received by the Company in the
Offerings, or approximately $0.7 million. Pursuant to the
Engagement Letter, the Company also agreed to issue to Wainwright
or its designees warrants (the “Wainwright Warrants”)
exercisable for up to 746,667 shares of Common stock, which is
equal to 7.0% of the amount determined by dividing the gross
proceeds of the Offerings by the offering price per share of Common
Stock, or $0.75. The Wainwright Warrants will have substantially
the same terms as the Private Placement Warrants, except with an
exercise price of $0.9375, or 125% of the per share price of the
Series C Preferred Stock issued in the Offerings. The Wainwright
Warrants will not be exercisable until the Stockholder Approval is
obtained. The Wainwright Warrants and the shares issuable upon
exercise of the Wainwright Warrants will be issued in reliance on
the exemption from registration provided by Section 4(a)(2) of the
Securities Act as transactions not involving a public offering and
in reliance on similar exemptions under state laws. The Company
will also reimburse Wainwright $35,000 for non-accountable
expenses, up to $125,000 for legal fees and expenses and other
out-of-pocket expenses and $12,900 for clearing
fees.
Pursuant to a separate advisory engagement letter with Wainwright,
also dated as of October 13, 2020, as amended, the Company has
previously paid Wainwright a $150,000 cash retainer fee for
services related to exploring certain potential acquisition
transactions with First Wave, and the Company became obligated to
pay an additional $150,000 fee upon entry into the License
Agreement, in each case as advisory fees.
Terms of Series C Preferred Stock
Under the Series C Certificate of Designations, each share of
Series C Preferred Stock will be convertible, subject to the
Beneficial Ownership Limitation and the Issuable Maximum, at either
the holder’s option or at the Company’s option at any
time, into Common Stock at a conversion rate equal to the quotient
of (i) the $750 stated value (the “Series C Stated
Value”) plus all accrued and accumulated and unpaid dividends
on such share of Series C Preferred Stock divided by (ii) the
initial conversion price of $0.75, subject to specified adjustments
for stock splits, cash or stock dividends, reorganizations,
reclassifications other similar events as set forth in
the Series C Certificate of Designations.
The Series C Preferred Stock contains limitations that prevent the
holder thereof from acquiring shares of Common Stock upon
conversion that would result in the number of shares beneficially
owned by such holder and its affiliates exceeding 9.99% of the
total number of shares of Common Stock outstanding immediately
after giving effect to the conversion (the “Beneficial
Ownership Limitation”). The Series C Certificate of
Designations provides for the issuance of Pre-funded Warrants to
the extent necessary to comply with the Beneficial Ownership
Limitation.
Until the
Company has obtained the Stockholder Approval, the Company may not
issue, upon conversion of the Series C Preferred Stock and certain
related transactions, a number of shares of Common Stock which
would exceed 6,186,966 shares of Common Stock in the aggregate,
which amount is equal to 19.99% of the shares of Common Stock
issued and outstanding on December 31, 2020, subject to adjustment
for forward and reverse stock splits, recapitalizations and the
like (the “Issuable Maximum”). The Issuable Maximum
shall be applied collectively, when any conversions of Series C
Preferred Stock are aggregated together with all shares of Common
Stock issuable upon conversion or exchange of any securities issued
in certain related transactions to the Offerings, including (i) any
shares of preferred stock issuable to First Wave as consideration
for the License Agreement, (ii) any Wainwright Warrants and (iii)
any securities issuable to holders of the Exchange Rights (as
defined and further described below) as a result of the Offerings.
Any conversions of Series C Preferred Stock will be processed in
the order in which the Company receives such conversion request
from the holders of Series C Preferred Stock, and not on a pro rata
basis.
Each holder of shares of Series C Preferred Stock, subject to the
preference and priority to the holders of our Series B Convertible
Preferred Stock, is entitled to receive dividends, commencing from
the date of issuance of the Series C Preferred Stock. Such
dividends may be paid only when, as and if declared by the
Company’s board of directors, out of assets legally available
therefore, quarterly in arrears on the last day of March, June,
September and December in each year, commencing on the date of
issuance, at the dividend rate of 9.0% per year. Such dividends are
cumulative and continue to accrue on a daily basis whether or not
declared and whether or not the Company has assets legally
available therefore.
Under the Series C Certificate of Designations, each share of
Series C Preferred Stock carries a liquidation preference equal to
the Series C Stated Value plus accrued and unpaid dividends thereon
and any other fees or liquidated damages then due and owing
thereon.
The holders of the Series C Preferred Stock have no voting rights.
We may not take the following actions without the prior consent of
the holders of at least a majority of the Series C Preferred Stock
then outstanding: (a) alter or change adversely the powers,
preferences or rights given to the Series C Preferred Stock or
alter or amend the Series C Certificate of Designations, (b)
authorize or create any class of stock ranking as to dividends,
redemption or distribution of assets upon a Liquidation (as defined
in the Series C Certificate of Designations) senior to, or
otherwise pari passu
with, the Series C Preferred Stock,
(c) amend our certificate of incorporation or other charter
documents in any manner that adversely affects any rights of the
holders of the Series C Preferred Stock, (d) increase the number of
authorized shares of Series C Preferred Stock, or (e) enter into
any agreement with respect to any of the
foregoing.
The foregoing summary of the terms of the Series C Certificate of
Designations is subject to, and qualified in their entirety by, the
form of such document, which is incorporated herein by
reference.
Terms of the Pre-Funded Warrants
The Pre-funded Warrants are exercisable at a price of $0.001 per
share and are not subject to expiration. The Company is prohibited
from effecting an exercise of any Pre-funded Warrants to the extent
that such exercise would result in the number of shares of Common
Stock beneficially owned by such holder and its affiliates
exceeding 4.99% of the total number of shares of Common Stock
outstanding immediately after giving effect to the exercise, which
percentage may be increased or decreased at the holder’s
election not to exceed 9.99%.
The form of the Pre-funded Warrants is filed as Exhibit 4.1 to this
Current Report on Form 8-K. The foregoing summary of the terms of
the Pre-funded Warrants is subject to, and qualified in its
entirety by, the form of such document, which is incorporated
herein by reference.
Terms of Private Placement Warrants
The Private Placement Warrants are exercisable at a price of $0.80
per share, for that number of shares of Common Stock (the
“Warrant Shares”) equal to 100% of the total number of
shares of Common Stock issuable upon conversion of the shares of
Series C Preferred Stock purchased in the Offerings, or 10,666,668
shares in the aggregate. The Private Placement Warrants expire on
July 5, 2026. The holders of the Private Placement Warrants may
exercise the Private Placement Warrants on a cashless basis, solely
to the extent no resale registration statement is available at the
time of exercise. The Company is prohibited from effecting an
exercise of any Private Placement Warrants to the extent that such
exercise would result in the number of shares of Common Stock
beneficially owned by such holder and its affiliates exceeding
4.99% of the total number of shares of Common Stock outstanding
immediately after giving effect to the exercise, which percentage
may be increased or decreased at the holder’s election not to
exceed 9.99%. The Private Placement Warrants provide for a
Black-Scholes payout upon certain fundamental change transactions
relating to the Company, as specified therein.
Until the Stockholder Approval is obtained, the Company may not
issue any shares of Common Stock upon exercise of the Private
Placement Warrants.
The form of the Private Placement Warrants is filed as Exhibit 4.2
to this Current Report on Form 8-K. The foregoing summary of the
terms of the Private Placement Warrants is subject to, and
qualified in its entirety by, the form of such document, which is
incorporated herein by reference.
Registration Rights Agreement
In connection with the Offerings, the Company entered into a
registration rights agreement, dated as of December 31, 2020 (the
“Registration Rights Agreement”), with the investor
named therein, pursuant to which the Company will undertake to
file, within 30 days following the Closing Date, a registration
statement to register the shares of Common Stock issuable upon: (i)
the conversion of the Series C Preferred Stock sold in the Private
Placement, (ii) the exercise of the Private Placement Warrants and
(iii) the exercise of any Pre-funded Warrants issued upon the
conversion of the Series C Preferred Stock sold in the Private
Placement (the “Registrable Securities”); and to cause
such and to cause such registration statement to be declared
effective under the Securities Act as promptly as possible after
the filing thereof, but in any event no later than 120 days
following the Closing Date, and shall use its best efforts to keep
such registration statement continuously effective under the
Securities Act until the date that all Registrable Securities
covered by such registration statement have been sold or are
otherwise able to be sold pursuant to Rule 144. The Registration
Rights Agreement provides for liquidated damages to the extent that
the Company does not file or maintain a registration statement in
accordance with the terms thereof.
The form of the Registration Rights Agreement is filed as Exhibit
10.2 to this Current Report on Form 8-K. The foregoing summary of
the terms of this document is subject to, and qualified in its
entirety by, such document, which is incorporated herein by
reference.
Exchange Right
Under
the Certificate of Designations of the Company’s issued and
outstanding Series B Convertible Preferred Stock (the “Series
B Certificate of Designations”), each holder of the
Company’s Series B Convertible Preferred Stock, par value
$0.0001 per share (the “Series B Preferred Stock”), has
the right to exchange the stated value, plus accrued and unpaid
dividends, of the Series B Preferred Stock for shares of Series C
Preferred Stock and Private Placement Warrants on a
dollar-for-dollar basis with investors in the Offerings, in lieu of
any cash subscription payments therefor (the “Exchange
Right”).
In
connection with any exercise of any Exchange Right, under Nasdaq
Listing Rule 5635 and related guidance, prior to obtaining the
Stockholder Approval, conversions into Common Stock at the reduced
conversion price of $0.75 per share applicable to the Series C
Preferred Stock will not be permissible in excess of the Issuable
Maximum (as defined and further described above), except to the
extent such conversions do not exceed the amount previously
issuable upon conversion of the Series B Preferred Stock at the
prior conversion price of $0.77 per share, which was the applicable
conversion price at the time of the Company’s stockholder
approval for the Series B Preferred Stock obtained on September 11,
2020.
Any
issuance by the Company of Series C Preferred Stock and Private
Placement Warrants pursuant to the Exchange Right, and of the
shares of Common Stock issuable upon the conversion or exercise
thereof (or any Pre-funded Warrants, as applicable), are not
anticipated to be registered under the Securities Act and are
anticipated to be made pursuant to the exemptions provided by
Section 3(a)(9) under the Securities Act, or another applicable
exemption therefrom. Accordingly, any such securities are not
anticipated to be freely transferable without restriction, pursuant
to the exemption provided by Rule 144 under the Securities Act,
except following the expiration of an applicable holding period, as
determined in accordance with Rule 144(d), which for non-affiliates
of the Company is generally six months from the date of the
original investment.
Item 3.02 Unregistered Sales of Equity
Securities.
The
information set forth above in Item 1.01 is hereby incorporated by
reference into this Item 3.02. The issuance of the Series
C Preferred Stock, the
Warrants, and the Placement Agent Warrants and any related shares
of Common Stock was made pursuant to Section 4(a)(2) of the
Securities Act, and the rules promulgated thereunder, to accredited
investors.
Item 7.01. Regulation FD Disclosure
Press Releases
On
January 4, 2020, the Company issued press releases announcing the
License Agreement and the Offerings. Copies of the press releases
are furnished as Exhibits 99.1 and 99.2.
Conference Call Instructions
On
Monday, January 4, 2021 at 8:30 a.m. Eastern Time, the
Company’s management team will host a conference call and
live audio webcast relating to the License Agreement described
herein.
Interested
participants and investors may access this conference call by
dialing 877-407-0784 (domestic) or 201-689-8560 (international)
fifteen minutes before the conference call begins and reference the
conference passcode 13714501. The
live conference call can be accessed via audio webcast at
http://public.viavid.com/index.php?id=142841.
A
replay of the call will be available on the “Investor
Relations” section of the Company’s website
(www.azurrx.com).
The
information in this Item 7.01 of this Current Report on Form 8-K,
including the information set forth in Exhibits 99.1 and 99.2, is
being furnished and shall not be deemed “filed” for
purposes of Section 18 of the Exchange Act, nor shall such
information or Exhibits 99.1 or 99.2 be deemed incorporated by
reference in any filing under the Securities Act or the Exchange
Act, except as shall be expressly set forth by specific reference
in such a filing.
Item 8.01. Other Events
Corporate Presentation
On
December 31, 2020, the Company posted on its corporate website an
updated copy of its corporate presentation, a copy of which is
filed as Exhibit 99.3 to this Current Report on Form
8-K.
Item 9.01. Financial Statements and Exhibits.
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(d)
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Exhibits.
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Exhibit No.
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Description
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Form of
Pre-Funded Warrant
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Form of
Private Placement Warrant
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Form of
Purchase Agreement
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Form of
Registration Rights Agreement
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Press
Release dated January 4, 2021
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Press
Release dated January 4, 2021
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Corporate
Presentation
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IMPORTANT ADDITIONAL INFORMATION WILL BE FILED WITH THE
SEC
The
Company plans to file with the Securities and Exchange Commission
(the “SEC”) and mail to its stockholders a proxy
statement in connection with the Stockholder Approval and the
transactions described herein. The proxy statement will contain
important information about the Company, the Offerings, the
Stockholder Approval, and related matters. Investors and other
security holders are urged to read the proxy statement carefully
when it is available. Investors and other security holders will be
able to obtain free copies of the proxy statement and other
documents filed with the SEC by the Company through the SEC’s
website at www.sec.gov. In addition, Investors and other
security holders will be able to obtain free copies of the proxy
statement from the Company by contacting the Chief Financial
Officer at (646) 699-7855.
The
Company and its directors and executive officers may be deemed to
be participants in the solicitation of proxies with respect to the
Stockholder Approval. Additional information regarding interests of
such participants is included in the Company’s definitive
proxy statement for its 2020 Annual Meeting of Stockholders, which
was filed with the SEC on August 11, 2020.
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf
by the undersigned hereunto duly authorized.
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AzurRx BioPharma, Inc.
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Date:
January 4, 2021
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By:
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/s/ James
Sapirstein
|
|
Name: James Sapirstein
|
|
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Title: President and Chief Executive Officer
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Exhibit
4.1
[NEITHER
THIS SECURITY NOR THE SECURITIES FOR WHICH THIS SECURITY IS
EXERCISABLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE
COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE
UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE “SECURITIES ACT”), AND,
ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR
PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT
SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND
IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS. THIS SECURITY
AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS SECURITY MAY BE
PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN
SECURED BY SUCH SECURITIES.]
PREFUNDED COMMON STOCK PURCHASE
WARRANT 1
AZURRX BIOPHARMA, INC.
|
Warrant Shares:
_______
|
Initial Exercise
Date: ____, 2020
|
THIS
PREFUNDED COMMON STOCK PURCHASE WARRANT (the “Warrant”) certifies that,
for value received, _____________ or its assigns (the
“Holder”) is entitled,
upon the terms and subject to the limitations on exercise and the
conditions hereinafter set forth, at any time on or after the date
hereof (the “Initial
Exercise Date”) and until this Warrant is exercised in
full (the “Termination Date”) but
not thereafter, to subscribe for and purchase from AzurRx
Biopharma, Inc., a Delaware corporation (the “Company”), up to ______
shares (as subject to adjustment hereunder, the “Warrant Shares”) of
Common Stock. The purchase price of one share of Common Stock under
this Warrant shall be equal to the Exercise Price, as defined in
Section 2(b).
Section
1. Definitions.
Capitalized terms used and not otherwise defined herein shall have
the meanings set forth in that certain Securities Purchase
Agreement (the “Purchase Agreement”),
dated _____, 2020, among the Company and the purchasers signatory
thereto.
Section
2. Exercise.
a) Exercise
of Warrant. Exercise of the purchase rights represented by
this Warrant may be made, in whole or in part, at any time or times
on or after the Initial Exercise Date and on or before the
Termination Date by delivery to the Company of a duly executed PDF
copy submitted by e-mail (or e-mail attachment) of the Notice of
Exercise in the form attached hereto as Annex A (the
“Notice of
Exercise”). Within the earlier of (i) two (2) Trading
Days and (ii) the number of Trading Days comprising the Standard
Settlement Period (as defined in Section 2(d)(i) herein) following
the date of exercise as aforesaid, the Holder shall deliver the
aggregate Exercise Price for the shares specified in the applicable
Notice of Exercise by wire transfer or cashier’s check drawn
on a United States bank unless the cashless exercise procedure
specified in Section 2(c) below is specified in the applicable
Notice of Exercise. No
ink-original Notice of Exercise shall be required, nor shall any
medallion guarantee (or other type of guarantee or notarization) of
any Notice of Exercise be required. Notwithstanding anything herein
to the contrary, the Holder shall not be required to physically
surrender this Warrant to the Company until the Holder has
purchased all of the Warrant Shares available hereunder and the
Warrant has been exercised in full, in which case, the Holder shall
surrender this Warrant to the Company for cancellation within three
(3) Trading Days of the date on which the final Notice of Exercise
is delivered to the Company. Partial exercises of this Warrant
resulting in purchases of a portion of the total number of Warrant
Shares available hereunder shall have the effect of lowering the
outstanding number of Warrant Shares purchasable hereunder in an
amount equal to the applicable number of Warrant Shares purchased.
The Holder and the Company shall maintain records showing the
number of Warrant Shares purchased and the date of such purchases.
The Company shall deliver any objection to any Notice of Exercise
within one (1) Trading Day of receipt of such notice. The Holder and any assignee, by acceptance of
this Warrant, acknowledge and agree that, by reason of the
provisions of this paragraph, following the purchase of a portion
of the Warrant Shares hereunder, the number of Warrant Shares
available for purchase hereunder at any given time may be less than
the amount stated on the face hereof.
1
Bracketed language to reflect registered or unregistered prefunded
warrant as applicable.
-1-
b) Exercise Price. The aggregate
exercise price of this Warrant, except for a nominal exercise price
of $0.001 per Warrant Share, was pre-funded to the Company on or
prior to the Initial Exercise Date and, consequently, no additional
consideration (other than the nominal exercise price of $0.001 per
Warrant Share) shall be required to be paid by the Holder to any
Person to effect any exercise of this Warrant. The Holder shall not
be entitled to the return or refund of all, or any portion, of such
pre-paid aggregate exercise price under any circumstance or for any
reason whatsoever, including in the event this Warrant shall not
have been exercised prior to the Termination Date. The remaining
unpaid exercise price per share of Common Stock under this Warrant
shall be $0.001, subject to adjustment hereunder (the
“Exercise
Price”).
c) Cashless Exercise. This Warrant
may also be exercised, in whole or in part, at such time by means
of a “cashless exercise” in which the Holder shall be
entitled to receive a number of Warrant Shares equal to the
quotient obtained by dividing [(A-B) (X)] by (A),
where:
(A) =
as applicable: (i) the VWAP on the Trading Day immediately
preceding the date of the applicable Notice of Exercise if such
Notice of Exercise is (1) both executed and delivered pursuant to
Section 2(a) hereof on a day that is not a Trading Day or (2) both
executed and delivered pursuant to Section 2(a) hereof on a Trading
Day prior to the opening of “regular trading hours” (as
defined in Rule 600(b)(68) of Regulation NMS promulgated under the
federal securities laws) on such Trading Day, (ii) at the option of
the Holder, either (y) the VWAP on the Trading Day immediately
preceding the date of the applicable Notice of Exercise or (z) the
Bid Price of the Common Stock on the principal Trading Market as
reported by Bloomberg L.P. as of the time of the Holder’s
execution of the applicable Notice of Exercise if such Notice of
Exercise is executed during “regular trading hours” on
a Trading Day and is delivered within two (2) hours thereafter
(including until two (2) hours after the close of “regular
trading hours” on a Trading Day) pursuant to Section 2(a)
hereof or (iii) the VWAP on the date of the applicable Notice of
Exercise if the date of such Notice of Exercise is a Trading Day
and such Notice of Exercise is both executed and delivered pursuant
to Section 2(a) hereof after the close of “regular trading
hours” on such Trading Day;
(B) =
the Exercise Price of this Warrant, as adjusted hereunder;
and
(X) =
the number of Warrant Shares that would be issuable upon exercise
of this Warrant in accordance with the terms of this Warrant if
such exercise were by means of a cash exercise rather than a
cashless exercise.
If Warrant Shares are issued in such a cashless exercise, the
parties acknowledge and agree that in accordance with Section
3(a)(9) of the Securities Act, the Warrant Shares shall take on the
[registered] characteristics of the Warrants being exercised[, and
the holding period of the Warrant Shares being issued may be tacked
on to the holding period of this Warrant]. The Company
agrees not to take any position contrary to this Section
2(c).
“Bid Price” means, for any
date, the price determined by the first of the following clauses
that applies: (a) if the Common Stock is then listed or quoted on a
Trading Market, the bid price of the Common Stock for the time in
question (or the nearest preceding date) on the Trading Market on
which the Common Stock is then listed or quoted as reported by
Bloomberg L.P. (based on a Trading Day from 9:30 a.m. (New York
City time) to 4:02 p.m. (New York City time)), (b) if OTCQB
or OTCQX is not a Trading Market, the volume weighted average price
of the Common Stock for such date (or the nearest preceding date)
on OTCQB or OTCQX as applicable, (c) if the Common Stock is not
then listed or quoted for trading on OTCQB or OTCQX and if prices
for the Common Stock are then reported on The Pink Open Market (or
a similar organization or agency succeeding to its functions of
reporting prices), the most recent bid price per share of the
Common Stock so reported, or (d) in all other cases, the fair
market value of a share of Common Stock as determined by an
independent appraiser selected in good faith by the Holders of a
majority in interest of the Warrants then outstanding and
reasonably acceptable to the Company, the fees and expenses of
which shall be paid by the Company.
-2-
“VWAP” means, for any
date, the price determined by the first of the following clauses
that applies: (a) if the Common Stock is then listed or quoted on a
Trading Market, the daily volume weighted average price of the
Common Stock for such date (or the nearest preceding date) on the
Trading Market on which the Common Stock is then listed or quoted
as reported by Bloomberg L.P. (based on a Trading Day from 9:30
a.m. (New York City time) to 4:02 p.m. (New York City time)),
(b) if OTCQB or OTCQX is not a Trading Market, the volume
weighted average price of the Common Stock for such date (or the
nearest preceding date) on OTCQB or OTCQX as applicable, (c) if the
Common Stock is not then listed or quoted for trading on OTCQB or
OTCQX and if prices for the Common Stock are then reported on The
Pink Open Market (or a similar organization or agency succeeding to
its functions of reporting prices), the most recent bid price per
share of the Common Stock so reported, or (d) in all other
cases, the fair market value of a share of Common Stock as
determined by an independent appraiser selected in good faith by
the Holders of a majority in interest of the Warrants then
outstanding and reasonably acceptable to the Company, the fees and
expenses of which shall be paid by the Company.
Notwithstanding
anything herein to the contrary, on the Termination Date, this
Warrant shall be automatically exercised via cashless exercise
pursuant to this Section 2(c).
d)
Mechanics of
Exercise.
i. Delivery of Warrant Shares Upon
Exercise. The Company shall cause the Warrant Shares
purchased hereunder to be transmitted by the Transfer Agent to the
Holder by crediting the account of the Holder’s or its
designee’s balance account with The Depository Trust Company
through its Deposit or Withdrawal at Custodian system
(“DWAC”) if the Company is
then a participant in such system and either (A) there is an
effective registration statement permitting the issuance of the
Warrant Shares to or resale of the Warrant Shares by the Holder or
(B) [this Warrant is being exercised via] [the Warrant Shares are
eligible for resale by the Holder without volume or manner-of-sale
limitations pursuant to Rule 144 (assuming] cashless exercise [of
the Warrants)], and otherwise by physical delivery of a
certificate, registered in the Company’s share register in
the name of the Holder or its designee, for the number of Warrant
Shares to which the Holder is entitled pursuant to such exercise to
the address specified by the Holder in the Notice of Exercise by
the date that is the earliest of (i) two (2) Trading Days after the
delivery to the Company of the Notice of Exercise and (ii) one (1)
Trading Day after delivery of the aggregate Exercise Price to the
Company (such date, the “Warrant Share Delivery
Date”). Upon delivery of the Notice of Exercise, the
Holder shall be deemed for all corporate purposes to have become
the holder of record of the Warrant Shares with respect to which
this Warrant has been exercised, irrespective of the date of
delivery of the Warrant Shares, provided that payment of the
aggregate Exercise Price (other than in the case of a cashless
exercise) is received within two (2) Trading Days following
delivery of the Notice of Exercise. If the Company fails for any
reason to deliver to the Holder the Warrant Shares subject to a
Notice of Exercise by the Warrant Share Delivery Date, the Company
shall pay to the Holder, in cash, as liquidated damages and not as
a penalty, for each $1,000 of Warrant Shares subject to such
exercise (based on the VWAP of the Common Stock on the date of the
applicable Notice of Exercise), $10 per Trading Day (increasing to
$20 per Trading Day on the fifth Trading Day after such liquidated
damages begin to accrue) for each Trading Day after such Warrant
Share Delivery Date until such Warrant Shares are delivered or
Holder rescinds such exercise. The Company agrees to maintain a
transfer agent that is a participant in the FAST program so long as
this Warrant remains outstanding and exercisable.
ii. Delivery of New Warrants Upon
Exercise. If this Warrant shall have been exercised in part,
the Company shall, at the request of a Holder and upon surrender of
this Warrant certificate, at the time of delivery of the Warrant
Shares, deliver to the Holder a new Warrant evidencing the rights
of the Holder to purchase the unpurchased Warrant Shares called for
by this Warrant, which new Warrant shall in all other respects be
identical with this Warrant.
-3-
iii. Rescission
Rights. If the Company fails to cause the Transfer Agent to
transmit to the Holder the Warrant Shares pursuant to Section
2(d)(i) by the Warrant Share Delivery Date, then the Holder will
have the right to rescind such exercise.
iv. Compensation for Buy-In on Failure to
Timely Deliver Warrant Shares Upon Exercise. In addition to
any other rights available to the Holder, if the Company fails to
cause the Transfer Agent to transmit to the Holder the Warrant
Shares in accordance with the provisions of Section 2(d)(i) above
pursuant to an exercise on or before the Warrant Share Delivery
Date, and if after such date the Holder is required by its broker
to purchase (in an open market transaction or otherwise) or the
Holder’s brokerage firm otherwise purchases, shares of Common
Stock to deliver in satisfaction of a sale by the Holder of the
Warrant Shares which the Holder anticipated receiving upon such
exercise (a “Buy-In”), then the
Company shall (A) pay in cash to the Holder the amount, if any, by
which (x) the Holder’s total purchase price (including
brokerage commissions, if any) for the shares of Common Stock so
purchased exceeds (y) the amount obtained by multiplying (1) the
number of Warrant Shares that the Company was required to deliver
to the Holder in connection with the exercise at issue times (2)
the price at which the sell order giving rise to such purchase
obligation was executed, and (B) at the option of the Holder,
either reinstate the portion of the Warrant and equivalent number
of Warrant Shares for which such exercise was not honored (in which
case such exercise shall be deemed rescinded) or deliver to the
Holder the number of shares of Common Stock that would have been
issued had the Company timely complied with its exercise and
delivery obligations hereunder. For example, if the Holder
purchases Common Stock having a total purchase price of $11,000 to
cover a Buy-In with respect to an attempted exercise of shares of
Common Stock with an aggregate sale price giving rise to such
purchase obligation of $10,000, under clause (A) of the immediately
preceding sentence the Company shall be required to pay the Holder
$1,000. The Holder shall provide the Company written notice
indicating the amounts payable to the Holder in respect of the
Buy-In and, upon request of the Company, evidence of the amount of
such loss. Nothing herein shall limit a Holder’s right to
pursue any other remedies available to it hereunder, at law or in
equity including, without limitation, a decree of specific
performance and/or injunctive relief with respect to the
Company’s failure to timely deliver shares of Common Stock
upon exercise of the Warrant as required pursuant to the terms
hereof.
v. No Fractional Shares or Scrip.
No fractional shares or scrip representing fractional shares shall
be issued upon the exercise of this Warrant. As to any fraction of
a share which the Holder would otherwise be entitled to purchase
upon such exercise, the Company shall, at its election, either pay
a cash adjustment in respect of such final fraction in an amount
equal to such fraction multiplied by the Exercise Price or round up
to the next whole share.
vi. Charges, Taxes and Expenses.
Issuance of Warrant Shares shall be made without charge to the
Holder for any issue or transfer tax or other incidental expense in
respect of the issuance of such Warrant Shares, all of which taxes
and expenses shall be paid by the Company, and such Warrant Shares
shall be issued in the name of the Holder or in such name or names
as may be directed by the Holder; provided, however, that, in the event
that Warrant Shares are to be issued in a name other than the name
of the Holder, this Warrant when surrendered for exercise shall be
accompanied by the assignment form attached hereto as Annex B (the
“Assignment
Form”) duly executed by the Holder, and the Company
may require, as a condition thereto, the payment of a sum
sufficient to reimburse it for any transfer tax incidental thereto.
The Company shall pay all Transfer Agent fees required for same-day
processing of any Notice of Exercise and all fees to the Depository
Trust Company (or another established clearing corporation
performing similar functions) required for same-day electronic
delivery of the Warrant Shares.
vii. Closing
of Books. The Company will not close its stockholder books
or records in any manner which prevents the timely exercise of this
Warrant, pursuant to the terms hereof.
-4-
e) Beneficial
Ownership Limitations. The Company shall not effect any
exercise of this Warrant, and a Holder shall not have the right to
exercise any portion of this Warrant, pursuant to Section 2 or
otherwise, to the extent that after giving effect to such issuance
after exercise as set forth on the applicable Notice of Exercise,
the Holder (together with the Holder’s Affiliates, and any
other Persons acting as a group together with the Holder or any of
the Holder’s Affiliates (such Persons, “Attribution Parties”)),
would beneficially own in excess of the Beneficial Ownership
Limitation (as defined below). For purposes of the foregoing
sentence, the number of shares of Common Stock beneficially owned
by the Holder and its Affiliates and Attribution Parties shall
include the number of shares of Common Stock issuable upon exercise
of this Warrant with respect to which such determination is being
made, but shall exclude the number of shares of Common Stock which
would be issuable upon (i) exercise of the remaining, nonexercised
portion of this Warrant beneficially owned by the Holder or any of
its Affiliates or Attribution Parties and (ii) exercise or
conversion of the unexercised or nonconverted portion of any other
securities of the Company (including, without limitation, any other
Common Stock Equivalents) subject to a limitation on conversion or
exercise analogous to the limitation contained herein beneficially
owned by the Holder or any of its Affiliates or Attribution
Parties. Except as set forth in the preceding sentence, for
purposes of this Section 2(e), beneficial ownership shall be
calculated in accordance with Section 13(d) of the Exchange Act and
the rules and regulations promulgated thereunder, it being
acknowledged by the Holder that the Company is not representing to
the Holder that such calculation is in compliance with Section
13(d) of the Exchange Act and the Holder is solely responsible for
any schedules required to be filed in accordance therewith. To the
extent that the limitation contained in this Section 2(e) applies,
the determination of whether this Warrant is exercisable (in
relation to other securities owned by the Holder together with any
Affiliates and Attribution Parties) and of which portion of this
Warrant is exercisable shall be in the sole discretion of the
Holder, and the submission of a Notice of Exercise shall be deemed
to be the Holder’s determination of whether this Warrant is
exercisable (in relation to other securities owned by the Holder
together with any Affiliates and Attribution Parties) and of which
portion of this Warrant is exercisable, in each case subject to the
Beneficial Ownership Limitation, and the Company shall have no
obligation to verify or confirm the accuracy of such determination.
In addition, a determination as to any group status as contemplated
above shall be determined in accordance with Section 13(d) of the
Exchange Act and the rules and regulations promulgated thereunder.
For purposes of this Section 2(e), in determining the number of
outstanding shares of Common Stock, a Holder may rely on the number
of outstanding shares of Common Stock as reflected in (A) the
Company’s most recent periodic or annual report filed with
the Commission, as the case may be, (B) a more recent public
announcement by the Company or (C) a more recent written notice by
the Company or the Transfer Agent setting forth the number of
shares of Common Stock outstanding. Upon the written or oral
request of a Holder, the Company shall within one Trading Day
confirm orally and in writing to the Holder the number of shares of
Common Stock then outstanding. In any case, the number of
outstanding shares of Common Stock shall be determined after giving
effect to the conversion or exercise of securities of the Company,
including this Warrant, by the Holder or its Affiliates or
Attribution Parties since the date as of which such number of
outstanding shares of Common Stock was reported. The
“Beneficial
Ownership Limitation” shall be [4.99%/9.99%] of the
number of shares of the Common Stock outstanding immediately after
giving effect to the issuance of shares of Common Stock issuable
upon exercise of this Warrant. The Holder, upon notice to the
Company, may increase or decrease the Beneficial Ownership
Limitation provisions of this Section 2(e), provided that the
Beneficial Ownership Limitation in no event exceeds 9.99% of the
number of shares of the Common Stock outstanding immediately after
giving effect to the issuance of shares of Common Stock upon
exercise of this Warrant held by the Holder and the provisions of
this Section 2(e) shall continue to apply. Any increase in the
Beneficial Ownership Limitation will not be effective until the
61st day
after such notice is delivered to the Company. The provisions of
this paragraph shall be construed and implemented in a manner
otherwise than in strict conformity with the terms of this Section
2(e) to correct this paragraph (or any portion hereof) which may be
defective or inconsistent with the intended Beneficial Ownership
Limitation herein contained or to make changes or supplements
necessary or desirable to properly give effect to such limitation.
The limitations contained in this paragraph shall apply to a
successor holder of this Warrant.
-5-
Section
3. Certain
Adjustments.
a) Stock Dividends and Splits. If
the Company, at any time while this Warrant is outstanding: (i)
pays a stock dividend or otherwise makes a distribution or
distributions on shares of its Common Stock or any other equity or
equity equivalent securities payable in shares of Common Stock
(which, for avoidance of doubt, shall not include any shares of
Common Stock issued by the Company upon exercise of this Warrant),
(ii) subdivides outstanding shares of Common Stock into a larger
number of shares, (iii) combines (including by way of reverse stock
split) outstanding shares of Common Stock into a smaller number of
shares, or (iv) issues by reclassification of shares of the Common
Stock any shares of capital stock of the Company, then in each case
the Exercise Price shall be multiplied by a fraction of which the
numerator shall be the number of shares of Common Stock (excluding
treasury shares, if any) outstanding immediately before such event
and of which the denominator shall be the number of shares of
Common Stock outstanding immediately after such event, and the
number of shares issuable upon exercise of this Warrant shall be
proportionately adjusted such that the aggregate Exercise Price of
this Warrant shall remain unchanged. Any adjustment made pursuant
to this Section 3(a) shall become effective immediately after the
record date for the determination of stockholders entitled to
receive such dividend or distribution and shall become effective
immediately after the effective date in the case of a subdivision,
combination or re-classification.
b) [RESERVED]
c) Subsequent Rights Offerings.
In addition to any adjustments
pursuant to Section 3(a) above, if at any time the Company grants,
issues or sells any Common Stock Equivalents or rights to purchase
stock, warrants, securities or other property pro rata to the
record holders of any class of shares of Common Stock (the
“Purchase
Rights”), then the Holder
will be entitled to acquire, upon the terms applicable to such
Purchase Rights, the aggregate Purchase Rights which the Holder
could have acquired if the Holder had held the number of shares of
Common Stock acquirable upon complete exercise of this Warrant
(without regard to any limitations on exercise hereof, including
without limitation, the Beneficial Ownership Limitation)
immediately before the date on which a record is taken for the
grant, issuance or sale of such Purchase Rights, or, if no such
record is taken, the date as of which the record holders of shares
of Common Stock are to be determined for the grant, issue or sale
of such Purchase Rights (provided,
however,
that, to the extent that the Holder’s right to participate in
any such Purchase Right would result in the Holder exceeding the
Beneficial Ownership Limitation, then the Holder shall not be
entitled to participate in such Purchase Right to such extent (or
beneficial ownership of such shares of Common Stock as a result of
such Purchase Right to such extent) and such Purchase Right to such
extent shall be held in abeyance for the Holder until such time, if
ever, as its right thereto would not result in the Holder exceeding
the Beneficial Ownership Limitation).
d) Pro
Rata Distributions. During such time as this Warrant is
outstanding, if the Company shall declare or make any dividend or
other distribution of its assets (or rights to acquire its assets)
to holders of shares of Common Stock, by way of return of capital
or otherwise (including, without limitation, any distribution of
cash, stock or other securities, property or options by way of a
dividend, spin off, reclassification, corporate rearrangement,
scheme of arrangement or other similar transaction) (a
“Distribution”), at any
time after the issuance of this Warrant, then, in each such case,
the Holder shall be entitled to participate in such Distribution to
the same extent that the Holder would have participated therein if
the Holder had held the number of shares of Common Stock acquirable
upon complete exercise of this Warrant (without regard to any
limitations on exercise hereof, including without limitation, the
Beneficial Ownership Limitation) immediately before the date of
which a record is taken for such Distribution, or, if no such
record is taken, the date as of which the record holders of shares
of Common Stock are to be determined for the participation in such
Distribution (provided, however, that, to the extent
that the Holder's right to participate in any such Distribution
would result in the Holder exceeding the Beneficial Ownership
Limitation, then the Holder shall not be entitled to participate in
such Distribution to such extent (or in the beneficial ownership of
any shares of Common Stock as a result of such Distribution to such
extent) and the portion of such Distribution shall be held in
abeyance for the benefit of the Holder until such time, if ever, as
its right thereto would not result in the Holder exceeding the
Beneficial Ownership Limitation).
-6-
e) Fundamental Transaction. If, at
any time while this Warrant is outstanding, (i) the Company (and
all of its Subsidiaries, taken as a whole), directly or indirectly,
in one or more related transactions effects any merger or
consolidation of the Company with or into another Person, (ii) the
Company, directly or indirectly, effects any sale, lease, license,
assignment, transfer, conveyance or other disposition of all or
substantially all of its assets in one or a series of related
transactions, (iii) any, direct or indirect, purchase offer, tender
offer or exchange offer (whether by the Company or another Person)
is completed pursuant to which holders of Common Stock are
permitted to sell, tender or exchange their shares for other
securities, cash or property and has been accepted by the holders
of 50% or more of the outstanding Common Stock, (iv) the Company,
directly or indirectly, in one or more related transactions effects
any reclassification, reorganization or recapitalization of the
Common Stock or any compulsory share exchange pursuant to which the
Common Stock is effectively converted into or exchanged for other
securities, cash or property, or (v) the Company, directly or
indirectly, in one or more related transactions consummates a stock
or share purchase agreement or other business combination
(including, without limitation, a reorganization, recapitalization,
spin-off, merger or scheme of arrangement) with another Person or
group of Persons whereby such other Person or group acquires more
than 50% of the outstanding shares of Common Stock (not including
any shares of Common Stock held by the other Person or other
Persons making or party to, or associated or affiliated with the
other Persons making or party to, such stock or share purchase
agreement or other business combination) (each a
“Fundamental
Transaction”), then, upon any subsequent exercise of
this Warrant, the Holder shall have the right to receive, for each
Warrant Share that would have been issuable upon such exercise
immediately prior to the occurrence of such Fundamental
Transaction, at the option of the Holder (without regard to any
limitation in Section 2(e) on the exercise of this Warrant), the
number of shares of Common Stock of the successor or acquiring
corporation or of the Company, if it is the surviving corporation,
and any additional consideration (the “Alternate Consideration”)
receivable as a result of such Fundamental Transaction by a holder
of the number of shares of Common Stock for which this Warrant is
exercisable immediately prior to such Fundamental Transaction
(without regard to any limitation in Section 2(e) on the exercise
of this Warrant). For purposes of any such exercise, the
determination of the Exercise Price shall be appropriately adjusted
to apply to such Alternate Consideration based on the amount of
Alternate Consideration issuable in respect of one share of Common
Stock in such Fundamental Transaction, and the Company shall
apportion the Exercise Price among the Alternate Consideration in a
reasonable manner reflecting the relative value of any different
components of the Alternate Consideration. If holders of Common
Stock are given any choice as to the securities, cash or property
to be received in a Fundamental Transaction, then the Holder shall
be given the same choice as to the Alternate Consideration it
receives upon any exercise of this Warrant following such
Fundamental Transaction. The Company shall cause any successor
entity in a Fundamental Transaction in which the Company is not the
survivor (the “Successor Entity”) to
assume in writing all of the obligations of the Company under this
Warrant and the other Transaction Documents in accordance with the
provisions of this Section 3(e) pursuant to written agreements in
form and substance reasonably satisfactory to the Holder and
approved by the Holder (without unreasonable delay) prior to such
Fundamental Transaction and shall, at the option of the Holder,
deliver to the Holder in exchange for this Warrant a security of
the Successor Entity evidenced by a written instrument
substantially similar in form and substance to this Warrant which
is exercisable for a corresponding number of shares of capital
stock of such Successor Entity (or its parent entity) equivalent to
the shares of Common Stock acquirable and receivable upon exercise
of this Warrant (without regard to any limitations on the exercise
of this Warrant) prior to such Fundamental Transaction, and with an
exercise price which applies the exercise price hereunder to such
shares of capital stock (but taking into account the relative value
of the shares of Common Stock pursuant to such Fundamental
Transaction and the value of such shares of capital stock, such
number of shares of capital stock and such exercise price being for
the purpose of protecting the economic value of this Warrant
immediately prior to the consummation of such Fundamental
Transaction), and which is reasonably satisfactory in form and
substance to the Holder. Upon the occurrence of any such
Fundamental Transaction, the Successor Entity shall succeed to, and
be substituted for the Company (so that from and after the date of
such Fundamental Transaction, the provisions of this Warrant and
the other Transaction Documents referring to the
“Company” shall refer instead to the Successor Entity),
and the Successor Entity may exercise every right and power of the
Company and shall assume all of the obligations of the Company
under this Warrant and the other Transaction Documents with the
same effect as if such Successor Entity had been named as the
Company herein.
-7-
f) Calculations. All calculations
under this Section 3 shall be made to the nearest cent or the
nearest 1/100th of a share, as the case may be. For purposes of
this Section 3, the number of shares of Common Stock deemed to be
issued and outstanding as of a given date shall be the sum of the
number of shares of Common Stock (excluding treasury shares, if
any) issued and outstanding.
g) Notice to Holder.
i. Adjustment to Exercise Price.
Whenever the Exercise Price is adjusted pursuant to any provision
of this Section 3, the Company shall promptly deliver to the Holder
by email a notice setting forth the Exercise Price after such
adjustment and any resulting adjustment to the number of Warrant
Shares and setting forth a brief statement of the facts requiring
such adjustment.
ii. Notice to Allow Exercise by
Holder. If (A) the Company shall declare a dividend (or any
other distribution in whatever form) on the Common Stock, (B) the
Company shall declare a special nonrecurring cash dividend on or a
redemption of the Common Stock, (C) the Company shall authorize the
granting to all holders of the Common Stock rights or warrants to
subscribe for or purchase any shares of capital stock of any class
or of any rights, (D) the approval of any stockholders of the
Company shall be required in connection with any reclassification
of the Common Stock, any consolidation or merger to which the
Company (and all of its Subsidiaries, taken as a whole) is a party,
any sale or transfer of all or substantially all of the assets of
the Company, or any compulsory share exchange whereby the Common
Stock is converted into other securities, cash or property, or (E)
the Company shall authorize the voluntary or involuntary
dissolution, liquidation or winding up of the affairs of the
Company, then, in each case, the Company shall cause to be
delivered by email to the Holder at its last email or other address
as it shall appear upon the Warrant Register of the Company, at
least 20 calendar days prior to the applicable record or effective
date hereinafter specified, a notice stating (x) the date on which
a record is to be taken for the purpose of such dividend,
distribution, redemption, rights or warrants, or if a record is not
to be taken, the date as of which the holders of the Common Stock
of record to be entitled to such dividend, distributions,
redemption, rights or warrants are to be determined or (y) the date
on which such reclassification, consolidation, merger, sale,
transfer or share exchange is expected to become effective or
close, and the date as of which it is expected that holders of the
Common Stock of record shall be entitled to exchange their shares
of the Common Stock for securities, cash or other property
deliverable upon such reclassification, consolidation, merger,
sale, transfer or share exchange; provided that the failure to
deliver such notice or any defect therein or in the delivery
thereof shall not affect the validity of the corporate action
required to be specified in such notice. To the extent that any
notice provided in this Warrant constitutes, or contains, material,
non-public information regarding the Company or any of the
Subsidiaries, the Company shall simultaneously file such notice
with the Commission pursuant to a Current Report on Form 8-K. The
Holder shall remain entitled to exercise this Warrant during the
period commencing on the date of such notice to the effective date
of the event triggering such notice except as may otherwise be
expressly set forth herein.
-8-
Section
4. Transfer
of Warrant.
a) Transferability. [This]
[Subject to compliance with any applicable securities laws and the
conditions set forth in Section 4(d) hereof and to the provisions
of Section 4.1 of the Purchase Agreement, this] Warrant and all
rights hereunder (including, without limitation, any registration
rights) are transferable, in whole or in part, upon surrender of
this Warrant at the principal office of the Company or its
designated agent, together with a written assignment of this
Warrant substantially in the form attached 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 required, such payment, the Company shall execute
and deliver a new Warrant or Warrants in the name of the assignee
or assignees, as applicable, and in the denomination or
denominations 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. Notwithstanding anything
herein to the contrary, the Holder shall not be required to
physically surrender this Warrant to the Company unless the Holder
has assigned this Warrant in full, in which case, the Holder shall
surrender this Warrant to the Company within three (3) Trading Days
of the date on which the Holder delivers a duly executed Assignment
Form to the Company assigning this Warrant in
full. The Warrant,
if properly assigned in accordance herewith, may be exercised by a
new holder for the purchase of Warrant Shares without having a new
Warrant issued.
b) New Warrants. This Warrant may
be divided or combined with other Warrants upon presentation hereof
at the aforesaid office 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 4(a), 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. All Warrants issued on transfers or exchanges shall be
dated the Initial Exercise Date and shall be identical with this
Warrant except as to the number of Warrant Shares issuable pursuant
thereto.
c) Warrant Register. The Company
shall register this Warrant, upon records to be maintained by the
Company for that purpose (the “Warrant Register”), in
the name of the record Holder hereof from time to time. The Company
may deem and treat the registered Holder of this Warrant as the
absolute owner hereof for the purpose of any exercise hereof or any
distribution to the Holder, and for all other purposes, absent
actual notice to the contrary.
d) [Transfer
Restrictions. If, at the
time of the surrender of this Warrant
in connection with any transfer of this Warrant, the transfer of
this Warrant shall not be either (i) registered pursuant to an
effective registration
statement under the
Securities Act and under
applicable state securities or blue sky laws or (ii) eligible for
resale without volume or manner-of-sale restrictions or current
public information requirements pursuant to Rule 144, the Company
may require, as a condition of allowing such transfer, that the
Holder or transferee of this Warrant, as the case may be, comply
with the provisions of Section 5.7 of the Purchase
Agreement.]
e) [Representation by the Holder.
The Holder, by the acceptance hereof, represents and warrants that
it is acquiring this Warrant and, upon any exercise hereof, will
acquire the Warrant Shares issuable upon such exercise, for its own
account and not with a view to or for distributing or reselling
such Warrant Shares or any part thereof in violation of the
Securities Act or any applicable state securities law, except
pursuant to sales registered or exempted under the Securities
Act.]
-9-
Section
5. Miscellaneous.
a) No Rights as Stockholder Until
Exercise; No Settlement in Cash. This Warrant does not
entitle the Holder to any voting rights, dividends or other rights
as a stockholder of the Company prior to the exercise hereof as set
forth in Section 2(d)(i), except as expressly set forth in Section
3. Without limiting any rights of a Holder to receive Warrant
Shares on a “cashless exercise” pursuant to Section
2(c) or to receive cash payments pursuant to Section 2(d)(i) and
Section 2(d)(iv) herein, in no event shall the Company be required
to net cash settle an exercise of this Warrant.
b) Loss, Theft, Destruction or Mutilation
of Warrant. The Company covenants that upon receipt by the
Company of evidence reasonably satisfactory to it of the loss,
theft, destruction or mutilation of this Warrant or any stock
certificate relating to the Warrant Shares, and in case of loss,
theft or destruction, of indemnity or security reasonably
satisfactory to it (which, in the case of the Warrant, shall not
include the posting of any bond), and upon surrender and
cancellation of such Warrant or stock certificate, if mutilated,
the Company will make and deliver a new Warrant or stock
certificate of like tenor and dated as of such cancellation, in
lieu of such Warrant or stock certificate.
c) Saturdays, Sundays, Holidays,
etc. If the last or appointed day for the taking of any
action or the expiration of any right required or granted herein
shall not be a Trading Day, then such action may be taken or such
right may be exercised on the next succeeding Trading
Day.
d) Authorized Shares.
The
Company covenants that, during the period the Warrant is
outstanding, it will reserve from its authorized and unissued
Common Stock a sufficient number of shares to provide for the
issuance of the Warrant Shares upon the exercise of any purchase
rights under this Warrant. The Company further covenants that its
issuance of this Warrant shall constitute full authority to its
officers who are charged with the duty of issuing the necessary
Warrant Shares upon the exercise of the purchase rights under this
Warrant. The Company will take all such reasonable action as may be
necessary to assure that such Warrant Shares may be issued as
provided herein without violation of any applicable law or
regulation, or of any requirements of the Trading Market upon which
the Common Stock may be listed. The Company covenants that all
Warrant Shares which may be issued upon the exercise of the
purchase rights represented by this Warrant will, upon exercise of
the purchase rights represented by this Warrant and payment for
such Warrant Shares in accordance herewith, be duly authorized,
validly issued, fully paid and nonassessable and free from all
taxes, liens and charges created by the Company in respect of the
issue thereof (other than taxes in respect of any transfer
occurring contemporaneously with such issue).
Except
and to the extent as waived or consented to by the Holder, the
Company shall not by any action, including, without limitation,
amending its certificate of incorporation 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 Holder as set forth in this Warrant against impairment.
Without limiting the generality of the foregoing, the Company will
(i) not increase the par value of any Warrant Shares above the
amount payable therefor upon such exercise immediately prior to
such increase in par value, (ii) take all such action as may be
necessary or appropriate in order that the Company may validly and
legally issue fully paid and nonassessable Warrant Shares upon the
exercise of this Warrant and (iii) use commercially reasonable
efforts to obtain all such authorizations, exemptions or consents
from any public regulatory body having jurisdiction thereof, as may
be, necessary to enable the Company to perform its obligations
under this Warrant.
Before
taking any action which would result in an adjustment in the number
of Warrant Shares for which this Warrant is exercisable or in the
Exercise Price, the Company shall obtain all such authorizations or
exemptions thereof, or consents thereto, as may be necessary from
any public regulatory body or bodies having jurisdiction
thereof.
-10-
e) Jurisdiction. All questions
concerning the construction, validity, enforcement and
interpretation of this Warrant shall be determined in accordance
with the provisions of the Purchase Agreement.
f) Restrictions. The Holder
acknowledges that the Warrant Shares acquired upon the exercise of
this Warrant, if not registered, and the Holder does not utilize
cashless exercise, will have restrictions upon resale imposed by
state and federal securities laws.
g) Nonwaiver and Expenses. No
course of dealing or any delay or failure to exercise any right
hereunder on the part of Holder shall operate as a waiver of such
right or otherwise prejudice the Holder’s rights, powers or
remedies. Without limiting any other provision of this Warrant or
the Purchase Agreement, if the Company willfully and knowingly
fails to comply with any provision of this Warrant, which results
in any material damages to the Holder, the Company shall pay to the
Holder such amounts as shall be sufficient to cover any 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.
h) Notices. Any notice, request or
other document required or permitted to be given or delivered to
the Holder by the Company shall be delivered in accordance with the
notice provisions of the Purchase Agreement.
i) Limitation of Liability. No
provision hereof, in the absence of any affirmative action by the
Holder to exercise this Warrant to purchase Warrant Shares, and no
enumeration herein of the rights or privileges of the Holder, shall
give rise to any liability of the Holder for the purchase price of
any Common Stock or as a stockholder of the Company, whether such
liability is asserted by the Company or by creditors of the
Company.
j) Remedies. The Holder, in
addition to being entitled to exercise all rights granted by law,
including recovery of damages, will be entitled to specific
performance of its rights under this Warrant. The Company agrees
that monetary damages would not be adequate compensation for any
loss incurred by reason of a breach by it of the provisions of this
Warrant and hereby agrees to waive and not to assert the defense in
any action for specific performance that a remedy at law would be
adequate.
k) Successors and Assigns. Subject
to applicable securities laws, this Warrant and the rights and
obligations evidenced hereby shall inure to the benefit of and be
binding upon the successors and permitted assigns of the Company
and the successors and permitted assigns of Holder. The provisions
of this Warrant are intended to be for the benefit of any Holder
from time to time of this Warrant and shall be enforceable by the
Holder or holder of Warrant Shares.
l) Amendment. This Warrant may be
modified or amended or the provisions hereof waived with the
written consent of the Company and the
Holder.
m) Severability. Wherever
possible, each provision of this Warrant shall be interpreted in
such manner as to be effective and valid under applicable law, but
if any provision of this Warrant shall be prohibited by or invalid
under applicable law, such provision shall be ineffective to the
extent of such prohibition or invalidity, without invalidating the
remainder of such provisions or the remaining provisions of this
Warrant.
n) 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.
********************
(Signature Page Follows)
-11-
IN
WITNESS WHEREOF, the Company has caused this Warrant to be executed
by its officer thereunto duly authorized as of the date first above
indicated.
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AZURRX BIOPHARMA, INC.
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By:__________________________________________
Name:
Title:
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-12-
Annex A
NOTICE OF EXERCISE
TO:
AZURRX BIOPHARMA,
INC.
(1) The undersigned
hereby elects to purchase ________ Warrant Shares of the Company
pursuant to the terms of the attached Warrant (only if exercised in
full), and tenders herewith payment of the exercise price in full,
together with all applicable transfer taxes, if any.
(2) Payment shall take
the form of (check applicable box):
[ ] in
lawful money of the United States; or
[ ] [if
permitted the cancellation of such number of Warrant Shares as is
necessary, in accordance with the formula set forth in subsection
2(c), to exercise this Warrant with respect to the maximum number
of Warrant Shares purchasable pursuant to the cashless exercise
procedure set forth in subsection 2(c).
(3) Please issue said
Warrant Shares in the name of the undersigned or in such other name
as is specified below:
_______________________________
The
Warrant Shares shall be delivered to the following DWAC Account
Number:
_______________________________
_______________________________
_______________________________
(4)
Accredited
Investor. The undersigned is an “accredited
investor” as defined in Regulation D promulgated under the
Securities Act of 1933, as amended.
[SIGNATURE
OF HOLDER]
Name of
Investing Entity:
________________________________________________________________________
Signature of Authorized Signatory of Investing
Entity:
_________________________________________________
Name of
Authorized Signatory:
___________________________________________________________________
Title
of Authorized Signatory:
____________________________________________________________________
Date:
________________________________________________________________________________________
A-1
Annex B
ASSIGNMENT FORM
(To assign the foregoing Warrant, execute this form and
supply required information. Do not use this form to purchase
shares.)
FOR
VALUE RECEIVED, the foregoing Warrant and all rights evidenced
thereby are hereby assigned to
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Name:
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(Please Print)
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Address:
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Phone Number:
Email Address:
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(Please
Print)
______________________________________
______________________________________
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Dated: _______________ __, ______
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Holder’s
Signature:
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Holder’s
Address:
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B-1
Exhibit
4.2
NEITHER
THIS SECURITY NOR THE SECURITIES FOR WHICH THIS SECURITY IS
EXERCISABLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE
COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE
UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE “SECURITIES ACT”), AND,
ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR
PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT
SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND
IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS. THIS SECURITY
AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS SECURITY MAY BE
PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN
SECURED BY SUCH SECURITIES.
COMMON STOCK PURCHASE WARRANT
AZURRX BIOPHARMA, INC.
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Warrant Shares:
_______
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Initial Exercise
Date: ____, 2020
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THIS
COMMON STOCK PURCHASE WARRANT (the “Warrant”) certifies that,
for value received, _____________ or its assigns (the
“Holder”) is entitled,
upon the terms and subject to the limitations on exercise and the
conditions hereinafter set forth, at any time on or after the date
hereof (the “Initial
Exercise Date”) and on or prior to 5:00 p.m. (New York
City time) on __________, 20261 (the “Termination Date”) but
not thereafter, to subscribe for and purchase from AzurRx
Biopharma, Inc., a Delaware corporation (the “Company”), up to ______
shares (as subject to adjustment hereunder, the “Warrant Shares”) of
Common Stock. The purchase price of one share of Common Stock under
this Warrant shall be equal to the Exercise Price, as defined in
Section 2(b).
Section
1. Definitions.
Capitalized terms used and not otherwise defined herein shall have
the meanings set forth in that certain [Securities Purchase
Agreement]/[MFN Exchange Agreement] (the “Purchase Agreement”),
dated _____, 2020, among the Company and the purchasers signatory
thereto.
Section
2. Exercise.
a) Exercise
of Warrant. Exercise of the purchase rights represented by
this Warrant may be made, in whole or in part, at any time or times
on or after the Initial Exercise Date and on or before the
Termination Date by delivery to the Company of a duly executed PDF
copy submitted by e-mail (or e-mail attachment) of the Notice of
Exercise in the form attached hereto as Annex A (the
“Notice of
Exercise”). Within the earlier of (i) two (2) Trading
Days and (ii) the number of Trading Days comprising the Standard
Settlement Period (as defined in Section 2(d)(i) herein) following
the date of exercise as aforesaid, the Holder shall deliver the
aggregate Exercise Price for the shares specified in the applicable
Notice of Exercise by wire transfer or cashier’s check drawn
on a United States bank unless the cashless exercise procedure
specified in Section 2(c) below is specified in the applicable
Notice of Exercise. No
ink-original Notice of Exercise shall be required, nor shall any
medallion guarantee (or other type of guarantee or notarization) of
any Notice of Exercise be required. Notwithstanding anything herein
to the contrary, the Holder shall not be required to physically
surrender this Warrant to the Company until the Holder has
purchased all of the Warrant Shares available hereunder and the
Warrant has been exercised in full, in which case, the Holder shall
surrender this Warrant to the Company for cancellation within three
(3) Trading Days of the date on which the final Notice of Exercise
is delivered to the Company. Partial exercises of this Warrant
resulting in purchases of a portion of the total number of Warrant
Shares available hereunder shall have the effect of lowering the
outstanding number of Warrant Shares purchasable hereunder in an
amount equal to the applicable number of Warrant Shares purchased.
The Holder and the Company shall maintain records showing the
number of Warrant Shares purchased and the date of such purchases.
The Company shall deliver any objection to any Notice of Exercise
within one (1) Trading Day of receipt of such notice. The Holder and any assignee, by acceptance of
this Warrant, acknowledge and agree that, by reason of the
provisions of this paragraph, following the purchase of a portion
of the Warrant Shares hereunder, the number of Warrant Shares
available for purchase hereunder at any given time may be less than
the amount stated on the face hereof.
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-1-
b) Exercise Price. The exercise
price per share of Common Stock under this Warrant shall be $0.80,
subject to adjustment hereunder (the “Exercise
Price”).
c) Cashless Exercise. If at the
time of exercise hereof there is no effective registration
statement registering, or the prospectus contained therein is not
available for the resale of the Warrant Shares by the Holder, then
this Warrant may also be exercised, in whole or in part, at such
time by means of a “cashless exercise” in which the
Holder shall be entitled to receive a number of Warrant Shares
equal to the quotient obtained by dividing [(A-B) (X)] by (A),
where:
(A) =
as applicable: (i) the VWAP on the Trading Day immediately
preceding the date of the applicable Notice of Exercise if such
Notice of Exercise is (1) both executed and delivered pursuant to
Section 2(a) hereof on a day that is not a Trading Day or (2) both
executed and delivered pursuant to Section 2(a) hereof on a Trading
Day prior to the opening of “regular trading hours” (as
defined in Rule 600(b)(68) of Regulation NMS promulgated under the
federal securities laws) on such Trading Day, (ii) at the option of
the Holder, either (y) the VWAP on the Trading Day immediately
preceding the date of the applicable Notice of Exercise or (z) the
Bid Price of the Common Stock on the principal Trading Market as
reported by Bloomberg L.P. as of the time of the Holder’s
execution of the applicable Notice of Exercise if such Notice of
Exercise is executed during “regular trading hours” on
a Trading Day and is delivered within two (2) hours thereafter
(including until two (2) hours after the close of “regular
trading hours” on a Trading Day) pursuant to Section 2(a)
hereof or (iii) the VWAP on the date of the applicable Notice of
Exercise if the date of such Notice of Exercise is a Trading Day
and such Notice of Exercise is both executed and delivered pursuant
to Section 2(a) hereof after the close of “regular trading
hours” on such Trading Day;
(B) =
the Exercise Price of this Warrant, as adjusted hereunder;
and
(X) =
the number of Warrant Shares that would be issuable upon exercise
of this Warrant in accordance with the terms of this Warrant if
such exercise were by means of a cash exercise rather than a
cashless exercise.
If Warrant Shares are issued in such a cashless exercise, the
parties acknowledge and agree that in accordance with Section
3(a)(9) of the Securities Act, the Warrant Shares shall take on the
characteristics of the Warrants being exercised, and the holding
period of the Warrant Shares being issued may be tacked on to the
holding period of this Warrant. The Company agrees not
to take any position contrary to this Section 2(c).
“Bid Price” means, for any
date, the price determined by the first of the following clauses
that applies: (a) if the Common Stock is then listed or quoted on a
Trading Market, the bid price of the Common Stock for the time in
question (or the nearest preceding date) on the Trading Market on
which the Common Stock is then listed or quoted as reported by
Bloomberg L.P. (based on a Trading Day from 9:30 a.m. (New York
City time) to 4:02 p.m. (New York City time)), (b) if OTCQB
or OTCQX is not a Trading Market, the volume weighted average price
of the Common Stock for such date (or the nearest preceding date)
on OTCQB or OTCQX as applicable, (c) if the Common Stock is not
then listed or quoted for trading on OTCQB or OTCQX and if prices
for the Common Stock are then reported on The Pink Open Market (or
a similar organization or agency succeeding to its functions of
reporting prices), the most recent bid price per share of the
Common Stock so reported, or (d) in all other cases, the fair
market value of a share of Common Stock as determined by an
independent appraiser selected in good faith by the Holders of a
majority in interest of the Warrants then outstanding and
reasonably acceptable to the Company, the fees and expenses of
which shall be paid by the Company.
-2-
“VWAP” means, for any
date, the price determined by the first of the following clauses
that applies: (a) if the Common Stock is then listed or quoted on a
Trading Market, the daily volume weighted average price of the
Common Stock for such date (or the nearest preceding date) on the
Trading Market on which the Common Stock is then listed or quoted
as reported by Bloomberg L.P. (based on a Trading Day from 9:30
a.m. (New York City time) to 4:02 p.m. (New York City time)),
(b) if OTCQB or OTCQX is not a Trading Market, the volume
weighted average price of the Common Stock for such date (or the
nearest preceding date) on OTCQB or OTCQX as applicable, (c) if the
Common Stock is not then listed or quoted for trading on OTCQB or
OTCQX and if prices for the Common Stock are then reported on The
Pink Open Market (or a similar organization or agency succeeding to
its functions of reporting prices), the most recent bid price per
share of the Common Stock so reported, or (d) in all other
cases, the fair market value of a share of Common Stock as
determined by an independent appraiser selected in good faith by
the Holders of a majority in interest of the Warrants then
outstanding and reasonably acceptable to the Company, the fees and
expenses of which shall be paid by the Company.
Notwithstanding
anything herein to the contrary, on the Termination Date, this
Warrant shall be automatically exercised via cashless exercise
pursuant to this Section 2(c).
d)
Mechanics of
Exercise.
i. Delivery of Warrant Shares Upon
Exercise. The Company shall cause the Warrant Shares
purchased hereunder to be transmitted by the Transfer Agent to the
Holder by crediting the account of the Holder’s or its
designee’s balance account with The Depository Trust Company
through its Deposit or Withdrawal at Custodian system
(“DWAC”) if the Company is
then a participant in such system and either (A) there is an
effective registration statement permitting the issuance of the
Warrant Shares to or resale of the Warrant Shares by the Holder or
(B) the Warrant Shares are eligible for resale by the Holder
without volume or manner-of-sale limitations pursuant to Rule 144
(assuming cashless exercise of the Warrants), and otherwise by
physical delivery of a certificate, registered in the
Company’s share register in the name of the Holder or its
designee, for the number of Warrant Shares to which the Holder is
entitled pursuant to such exercise to the address specified by the
Holder in the Notice of Exercise by the date that is the earliest
of (i) two (2) Trading Days after the delivery to the Company of
the Notice of Exercise and (ii) one (1) Trading Day after delivery
of the aggregate Exercise Price to the Company (such date, the
“Warrant Share
Delivery Date”). Upon delivery of the Notice of
Exercise, the Holder shall be deemed for all corporate purposes to
have become the holder of record of the Warrant Shares with respect
to which this Warrant has been exercised, irrespective of the date
of delivery of the Warrant Shares, provided that payment of the
aggregate Exercise Price (other than in the case of a cashless
exercise) is received within two (2) Trading Days following
delivery of the Notice of Exercise. If the Company fails for any
reason to deliver to the Holder the Warrant Shares subject to a
Notice of Exercise by the Warrant Share Delivery Date, the Company
shall pay to the Holder, in cash, as liquidated damages and not as
a penalty, for each $1,000 of Warrant Shares subject to such
exercise (based on the VWAP of the Common Stock on the date of the
applicable Notice of Exercise), $10 per Trading Day (increasing to
$20 per Trading Day on the fifth Trading Day after such liquidated
damages begin to accrue) for each Trading Day after such Warrant
Share Delivery Date until such Warrant Shares are delivered or
Holder rescinds such exercise. The Company agrees to maintain a
transfer agent that is a participant in the FAST program so long as
this Warrant remains outstanding and exercisable.
ii. Delivery of New Warrants Upon
Exercise. If this Warrant shall have been exercised in part,
the Company shall, at the request of a Holder and upon surrender of
this Warrant certificate, at the time of delivery of the Warrant
Shares, deliver to the Holder a new Warrant evidencing the rights
of the Holder to purchase the unpurchased Warrant Shares called for
by this Warrant, which new Warrant shall in all other respects be
identical with this Warrant.
-3-
iii. Rescission
Rights. If the Company fails to cause the Transfer Agent to
transmit to the Holder the Warrant Shares pursuant to Section
2(d)(i) by the Warrant Share Delivery Date, then the Holder will
have the right to rescind such exercise.
iv. Compensation for Buy-In on Failure to
Timely Deliver Warrant Shares Upon Exercise. In addition to
any other rights available to the Holder, if the Company fails to
cause the Transfer Agent to transmit to the Holder the Warrant
Shares in accordance with the provisions of Section 2(d)(i) above
pursuant to an exercise on or before the Warrant Share Delivery
Date, and if after such date the Holder is required by its broker
to purchase (in an open market transaction or otherwise) or the
Holder’s brokerage firm otherwise purchases, shares of Common
Stock to deliver in satisfaction of a sale by the Holder of the
Warrant Shares which the Holder anticipated receiving upon such
exercise (a “Buy-In”), then the
Company shall (A) pay in cash to the Holder the amount, if any, by
which (x) the Holder’s total purchase price (including
brokerage commissions, if any) for the shares of Common Stock so
purchased exceeds (y) the amount obtained by multiplying (1) the
number of Warrant Shares that the Company was required to deliver
to the Holder in connection with the exercise at issue times (2)
the price at which the sell order giving rise to such purchase
obligation was executed, and (B) at the option of the Holder,
either reinstate the portion of the Warrant and equivalent number
of Warrant Shares for which such exercise was not honored (in which
case such exercise shall be deemed rescinded) or deliver to the
Holder the number of shares of Common Stock that would have been
issued had the Company timely complied with its exercise and
delivery obligations hereunder. For example, if the Holder
purchases Common Stock having a total purchase price of $11,000 to
cover a Buy-In with respect to an attempted exercise of shares of
Common Stock with an aggregate sale price giving rise to such
purchase obligation of $10,000, under clause (A) of the immediately
preceding sentence the Company shall be required to pay the Holder
$1,000. The Holder shall provide the Company written notice
indicating the amounts payable to the Holder in respect of the
Buy-In and, upon request of the Company, evidence of the amount of
such loss. Nothing herein shall limit a Holder’s right to
pursue any other remedies available to it hereunder, at law or in
equity including, without limitation, a decree of specific
performance and/or injunctive relief with respect to the
Company’s failure to timely deliver shares of Common Stock
upon exercise of the Warrant as required pursuant to the terms
hereof.
v. No Fractional Shares or Scrip.
No fractional shares or scrip representing fractional shares shall
be issued upon the exercise of this Warrant. As to any fraction of
a share which the Holder would otherwise be entitled to purchase
upon such exercise, the Company shall, at its election, either pay
a cash adjustment in respect of such final fraction in an amount
equal to such fraction multiplied by the Exercise Price or round up
to the next whole share.
vi. Charges, Taxes and Expenses.
Issuance of Warrant Shares shall be made without charge to the
Holder for any issue or transfer tax or other incidental expense in
respect of the issuance of such Warrant Shares, all of which taxes
and expenses shall be paid by the Company, and such Warrant Shares
shall be issued in the name of the Holder or in such name or names
as may be directed by the Holder; provided, however, that, in the event
that Warrant Shares are to be issued in a name other than the name
of the Holder, this Warrant when surrendered for exercise shall be
accompanied by the assignment form attached hereto as Annex B (the
“Assignment
Form”) duly executed by the Holder, and the Company
may require, as a condition thereto, the payment of a sum
sufficient to reimburse it for any transfer tax incidental thereto.
The Company shall pay all Transfer Agent fees required for same-day
processing of any Notice of Exercise and all fees to the Depository
Trust Company (or another established clearing corporation
performing similar functions) required for same-day electronic
delivery of the Warrant Shares.
vii. Closing
of Books. The Company will not close its stockholder books
or records in any manner which prevents the timely exercise of this
Warrant, pursuant to the terms hereof.
-4-
e) Beneficial
Ownership Limitations. The Company shall not effect any
exercise of this Warrant, and a Holder shall not have the right to
exercise any portion of this Warrant, pursuant to Section 2 or
otherwise, to the extent that after giving effect to such issuance
after exercise as set forth on the applicable Notice of Exercise,
the Holder (together with the Holder’s Affiliates, and any
other Persons acting as a group together with the Holder or any of
the Holder’s Affiliates (such Persons, “Attribution Parties”)),
would beneficially own in excess of the Beneficial Ownership
Limitation (as defined below). For purposes of the foregoing
sentence, the number of shares of Common Stock beneficially owned
by the Holder and its Affiliates and Attribution Parties shall
include the number of shares of Common Stock issuable upon exercise
of this Warrant with respect to which such determination is being
made, but shall exclude the number of shares of Common Stock which
would be issuable upon (i) exercise of the remaining, nonexercised
portion of this Warrant beneficially owned by the Holder or any of
its Affiliates or Attribution Parties and (ii) exercise or
conversion of the unexercised or nonconverted portion of any other
securities of the Company (including, without limitation, any other
Common Stock Equivalents) subject to a limitation on conversion or
exercise analogous to the limitation contained herein beneficially
owned by the Holder or any of its Affiliates or Attribution
Parties. Except as set forth in the preceding sentence, for
purposes of this Section 2(e), beneficial ownership shall be
calculated in accordance with Section 13(d) of the Exchange Act and
the rules and regulations promulgated thereunder, it being
acknowledged by the Holder that the Company is not representing to
the Holder that such calculation is in compliance with Section
13(d) of the Exchange Act and the Holder is solely responsible for
any schedules required to be filed in accordance therewith. To the
extent that the limitation contained in this Section 2(e) applies,
the determination of whether this Warrant is exercisable (in
relation to other securities owned by the Holder together with any
Affiliates and Attribution Parties) and of which portion of this
Warrant is exercisable shall be in the sole discretion of the
Holder, and the submission of a Notice of Exercise shall be deemed
to be the Holder’s determination of whether this Warrant is
exercisable (in relation to other securities owned by the Holder
together with any Affiliates and Attribution Parties) and of which
portion of this Warrant is exercisable, in each case subject to the
Beneficial Ownership Limitation, and the Company shall have no
obligation to verify or confirm the accuracy of such determination.
In addition, a determination as to any group status as contemplated
above shall be determined in accordance with Section 13(d) of the
Exchange Act and the rules and regulations promulgated thereunder.
For purposes of this Section 2(e), in determining the number of
outstanding shares of Common Stock, a Holder may rely on the number
of outstanding shares of Common Stock as reflected in (A) the
Company’s most recent periodic or annual report filed with
the Commission, as the case may be, (B) a more recent public
announcement by the Company or (C) a more recent written notice by
the Company or the Transfer Agent setting forth the number of
shares of Common Stock outstanding. Upon the written or oral
request of a Holder, the Company shall within one Trading Day
confirm orally and in writing to the Holder the number of shares of
Common Stock then outstanding. In any case, the number of
outstanding shares of Common Stock shall be determined after giving
effect to the conversion or exercise of securities of the Company,
including this Warrant, by the Holder or its Affiliates or
Attribution Parties since the date as of which such number of
outstanding shares of Common Stock was reported. The
“Beneficial
Ownership Limitation” shall be [4.99%/9.99%] of the
number of shares of the Common Stock outstanding immediately after
giving effect to the issuance of shares of Common Stock issuable
upon exercise of this Warrant. The Holder, upon notice to the
Company, may increase or decrease the Beneficial Ownership
Limitation provisions of this Section 2(e), provided that the
Beneficial Ownership Limitation in no event exceeds 9.99% of the
number of shares of the Common Stock outstanding immediately after
giving effect to the issuance of shares of Common Stock upon
exercise of this Warrant held by the Holder and the provisions of
this Section 2(e) shall continue to apply. Any increase in the
Beneficial Ownership Limitation will not be effective until the
61st day
after such notice is delivered to the Company. The provisions of
this paragraph shall be construed and implemented in a manner
otherwise than in strict conformity with the terms of this Section
2(e) to correct this paragraph (or any portion hereof) which may be
defective or inconsistent with the intended Beneficial Ownership
Limitation herein contained or to make changes or supplements
necessary or desirable to properly give effect to such limitation.
The limitations contained in this paragraph shall apply to a
successor holder of this Warrant.
-5-
f) Issuance
Limitations. Notwithstanding anything herein to the
contrary, if the Company has not obtained Stockholder Approval (as
defined in the Purchase Agreement), then the Company may not issue,
upon the exercise of this Warrant, any shares of Common
Stock.
Section
3. Certain
Adjustments.
a) Stock Dividends and Splits. If
the Company, at any time while this Warrant is outstanding: (i)
pays a stock dividend or otherwise makes a distribution or
distributions on shares of its Common Stock or any other equity or
equity equivalent securities payable in shares of Common Stock
(which, for avoidance of doubt, shall not include any shares of
Common Stock issued by the Company upon exercise of this Warrant),
(ii) subdivides outstanding shares of Common Stock into a larger
number of shares, (iii) combines (including by way of reverse stock
split) outstanding shares of Common Stock into a smaller number of
shares, or (iv) issues by reclassification of shares of the Common
Stock any shares of capital stock of the Company, then in each case
the Exercise Price shall be multiplied by a fraction of which the
numerator shall be the number of shares of Common Stock (excluding
treasury shares, if any) outstanding immediately before such event
and of which the denominator shall be the number of shares of
Common Stock outstanding immediately after such event, and the
number of shares issuable upon exercise of this Warrant shall be
proportionately adjusted such that the aggregate Exercise Price of
this Warrant shall remain unchanged. Any adjustment made pursuant
to this Section 3(a) shall become effective immediately after the
record date for the determination of stockholders entitled to
receive such dividend or distribution and shall become effective
immediately after the effective date in the case of a subdivision,
combination or re-classification.
b) [RESERVED]
c) Subsequent Rights Offerings.
In addition to any adjustments
pursuant to Section 3(a) above, if at any time the Company grants,
issues or sells any Common Stock Equivalents or rights to purchase
stock, warrants, securities or other property pro rata to the
record holders of any class of shares of Common Stock (the
“Purchase
Rights”), then the Holder
will be entitled to acquire, upon the terms applicable to such
Purchase Rights, the aggregate Purchase Rights which the Holder
could have acquired if the Holder had held the number of shares of
Common Stock acquirable upon complete exercise of this Warrant
(without regard to any limitations on exercise hereof, including
without limitation, the Beneficial Ownership Limitation)
immediately before the date on which a record is taken for the
grant, issuance or sale of such Purchase Rights, or, if no such
record is taken, the date as of which the record holders of shares
of Common Stock are to be determined for the grant, issue or sale
of such Purchase Rights (provided,
however,
that, to the extent that the Holder’s right to participate in
any such Purchase Right would result in the Holder exceeding the
Beneficial Ownership Limitation, then the Holder shall not be
entitled to participate in such Purchase Right to such extent (or
beneficial ownership of such shares of Common Stock as a result of
such Purchase Right to such extent) and such Purchase Right to such
extent shall be held in abeyance for the Holder until such time, if
ever, as its right thereto would not result in the Holder exceeding
the Beneficial Ownership Limitation).
d) Pro
Rata Distributions. During such time as this Warrant is
outstanding, if the Company shall declare or make any dividend or
other distribution of its assets (or rights to acquire its assets)
to holders of shares of Common Stock, by way of return of capital
or otherwise (including, without limitation, any distribution of
cash, stock or other securities, property or options by way of a
dividend, spin off, reclassification, corporate rearrangement,
scheme of arrangement or other similar transaction) (a
“Distribution”), at any
time after the issuance of this Warrant, then, in each such case,
the Holder shall be entitled to participate in such Distribution to
the same extent that the Holder would have participated therein if
the Holder had held the number of shares of Common Stock acquirable
upon complete exercise of this Warrant (without regard to any
limitations on exercise hereof, including without limitation, the
Beneficial Ownership Limitation) immediately before the date of
which a record is taken for such Distribution, or, if no such
record is taken, the date as of which the record holders of shares
of Common Stock are to be determined for the participation in such
Distribution (provided, however, that, to the extent
that the Holder's right to participate in any such Distribution
would result in the Holder exceeding the Beneficial Ownership
Limitation, then the Holder shall not be entitled to participate in
such Distribution to such extent (or in the beneficial ownership of
any shares of Common Stock as a result of such Distribution to such
extent) and the portion of such Distribution shall be held in
abeyance for the benefit of the Holder until such time, if ever, as
its right thereto would not result in the Holder exceeding the
Beneficial Ownership Limitation).
-6-
e) Fundamental Transaction. If, at
any time while this Warrant is outstanding, (i) the Company (and
all of its Subsidiaries, taken as a whole), directly or indirectly,
in one or more related transactions effects any merger or
consolidation of the Company with or into another Person, (ii) the
Company, directly or indirectly, effects any sale, lease, license,
assignment, transfer, conveyance or other disposition of all or
substantially all of its assets in one or a series of related
transactions, (iii) any, direct or indirect, purchase offer, tender
offer or exchange offer (whether by the Company or another Person)
is completed pursuant to which holders of Common Stock are
permitted to sell, tender or exchange their shares for other
securities, cash or property and has been accepted by the holders
of 50% or more of the outstanding Common Stock, (iv) the Company,
directly or indirectly, in one or more related transactions effects
any reclassification, reorganization or recapitalization of the
Common Stock or any compulsory share exchange pursuant to which the
Common Stock is effectively converted into or exchanged for other
securities, cash or property, or (v) the Company, directly or
indirectly, in one or more related transactions consummates a stock
or share purchase agreement or other business combination
(including, without limitation, a reorganization, recapitalization,
spin-off, merger or scheme of arrangement) with another Person or
group of Persons whereby such other Person or group acquires more
than 50% of the outstanding shares of Common Stock (not including
any shares of Common Stock held by the other Person or other
Persons making or party to, or associated or affiliated with the
other Persons making or party to, such stock or share purchase
agreement or other business combination) (each a
“Fundamental
Transaction”), then, upon any subsequent exercise of
this Warrant, the Holder shall have the right to receive, for each
Warrant Share that would have been issuable upon such exercise
immediately prior to the occurrence of such Fundamental
Transaction, at the option of the Holder (without regard to any
limitation in Section 2(e) and Section 2(f) on the exercise of this
Warrant), the number of shares of Common Stock of the successor or
acquiring corporation or of the Company, if it is the surviving
corporation, and any additional consideration (the
“Alternate
Consideration”) receivable as a result of such
Fundamental Transaction by a holder of the number of shares of
Common Stock for which this Warrant is exercisable immediately
prior to such Fundamental Transaction (without regard to any
limitation in Section 2(e) and Section 2(f) on the exercise of this
Warrant). For purposes of any such exercise, the determination of
the Exercise Price shall be appropriately adjusted to apply to such
Alternate Consideration based on the amount of Alternate
Consideration issuable in respect of one share of Common Stock in
such Fundamental Transaction, and the Company shall apportion the
Exercise Price among the Alternate Consideration in a reasonable
manner reflecting the relative value of any different components of
the Alternate Consideration. If holders of Common Stock are given
any choice as to the securities, cash or property to be received in
a Fundamental Transaction, then the Holder shall be given the same
choice as to the Alternate Consideration it receives upon any
exercise of this Warrant following such Fundamental Transaction.
Notwithstanding anything to the contrary, in the event of a
Fundamental Transaction (other than (x) any stock split or reverse
stock split, (y) any transaction effected solely for the purpose of
changing the jurisdiction of incorporation of the Company, or (z)
any holding company reorganization or parent-subsidiary merger not
requiring stockholder approval pursuant to Sections 251(g) or 253
of the Delaware General Corporation Law (or any successor
provisions thereof)), the Company or any Successor Entity (as
defined below) shall, at the Holder’s option, exercisable at
any time concurrently with, or within 30 days after, the
consummation of the Fundamental Transaction (or, if later, the date
of the public announcement of the applicable Fundamental
Transaction), purchase this Warrant from the Holder by paying to
the Holder an amount of cash equal to the Black Scholes Value of
the remaining unexercised portion of this Warrant on the date of
the consummation of such Fundamental Transaction; provided, however, if the Fundamental
Transaction is not within the Company's control, including not
approved by the Company's Board of Directors, Holder shall only be
entitled to receive from the Company or any Successor Entity, as of
the date of consummation of such Fundamental Transaction, the same
type or form of consideration (and in the same proportion), at the
Black Scholes Value (as defined below) of the unexercised portion
of this Warrant, that is being offered and paid to the holders of
Common Stock of the Company in connection with the Fundamental
Transaction, whether that consideration be in the form of cash,
stock or any combination thereof, or whether the holders of Common
Stock are given the choice to receive from among alternative forms
of consideration in connection with the Fundamental Transaction.
“Black Scholes
Value” means the value of this Warrant based on the
Black-Scholes Option Pricing Model obtained from the
“OV” function on Bloomberg, L.P. (“Bloomberg”) determined as
of the day of consummation of the applicable Fundamental
Transaction for pricing purposes and reflecting (A) a risk-free
interest rate corresponding to the U.S. Treasury rate for a period
equal to the time between the date of the public announcement of
the applicable Fundamental Transaction and the Termination Date,
(B) an expected volatility equal to the 100 day volatility
obtained
-7-
from
the HVT function on Bloomberg (determined utilizing a 365 day
annualization factor) as of the Trading Day immediately following
the public announcement of the applicable Fundamental Transaction,
(C) the underlying price per share used in such calculation shall
be the greater of (i) the sum of the price per share being offered
in cash, if any, plus the value of any non-cash consideration, if
any, being offered in such Fundamental Transaction and (ii) the
greater of (x) the last VWAP immediately prior to the public
announcement of such Fundamental Transaction and (y) the last VWAP
immediately prior to the consummation of such Fundamental
Transaction and (D) a remaining option time equal to the time
between the date of the public announcement of the applicable
Fundamental Transaction and the Termination Date. The payment of
the Black Scholes Value will be made by wire transfer of
immediately available funds within five Trading Days of the
Holder’s election (or, if later, on the effective date of the
Fundamental Transaction). The Company shall cause any successor
entity in a Fundamental Transaction in which the Company is not the
survivor (the “Successor Entity”) to
assume in writing all of the obligations of the Company under this
Warrant and the other Transaction Documents in accordance with the
provisions of this Section 3(e) pursuant to written agreements in
form and substance reasonably satisfactory to the Holder and
approved by the Holder (without unreasonable delay) prior to such
Fundamental Transaction and shall, at the option of the Holder,
deliver to the Holder in exchange for this Warrant a security of
the Successor Entity evidenced by a written instrument
substantially similar in form and substance to this Warrant which
is exercisable for a corresponding number of shares of capital
stock of such Successor Entity (or its parent entity) equivalent to
the shares of Common Stock acquirable and receivable upon exercise
of this Warrant (without regard to any limitations on the exercise
of this Warrant) prior to such Fundamental Transaction, and with an
exercise price which applies the exercise price hereunder to such
shares of capital stock (but taking into account the relative value
of the shares of Common Stock pursuant to such Fundamental
Transaction and the value of such shares of capital stock, such
number of shares of capital stock and such exercise price being for
the purpose of protecting the economic value of this Warrant
immediately prior to the consummation of such Fundamental
Transaction), and which is reasonably satisfactory in form and
substance to the Holder. Upon the occurrence of any such
Fundamental Transaction, the Successor Entity shall succeed to, and
be substituted for the Company (so that from and after the date of
such Fundamental Transaction, the provisions of this Warrant and
the other Transaction Documents referring to the
“Company” shall refer instead to the Successor Entity),
and the Successor Entity may exercise every right and power of the
Company and shall assume all of the obligations of the Company
under this Warrant and the other Transaction Documents with the
same effect as if such Successor Entity had been named as the
Company herein.
f) Calculations. All calculations
under this Section 3 shall be made to the nearest cent or the
nearest 1/100th of a share, as the case may be. For purposes of
this Section 3, the number of shares of Common Stock deemed to be
issued and outstanding as of a given date shall be the sum of the
number of shares of Common Stock (excluding treasury shares, if
any) issued and outstanding.
g) Notice to Holder.
i. Adjustment to Exercise Price.
Whenever the Exercise Price is adjusted pursuant to any provision
of this Section 3, the Company shall promptly deliver to the Holder
by email a notice setting forth the Exercise Price after such
adjustment and any resulting adjustment to the number of Warrant
Shares and setting forth a brief statement of the facts requiring
such adjustment.
-8-
ii. Notice to Allow Exercise by
Holder. If (A) the Company shall declare a dividend (or any
other distribution in whatever form) on the Common Stock, (B) the
Company shall declare a special nonrecurring cash dividend on or a
redemption of the Common Stock, (C) the Company shall authorize the
granting to all holders of the Common Stock rights or warrants to
subscribe for or purchase any shares of capital stock of any class
or of any rights, (D) the approval of any stockholders of the
Company shall be required in connection with any reclassification
of the Common Stock, any consolidation or merger to which the
Company (and all of its Subsidiaries, taken as a whole) is a party,
any sale or transfer of all or substantially all of the assets of
the Company, or any compulsory share exchange whereby the Common
Stock is converted into other securities, cash or property, or (E)
the Company shall authorize the voluntary or involuntary
dissolution, liquidation or winding up of the affairs of the
Company, then, in each case, the Company shall cause to be
delivered by email to the Holder at its last email or other address
as it shall appear upon the Warrant Register of the Company, at
least 20 calendar days prior to the applicable record or effective
date hereinafter specified, a notice stating (x) the date on which
a record is to be taken for the purpose of such dividend,
distribution, redemption, rights or warrants, or if a record is not
to be taken, the date as of which the holders of the Common Stock
of record to be entitled to such dividend, distributions,
redemption, rights or warrants are to be determined or (y) the date
on which such reclassification, consolidation, merger, sale,
transfer or share exchange is expected to become effective or
close, and the date as of which it is expected that holders of the
Common Stock of record shall be entitled to exchange their shares
of the Common Stock for securities, cash or other property
deliverable upon such reclassification, consolidation, merger,
sale, transfer or share exchange; provided that the failure to
deliver such notice or any defect therein or in the delivery
thereof shall not affect the validity of the corporate action
required to be specified in such notice. To the extent that any
notice provided in this Warrant constitutes, or contains, material,
non-public information regarding the Company or any of the
Subsidiaries, the Company shall simultaneously file such notice
with the Commission pursuant to a Current Report on Form 8-K. The
Holder shall remain entitled to exercise this Warrant during the
period commencing on the date of such notice to the effective date
of the event triggering such notice except as may otherwise be
expressly set forth herein.
Section
4. Transfer
of Warrant.
a) Transferability. Subject to
compliance with any applicable securities laws and the conditions
set forth in Section 4(d) hereof and to the provisions of Section
4.1 of the Purchase Agreement, this Warrant and all rights
hereunder (including, without limitation, any registration rights)
are transferable, in whole or in part, upon surrender of this
Warrant at the principal office of the Company or its designated
agent, together with a written assignment of this Warrant
substantially in the form attached 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 required, such payment, the Company shall execute
and deliver a new Warrant or Warrants in the name of the assignee
or assignees, as applicable, and in the denomination or
denominations 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. Notwithstanding anything
herein to the contrary, the Holder shall not be required to
physically surrender this Warrant to the Company unless the Holder
has assigned this Warrant in full, in which case, the Holder shall
surrender this Warrant to the Company within three (3) Trading Days
of the date on which the Holder delivers a duly executed Assignment
Form to the Company assigning this Warrant in
full. The Warrant,
if properly assigned in accordance herewith, may be exercised by a
new holder for the purchase of Warrant Shares without having a new
Warrant issued.
-9-
b) New Warrants. This Warrant may
be divided or combined with other Warrants upon presentation hereof
at the aforesaid office 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 4(a), 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. All Warrants issued on transfers or exchanges shall be
dated the Initial Exercise Date and shall be identical with this
Warrant except as to the number of Warrant Shares issuable pursuant
thereto.
c) Warrant Register. The Company
shall register this Warrant, upon records to be maintained by the
Company for that purpose (the “Warrant Register”), in
the name of the record Holder hereof from time to time. The Company
may deem and treat the registered Holder of this Warrant as the
absolute owner hereof for the purpose of any exercise hereof or any
distribution to the Holder, and for all other purposes, absent
actual notice to the contrary.
d) Transfer
Restrictions. If, at the
time of the surrender of this Warrant
in connection with any transfer of this Warrant, the transfer of
this Warrant shall not be either (i) registered pursuant to an
effective registration statement under the Securities Act and
under applicable state securities or
blue sky laws or (ii) eligible for resale without volume or
manner-of-sale restrictions or current public information
requirements pursuant to Rule 144, the Company may require, as a
condition of allowing such transfer, that the Holder or transferee
of this Warrant, as the case may be, comply with the provisions of
Section 5.7 of the Purchase Agreement.
e) Representation by the Holder.
The Holder, by the acceptance hereof, represents and warrants that
it is acquiring this Warrant and, upon any exercise hereof, will
acquire the Warrant Shares issuable upon such exercise, for its own
account and not with a view to or for distributing or reselling
such Warrant Shares or any part thereof in violation of the
Securities Act or any applicable state securities law, except
pursuant to sales registered or exempted under the Securities
Act.
Section
5. Miscellaneous.
a) No Rights as Stockholder Until
Exercise; No Settlement in Cash. This Warrant does not
entitle the Holder to any voting rights, dividends or other rights
as a stockholder of the Company prior to the exercise hereof as set
forth in Section 2(d)(i), except as expressly set forth in Section
3. Without limiting any rights of a Holder to receive Warrant
Shares on a “cashless exercise” pursuant to Section
2(c) or to receive cash payments pursuant to Section 2(d)(i) and
Section 2(d)(iv) herein, in no event shall the Company be required
to net cash settle an exercise of this Warrant.
b) Loss, Theft, Destruction or Mutilation
of Warrant. The Company covenants that upon receipt by the
Company of evidence reasonably satisfactory to it of the loss,
theft, destruction or mutilation of this Warrant or any stock
certificate relating to the Warrant Shares, and in case of loss,
theft or destruction, of indemnity or security reasonably
satisfactory to it (which, in the case of the Warrant, shall not
include the posting of any bond), and upon surrender and
cancellation of such Warrant or stock certificate, if mutilated,
the Company will make and deliver a new Warrant or stock
certificate of like tenor and dated as of such cancellation, in
lieu of such Warrant or stock certificate.
c) Saturdays, Sundays, Holidays,
etc. If the last or appointed day for the taking of any
action or the expiration of any right required or granted herein
shall not be a Trading Day, then such action may be taken or such
right may be exercised on the next succeeding Trading
Day.
-10-
d) Authorized Shares.
The
Company covenants that, during the period the Warrant is
outstanding, it will reserve from its authorized and unissued
Common Stock a sufficient number of shares to provide for the
issuance of the Warrant Shares upon the exercise of any purchase
rights under this Warrant. The Company further covenants that its
issuance of this Warrant shall constitute full authority to its
officers who are charged with the duty of issuing the necessary
Warrant Shares upon the exercise of the purchase rights under this
Warrant. The Company will take all such reasonable action as may be
necessary to assure that such Warrant Shares may be issued as
provided herein without violation of any applicable law or
regulation, or of any requirements of the Trading Market upon which
the Common Stock may be listed. The Company covenants that all
Warrant Shares which may be issued upon the exercise of the
purchase rights represented by this Warrant will, upon exercise of
the purchase rights represented by this Warrant and payment for
such Warrant Shares in accordance herewith, be duly authorized,
validly issued, fully paid and nonassessable and free from all
taxes, liens and charges created by the Company in respect of the
issue thereof (other than taxes in respect of any transfer
occurring contemporaneously with such issue).
Except
and to the extent as waived or consented to by the Holder, the
Company shall not by any action, including, without limitation,
amending its certificate of incorporation 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 Holder as set forth in this Warrant against impairment.
Without limiting the generality of the foregoing, the Company will
(i) not increase the par value of any Warrant Shares above the
amount payable therefor upon such exercise immediately prior to
such increase in par value, (ii) take all such action as may be
necessary or appropriate in order that the Company may validly and
legally issue fully paid and nonassessable Warrant Shares upon the
exercise of this Warrant and (iii) use commercially reasonable
efforts to obtain all such authorizations, exemptions or consents
from any public regulatory body having jurisdiction thereof, as may
be, necessary to enable the Company to perform its obligations
under this Warrant.
Before
taking any action which would result in an adjustment in the number
of Warrant Shares for which this Warrant is exercisable or in the
Exercise Price, the Company shall obtain all such authorizations or
exemptions thereof, or consents thereto, as may be necessary from
any public regulatory body or bodies having jurisdiction
thereof.
e) Jurisdiction. All questions
concerning the construction, validity, enforcement and
interpretation of this Warrant shall be determined in accordance
with the provisions of the Purchase Agreement.
f) Restrictions. The Holder
acknowledges that the Warrant Shares acquired upon the exercise of
this Warrant, if not registered, and the Holder does not utilize
cashless exercise, will have restrictions upon resale imposed by
state and federal securities laws.
g) Nonwaiver and Expenses. No
course of dealing or any delay or failure to exercise any right
hereunder on the part of Holder shall operate as a waiver of such
right or otherwise prejudice the Holder’s rights, powers or
remedies. Without limiting any other provision of this Warrant or
the Purchase Agreement, if the Company willfully and knowingly
fails to comply with any provision of this Warrant, which results
in any material damages to the Holder, the Company shall pay to the
Holder such amounts as shall be sufficient to cover any 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-
h) Notices. Any notice, request or
other document required or permitted to be given or delivered to
the Holder by the Company shall be delivered in accordance with the
notice provisions of the Purchase Agreement.
i) Limitation of Liability. No
provision hereof, in the absence of any affirmative action by the
Holder to exercise this Warrant to purchase Warrant Shares, and no
enumeration herein of the rights or privileges of the Holder, shall
give rise to any liability of the Holder for the purchase price of
any Common Stock or as a stockholder of the Company, whether such
liability is asserted by the Company or by creditors of the
Company.
j) Remedies. The Holder, in
addition to being entitled to exercise all rights granted by law,
including recovery of damages, will be entitled to specific
performance of its rights under this Warrant. The Company agrees
that monetary damages would not be adequate compensation for any
loss incurred by reason of a breach by it of the provisions of this
Warrant and hereby agrees to waive and not to assert the defense in
any action for specific performance that a remedy at law would be
adequate.
k) Successors and Assigns. Subject
to applicable securities laws, this Warrant and the rights and
obligations evidenced hereby shall inure to the benefit of and be
binding upon the successors and permitted assigns of the Company
and the successors and permitted assigns of Holder. The provisions
of this Warrant are intended to be for the benefit of any Holder
from time to time of this Warrant and shall be enforceable by the
Holder or holder of Warrant Shares.
l) Amendment. This Warrant may be
modified or amended or the provisions hereof waived with the
written consent of the Company and the
Holder.
m) Severability. Wherever
possible, each provision of this Warrant shall be interpreted in
such manner as to be effective and valid under applicable law, but
if any provision of this Warrant shall be prohibited by or invalid
under applicable law, such provision shall be ineffective to the
extent of such prohibition or invalidity, without invalidating the
remainder of such provisions or the remaining provisions of this
Warrant.
n) 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.
********************
(Signature Page Follows)
-12-
IN
WITNESS WHEREOF, the Company has caused this Warrant to be executed
by its officer thereunto duly authorized as of the date first above
indicated.
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AZURRX BIOPHARMA, INC.
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By:__________________________________________
Name:
Title:
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-13-
Annex A
NOTICE OF EXERCISE
TO:
AZURRX BIOPHARMA,
INC.
(1) The undersigned
hereby elects to purchase ________ Warrant Shares of the Company
pursuant to the terms of the attached Warrant (only if exercised in
full), and tenders herewith payment of the exercise price in full,
together with all applicable transfer taxes, if any.
(2) Payment shall take
the form of (check applicable box):
[ ] in
lawful money of the United States; or
[ ] if
permitted the cancellation of such number of Warrant Shares as is
necessary, in accordance with the formula set forth in subsection
2(c), to exercise this Warrant with respect to the maximum number
of Warrant Shares purchasable pursuant to the cashless exercise
procedure set forth in subsection 2(c).
(3) Please issue said
Warrant Shares in the name of the undersigned or in such other name
as is specified below:
_______________________________
The
Warrant Shares shall be delivered to the following DWAC Account
Number:
_______________________________
_______________________________
_______________________________
(4)
Accredited
Investor. The undersigned is an “accredited
investor” as defined in Regulation D promulgated under the
Securities Act of 1933, as amended.
[SIGNATURE
OF HOLDER]
Name of
Investing Entity:
________________________________________________________________________
Signature of Authorized Signatory of Investing
Entity:
_________________________________________________
Name of
Authorized Signatory:
___________________________________________________________________
Title
of Authorized Signatory:
____________________________________________________________________
Date:
________________________________________________________________________________________
A-1
Annex B
ASSIGNMENT FORM
(To assign the foregoing Warrant, execute this form and
supply required information. Do not use this form to purchase
shares.)
FOR
VALUE RECEIVED, the foregoing Warrant and all rights evidenced
thereby are hereby assigned to
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Name:
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(Please Print)
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Address:
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Phone Number:
Email Address:
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(Please
Print)
______________________________________
______________________________________
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Dated: _______________ __, ______
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Holder’s
Signature:
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Holder’s
Address:
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B-1
Exhibit 10.1
SECURITIES PURCHASE AGREEMENT
This
Securities Purchase Agreement (this “Agreement”) is dated as
of December 31, 2020, between AzurRx BioPharma, Inc., a Delaware
corporation (the “Company”), and the
purchaser identified on the signature page hereto (including its
successors and assigns, the “Purchaser”).
WHEREAS, subject to
the terms and conditions set forth in this Agreement and pursuant
to (i) an effective registration statement under the Securities Act
of 1933, as amended (the “Securities Act”) as to
the Registered Preferred Shares and (ii) pursuant to an exemption
from the registration requirements of Section 5 of the Securities
Act contained in Section 4(a)(2) thereof and Rule 506 promulgated
thereunder as to the Warrants and the Unregistered Preferred
Shares, the Company desires to issue and sell to the Purchaser, and
the Purchaser desires to purchase from the Company, securities of
the Company as more fully described in this Agreement.
NOW,
THEREFORE, IN CONSIDERATION of the mutual covenants contained in
this Agreement, and for other good and valuable consideration, the
receipt and adequacy of which are hereby acknowledged, the Company
and the Purchaser agree as follows:
ARTICLE I.
DEFINITIONS
1.1 Definitions.
In addition to the terms defined elsewhere in this Agreement, for
all purposes of this Agreement, the following terms have the
meanings set forth in this Section 1.1:
“Acquiring
Person” shall have the
meaning ascribed to such term in Section 4.5.
“Action” shall have the
meaning ascribed to such term in Section 3.1(j).
“Affiliate” means any
Person that, directly or indirectly through one or more
intermediaries, controls or is controlled by or is under common
control with a Person, as such terms are used in and construed
under Rule 405 under the Securities Act.
“Board of Directors” means
the board of directors of the Company.
“Business Day” means any
day except any Saturday, any Sunday, any day which is a federal
legal holiday in the United States or any day on which banking
institutions in the State of New York are authorized or required by
law or other governmental action to close.
“Certificate of
Designation” means the Certificate of Designation to
be filed prior to the Closing by the Company with the Secretary of
State of Delaware, in the form of Exhibit A attached
hereto.
“Closing” means the
closing of the purchase and sale of the Securities pursuant to
Section 2.1.
“Closing Date” means the
Trading Day on which all of the Transaction Documents have been
executed and delivered by the applicable parties thereto, and all
conditions precedent to (i) the Purchaser’s obligations to
pay the Subscription Amount and (ii) the Company’s
obligations to deliver the Securities, in each case, have been
satisfied or waived.
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-1-
“Commission”
means the United States Securities and Exchange
Commission.
“Common Stock” means the
common stock of the Company, par value $0.0001 per share, and any
other class of securities into which such securities may hereafter
be reclassified or changed.
“Common Stock Equivalents”
means any securities of the Company or the Subsidiaries which would
entitle the holder thereof to acquire at any time Common Stock,
including, without limitation, any debt, preferred stock, right,
option, warrant or other instrument that is at any time convertible
into or exercisable or exchangeable for, or otherwise entitles the
holder thereof to receive, Common Stock.
“Company Counsel” means
Lowenstein Sandler LLP, One Lowenstein Drive, Roseland, New Jersey
07068.
“Conversion Shares” means
the shares of Common Stock issuable upon conversion of the
Preferred Stock (or exercise of any Prefunded Warrants, as
applicable), in accordance with the terms of the Certificate of
Designation.
“Covered Securities” means
any shares of Common Stock underlying (x) any shares of preferred
stock issuable to First Wave Bio, Inc., as consideration for the
License Agreement (if other than the Preferred Stock), (y) any
warrants issuable to the Placement Agent, as compensation for the
placement of the Securities hereunder, and (z) any securities
issuable to holders of Series B Exchange Rights, as a result of the
transactions contemplated by this Agreement.
“Disclosure Schedules”
means the Disclosure Schedules of the Company delivered
concurrently herewith.
“Disclosure Time” means,
(i) if this Agreement is signed on a day that is not a Trading Day
or after 9:00 a.m. (New York City time) and before midnight (New
York City time) on any Trading Day, 9:01 a.m. (New York City time)
on the Trading Day immediately following the date hereof, unless
otherwise instructed as to an earlier time by the Placement Agent,
and (ii) if this Agreement is signed between midnight (New York
City time) and 9:00 a.m. (New York City time) on any Trading Day,
no later than 9:01 a.m. (New York City time) on the date hereof,
unless otherwise instructed as to an earlier time by the Placement
Agent.
“Effective Date” means the
earliest of the date that (a) the initial Resale Registration
Statement has been declared effective by the Commission, (b) all of
the Conversion Shares and Warrant Shares have been sold pursuant to
Rule 144 or may be sold pursuant to Rule 144 without the
requirement for the Company to be in compliance with the current
public information required under Rule 144 and without volume or
manner-of-sale restrictions, (c) following the one year anniversary
of the Closing Date provided that a holder of Conversion Shares or
Warrant Shares is not an Affiliate of the Company, or (d) all of
the Conversion Shares and Warrant Shares may be sold pursuant to an
exemption from registration under Section 4(a)(1) of the Securities
Act without volume or manner-of-sale restrictions and Company
Counsel has delivered to such holders a standing written
unqualified opinion that resales may then be made by such holders
of the Conversion Shares and Warrant Shares pursuant to such
exemption which opinion shall be in form and substance reasonably
acceptable to such holders.
“Evaluation Date” shall
have the meaning ascribed to such term in Section
3.1(s).
“Exchange Act” means the
Securities Exchange Act of 1934, as amended, and the rules and
regulations promulgated thereunder.
-2-
“Exempt Issuance” means
the issuance of (a) shares of Common Stock or Common Stock
Equivalents to employees, officers or directors of the Company
pursuant to any stock or option plan duly adopted for such purpose,
by a majority of the non-employee members of the Board of Directors
or a majority of the members of a committee of non-employee
directors established for such purpose (“Board Approval”) for
services rendered to the Company, (b) up to 500,000 shares of Common Stock or
Common Stock Equivalents to consultants or advisors, or to their
designees, for bona fide services provided in connection with the
offer or sale of securities in a capital-raising transaction, or
directly or indirectly promoting or maintaining a market for the
Company’s securities; provided that such securities are
issued as “restricted securities” (as defined in Rule
144) and carry no registration rights that require or permit the
filing of any registration statement in connection therewith during
the prohibition period in Section 4.11(a) herein, (c) securities
upon the exercise or exchange of or conversion of any Securities
issued hereunder and/or other securities exercisable or
exchangeable for or convertible into shares of Common Stock issued
and outstanding on the date of this Agreement, provided that such
securities have not been amended since the date of this Agreement
to increase the number of such securities or to decrease the
exercise price, exchange price or conversion price of such
securities (other than in connection with stock splits or
combinations) or to extend the term of such securities, (d) to
banks, equipment lessors or other financial institutions, or to
real property lessors, pursuant to a debt financing, equipment
lease financing, credit agreement, real property lease or other
commercial transaction, provided that the primary purpose thereof
is not to raise equity capital, and subject to Board Approval and
(e) securities issued pursuant to acquisitions or strategic
transactions approved by a majority of the disinterested directors
of the Company, provided that such securities are issued as
“restricted securities” (as defined in Rule 144) and
carry no registration rights that require or permit the filing of
any registration statement in connection therewith during the
prohibition period in Section 4.11(a) herein, and provided that any
such issuance shall only be to a Person (or to the equityholders of
a Person) which is, itself or through its subsidiaries, an
operating company or an owner of an asset in a business synergistic
with the business of the Company and shall provide to the Company
additional benefits in addition to the investment of funds, but
shall not include a transaction in which the Company is issuing
securities primarily for the purpose of raising capital or to an
entity whose primary business is investing in
securities
“FCPA” means the Foreign
Corrupt Practices Act of 1977, as amended.
“FDA” shall have the
meaning ascribed to such term in Section 3.1(kk).
“FDCA” shall have the
meaning ascribed to such term in Section 3.1(kk).
“GAAP” shall have the
meaning ascribed to such term in Section 3.1(h).
“Haynes and Boone” means
Haynes and Boone, LLP, 30 Rockefeller Plaza, 26th Floor, New York,
New York 10012.
“Indebtedness” shall have
the meaning ascribed to such term in Section 3.1(bb).
“Intellectual Property
Rights” shall have the meaning ascribed to such term
in Section 3.1(p).
“Legend Removal Date”
shall have the meaning ascribed to such term in Section
4.1(e).
“Liens” means a lien,
charge pledge, security interest, encumbrance, right of first
refusal, preemptive right or other restriction.
“Material Adverse Effect”
shall have the meaning assigned to such term in Section
3.1(b).
“Material Permits” shall
have the meaning ascribed to such term in Section
3.1(n).
-3-
“Per Preferred Purchase
Price” equals $750.00 per share of Preferred Stock,
subject to adjustment for reverse and forward stock splits, stock
dividends, stock combinations and other similar transactions of the
Common Stock that occur after the date of this
Agreement.
“Person” means an
individual or corporation, partnership, trust, incorporated or
unincorporated association, joint venture, limited liability
company, joint stock company, government (or an agency or
subdivision thereof) or other entity of any kind.
“Pharmaceutical Product”
shall have the meaning ascribed to such term in Section
3.1(kk).
“Placement Agent” means
H.C. Wainwright & Co., LLC.
“Preferred Stock” means
the Series C 9.00% Convertible Junior Preferred Stock of the
Company, par value $0.0001, issued pursuant to the term so of the
Certificate of Designation.
“Prefunded Warrants” means
any prefunded warrants issuable in lieu of Common Stock pursuant to
the Certificate of Designation, in the form of Exhibit D attached
hereto.
“Proceeding” means an
action, claim, suit, investigation or proceeding (including,
without limitation, an informal investigation or partial
proceeding, such as a deposition), whether commenced or
threatened.
“Prospectus” means the
final base prospectus filed for the Shelf Registration
Statement.
“Prospectus Supplement”
means the supplement to the Prospectus complying with Rule 424(b)
of the Securities Act that is filed with the Commission and
delivered by the Company to the Purchaser at the
Closing.
“Proxy Statement” shall
have the meaning ascribed to such term in Section
4.16.
“Public Information
Failure” shall have the meaning ascribed to such term
in Section 4.2(b).
“Public Information Failure
Payments” shall have the meaning ascribed to such term
in Section 4.2(b).
“Purchaser Party” shall
have the meaning ascribed to such term in Section 4.8.
“Registered Conversion
Shares” means the Conversion Shares issuable upon
conversion of Registered Preferred Shares (or exercise of any
Registered Prefunded Warrants, as applicable).
“Registered Preferred
Shares” shall have the meaning ascribed to such term
in Section 2.1.
“Registered Prefunded
Warrants” means any Prefunded Warrants issuable in
respect of Registered Preferred Shares in accordance with the
Certificate of Designation.
“Registration Rights
Agreement” means the Registration Rights Agreement,
dated on or about the date hereof, among the Company and the
Purchaser, in the form of Exhibit B attached
hereto.
“Shelf Registration
Statement” means the effective registration statement
with Commission File No. 333-231954 which registers the sale of the
Registered Preferred Shares to the Purchaser.
-4-
“Required Approvals” shall
have the meaning ascribed to such term in Section
3.1(e).
“Resale Registration
Statement” means a registration statement meeting the
requirements set forth in the Registration Rights Agreement and
covering the resale by the Purchaser of the Conversion Shares and
the Warrant Shares.
“Rule 144” means Rule 144
promulgated by the Commission pursuant to the Securities Act, as
such Rule may be amended or interpreted from time to time, or any
similar rule or regulation hereafter adopted by the Commission
having substantially the same purpose and effect as such
Rule.
“Rule 424” means Rule 424
promulgated by the Commission pursuant to the Securities Act, as
such Rule may be amended or interpreted from time to time, or any
similar rule or regulation hereafter adopted by the Commission
having substantially the same purpose and effect as such
Rule.
“SEC Reports” shall have
the meaning ascribed to such term in Section 3.1(h).
“Securities” means the
Preferred Stock, the Prefunded Warrants, the Warrants, the Warrant
Shares and the Conversion Shares.
“Securities Act” means the
Securities Act of 1933, as amended, and the rules and regulations
promulgated thereunder.
“Series B Exchange Rights”
means the rights set forth in Section 8 of the Certificate of
Designations, Powers, Preferences and Rights of the Company’s
Series B Convertible Preferred Stock, par value $0.0001 per
share.
“Short Sales” means all
“short sales” as defined in Rule 200 of Regulation SHO
under the Exchange Act (but shall not
be deemed to include locating and/or borrowing shares of Common Stock).
“Stockholder Approval”
means such approval as may be required from the stockholders of the
Company in accordance with applicable law, the applicable rules and
regulations of the Nasdaq Stock Market (or any successor entity),
the Company’s certificate of incorporation and bylaws and the
General Corporate Law of the State of Delaware with respect to the
transactions contemplated by the Transaction Documents, including
(x) an increase in the number of authorized shares of Common Stock
above 150,000,000 and (y) the issuance of any Underlying Shares or
other Covered Securities in excess of the Issuable Maximum (as
defined in the Certificate of Designation).
“Stockholder Meeting”
shall have the meaning ascribed to such term in Section
4.16.
“Stockholder Meeting
Deadline” shall have the meaning ascribed to such term
in Section 4.16.
“Subscription Amount”
means, as to the Purchaser, the aggregate amount to be paid for
Preferred Stock and Warrants purchased hereunder as specified below
the Purchaser’s name on the signature page of this Agreement
and next to the heading “Subscription Amount,” in
United States dollars and in immediately available
funds.
“Subsidiary” means any
subsidiary of the Company as set forth in the SEC Reports and
shall, where applicable, also include any direct or indirect
subsidiary of the Company formed or acquired after the date
hereof.
-5-
“Trading Day” means a day
on which the principal Trading Market is open for
trading.
“Trading Market” means any
of the following markets or exchanges on which the Common Stock is
listed or quoted for trading on the date in question: the NYSE
American, the Nasdaq Capital Market, the Nasdaq Global Market, the
Nasdaq Global Select Market, the New York Stock Exchange, OTCQB or
OTCQX (or any successors to any of the foregoing).
“Transaction Documents”
means this Agreement, the Warrants, the Registration Rights
Agreement, all exhibits and schedules thereto and hereto and any
other documents or agreements executed in connection with the
transactions contemplated hereunder.
“Transfer Agent” means
Colonial Stock Transfer Company, Inc., the current transfer agent
of the Company, with a mailing address of 66 Exchange Place,
1st Floor,
Salt Lake City, Utah 84111, and any successor transfer agent of the
Company.
“Underlying Shares” means,
collectively, the shares of Common Stock issued and issuable upon
conversion of the Series C Preferred Stock (or exercise of any
Unregistered Prefunded Warrants, as applicable), and upon exercise
of the Warrants.
“Unregistered Conversion
Shares” means the Conversion Shares issuable upon
conversion of the Unregistered Preferred Shares (or exercise of any
Unregistered Prefunded Warrants, as applicable).
“Unregistered Preferred
Shares” shall have the meaning ascribed to such term
in Section 2.1.
“Unregistered Prefunded
Warrants” means any Prefunded Warrants issuable in
respect of the Unregistered Preferred Shares in accordance with the
Certificate of Designation.
“Variable Rate
Transaction” shall have the meaning ascribed to such
term in Section 4.12(b). “VWAP” means, for any
date, the price determined by the first of the following clauses
that applies: (a) if the Common Stock is then listed or quoted on a
Trading Market, the daily volume weighted average price of the
Common Stock for such date (or the nearest preceding date) on the
Trading Market on which the Common Stock is then listed or quoted
as reported by Bloomberg L.P. (based on a Trading Day from 9:30
a.m. (New York City time) to 4:02 p.m. (New York City time)),
(b) if OTCQB or OTCQX is not a Trading Market, the volume
weighted average price of the Common Stock for such date (or the
nearest preceding date) on OTCQB or OTCQX as applicable, (c) if the
Common Stock is not then listed or quoted for trading on OTCQB or
OTCQX and if prices for the Common Stock are then reported on the
Pink Open Market (or a similar organization or agency succeeding to
its functions of reporting prices), the most recent bid price per
share of the Common Stock so reported, or (d) in all other
cases, the fair market value of a share of Common Stock as
determined by an independent appraiser selected in good faith by
the purchasers of a majority in interest of the Securities then
outstanding and reasonably acceptable to the Company, the fees and
expenses of which shall be paid by the Company.
“Warrants” means the
Common Stock purchase warrants delivered to the Purchaser at the
Closing in accordance with Section 2.2(a) hereof, which Warrants
shall be exercisable immediately and have a term of exercise equal
to five and one-half years, in the form of Exhibit C attached
hereto.
“Warrant Shares” means the
shares of Common Stock issuable upon exercise of the
Warrants.
-6-
ARTICLE II.
PURCHASE AND SALE
2.1 Closing.
On the Closing Date, upon the terms and subject to the conditions
set forth herein, the Company agrees to sell, and the Purchaser
agrees to purchase, up to an aggregate of $8,000,001 of Preferred
Stock and Warrants. The Purchaser’s Subscription Amount as
set forth on the signature page hereto executed by the Purchaser
(i) with respect to any Registered Conversion Shares issuable at
Closing shall be made available for “Delivery Versus
Payment” (“DVP”) settlement with the Company or its
designees or (ii) with respect to any other Securities being
acquired hereunder, shall be delivered to the Company or its
designees, via wire transfer, immediately available funds. The
Company shall deliver to the Purchaser its respective shares of
Preferred Stock and a Warrant as determined pursuant to Section
2.2(a), and the Company and the Purchaser shall deliver the other
items set forth in Section 2.2 deliverable at the Closing. Upon
satisfaction of the covenants and conditions set forth in Sections
2.2 and 2.3, the Closing shall occur at the offices of the
Placement Agent or such other location as the parties shall
mutually agree. 5,333.3333 shares of Preferred Stock will be
registered under Securities Act pursuant to the Shelf Registration
Statement (the “Registered Preferred
Shares”), and 5,333.3333
shares of Preferred Stock (the “Unregistered Preferred
Shares”), together with
the Warrants, will be issued in a private placement pursuant to an
exemption from the registration requirements of Section 5 of the
Securities Act contained in Section 4(a)(2) thereof and Rule 506
promulgated thereunder. Unless otherwise directed by the Placement
Agent, on the Closing Date, the Company shall issue the Preferred
Stock registered in the Purchaser’s name and address in book
entry form and the Purchaser shall deliver payment therefor by wire
transfer to the Company. The Company covenants that, if
the Purchaser delivers a Notice of Conversion to convert any shares
of Preferred Stock between the date hereof and the Closing Date,
the Company shall deliver the Conversion Shares (or Prefunded
Warrants, as applicable) to the Purchaser on the Closing Date in
connection with such Notice of Conversion.
2.2 Deliveries.
(a) On or prior to the
Closing Date, the Company shall deliver or cause to be delivered to
the Purchaser the following:
(i) this Agreement duly
executed by the Company;
(ii) a
legal opinion of Company Counsel, in such form as is reasonably
satisfactory to the Purchaser and the Placement Agent;
(iii) the
Company’s wire instructions, on Company letterhead and
executed by the Chief Executive Officer or Chief Financial
Officer;
(iv) subject
to the last sentence of Section 2.1, a copy of the irrevocable
instructions to the Transfer Agent instructing the Transfer Agent
to deliver on an expedited basis, a copy of an account statement
issued by the Transfer Agent evidencing a book entry notification
in the name of the Purchaser evidencing a number of shares of
Preferred Stock equal to the Purchaser’s Subscription Amount
divided by the Per Preferred Purchase Price, registered in the name
of the Purchaser;
(v) a Warrant
registered in the name of the Purchaser to purchase such number of
shares of Common Stock equal to 100% of the Conversion Shares
issuable upon the full conversion of the Purchaser’s shares
of Preferred Stock (or exercise of any Prefunded Warrants, as
applicable), with an exercise price equal to $0.80, subject to
adjustment therein;
(vi) the
Prospectus and Prospectus Supplement (which may be delivered in
accordance with Rule 172 under the Securities Act);
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(vii) evidence
of the filing and acceptance of the Certificate of Designation from
the Secretary of State of Delaware; and
(viii) the
Registration Rights Agreement duly executed by the
Company.
(b) On or prior to the
Closing Date, the Purchaser shall deliver or cause to be delivered
to the Company, the following:
(i) this Agreement duly
executed by the Purchaser;
(ii) the
Purchaser’s Subscription Amount, which shall be made
available (A) for DVP settlement with the Company or its designees
for any Registered Conversion Shares issuable at the Closing and
(B) by wire transfer to the account specified in writing by the
Company for any other Securities issuable at Closing;
and
(iii) the
Registration Rights Agreement duly executed by the
Purchaser.
2.3 Closing
Conditions.
(a) The
obligations of the Company hereunder in connection with the Closing
are subject to the following conditions being
met:
(i) the accuracy in all
material respects (or, to the extent representations or warranties
are qualified by materiality or Material Adverse Effect, in all
respects) when made and on the Closing Date of the representations
and warranties of the Purchaser contained herein (unless as of a
specific date therein in which case they shall be accurate as of
such date);
(ii) all
obligations, covenants and agreements of the Purchaser required to
be performed at or prior to the Closing Date shall have been
performed;
(iii) the
delivery by the Purchaser of the items set forth in Section 2.2(b)
of this Agreement; and
(iv) the
delivery by First Wave Bio, Inc. to the Company of the License
Agreement by and between such parties (the “License Agreement”), duly
executed by First Wave Bio, Inc.
(c) The respective
obligations of the Purchaser hereunder in connection with the
Closing are subject to the following conditions being
met:
(i) the accuracy in all
material respects (or, to the extent representations or warranties
are qualified by materiality or Material Adverse Effect, in all
respects) when made and on the Closing Date of the representations
and warranties of the Company contained herein (unless as of a
specific date therein in which case they shall be accurate as of
such date);
(ii) all
obligations, covenants and agreements of the Company required to be
performed at or prior to the Closing Date shall have been
performed;
(iii) the
delivery by the Company of the items set forth in Section 2.2(a) of
this Agreement;
(iv) there
shall have been no Material Adverse Effect with respect to the
Company since the date hereof; and
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(v) from the date
hereof to the Closing Date, trading in the Common Stock shall not
have been suspended by the Commission or the Company’s
principal Trading Market, and, at any time prior to the Closing
Date, trading in securities generally as reported by Bloomberg L.P.
shall not have been suspended or limited, or minimum prices shall
not have been established on securities whose trades are reported
by such service, or on any Trading Market, nor shall a banking
moratorium have been declared either by the United States or New
York State authorities nor shall there have occurred any material
outbreak or escalation of hostilities or other national or
international calamity of such magnitude in its effect on, or any
material adverse change in, any financial market which, in each
case, in the reasonable judgment of the Purchaser, makes it
impracticable or inadvisable to purchase the Securities at the
Closing.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES
3.1 Representations
and Warranties of the Company.
Except as set forth in the Disclosure Schedules, which Disclosure
Schedules shall be deemed a part hereof and shall qualify any
representation or otherwise made herein to the extent of the
disclosure contained in the corresponding section of the Disclosure
Schedules, or as set forth in the SEC Reports, the Company hereby
makes the following representations and warranties to the
Purchaser:
(a) Subsidiaries. All of the direct
and indirect subsidiaries of the Company are set forth in the
Disclosure Schedules. The Company owns, directly or indirectly, all
of the capital stock or other equity interests of each Subsidiary
free and clear of any Liens, and all of the issued and outstanding
shares of capital stock of each Subsidiary are validly issued and
are fully paid, non-assessable and free of preemptive and similar
rights to subscribe for or purchase securities. If the Company has
no subsidiaries, all other references to the Subsidiaries or any of
them in the Transaction Documents shall be
disregarded.
(b) Organization and Qualification.
The Company and each of the Subsidiaries is an entity duly
incorporated or otherwise organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation or
organization, with the requisite power and authority to own and use
its properties and assets and to carry on its business as currently
conducted. Neither the Company nor any Subsidiary is in violation
nor default of any of the provisions of its respective certificate
or articles of incorporation, bylaws or other organizational or
charter documents. Each of the Company and the Subsidiaries is duly
qualified to conduct business and is in good standing as a foreign
corporation or other entity in each jurisdiction in which the
nature of the business conducted or property owned by it makes such
qualification necessary, except where the failure to be so
qualified or in good standing, as the case may be, would not have
or reasonably be expected to result in: (i) a material adverse
effect on the legality, validity or enforceability of any
Transaction Document, (ii) a material adverse effect on the results
of operations, assets, business, prospects or condition (financial
or otherwise) of the Company and the Subsidiaries, taken as a
whole, or (iii) a material adverse effect on the Company’s
ability to perform in any material respect on a timely basis its
obligations under any Transaction Document (any of (i), (ii) or
(iii), a “Material
Adverse Effect”) and no Proceeding has been instituted
in any such jurisdiction revoking, limiting or curtailing or
seeking to revoke, limit or curtail such power and authority or
qualification.
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(c) Authorization; Enforcement. The
Company has the requisite corporate power and authority to enter
into and to consummate the transactions contemplated by this
Agreement and each of the other Transaction Documents and otherwise
to carry out its obligations hereunder and thereunder. The
execution and delivery of this Agreement and each of the other
Transaction Documents by the Company and the consummation by it of
the transactions contemplated hereby and thereby have been duly
authorized by all necessary action on the part of the Company and
no further action is required by the Company, the Board of
Directors or the Company’s stockholders in connection
herewith or therewith other than in connection with the Required
Approvals. This Agreement and each other Transaction Document to
which it is a party has been (or upon delivery will have been) duly
executed by the Company and, when delivered in accordance with the
terms hereof and thereof, will constitute the valid and binding
obligation of the Company enforceable against the Company in
accordance with its terms, except (i) as limited by general
equitable principles and applicable bankruptcy, insolvency,
reorganization, moratorium and other laws of general application
affecting enforcement of creditors’ rights generally, (ii) as
limited by laws relating to the availability of specific
performance, injunctive relief or other equitable remedies and
(iii) insofar as indemnification and contribution provisions may be
limited by applicable law.
(d) No Conflicts. The execution,
delivery and performance by the Company of this Agreement and the
other Transaction Documents to which it is a party, the issuance
and sale of the Securities and the consummation by it of the
transactions contemplated hereby and thereby do not and will not
(i) conflict with or violate any provision of the Company’s
or any Subsidiary’s certificate or articles of incorporation,
bylaws or other organizational or charter documents, or (ii)
conflict with, or constitute a default (or an event that with
notice or lapse of time or both would become a default) under,
result in the creation of any Lien upon any of the properties or
assets of the Company or any Subsidiary, or give to others any
rights of termination, amendment, anti-dilution or similar
adjustments, acceleration or cancellation (with or without notice,
lapse of time or both) of, any agreement, credit facility, debt or
other instrument (evidencing a Company or Subsidiary debt or
otherwise) or other understanding to which the Company or any
Subsidiary is a party or by which any property or asset of the
Company or any Subsidiary is bound or affected, or (iii) subject to
the Required Approvals, conflict with or result in a violation of
any law, rule, regulation, order, judgment, injunction, decree or
other restriction of any court or governmental authority to which
the Company or a Subsidiary is subject (including federal and state
securities laws and regulations), or by which any property or asset
of the Company or a Subsidiary is bound or affected; except in the
case of each of clauses (ii) and (iii), such as would not have or
reasonably be expected to result in a Material Adverse
Effect.
(e) Filings, Consents and
Approvals. The Company is not required to obtain any
consent, waiver, authorization or order of, give any notice to, or
make any filing or registration with, any court or other federal,
state, local or other governmental authority or other Person in
connection with the execution, delivery and performance by the
Company of the Transaction Documents, other than: (i) the filings
required pursuant to Section 4.4 of this Agreement, (ii) the filing
with the Commission of the Prospectus Supplement, (iii)
application(s) to each applicable Trading Market for the listing of
the Conversion Shares and Warrant Shares for trading thereon in the
time and manner required thereby, (iv) the filing of Form D with
the Commission, (v) the filing of a registration statement with the
Commission pursuant to the Registration Rights Agreement, and (vi)
such filings as are required to be made under applicable state
securities laws (collectively, the “Required
Approvals”).
-10-
(f) Issuance of the Securities;
Registration. The Securities are duly authorized and, when
issued and paid for in accordance with the applicable Transaction
Documents, will be duly and validly issued, fully paid and
nonassessable, free and clear of all Liens imposed by the Company.
The Warrant Shares, when issued in accordance with the terms of the
Warrants, will be validly issued, fully paid and nonassessable,
free and clear of all Liens imposed by the Company. The Conversion
Shares, when converted, will be issued in accordance with the
Certificate of Designation and will be validly issued, fully paid
and nonassessable, free and clear of all Liens imposed by the
Company. The Company has reserved from its duly authorized capital
stock the maximum number of shares of Common Stock issuable
pursuant to this Agreement, the Warrants and the Certificate of
Designation. The Company has prepared and filed the Shelf
Registration Statement in conformity with the requirements of the
Securities Act, which became effective on June 25, 2019, including
the Prospectus, and such amendments and supplements thereto as may
have been required to the date of this Agreement. The Company was
at the time of the filing of the Shelf Registration Statement
eligible to use Form S-3. The Company is eligible to use Form S-3
under the Securities Act and it meets the transaction requirements
with respect to the aggregate market value of securities being sold
pursuant to the Shelf Registration Statement in this offering and
during the twelve (12) calendar months prior to this offering, as
set forth in General Instruction I.B.6 of Form S-3. The Shelf
Registration Statement is effective under the Securities Act and no
stop order preventing or suspending the effectiveness of the Shelf
Registration Statement or suspending or preventing the use of the
Prospectus has been issued by the Commission and no proceedings for
that purpose have been instituted or, to the knowledge of the
Company, are threatened by the Commission. The Company, if required
by the rules and regulations of the Commission, shall file the
Prospectus Supplement with the Commission pursuant to Rule 424(b).
At the time the Shelf Registration Statement and any amendments
thereto became effective, at the date of this Agreement and at the
Closing Date, the Shelf Registration Statement and any amendments
thereto conformed and will conform in all material respects to the
requirements of the Securities Act and did not and will not contain
any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make
the statements therein not misleading; and the Prospectus and any
amendments or supplements thereto, at the time the Prospectus or
any amendment or supplement thereto was issued and at the Closing
Date, conformed and will conform in all material respects to the
requirements of the Securities Act and did not and will not contain
an untrue statement of a material fact or omit to state a material
fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not
misleading.
(g) Capitalization. The
capitalization of the Company as of the date hereof is as set forth
on Schedule 3.1(g),
which Schedule
3.1(g) shall also include the number of shares of Common
Stock owned beneficially, and of record, by Affiliates of the
Company as of the date hereof. The Company has not issued any
capital stock since its most recently
filed periodic report under the Exchange Act, other than
pursuant to the exercise of employee stock options under the
Company’s stock option plans, the issuance of shares of
Common Stock to employees pursuant to the Company’s employee
stock purchase plans and pursuant to the conversion and/or exercise
of Common Stock Equivalents outstanding as of the date of the most
recently filed periodic report under the Exchange Act. No Person
has any right of first refusal, preemptive right, right of
participation, or any similar right to participate in the
transactions contemplated by the Transaction Documents. Except as a
result of the purchase and sale of the Securities or as set forth
in Schedule 3.1(g),
there are no outstanding options, warrants, scrip rights to
subscribe to, calls or commitments of any character whatsoever
relating to, or securities, rights or obligations convertible into
or exercisable or exchangeable for, or giving any Person any right
to subscribe for or acquire, any shares of Common Stock or the
capital stock of any Subsidiary, or contracts, commitments,
understandings or arrangements by which the Company or any
Subsidiary is or may become bound to issue additional shares of
Common Stock or Common Stock Equivalents or capital stock of any
Subsidiary. Except as set forth in Schedule 3.1(g), the issuance
and sale of the Securities will not obligate the Company or any
Subsidiary to issue shares of Common Stock or other securities to
any Person (other than the Purchaser). Except as set forth in
Schedule 3.1(g),
there are no outstanding securities or instruments of the Company
or any Subsidiary with any provision that adjusts the exercise,
conversion, exchange or reset price of such security or instrument
upon an issuance of securities by the Company or any Subsidiary.
There are no outstanding securities or instruments of the Company
or any Subsidiary that contain any redemption or similar
provisions, and there are no contracts, commitments, understandings
or arrangements by which the Company or any Subsidiary is or may
become bound to redeem a security of the Company or such
Subsidiary. The Company does not have any stock appreciation rights
or “phantom stock” plans or agreements or any similar
plan or agreement. All of the outstanding shares of capital stock
of the Company are duly authorized, validly issued, fully paid and
nonassessable, have been issued in compliance with all federal and
state securities laws, and none of such outstanding shares was
issued in violation of any preemptive rights or similar rights to
subscribe for or purchase securities. No further approval or
authorization of any stockholder, the Board of Directors or others
is required for the issuance and sale of the Securities. There are
no stockholders agreements, voting agreements or other similar
agreements with respect to the Company’s capital stock to
which the Company is a party or, to the knowledge of the Company,
between or among any of the Company’s
stockholders.
-11-
(h) SEC Reports; Financial
Statements. The Company has filed all reports, schedules,
forms, statements and other documents required to be filed by the
Company under the Securities Act and the Exchange Act, including
pursuant to Section 13(a) or 15(d) thereof, for the two years
preceding the date hereof (or such shorter period as the Company
was required by law or regulation to file such material) (the
foregoing materials, including the exhibits thereto and documents
incorporated by reference therein, together with the Prospectus and
the Prospectus Supplement, being collectively referred to herein as
the “SEC
Reports”) on a timely basis or has received a valid
extension of such time of filing and has filed any such SEC Reports
prior to the expiration of any such extension. As of their
respective dates, the SEC Reports complied in all material respects
with the requirements of the Securities Act and the Exchange Act,
as applicable, and none of the SEC Reports, when filed, contained
any untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary in order
to make the statements therein, in the light of the circumstances
under which they were made, not misleading. The Company has never
been an issuer subject to Rule 144(i) under the Securities Act. The
financial statements of the Company included in the SEC Reports
comply in all material respects with applicable accounting
requirements and the rules and regulations of the Commission with
respect thereto as in effect at the time of filing. Such financial
statements have been prepared in accordance with United States
generally accepted accounting principles applied on a consistent
basis during the periods involved (“GAAP”), except as may be
otherwise specified in such financial statements or the notes
thereto and except that unaudited financial statements may not
contain all footnotes required by GAAP, and fairly present in all
material respects the financial position of the Company and its
consolidated Subsidiaries as of and for the dates thereof and the
results of operations and cash flows for the periods then ended,
subject, in the case of unaudited statements, to normal,
immaterial, year-end audit adjustments.
(i) Material Changes; Undisclosed Events,
Liabilities or Developments. Since the date of the latest
audited financial statements included within the SEC Reports,
except as set forth in the SEC Reports or on Schedule 3.1(i), (i) there has
been no event, occurrence or development that has had or that would
reasonably be expected to result in a Material Adverse Effect, (ii)
the Company has not incurred any liabilities (contingent or
otherwise) other than (A) trade payables and accrued expenses
incurred in the ordinary course of business consistent with past
practice and (B) liabilities not required to be reflected in the
Company’s financial statements pursuant to GAAP or disclosed
in filings made with the Commission, (iii) the Company has not
altered its method of accounting, (iv) the Company has not declared
or made any dividend or distribution of cash or other property to
its stockholders or purchased, redeemed or made any agreements to
purchase or redeem any shares of its capital stock and (v) the
Company has not issued any equity securities to any officer,
director or Affiliate, except pursuant to existing Company stock
option plans. The Company does not have pending before the
Commission any request for confidential treatment of information.
Except for the issuance of the Securities contemplated by this
Agreement or as set forth on Schedule 3.1(i), no material
event, liability, fact, circumstance, occurrence or development has
occurred or exists or is reasonably expected to occur or exist with
respect to the Company or its Subsidiaries or their respective
businesses, prospects, properties, operations, assets or financial
condition that would be required to be disclosed by the Company
under applicable securities laws at the time this representation is
made or deemed made that has not been publicly disclosed at least 1
Trading Day prior to the date that this representation is
made.
(j) Litigation. Except as disclosed
the SEC Reports or on Schedule 3.1(j), there is no
action, suit, inquiry, notice of violation, proceeding or
investigation pending or, to the knowledge of the Company,
threatened against or affecting the Company, any Subsidiary or any
of their respective properties before or by any court, arbitrator,
governmental or administrative agency or regulatory authority
(federal, state, county, local or foreign) (collectively, an
“Action”) which (i)
adversely affects or challenges the legality, validity or
enforceability of any of the Transaction Documents or the
Securities or (ii) would, if there were an unfavorable decision,
have or reasonably be expected to result in a Material Adverse
Effect. Neither the Company nor any Subsidiary, nor any director or
officer (in his or her capacity as such) thereof, is or has been
the subject of any Action involving a claim of violation of or
liability under federal or state securities laws or a claim of
breach of fiduciary duty. There has not been, and to the knowledge
of the Company, there is not pending or contemplated, any
investigation by the Commission involving the Company or any
current or former director or officer (in his or her capacity as
such). of the Company. The Commission has not issued any stop order
or other order suspending the effectiveness of any registration
statement filed by the Company or any Subsidiary under the Exchange
Act or the Securities Act.
-12-
(k) Labor Relations. No labor
dispute exists or, to the knowledge of the Company, is imminent
with respect to any of the employees of the Company, which would
reasonably be expected to result in a Material Adverse Effect. None
of the Company’s or its Subsidiaries’ employees is a
member of a union that relates to such employee’s
relationship with the Company or such Subsidiary, and neither the
Company nor any of its Subsidiaries is a party to a collective
bargaining agreement, and the Company and its Subsidiaries believe
that their relationships with their employees are good. To the
knowledge of the Company, no executive officer of the Company or
any Subsidiary is, or is now expected to be, in violation of any
material term of any employment contract, confidentiality,
disclosure or proprietary information agreement or non-competition
agreement, or any other contract or agreement or any restrictive
covenant in favor of any third party, and the continued employment
of each such executive officer does not subject the Company or any
of its Subsidiaries to any liability with respect to any of the
foregoing matters. The Company and its Subsidiaries are in
compliance with all U.S. federal, state, local and foreign laws and
regulations relating to employment and employment practices, terms
and conditions of employment and wages and hours, except where the
failure to be in compliance would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse
Effect.
(l) Compliance.
Except as disclosed on the SEC Reports or on Schedule 3.1(l), neither the
Company nor any Subsidiary: (i) is in default under or in violation
of (and no event has occurred that has not been waived that, with
notice or lapse of time or both, would result in a default by the
Company or any Subsidiary under), nor has the Company or any
Subsidiary received notice of a claim that it is in default under
or that it is in violation of, any indenture, loan or credit
agreement or any other agreement or instrument to which it is a
party or by which it or any of its properties is bound (whether or
not such default or violation has been waived), (ii) is in
violation of any judgment, decree, or order of any court,
arbitrator or other governmental authority or (iii) is or has been
in violation of any statute, rule, ordinance or regulation of any
governmental authority, including without limitation all foreign,
federal, state and local laws relating to taxes, environmental
protection, occupational health and safety, product quality and
safety and employment and labor matters, except in each case as
would not have or reasonably be expected to result in a Material
Adverse Effect.
(m) Environmental Laws. The Company
and its Subsidiaries (i) are in compliance with all federal, state,
local and foreign laws relating to pollution or protection of human
health or the environment (including ambient air, surface water,
groundwater, land surface or subsurface strata), including laws
relating to emissions, discharges, releases or threatened releases
of chemicals, pollutants, contaminants, or toxic or hazardous
substances or wastes (collectively, “Hazardous Materials”)
into the environment, or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, disposal,
transport or handling of Hazardous Materials, as well as all
authorizations, codes, decrees, demands, or demand letters,
injunctions, judgments, licenses, notices or notice letters,
orders, permits, plans or regulations, issued, entered, promulgated
or approved thereunder (“Environmental Laws”);
(ii) have received all permits licenses or other approvals required
of them under applicable Environmental Laws to conduct their
respective businesses; and (iii) are in compliance with all terms
and conditions of any such permit, license or approval where in
each clause (i), (ii) and (iii), the failure to so comply would be
reasonably expected to have, individually or in the aggregate, a
Material Adverse Effect.
(n) Regulatory Permits. The Company
and the Subsidiaries possess all certificates, authorizations and
permits issued by the appropriate federal, state, local or foreign
regulatory authorities necessary to conduct their respective
businesses as described in the SEC Reports, except where the
failure to possess such permits would not reasonably be expected to
result in a Material Adverse Effect (“Material Permits”), and
neither the Company nor any Subsidiary has received any notice of
proceedings relating to the revocation or modification of any
Material Permit.
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(o) Title to Assets. The Company
and the Subsidiaries have good and marketable title in fee simple
to all real property owned by them and good and marketable title in
all personal property owned by them that is material to the
business of the Company and the Subsidiaries, in each case free and
clear of all Liens, except for (i) Liens as do not materially
affect the value of such property and do not materially interfere
with the use made and proposed to be made of such property by the
Company and the Subsidiaries and (ii) Liens for the payment of
federal, state or other taxes, for which appropriate reserves have
been made therefor in accordance with GAAP and the payment of which
is neither delinquent nor subject to penalties. Any real property
and facilities held under lease by the Company and the Subsidiaries
are held by them under valid, subsisting and enforceable leases
with which the Company and the Subsidiaries are in
compliance.
(p) Intellectual Property. To the
knowledge of the Company, the Company and the Subsidiaries have, or
have rights to use, all patents, patent applications, trademarks,
trademark applications, service marks, trade names, trade secrets,
inventions, copyrights, licenses and other intellectual property
rights and similar rights necessary or required for use in
connection with their respective businesses as described in the SEC
Reports and which the failure to so have would have a Material
Adverse Effect (collectively, the “Intellectual Property
Rights”). None of, and neither the Company nor any
Subsidiary has received a written notice that any of, the
Intellectual Property Rights has expired, terminated or been
abandoned, or is expected to expire or terminate or be abandoned,
within two (2) years from the date of this Agreement for which the
expiration, termination or abandonment could have a Material
Adverse Effect. Neither the Company nor any Subsidiary has
received, since the date of the latest audited financial statements
included within the SEC Reports, a written notice of a claim or
otherwise has any knowledge that the Intellectual Property Rights
violate or infringe upon the rights of any Person, except as would
not have or reasonably be expected to not have a Material Adverse
Effect. To the knowledge of the Company, all such Intellectual
Property Rights are enforceable and there is no existing
infringement by another Person of any of the Intellectual Property
Rights. The Company and its Subsidiaries have taken reasonable
security measures to protect the secrecy, confidentiality and value
of all of their intellectual properties, except where failure to do
so would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect.
(q) Insurance. The Company and the
Subsidiaries are insured by insurers of recognized financial
responsibility against such losses and risks and in such amounts as
are prudent and customary in the businesses in which the Company
and the Subsidiaries are engaged, including, but not limited to,
directors and officers insurance coverage at least equal to the
aggregate Subscription Amount. Neither the Company nor any
Subsidiary has any reason to believe that it will not be able to
renew its existing insurance coverage as and when such coverage
expires or to obtain similar coverage from similar insurers as may
be necessary to continue its business without a significant
increase in cost.
(r) Transactions with Affiliates and
Employees. Except as set forth on Schedule 3.1(r), none of the
officers or directors of the Company or any Subsidiary and, to the
knowledge of the Company, none of the employees of the Company or
any Subsidiary is presently a party to any transaction with the
Company or any Subsidiary (other than for services as employees,
officers and directors), including any contract, agreement or other
arrangement providing for the furnishing of services to or by,
providing for rental of real or personal property to or from,
providing for the borrowing of money from or lending of money to or
otherwise requiring payments to or from any officer, director or
such employee or, to the knowledge of the Company, any entity in
which any officer, director, or any such employee has a substantial
interest or is an officer, director, trustee, stockholder, member
or partner, in each case in excess of $120,000 other than for (i)
payment of salary or consulting fees for services rendered, (ii)
reimbursement for expenses incurred on behalf of the Company and
(iii) other employee benefits, including stock option agreements
under any stock option plan of the Company.
-14-
(s) Sarbanes-Oxley; Internal Accounting
Controls. The Company and the Subsidiaries are in compliance
in all material respects with any and all applicable requirements
of the Sarbanes-Oxley Act of 2002 that are effective as of the date
hereof, and any and all applicable rules and regulations
promulgated by the Commission thereunder that are effective as of
the date hereof and as of the Closing Date. The Company and the Subsidiaries maintain a system
of internal accounting controls sufficient to provide reasonable
assurance that: (i) transactions are executed in accordance with
management’s general or specific authorizations, (ii)
transactions are recorded as necessary to permit preparation of
financial statements in conformity with GAAP and to maintain asset
accountability, (iii) access to assets is permitted only in
accordance with management’s general or specific
authorization, and (iv) the recorded accountability for assets is
compared with the existing assets at reasonable intervals and
appropriate action is taken with respect to any differences. The
Company and the Subsidiaries have established disclosure controls
and procedures (as defined in Exchange Act Rules 13a-15(e) and
15d-15(e)) for the Company and the Subsidiaries and designed such
disclosure controls and procedures to ensure that information
required to be disclosed by the Company in the reports it files or
submits under the Exchange Act is recorded, processed, summarized
and reported, within the time periods specified in the
Commission’s rules and forms. The Company’s certifying
officers have evaluated the effectiveness of the disclosure
controls and procedures of the Company and the Subsidiaries as of
the end of the period covered by the most recently filed periodic
report under the Exchange Act (such date, the
“Evaluation
Date”). The Company
presented in its most recently filed periodic report under the
Exchange Act the conclusions of the certifying officers about the
effectiveness of the disclosure controls and procedures based on
their evaluations as of the Evaluation Date. Since the Evaluation
Date, there have been no changes in the internal control over
financial reporting (as such term is defined in the Exchange Act)
of the Company and its Subsidiaries that have materially affected,
or is reasonably likely to materially affect, the internal control
over financial reporting of the Company and its
Subsidiaries.
(t) Certain Fees. Except for the
fees and expenses of the Placement Agent, no brokerage or
finder’s fees or commissions are or will be payable by the
Company or any Subsidiary to any broker, financial advisor or
consultant, finder, placement agent, investment banker, bank or
other Person with respect to the transactions contemplated by the
Transaction Documents. The Purchaser shall have no obligation with
respect to any fees or with respect to any claims made by or on
behalf of other Persons for fees of a type contemplated in this
Section that may be due in connection with the transactions
contemplated by the Transaction Documents.
(u) Private Placement. Assuming the
accuracy of the Purchaser’s representations and warranties
set forth in Section 3.2, no registration under the Securities Act
is required for the offer and sale of the Warrants, the Warrant
Shares, the Unregistered Preferred Shares, the Unregistered
Prefunded Warrants or the Unregistered Conversion Shares by the
Company to the Purchaser as contemplated hereby.
(v) Investment Company. The Company
is not, and is not an Affiliate of, and immediately after receipt
of payment for the Securities, will not be or be an Affiliate of,
an “investment company” within the meaning of the
Investment Company Act of 1940, as amended. The Company shall
conduct its business in a manner so that it will not become an
“investment company” subject to registration under the
Investment Company Act of 1940, as amended.
(w) Registration Rights. Except as
set forth on Schedule
3.1(w), other than the Purchaser pursuant to the
Registration Rights Agreement, no Person has any right to cause the
Company or any Subsidiary to effect the registration under the
Securities Act of any securities of the Company or any
Subsidiary.
-15-
(x) Listing and Maintenance
Requirements. The Common Stock is registered pursuant to
Section 12(b) or 12(g) of the Exchange Act, and the Company has
taken no action designed to, or which to its knowledge is likely to
have the effect of, terminating the registration of the Common
Stock under the Exchange Act nor has the Company received any
notification that the Commission is contemplating terminating such
registration. Except as disclosed in the SEC Reports or on
Schedule 3.1(x),
the Company has not, in the 12 months preceding the date hereof,
received notice from any Trading Market on which the Common Stock
is or has been listed or quoted to the effect that the Company is
not in compliance with the listing or maintenance requirements of
such Trading Market. Except as set forth in the SEC Reports or on
Schedule 3.1(x), the Company is, and has no reason to believe that
it will not in the foreseeable future continue to be, in compliance
with all such listing and maintenance requirements. The Common
Stock is currently eligible for electronic transfer through the
Depository Trust Company or another established clearing
corporation and the Company is current in payment of the fees to
the Depository Trust Company (or such other established clearing
corporation) in connection with such electronic
transfer.
(y) Application of Takeover
Protections. The Company and the Board of Directors have
taken all necessary action, if any, in order to render inapplicable
any control share acquisition, business combination, poison pill
(including any distribution under a rights agreement) or other
similar anti-takeover provision under the Company’s
certificate of incorporation (or similar charter documents) or the
laws of its state of incorporation that is or would become
applicable to the Purchaser as a result of the Purchaser and the
Company fulfilling their obligations or exercising their rights
under the Transaction Documents, including without limitation as a
result of the Company’s issuance of the Securities and the
Purchaser’s ownership of the Securities.
(z) Disclosure. Except with respect
to the material terms and conditions of the transactions
contemplated by the Transaction Documents, the Company confirms
that neither it nor any other Person acting on its behalf has
provided the Purchaser or its agents or counsel with any
information that it believes constitutes or might constitute
material, non-public information. The Company understands and
confirms that the Purchaser will rely on the foregoing
representation in effecting transactions in securities of the
Company. All of the disclosure furnished by or on behalf of the
Company to the Purchaser regarding the Company and its
Subsidiaries, their respective businesses and the transactions
contemplated hereby, including the Disclosure Schedules to this
Agreement, is true and correct and does not contain any untrue
statement of a material fact or omit to state any material fact
necessary in order to make the statements made therein, in the
light of the circumstances under which they were made, not
misleading. The Company acknowledges and agrees that the Purchaser
does not make nor has made any representations or warranties with
respect to the transactions contemplated hereby other than those
specifically set forth in Section 3.2 hereof.
(aa) No
Integrated Offering. Assuming the accuracy of the
Purchaser’s representations and warranties set forth in
Section 3.2, neither the Company, nor any of its Affiliates, nor
any Person acting on its or their behalf has, directly or
indirectly, made any offers or sales of any security or solicited
any offers to buy any security, under circumstances that would
cause this offering of the Securities to be integrated with prior
offerings by the Company for purposes of (i) the Securities Act
which would require the registration of any such securities under
the Securities Act, or (ii) any applicable shareholder approval
provisions of any Trading Market on which any of the securities of
the Company are listed or designated.
-16-
(bb) Solvency.
Based on the consolidated financial condition of the Company as of
the Closing Date, after giving effect to the receipt by the Company
of the proceeds from the sale of the Securities hereunder, (i) the
fair saleable value of the Company’s assets exceeds the
amount that will be required to be paid on or in respect of the
Company’s existing debts and other liabilities (including
known contingent liabilities) as they mature, (ii) the
Company’s assets do not constitute unreasonably small capital
to carry on its business as now conducted and as proposed to be
conducted including its capital needs taking into account the
particular capital requirements of the business conducted by the
Company, consolidated and projected capital requirements and
capital availability thereof, and (iii) the current cash flow of
the Company, together with the proceeds the Company would receive,
were it to liquidate all of its assets, after taking into account
all anticipated uses of the cash, would be sufficient to pay all
amounts on or in respect of its liabilities when such amounts are
required to be paid. The Company does not intend to incur debts
beyond its ability to pay such debts as they mature (taking into
account the timing and amounts of cash to be payable on or in
respect of its debt). The Company has no knowledge of any facts or
circumstances which lead it to believe that it will file for
reorganization or liquidation under the bankruptcy or
reorganization laws of any jurisdiction within one year from the
Closing Date. Schedule
3.1(bb) sets forth as of the date hereof all outstanding
secured and unsecured Indebtedness of the Company or any
Subsidiary, or for which the Company or any Subsidiary has
commitments. For the purposes of this Agreement,
“Indebtedness”
means (x) any liabilities for borrowed money or amounts owed in
excess of $100,000 (other than trade accounts payable incurred in
the ordinary course of business), (y) all guaranties, endorsements
and other contingent obligations in respect of indebtedness of
others, whether or not the same are or should be reflected in the
Company’s consolidated balance sheet (or the notes thereto),
except guaranties by endorsement of negotiable instruments for
deposit or collection or similar transactions in the ordinary
course of business; and (z) the present value of any lease payments
in excess of $50,000 due under leases required to be capitalized in
accordance with GAAP. Neither the Company nor any Subsidiary is in
default with respect to any Indebtedness.
(cc) Tax
Status. Except for matters that would not, individually or
in the aggregate, have or reasonably be expected to result in a
Material Adverse Effect, the Company and its Subsidiaries each (i)
has made or filed all United States federal, state and local income
and all foreign income and franchise tax returns, reports and
declarations required by any jurisdiction to which it is subject,
(ii) 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 and (iii) has set aside
on its books provision reasonably adequate for the payment of all
material taxes for periods subsequent to the periods to which such
returns, reports or declarations apply. There are no unpaid taxes
in any material amount claimed to be due by the taxing authority of
any jurisdiction, and the officers of the Company or of any
Subsidiary know of no basis for any such claim.
(dd) No
General Solicitation. Neither the Company nor any Person
acting on behalf of the Company has offered or sold any of the
Warrants, the Warrant Shares, the Unregistered Preferred Shares,
the Unregistered Prefunded Warrants or the Unregistered Conversion
Shares by any form of general solicitation or general advertising.
The Company has offered the Warrants, the Warrant Shares, the
Unregistered Preferred Shares, the Unregistered Prefunded Warrants
and the Unregistered Conversion Shares for sale only to the
Purchaser and certain other “accredited investors”
within the meaning of Rule 501 under the Securities
Act
(ee) Foreign
Corrupt Practices. Neither the Company nor any Subsidiary,
nor to the knowledge of the Company or any Subsidiary, any agent or
other person acting on behalf of the Company or any Subsidiary, has
(i) directly or indirectly, used any funds for unlawful
contributions, gifts, entertainment or other unlawful expenses
related to foreign or domestic political activity, (ii) made any
unlawful payment to foreign or domestic government officials or
employees or to any foreign or domestic political parties or
campaigns from corporate funds, (iii) failed to disclose fully any
contribution made by the Company or any Subsidiary (or made by any
person acting on its behalf of which the Company is aware) which is
in violation of law or (iv) violated in any material respect any
provision of FCPA.
-17-
(ff) Accountants.
The Company’s accounting firm is set forth in the SEC
Reports. To the knowledge and belief of the Company, such
accounting firm (i) is a registered public accounting firm as
required by the Exchange Act and (ii) shall express its opinion
with respect to the financial statements to be included in the
Company’s Annual Report for the fiscal year ending December
31, 2020.
(gg) No
Disagreements with Accountants and Lawyers. There are no
disagreements of any kind presently existing, or reasonably
anticipated by the Company to arise, between the Company and the
accountants and lawyers formerly or presently employed by the
Company and the Company is current with respect to any fees owed to
its accountants and lawyers which could affect the Company’s
ability to perform any of its obligations under any of the
Transaction Documents.
(hh) Acknowledgment
Regarding Purchaser’s Purchase of Securities. The
Company acknowledges and agrees that the Purchaser is acting solely
in the capacity of an arm’s length purchaser with respect to
the Transaction Documents and the transactions contemplated
thereby. The Company further acknowledges that the Purchaser 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 thereby and any advice given by the
Purchaser or any of its respective representatives or agents in
connection with the Transaction Documents and the transactions
contemplated thereby is merely incidental to the Purchaser’s
purchase of the Securities. The Company further represents to the
Purchaser that the Company’s decision to enter into this
Agreement and the other Transaction Documents has been based solely
on the independent evaluation of the transactions contemplated
hereby by the Company and its representatives.
(ii) Acknowledgment
Regarding Purchaser’s Trading Activity. Anything in this Agreement or elsewhere herein to
the contrary notwithstanding (except for Sections 3.2(f) and 4.14
hereof), it is understood and acknowledged by the Company that: (i)
the Purchaser has not been asked by the Company to agree, nor has
the Purchaser agreed, to desist from purchasing or selling, long
and/or short, securities of the Company, or
“derivative” securities based on securities issued by
the Company or to hold the Securities for any specified term, (ii)
past or future open market or other transactions by the Purchaser,
specifically including, without limitation, Short Sales or
“derivative” transactions, before or after the closing
of this or future private placement transactions, may negatively
impact the market price of the Company’s publicly-traded
securities, (iii) the Purchaser, and counter-parties in
“derivative” transactions to which the Purchaser is a
party, directly or indirectly, presently may have a
“short” position in the Common Stock and (iv) the
Purchaser shall not be deemed to have any affiliation with or
control over any arm’s length counter-party in any
“derivative” transaction. The Company further
understands and acknowledges that (y) the Purchaser may engage in
hedging activities at various times during the period that the
Securities are outstanding, including, without limitation, during
the periods that the value of the Warrant Shares and Conversion
Shares deliverable with respect to Securities are being determined,
and (z) such hedging activities (if any) could reduce the value of
the existing stockholders' equity interests in the Company at and
after the time that the hedging activities are being
conducted. The Company acknowledges that such aforementioned
hedging activities do not constitute a breach of any of the
Transaction Documents.
(jj) Regulation
M Compliance. The Company has not, and to its
knowledge no one acting on its behalf has, (i) taken, directly or
indirectly, any action designed to cause or to result in the
stabilization or manipulation of the price of any security of the
Company to facilitate the sale or resale of any of the Securities,
(ii) sold, bid for, purchased, or paid any compensation for
soliciting purchases of, any of the Securities, or (iii) paid or
agreed to pay to any Person any compensation for soliciting another
to purchase any other securities of the Company, other than, in the
case of clauses (ii) and (iii), compensation paid to the Placement
Agent in connection with the placement of the
Securities.
-18-
(kk) FDA.
As to each product subject to the jurisdiction of the U.S. Food and
Drug Administration (“FDA”) under the Federal
Food, Drug and Cosmetic Act, as amended, and the regulations
thereunder (“FDCA”) that is
manufactured, packaged, labeled, tested, distributed, sold, and/or
marketed by the Company or any of its Subsidiaries (each such
product, a “Pharmaceutical Product”),
such Pharmaceutical Product is being manufactured, packaged,
labeled, tested, distributed, sold and/or marketed by the Company
in compliance with all applicable requirements under FDCA and
similar laws, rules and regulations, except where the failure to be
in compliance would not have a Material Adverse Effect. There is no
pending, completed or, to the Company's knowledge, threatened,
action (including any lawsuit, arbitration, or legal or
administrative or regulatory proceeding, charge, complaint, or
investigation) against the Company or any of its Subsidiaries, and
none of the Company or any of its Subsidiaries has received any
notice, warning letter or other communication from the FDA or any
other governmental entity, which (i) imposes a clinical hold on any
clinical investigation by the Company or any of its Subsidiaries,
(ii) enjoins production at any facility of the Company or any of
its Subsidiaries, (iii) enters or proposes to enter into a consent
decree of permanent injunction with the Company or any of its
Subsidiaries, or (iv) otherwise alleges any violation of any laws,
rules or regulations by the Company or any of its Subsidiaries, and
which, either individually or in the aggregate, would have a
Material Adverse Effect. The properties, business and operations of
the Company have been and are being conducted in all material
respects in accordance with all applicable laws, rules and
regulations of the FDA. The Company has not been informed by
the FDA that the FDA will prohibit the marketing, sale, license or
use in the United States of any product proposed to be developed,
produced or marketed by the Company.
(ll) Reserved.
(mm) Stock
Option Plans. Each stock option granted by the Company under
the Company’s stock option plan was granted (i) in accordance
with the terms of the Company’s stock option plan and (ii)
with an exercise price at least equal to the fair market value of
the Common Stock on the date such stock option would be considered
granted under GAAP and applicable law. No stock option granted
under the Company’s stock option plan has been backdated. The
Company has not knowingly granted, and there is no and has been no
Company policy or practice to knowingly grant, stock options prior
to, or otherwise knowingly coordinate the grant of stock options
with, the release or other public announcement of material
information regarding the Company or its Subsidiaries or their
financial results or prospects.
(nn) Office
of Foreign Assets Control. Neither the Company nor any
Subsidiary nor, to the Company's knowledge, any director, officer,
agent, employee or affiliate of the Company or any Subsidiary is
currently subject to any U.S. sanctions administered by the Office
of Foreign Assets Control of the U.S. Treasury Department
(“OFAC”).
(oo) U.S.
Real Property Holding Corporation. The Company is not and
has never been a U.S. real property holding corporation within the
meaning of Section 897 of the Internal Revenue Code of 1986, as
amended, and the Company shall so certify upon the
Purchaser’s request.
(pp) Bank
Holding Company Act. Neither the Company nor any of its
Subsidiaries or Affiliates is subject to the Bank Holding Company
Act of 1956, as amended (the “BHCA”) and to regulation
by the Board of Governors of the Federal Reserve System (the
“Federal
Reserve”). Neither the Company nor any of its
Subsidiaries or Affiliates owns or controls, directly or
indirectly, five percent (5%) or more of the outstanding shares of
any class of voting securities or twenty-five percent or more of
the total equity of a bank or any entity that is subject to the
BHCA and to regulation by the Federal Reserve. Neither the Company
nor any of its Subsidiaries or Affiliates exercises a controlling
influence over the management or policies of a bank or any entity
that is subject to the BHCA and to regulation by the Federal
Reserve.
-19-
(qq) Money
Laundering. The operations of the Company and its
Subsidiaries are and have been conducted at all times in compliance
with applicable financial record-keeping and reporting requirements
of the Currency and Foreign Transactions Reporting Act of 1970, as
amended, applicable money laundering statutes and applicable rules
and regulations thereunder (collectively, the “Money Laundering Laws”),
and no Action or Proceeding by or before any court or governmental
agency, authority or body or any arbitrator involving the Company
or any Subsidiary with respect to the Money Laundering Laws is
pending or, to the knowledge of the Company or any Subsidiary,
threatened.
(rr) No
Disqualification Events. With respect to the
Securities to be offered and sold hereunder in reliance on Rule 506
under the Securities Act, none of the Company, any of its
predecessors, any affiliated issuer, any director, executive
officer, other officer of the Company participating in the offering
hereunder, any beneficial owner of 20% or more of the
Company’s outstanding voting equity securities, calculated on
the basis of voting power, nor any promoter (as that term is
defined in Rule 405 under the Securities Act) connected with the
Company in any capacity at the time of sale (each, an
“Issuer Covered
Person” and, together, “Issuer Covered Persons”)
is subject to any of the "Bad Actor" disqualifications described in
Rule 506(d)(1)(i) to (viii) under the Securities Act (a
“Disqualification
Event”), except for a Disqualification Event covered
by Rule 506(d)(2) or (d)(3). The Company has exercised reasonable
care to determine whether any Issuer Covered Person is subject to a
Disqualification Event. The Company has complied, to the extent
applicable, with its disclosure obligations under Rule 506(e), and
has furnished to the Purchaser a copy of any disclosures provided
thereunder.
(ss) Other
Covered Persons. Other than the Placement Agent, the Company
is not aware of any person (other than any Issuer Covered Person)
that has been or will be paid (directly or indirectly) remuneration
for solicitation of purchasers in connection with the sale of any
Securities.
(tt) Notice
of Disqualification Events. The Company will notify the
Purchaser and the Placement Agent in writing, prior to the Closing
Date of (i) any Disqualification Event relating to any Issuer
Covered Person and (ii) any event that would, with the passage of
time, become a Disqualification Event relating to any Issuer
Covered Person.
3.2 Representations
and Warranties of the Purchaser. The Purchaser hereby represents and warrants as
of the date hereof and as of the Closing Date to the Company as
follows:
(a) Organization;
Authority. The Purchaser is
either an individual or an entity duly incorporated or formed,
validly existing and in good standing under the laws of the
jurisdiction of its incorporation or formation with full right,
corporate, partnership, limited liability company or similar power
and authority to enter into and to consummate the transactions
contemplated by the Transaction Documents and otherwise to carry
out its obligations hereunder and thereunder. The execution and
delivery of the Transaction Documents and performance by the
Purchaser of the transactions contemplated by the Transaction
Documents have been duly authorized by all necessary corporate,
partnership, limited liability company or similar action, as
applicable, on the part of the Purchaser. Each Transaction Document
to which it is a party has been duly executed by the Purchaser, and
when delivered by the Purchaser in accordance with the terms
hereof, will constitute the valid and legally binding obligation of
the Purchaser, enforceable against it in accordance with its terms,
except: (i) as limited by general equitable principles and
applicable bankruptcy, insolvency, reorganization, moratorium and
other laws of general application affecting enforcement of
creditors’ rights generally, (ii) as limited by laws relating
to the availability of specific performance, injunctive relief or
other equitable remedies and (iii) insofar as indemnification and
contribution provisions may be limited by applicable
law.
-20-
(b) Understandings
or Arrangements. The Purchaser
is acquiring the Securities as principal for its own account and
has no direct or indirect arrangement or understandings with any
other persons to distribute or regarding the distribution of such
Securities (this representation and warranty not limiting the
Purchaser’s right to sell the Securities pursuant to the
Shelf Registration Statement, the Resale Registration Statement or
otherwise in compliance with applicable federal and state
securities laws). The Purchaser is acquiring the Securities
hereunder in the ordinary course of its business. The Purchaser
understands that the Warrants, the Warrant Shares, the Unregistered
Preferred Shares, the Unregistered Prefunded Warrants and the
Unregistered Conversion Shares are “restricted
securities” and have not been registered under the Securities
Act or any applicable state securities law and is acquiring such
Securities as principal for his, her or its own account and not
with a view to or for distributing or reselling such Securities or
any part thereof in violation of the Securities Act or any
applicable state securities law, has no present intention of
distributing any of such Securities in violation of the Securities
Act or any applicable state securities law and has no direct or
indirect arrangement or understandings with any other persons to
distribute or regarding the distribution of such Securities in
violation of the Securities Act or any applicable state securities
law (this representation and warranty not limiting the
Purchaser’s right to sell such Securities pursuant to a
registration statement or otherwise in compliance with applicable
federal and state securities laws).
(c) Purchaser
Status. At the time the
Purchaser was offered the Securities, it was, and as of the date
hereof it is, and on each date on which it exercises any Warrants,
it will be either: (i) an “accredited investor” as
defined in Rule 501(a)(1), (a)(2), (a)(3), (a)(7) or (a)(8) under
the Securities Act or (ii) a “qualified institutional
buyer” as defined in Rule 144A(a) under the Securities
Act.
(d) Experience
of The Purchaser. The
Purchaser, either alone or together with its representatives, has
such knowledge, sophistication and experience in business and
financial matters so as to be capable of evaluating the merits and
risks of the prospective investment in the Securities, and has so
evaluated the merits and risks of such investment. The Purchaser is
able to bear the economic risk of an investment in the Securities
and, at the present time, is able to afford a complete loss of such
investment.
(e) Access
to Information. The Purchaser
acknowledges that it has had the opportunity to review the
Transaction Documents (including all exhibits and schedules
thereto) and the SEC Reports and has been afforded, (i) the
opportunity to ask such questions as it has deemed necessary of,
and to receive answers from, representatives of the Company
concerning the terms and conditions of the offering of the
Securities and the merits and risks of investing in the Securities;
(ii) access to information about the Company and its financial
condition, results of operations, business, properties, management
and prospects sufficient to enable it to evaluate its investment;
and (iii) the opportunity to obtain such additional information
that the Company possesses or can acquire without unreasonable
effort or expense that is necessary to make an informed investment
decision with respect to the investment. The Purchaser
acknowledges and agrees that neither the Placement Agent nor any
Affiliate of the Placement Agent has provided the Purchaser with
any information or advice with respect to the Securities nor is
such information or advice necessary or desired. Neither the
Placement Agent nor any Affiliate has made or makes any
representation as to the Company or the quality of the Securities
and the Placement Agent and any Affiliate may have acquired
non-public information with respect to the Company which the
Purchaser agrees need not be provided to it. In connection
with the issuance of the Securities to the Purchaser, neither the
Placement Agent nor any of its Affiliates has acted as a financial
advisor or fiduciary to the Purchaser.
-21-
(f) Certain
Transactions and Confidentiality. Other than consummating the transactions
contemplated hereunder, the Purchaser has not, nor has any Person
acting on behalf of or pursuant to any understanding with the
Purchaser, directly or indirectly executed any purchases or sales,
including Short Sales, of the securities of the Company during
the period commencing as of the time that the Purchaser first
received a term sheet (written or oral) from the Company or any
other Person representing the Company setting forth the material
terms of the transactions contemplated hereunder and ending
immediately prior to the execution hereof. Notwithstanding the foregoing, if the Purchaser
is a multi-managed investment vehicle whereby separate portfolio
managers manage separate portions of the Purchaser’s assets
and the portfolio managers have no direct knowledge of the
investment decisions made by the portfolio managers managing other
portions of the Purchaser’s assets, the representation set
forth above shall only apply with respect to the portion of assets
managed by the portfolio manager that made the investment decision
to purchase the Securities covered by this Agreement. Other than to
other Persons party to this Agreement or to the Purchaser’s
representatives, including, without limitation, its officers,
directors, partners, legal and other advisors, employees, agents
and Affiliates, the Purchaser has maintained the confidentiality of
all disclosures made to it in connection with this transaction
(including the existence and terms of this transaction).
Notwithstanding the foregoing, for the avoidance of doubt, nothing
contained herein shall constitute a representation or warranty, or
preclude any actions, with respect to locating or borrowing shares
in order to effect Short Sales or similar transactions in the
future.
(g) General
Solicitation. The Purchaser is
not purchasing the Securities as a result of any advertisement,
article, notice or other communication regarding the Securities
published in any newspaper, magazine or similar media or broadcast
over television or radio or presented at any seminar or, to the
knowledge of the Purchaser, any other general solicitation or
general advertisement.
The
Company acknowledges and agrees that the representations contained
in this Section 3.2 shall not modify, amend or affect the
Purchaser’s right to rely on the Company’s
representations and warranties contained in this Agreement or any
representations and warranties contained in any other Transaction
Document or any other document or instrument executed and/or
delivered in connection with this Agreement or the consummation of
the transactions contemplated hereby. Notwithstanding the
foregoing, for the avoidance of doubt, nothing contained herein
shall constitute a representation or warranty, or preclude any
actions, with respect to locating or borrowing shares in order to
effect Short Sales or similar transactions in the
future.
ARTICLE IV.
OTHER AGREEMENTS OF THE PARTIES
4.1 Removal
of Legends.
(a) The
Warrants, the Warrant Shares, the Unregistered Preferred Shares,
the Unregistered Prefunded Warrants and the Unregistered Conversion
Shares may only be disposed of in compliance with state and federal
securities laws. In connection with any transfer of Warrants,
Warrant Shares, Unregistered Preferred Shares, Unregistered
Prefunded Warrants or Unregistered Conversion Shares, other than
pursuant to an effective registration statement or Rule 144, to the
Company or to an Affiliate of the Purchaser or in connection with a
pledge as contemplated in Section 4.1(b), the Company may require
the transferor thereof to provide to the Company an opinion of
counsel selected by the transferor and reasonably acceptable to the
Company, the form and substance of which opinion shall be
reasonably satisfactory to the Company, to the effect that such
transfer does not require registration of such transferred
Warrants, Warrant Shares, Unregistered Preferred Shares,
Unregistered Prefunded Warrants or Unregistered Conversion Shares
under the Securities Act.
(b) The
Purchaser agrees to the imprinting, so long as is required by this
Section 4.1, of a legend on any of the Warrants, Warrant Shares,
Unregistered Preferred Shares, Unregistered Prefunded Warrants or
Unregistered Conversion Shares substantially in the following
form:
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(c) NEITHER
THIS SECURITY NOR THE SECURITIES INTO WHICH THIS SECURITY IS
EXERCISABLE OR CONVERTIBLE HAS BEEN REGISTERED WITH THE SECURITIES
AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE
IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES
ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A
TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES
LAWS. THIS SECURITY AND THE SECURITIES ISSUABLE UPON EXERCISE OR
CONVERSION OF THIS SECURITY MAY BE PLEDGED IN CONNECTION WITH A
BONA FIDE MARGIN ACCOUNT WITH A REGISTERED BROKER-DEALER OR OTHER
LOAN WITH A FINANCIAL INSTITUTION THAT IS AN “ACCREDITED
INVESTOR” AS DEFINED IN RULE 501(a) UNDER THE SECURITIES ACT
OR OTHER LOAN SECURED BY SUCH SECURITIES.
(d) The
Company acknowledges and agrees that the Purchaser may from time to
time pledge pursuant to a bona fide margin agreement with a
registered broker-dealer or grant a security interest in some or
all of the Securities to a financial institution that is an
“accredited investor” as defined in Rule 501(a) under
the Securities Act and, if required under the terms of such
arrangement, the Purchaser may transfer pledged or secured
Securities to the pledgees or secured parties. Such a pledge or
transfer would not be subject to approval of the Company and no
legal opinion of legal counsel of the pledgee, secured party or
pledgor shall be required in connection therewith. Further, no
notice shall be required of such pledge. At the appropriate
Purchaser’s expense, the Company will execute and deliver
such reasonable documentation as a pledgee or secured party of the
Securities may reasonably request in connection with a pledge or
transfer of the Securities, including,
if the Securities are subject to registration pursuant to the
Registration Rights Agreement, the preparation and filing of any
required prospectus supplement under Rule 424(b)(3) under the
Securities Act or other applicable provision of the Securities Act
to appropriately amend the list of Selling Stockholders (as defined
in the Registration Rights Agreement)
thereunder.
(e) Certificates
evidencing the Warrant Shares and Conversion Shares shall not
contain any legend (including the legend set forth in Section
4.1(b) hereof): (i) while a registration statement covering the
resale of such security is effective under the Securities Act, (ii)
following any sale of such Warrant Shares or Conversion Shares
pursuant to Rule 144 (assuming, in the case of Warrant Shares,
cashless exercise of the Warrants), (iii) if such Warrant Shares or
Conversion Shares are eligible for sale under Rule 144 (assuming,
in the case of Warrant Shares, cashless exercise of the Warrants),
or (iv) if such legend is not required under applicable
requirements of the Securities Act (including judicial
interpretations and pronouncements issued by the staff of the
Commission). The Company shall cause its counsel to issue a legal
opinion to the Transfer Agent or the Purchaser promptly if required
by the Transfer Agent to effect the removal of the legend
hereunder, or if requested by the Purchaser, respectively. If all
or any portion of a Warrant or an Unregistered Prefunded Warrant is
exercised or the Unregistered Preferred Shares is converted at a
time when there is an effective registration statement to cover the
resale of the Warrant Shares or Unregistered Conversion Shares, or
if such Warrant Shares or Unregistered Conversion Shares may be
sold under Rule 144 (assuming, in the case of Warrants, cashless
exercise of the Warrants) or if such legend is not otherwise
required under applicable requirements of the Securities Act
(including judicial interpretations and pronouncements issued by
the staff of the Commission), then such Warrant Shares or
Unregistered Conversion Shares, as the case may be, shall be issued
free of all legends. The Company agrees that following such time as
such legend is no longer required under this Section 4.1(e), the
Company will, no later than the earlier of (i) two (2) Trading Days
and (ii) the number of Trading Days comprising the Standard
Settlement Period (as defined below) following the delivery by the
Purchaser to the Company or the Transfer Agent of a certificate
representing Warrant Shares or Unregistered Conversion Shares, as
applicable, issued with a restrictive legend (such date, the
“Legend Removal
Date”), deliver or cause
to be delivered to the Purchaser a certificate representing such
shares that is free from all restrictive and other legends. The
Company may not make any notation on its records or give
instructions to the Transfer Agent that enlarge the restrictions on
transfer set forth in this Section 4. Warrant Shares and
Unregistered Conversion Shares subject to legend removal hereunder
shall be transmitted by the Transfer Agent to the Purchaser by
crediting the account of the Purchaser’s prime broker with
the Depository Trust Company System as directed by the Purchaser.
As used herein, “Standard Settlement
Period” means the
standard settlement period, expressed in a number of Trading Days,
on the Company’s primary Trading Market with respect to the
Common Stock as in effect on the date of delivery of a certificate
representing Warrant Shares or Unregistered Conversion Shares
issued with a restrictive legend.
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(f) In
addition to the Purchaser’s other available remedies, the
Company shall pay to the Purchaser, in cash, (i) as partial
liquidated damages and not as a penalty, for each $1,000 of Warrant
Shares or Unregistered Conversion Shares (based on the VWAP of the
Common Stock on the date such Warrant Shares or Unregistered
Conversion Shares are submitted to the Transfer Agent) delivered
for removal of the restrictive legend and subject to Section
4.1(e), $10 per Trading Day (increasing to $20 per Trading Day five
(5) Trading Days after such damages have begun to accrue) for each
Trading Day after the Legend Removal Date until such certificate is
delivered without a legend and (ii) if the Company fails to (a)
issue and deliver (or cause to be delivered) to the Purchaser by
the Legend Removal Date a certificate representing the Warrant
Shares or Unregistered Conversion Shares so delivered to the
Company by the Purchaser that is free from all restrictive and
other legends and (b) if after the Legend Removal Date the
Purchaser purchases (in an open market transaction or otherwise)
shares of Common Stock to deliver in satisfaction of a sale by the
Purchaser of all or any portion of the number of shares of Common
Stock, or a sale of a number of shares of Common Stock equal to all
or any portion of the number of shares of Common Stock, that the
Purchaser anticipated receiving from the Company without any
restrictive legend, then an amount equal to the excess of the
Purchaser’s total purchase price (including brokerage
commissions and other out-of-pocket expenses, if any) for the
shares of Common Stock so purchased (including brokerage
commissions and other out-of-pocket expenses, if any) (the
“Buy-In
Price”) over the product
of (A) such number of Warrant Shares or Unregistered Conversion
Shares that the Company was required to deliver to the Purchaser by
the Legend Removal Date multiplied by (B) the lowest closing sale
price of the Common Stock on any Trading Day during the period
commencing on the date of the delivery by the Purchaser to the
Company of the applicable Warrant Shares or Unregistered Conversion
Shares (as the case may be) and ending on the date of such delivery
and payment under this Section 4.1(f).
(g) The
Registered Preferred Shares, the Registered Prefunded Warrants and
the Registered Conversion Shares shall be issued free of
legends.
(h) The
Purchaser agrees with the Company that the Purchaser will sell any
Securities pursuant to either the registration requirements of the
Securities Act, including any applicable prospectus delivery
requirements, or an exemption therefrom, and that if Securities are
sold pursuant to a Resale Registration Statement, they will be sold
in compliance with the plan of distribution set forth therein, and
acknowledges that the removal of the restrictive legend from
certificates representing Securities as set forth in this Section
4.1 is predicated upon the Company’s reliance upon this
understanding.
4.2 Furnishing
of Information.
(a) As
long as the Purchaser owns Securities, the Company covenants to
timely file (or obtain extensions in respect thereof and file
within the applicable grace period) all reports required to be
filed by the Company after the date hereof pursuant to the Exchange
Act even if the Company is not then subject to the reporting
requirements of the Exchange Act.
(b) At any time during the period commencing from the
six (6) month anniversary of the date hereof and ending at such
time that all of the Securities (assuming cashless exercise of the
Warrants and any Prefunded Warrants, as applicable) may be sold
without the requirement for the Company to be in compliance with
Rule 144(c)(1) and otherwise without restriction or limitation
pursuant to Rule 144, if the Company (i) shall fail for any reason
to satisfy the current public information requirement under Rule
144(c) or (ii) has ever been an issuer described in Rule
144(i)(1)(i) or becomes an issuer in the future, and the Company
shall fail to satisfy any condition set forth in Rule 144(i)(2) (a
“Public Information
Failure”) then, in
addition to the Purchaser’s other available remedies, the
Company shall pay to the Purchaser, in cash, as partial liquidated
damages and not as a penalty, by reason of any such delay in or
reduction of its ability to sell the Securities, an amount in cash
equal to two percent (2.0%) of the aggregate Subscription Amount
for the Purchaser’s Securities on the day of a Public
Information Failure and on every thirtieth (30th) day (pro rated
for periods totaling less than thirty days) thereafter until the
earlier of (a) the date such Public Information Failure is cured
and (b) such time that such public information is no longer
required for the Purchaser to transfer the Securities pursuant to
Rule 144. The payments to which the Purchaser shall be entitled
pursuant to this Section 4.2(b) are referred to herein as
“Public Information
Failure Payments.” Public
Information Failure Payments shall be paid on the earlier of (i)
the last day of the calendar month during which such Public
Information Failure Payments are incurred and (ii) the third (3rd)
Business Day after the event or failure giving rise to the Public
Information Failure Payments is cured. In the event the Company
fails to make Public Information Failure Payments in a timely
manner, such Public Information Failure Payments shall bear
interest at the rate of 1.5% per month (prorated for partial
months) until paid in full. Nothing herein shall limit the
Purchaser’s right to pursue actual damages for the Public
Information Failure, and the Purchaser shall have the right to
pursue all remedies available to it at law or in equity including,
without limitation, a decree of specific performance and/or
injunctive relief.
-24-
4.3 Integration.
Except as set forth on Schedule
4.3, the Company shall not
sell, offer for sale or solicit offers to buy or otherwise
negotiate in respect of any security (as defined in Section 2 of
the Securities Act) that would be integrated with the offer or sale
of the Securities in a manner that would require the registration
under the Securities Act of the sale of the Securities or that
would be integrated with the offer or sale of the Securities for
purposes of the rules and regulations of any Trading Market such
that it would require shareholder approval prior to the closing of
such other transaction unless shareholder approval is obtained
before the closing of such subsequent
transaction.
4.4 Securities
Laws Disclosure; Publicity. The
Company shall (a) by the Disclosure Time, issue a press release or
file a Current Report on Form 8-K disclosing the material terms of
the transactions contemplated hereby and of the License Agreement,
and (b) file a Current Report on Form 8-K, including the
Transaction Documents as exhibits thereto, with the Commission
within the time required by the Exchange Act. From and after the
issuance of such press release, the Company represents to the
Purchaser that it shall have publicly disclosed all material,
non-public information delivered to the Purchaser by the Company or
any of its Subsidiaries, or any of their respective officers,
directors, employees or agents in connection with the transactions
contemplated by the Transaction Documents. In addition, effective
upon the issuance of such press release, the Company acknowledges
and agrees that any and all confidentiality or similar obligations
under any agreement, whether written or oral, between the Company,
any of its Subsidiaries or any of their respective officers,
directors, agents, employees or Affiliates on the one hand, and the
Purchaser or any of its Affiliates on the other hand, shall
terminate. The Company and the Purchaser shall consult with each
other in issuing any other press releases with respect to the
transactions contemplated hereby, and neither the Company nor the
Purchaser shall issue any such press release nor otherwise make any
such public statement without the prior consent of the Company,
with respect to any press release of the Purchaser, or without the
prior consent of the Purchaser, with respect to any press release
of the Company, which consent shall not unreasonably be withheld or
delayed, except if such disclosure is required by law, in which
case the disclosing party shall promptly provide the other party
with prior notice of such public statement or communication.
Notwithstanding the foregoing, the Company shall not publicly
disclose the name of the Purchaser, or include the name of the
Purchaser in any filing with the Commission or any regulatory
agency or Trading Market, without the prior written consent of the
Purchaser, except (a) as required by federal securities law in
connection with (i) any registration statement contemplated by the
Registration Rights Agreement and (ii) the filing of final
Transaction Documents with the Commission and (b) to the extent
such disclosure is required by law or Trading Market regulations,
in which case the Company shall provide the Purchaser with prior
notice of such disclosure permitted under this clause
(b).
4.5 Shareholder
Rights Plan. No claim will be
made or enforced by the Company or, with the consent of the
Company, any other Person, that the Purchaser is an
“Acquiring
Person” under any control
share acquisition, business combination, poison pill (including any
distribution under a rights agreement) or similar anti-takeover
plan or arrangement in effect or hereafter adopted by the Company,
or that the Purchaser could be deemed to trigger the provisions of
any such plan or arrangement, by virtue of receiving Securities
under the Transaction Documents or under any other agreement
between the Company and the Purchaser.
4.6 Non-Public
Information. Except with
respect to the material terms and conditions of the transactions
contemplated by the Transaction Documents, which shall be disclosed
pursuant to Section 4.4, the Company covenants and agrees that
neither it, nor any other Person acting on its behalf will provide
the Purchaser or its agents or counsel with any information that
constitutes, or the Company reasonably believes constitutes,
material non-public information, unless prior thereto the Purchaser
shall have consented to the receipt of such information and agreed
with the Company to keep such information confidential. The Company
understands and confirms that the Purchaser shall be relying on the
foregoing covenant in effecting transactions in securities of the
Company. To the extent that the Company delivers any material,
non-public information to the Purchaser without the
Purchaser’s consent, the Company hereby covenants and agrees
that the Purchaser shall not have any duty of confidentiality to
the Company, any of its Subsidiaries, or any of their respective
officers, directors, agents, employees or Affiliates, or a duty to
the Company, any of its Subsidiaries or any of their respective
officers, directors, agents, employees or Affiliates not to trade
on the basis of, such material, non-public information, provided
that the Purchaser shall remain subject to applicable law. To the
extent that any notice provided pursuant to any Transaction
Document constitutes, or contains, material, non-public information
regarding the Company or any Subsidiaries, the Company shall
simultaneously file such notice with the Commission pursuant to a
Current Report on Form 8-K. The Company understands and confirms
that the Purchaser shall be relying on the foregoing covenant in
effecting transactions in securities of the
Company.
-25-
4.7 Use
of Proceeds. Except as set
forth on Schedule 4.7
attached hereto, the Company shall use
the net proceeds from the sale of the Securities hereunder for
working capital purposes and shall not use such proceeds: (a) for
the satisfaction of any portion of the Company’s debt (other
than payment of trade payables in the ordinary course of the
Company’s business and prior practices), (b) for the
redemption of any Common Stock or Common Stock Equivalents, (c) for
the settlement of any outstanding litigation or (d) in violation of
FCPA or OFAC regulations.
4.8 Indemnification
of the Purchaser.
Subject to the provisions of this
Section 4.8, the Company will indemnify and hold the Purchaser and
its directors, officers, shareholders, members, partners, employees
and agents (and any other Persons with a functionally equivalent
role of a Person holding such titles notwithstanding a lack of such
title or any other title), each Person who controls the Purchaser
(within the meaning of Section 15 of the Securities Act and Section
20 of the Exchange Act), and the directors, officers, shareholders,
agents, members, partners or employees (and any other Persons with
a functionally equivalent role of a Person holding such titles
notwithstanding a lack of such title or any other title) of such
controlling persons (each, a “Purchaser
Party”) harmless from any
and all losses, liabilities, obligations, claims, contingencies,
damages, costs and expenses, including all judgments, amounts paid
in settlements, court costs and reasonable attorneys’ fees
and costs of investigation that any such Purchaser Party may suffer
or incur as a result of or relating to (a) any breach of any of the
representations, warranties, covenants or agreements made by the
Company in this Agreement or in the other Transaction Documents or
(b) any action instituted against the Purchaser Parties in any
capacity, or any of them or their respective Affiliates, by any
stockholder of the Company who is not an Affiliate of such
Purchaser Party, with respect to any of the transactions
contemplated by the Transaction Documents (unless such action is
solely based upon a material breach of such Purchaser Party’s
representations, warranties or covenants under the Transaction
Documents or any agreements or understandings such Purchaser Party
may have with any such stockholder or any violations by such
Purchaser Party of state or federal securities laws or any conduct
by such Purchaser Party which is finally judicially determined to
constitute fraud, gross negligence or willful misconduct), or (c)
in connection with any registration statement of the Company
providing for the resale by the Purchaser of the Warrant Shares or
Unregistered Conversion Shares issued and issuable upon exercise of
the Warrants or the Unregistered Prefunded Warrants or conversion
of the Unregistered Preferred Shares, as applicable, the Company
will indemnify each Purchaser Party, to the fullest extent
permitted by applicable law, from and against any and all losses,
claims, damages, liabilities, costs (including, without limitation,
reasonable attorneys’ fees) and expenses, as incurred,
arising out of or relating to (i) any untrue or alleged untrue
statement of a material fact contained in such 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
supplement thereto, in the light of the circumstances under which
they were made) not misleading, except to the extent, but only to
the extent, that such untrue statements or omissions are based
solely upon information regarding such Purchaser Party furnished in
writing to the Company by such Purchaser Party expressly for use
therein, or (ii) any violation or alleged violation by the Company
of the Securities Act, the Exchange Act or any state securities
law, or any rule or regulation thereunder in connection therewith.
If any action shall be brought against any Purchaser Party in
respect of which indemnity may be sought pursuant to this
Agreement, such Purchaser Party shall promptly notify the Company
in writing, and the Company shall have the right to assume the
defense thereof with counsel of its own choosing reasonably
acceptable to the Purchaser Party. Any Purchaser Party shall have
the right to employ separate counsel in any such action and
participate in the defense thereof, but the fees and expenses of
such counsel shall be at the expense of such Purchaser Party except
to the extent that (x) the employment thereof has been specifically
authorized by the Company in writing, (y) the Company has failed
after a reasonable period of time to assume such defense and to
employ counsel or (z) in such action there is, in the reasonable
opinion of counsel, a material conflict on any material issue
between the position of the Company and the position of such
Purchaser Party, in which case the Company shall be responsible for
the reasonable fees and expenses of no more than one such separate
counsel. The Company will not be liable to any Purchaser Party
under this Agreement (1) for any settlement by a Purchaser Party
effected without the Company’s prior written consent, which
shall not be unreasonably withheld or delayed; or (2) to the
extent, but only to the extent that a loss, claim, damage or
liability is attributable to any Purchaser Party’s breach of
any of the representations, warranties, covenants or agreements
made by such Purchaser Party in this Agreement or in the other
Transaction Documents. The indemnification required by this Section
4.8 shall be made by periodic payments of the amount thereof during
the course of the investigation or defense, as and when bills are
received or are incurred. The indemnity agreements contained herein
shall be in addition to any cause of action or similar right of any
Purchaser Party against the Company or others and any liabilities
the Company may be subject to pursuant to law.
-26-
4.9 Reservation
of Common Stock. As of the date
hereof, the Company has reserved and the Company shall continue to
reserve and keep available at all times, free of preemptive rights,
a sufficient number of shares of Common Stock for the purpose of
enabling the Company to issue Warrant Shares pursuant to the
exercise of the Warrants and Conversion Shares pursuant to the
conversion of the Preferred Stock (or exercise of any Prefunded
Warrants, as applicable).
4.10 Listing
of Common Stock. The Company
hereby agrees to use commercially reasonable efforts to maintain
the listing or quotation of the Common Stock on the Trading Market
on which it is currently listed, and concurrently with the Closing,
the Company shall apply to list or quote all of the Warrant Shares
and Conversion Shares on such Trading Market and promptly secure
the listing of all of the Warrant Shares and Conversion Shares on
such Trading Market. The Company further agrees, if the Company
applies to have the Common Stock traded on any other Trading
Market, it will then include in such application all of the Warrant
Shares and Conversion Shares, and will take such other action as is
necessary to cause all of the Warrant Shares and Conversion Shares
to be listed or quoted on such other Trading Market as promptly as
possible. The Company will then take all action reasonably
necessary to continue the listing and trading of its Common Stock
on a Trading Market and will comply in all respects with the
Company’s reporting, filing and other obligations under the
bylaws or rules of the Trading Market. The Company agrees to
maintain the eligibility of the Common Stock for electronic
transfer through the Depository Trust Company or another
established clearing corporation, including, without limitation, by
timely payment of fees to the Depository Trust Company or such
other established clearing corporation in connection with such
electronic transfer.
4.11 Subsequent
Equity Sales.
(a) From the date
hereof until the later of (x) 30 days after the Effective Date or
(y) the day the Company obtains the Stockholder Approval, neither
the Company nor any Subsidiary shall (i) issue, enter into any
agreement to issue or announce the issuance or proposed issuance of
any shares of Common Stock or Common Stock Equivalents or (ii) file
any registration statement or any amendment or supplement thereto,
in each case other than as contemplated pursuant to the
Registration Rights Agreement.
(b) From the date
hereof until the one-year anniversary of the date hereof, the
Company shall be prohibited from effecting or entering into an
agreement to effect any issuance by the Company or any of its
Subsidiaries of Common Stock or Common Stock Equivalents (or a
combination of units thereof) involving a Variable Rate
Transaction. “Variable Rate
Transaction” means a transaction in which the Company
(i) issues or sells any debt or equity securities that are
convertible into, exchangeable or exercisable for, or include the
right to receive, additional shares of Common Stock either (A) at a
conversion price, exercise price or exchange rate or other price
that is based upon, and/or varies with, the trading prices of or
quotations for the shares of Common Stock at any time after the
initial issuance of such debt or equity securities or (B) with a
conversion, exercise or exchange price that is subject to being
reset at some future date after the initial issuance of such debt
or equity security or upon the occurrence of specified or
contingent events directly or indirectly related to the business of
the Company or the market for the Common Stock or (ii) enters into,
or effects a transaction under, any agreement, including, but not
limited to, an equity line of credit, whereby the Company may issue
securities at a future determined price. The Purchaser shall be
entitled to obtain injunctive relief against the Company to
preclude any such issuance, which remedy shall be in addition to
any right to collect damages. Notwithstanding the foregoing, the
Company shall be entitled to (i) execute an at-the-market offering
program through the Placement Agent and such at-the-market offering
program shall not be deemed a Variable Rate Transaction, (ii)
following the six-month anniversary of the date hereof, make sales
of Common Stock under that certain Purchase Agreement, dated
November 13, 2019, by and between the Company and Lincoln Park
Capital Fund, LLC, as such agreement may be amended from time to
time in accordance with the terms thereof and (iii) effect any
exchanges as may be required pursuant to the Series B Exchange
Rights.
(c) Notwithstanding the
foregoing, this Section 4.11 shall not apply in respect of an
Exempt Issuance, except that no Variable Rate Transaction shall be
an Exempt Issuance.
-27-
4.12 Reserved.
4.13 Certain
Transactions and Confidentiality. The Purchaser covenants that neither it, nor any
Affiliate acting on its behalf or pursuant to any understanding
with it will execute any purchases or sales, including Short Sales,
of any of the Company’s securities during the period
commencing with the execution of this Agreement and ending at such
time that the transactions contemplated by this Agreement are first
publicly announced pursuant to the initial press release as
described in Section 4.4. The Purchaser covenants that until
such time as the transactions contemplated by this Agreement are
publicly disclosed by the Company pursuant to the initial press
release as described in Section 4.4, the Purchaser will maintain
the confidentiality of the existence and terms of this transaction
and the information included in the Disclosure Schedules.
Notwithstanding the foregoing and notwithstanding anything
contained in this Agreement to the contrary, the Company expressly
acknowledges and agrees that (i) no Purchaser makes any
representation, warranty or covenant hereby that it will not engage
in effecting transactions in any securities of the Company after
the time that the transactions contemplated by this Agreement are
first publicly announced pursuant to the initial press release as
described in Section 4.4, (ii) no Purchaser shall be restricted or
prohibited from effecting any transactions in any securities of the
Company in accordance with applicable securities laws from and
after the time that the transactions contemplated by this Agreement
are first publicly announced pursuant to the initial press release
as described in Section 4.4 and (iii) no Purchaser shall have any
duty of confidentiality or duty not to trade in the securities of
the Company to the Company or its Subsidiaries after the issuance
of the initial press release as described in Section 4.4.
Notwithstanding the foregoing, if the Purchaser is a multi-managed
investment vehicle whereby separate portfolio managers manage
separate portions of the Purchaser’s assets and the portfolio
managers have no direct knowledge of the investment decisions made
by the portfolio managers managing other portions of the
Purchaser’s assets, the covenant set forth above shall only
apply with respect to the portion of assets managed by the
portfolio manager that made the investment decision to purchase the
Securities covered by this Agreement.
4.14 Form
D; Blue Sky Filings. The
Company agrees to timely file a Form D with respect to the
Securities as required under Regulation D and to provide a copy
thereof, promptly upon request of the Purchaser. The Company shall
take such action as the Company shall reasonably determine is
necessary in order to obtain an exemption for, or to qualify the
Securities for, sale to the Purchaser at the Closing under
applicable securities or “Blue Sky” laws of the states
of the United States, and shall provide evidence of such actions
promptly upon request of the Purchaser.
4.15 Acknowledgment
of Dilution. The Company
acknowledges that the issuance of the Securities may result in
dilution of the outstanding shares of Common Stock, which dilution
may be substantial under certain market conditions. The Company
further acknowledges that its obligations under the Transaction
Documents, including, without limitation, its obligation to issue
the Conversion Shares and Warrant Shares pursuant to the
Transaction Documents, are unconditional and absolute and not
subject to any right of set off, counterclaim, delay or reduction,
regardless of the effect of any such dilution or any claim the
Company may have against the Purchaser and regardless of the
dilutive effect that such issuance may have on the ownership of the
other stockholders of the Company.
4.16 Stockholder
Approval.
(a) The Company shall
provide each stockholder entitled to vote at a special meeting of
stockholders of the Company (the “Stockholder Meeting”),
which shall be promptly called and held no later than March 31,
2020 (the “Stockholder Meeting
Deadline”), a proxy statement meeting the requirements
of Section 14 of the Securities Exchange Act of 1934, as amended,
and the related rules and regulations promulgated
thereunder (the “Proxy Statement”)
soliciting each such stockholder’s affirmative vote at the
Stockholder Meeting in favor of the Stockholder Approval, and the
Company shall use its best efforts to solicit the Stockholder
Approval from its stockholders (which efforts shall include,
without limitation, the requirement to hire a reputable proxy
solicitor) and to cause the board of directors of the Company to
recommend to the stockholders that they approve the Stockholder
Approval.
-28-
(b) The Proxy Statement
shall be in a form reasonably acceptable to the Purchases and
accordingly, the Company shall provide the Purchaser with
reasonable opportunity to review and comment on the Proxy
Statement. The Company shall keep the Purchaser apprised of the
status of matters relating to the Proxy Statement and the
Stockholder Meeting, including promptly furnishing the Purchaser
with copies of notices or other communications related to the Proxy
Statement, the Stockholder Meeting or the transactions contemplated
hereby received by the Company from the Securities and Exchange
Commission or the Nasdaq Stock Market.
(c) If, despite the
Company's best efforts, Stockholder Approval is not obtained on or
prior to the Stockholder Meeting Deadline, the Company shall cause
an additional Stockholder Meeting to be held every three (3) months
thereafter until such Stockholder Approval is
obtained.
ARTICLE V.
MISCELLANEOUS
5.1 Termination.
This Agreement may be terminated by the Purchaser by written notice
to the other parties, if the Closing has not been consummated on or
before the fifth (5th)
Trading Day following the date hereof; provided,
however,
that no such termination will affect the right of any party to sue
for any breach by any other party (or parties).
5.2 Fees
and Expenses. Except as
expressly set forth in the Transaction Documents to the contrary,
each party shall pay the fees and expenses of its advisers,
counsel, accountants and other experts, if any, and all other
expenses incurred by such party incident to the negotiation,
preparation, execution, delivery and performance of this Agreement.
The Company shall pay all Transfer Agent fees (including, without
limitation, any fees required for same-day processing of any
instruction letter delivered by the Company and any exercise notice
delivered by the Purchaser), stamp taxes and other taxes and duties
levied in connection with the delivery of any Securities to the
Purchaser.
5.3 Entire
Agreement. The Transaction
Documents, together with the exhibits and schedules thereto, the
Prospectus and the Prospectus Supplement, contain the entire
understanding of the parties with respect to the subject matter
hereof and thereof and supersede all prior agreements and
understandings, oral or written, with respect to such matters,
which the parties acknowledge have been merged into such documents,
exhibits and schedules.
5.4 Notices.
Any and all notices or other communications or deliveries required
or permitted to be provided hereunder shall be in writing and shall
be deemed given and effective on the earliest of: (a) the time of
transmission, if such notice or communication is delivered via
email attachment at the email address as set forth on the signature
pages attached hereto at or prior to 5:30 p.m. (New York City time)
on a Trading Day, (b) the next Trading Day after the time of
transmission, if such notice or communication is delivered via
email attachment at the email address as set forth on the signature
pages attached hereto on a day that is not a Trading Day or later
than 5:30 p.m. (New York City time) on any Trading Day, (c) the
second (2nd)
Trading Day following the date of mailing, if sent by U.S.
nationally recognized overnight courier service or (d) upon actual
receipt by the party to whom such notice is required to be given.
The address for such notices and communications shall be as set
forth on the signature pages attached hereto. To the extent that
any notice provided pursuant to any Transaction Document
constitutes, or contains material, non-public information regarding
the Company or any of the Subsidiaries, the Company shall
simultaneously file such notice with the Commission pursuant to a
Current Report on Form 8-K.
5.5 Amendments;
Waivers. No provision of this
Agreement may be waived, modified, supplemented or amended except
in a written instrument signed, in the case of an amendment, by the
Company and the Purchaser. No waiver of any default with respect to
any provision, condition or requirement of this Agreement shall be
deemed to be a continuing waiver in the future or a waiver of any
subsequent default or a waiver of any other provision, condition or
requirement hereof, nor shall any delay or omission of any party to
exercise any right hereunder in any manner impair the exercise of
any such right. Any amendment effected in accordance with this
Section 5.5 shall be binding upon the Purchaser and holder of
Securities and the Company.
-29-
5.6 Headings.
The headings herein are for convenience only, do not constitute a
part of this Agreement and shall not be deemed to limit or affect
any of the provisions hereof.
5.7 Successors
and Assigns. This Agreement
shall be binding upon and inure to the benefit of the parties and
their successors and permitted assigns. The Company may not assign
this Agreement or any rights or obligations hereunder without the
prior written consent of the Purchaser (other than by merger). The
Purchaser may assign any or all of its rights under this Agreement
to any Person to whom the Purchaser assigns or transfers any
Securities, provided that such transferee agrees in writing to be
bound, with respect to the transferred Securities, by the
provisions of the Transaction Documents that apply to the
“Purchaser.”
5.8 No
Third-Party Beneficiaries. The
Placement Agent shall be the third party beneficiary of the
representations and warranties of the Company in Section 3.1 and
the representations and warranties of the Purchaser in Section 3.2.
This Agreement is intended for the benefit of the parties hereto
and their respective successors and permitted assigns and is not
for the benefit of, nor may any provision hereof be enforced by,
any other Person, except as otherwise set forth in Section 4.8 and
this Section 5.8.
5.9 Governing
Law. All questions concerning
the construction, validity, enforcement and interpretation of the
Transaction Documents shall be governed by and construed and
enforced in accordance with the internal laws of the State of New
York, without regard to the principles of conflicts of law thereof.
Each party agrees that all legal Proceedings concerning the
interpretations, enforcement and defense of the transactions
contemplated by this Agreement and any other Transaction Documents
(whether brought against a party hereto or its respective
affiliates, directors, officers, shareholders, partners, members,
employees or agents) shall be commenced exclusively in the state
and federal courts sitting in the City of New York. Each party
hereby irrevocably submits to the exclusive jurisdiction of the
state and federal courts sitting in the City of New York, Borough
of Manhattan for the adjudication of any dispute hereunder or in
connection herewith or with any transaction contemplated hereby or
discussed herein (including with respect to the enforcement of any
of the Transaction Documents), and hereby irrevocably waives, and
agrees not to assert in any Action or Proceeding, any claim that it
is not personally subject to the jurisdiction of any such court,
that such Action or Proceeding is improper or is an inconvenient
venue for such Proceeding. Each party hereby irrevocably waives
personal service of process and consents to process being served in
any such Action or Proceeding by mailing a copy thereof via
registered or certified mail or overnight delivery (with evidence
of delivery) to such party at the address in effect for notices to
it under this Agreement and agrees that such service shall
constitute good and sufficient service of process and notice
thereof. Nothing contained herein shall be deemed to limit in any
way any right to serve process in any other manner permitted by
law. If any party shall commence an Action or Proceeding to enforce
any provisions of the Transaction Documents, then, in addition to
the obligations of the Company under Section 4.8, the prevailing
party in such Action or Proceeding shall be reimbursed by the
non-prevailing party for its reasonable attorneys’ fees and
other costs and expenses incurred with the investigation,
preparation and prosecution of such Action or
Proceeding.
5.10 Survival.
The representations and warranties contained herein shall survive
the Closing and the delivery of the Securities.
5.11 Execution.
This Agreement may be executed in two or more counterparts, all of
which when taken together shall be considered one and the same
agreement and shall become effective when counterparts have been
signed by each party and delivered to each other party, it being
understood that the parties need not sign the same counterpart. In
the event that any signature is delivered by e-mail delivery of a
“.pdf” format data file, such signature shall create a
valid and binding obligation of the party executing (or on whose
behalf such signature is executed) with the same force and effect
as if such “.pdf” signature page were an original
thereof.
-30-
5.12 Severability.
If any term, provision, covenant or restriction of this Agreement
is held by a court of competent jurisdiction to be invalid,
illegal, void or unenforceable, the remainder of the terms,
provisions, covenants and restrictions set forth herein shall
remain in full force and effect and shall in no way be affected,
impaired or invalidated, and the parties hereto shall use their
commercially reasonable efforts to find and employ an alternative
means to achieve the same or substantially the same result as that
contemplated by such term, provision, covenant or restriction. It
is hereby stipulated and declared to be the intention of the
parties that they would have executed the remaining terms,
provisions, covenants and restrictions without including any of
such that may be hereafter declared invalid, illegal, void or
unenforceable.
5.13 Rescission
and Withdrawal Right.
Notwithstanding anything to the contrary contained in (and without
limiting any similar provisions of) any of the other Transaction
Documents, whenever the Purchaser exercises a right, election,
demand or option under a Transaction Document and the Company does
not timely perform its related obligations within the periods
therein provided, then the Purchaser may rescind or withdraw, in
its sole discretion from time to time upon written notice to the
Company, any relevant notice, demand or election in whole or in
part without prejudice to its future actions and rights;
provided,
however,
that, in the case of a rescission of an exercise of a Warrant, the
Purchaser shall be required to return any shares of Common Stock
subject to any such rescinded exercise notice concurrently with the
return to the Purchaser of the aggregate exercise price paid to the
Company for such shares and the restoration of the
Purchaser’s right to acquire such shares pursuant to the
Purchaser’s Warrant (including, issuance of a replacement
warrant certificate evidencing such restored
right).
5.14 Replacement
of Securities. If any
certificate or instrument evidencing any Securities is mutilated,
lost, stolen or destroyed, the Company shall issue or cause to be
issued in exchange and substitution for and upon cancellation
thereof (in the case of mutilation), or in lieu of and substitution
therefor, a new certificate or instrument, but only upon receipt of
evidence reasonably satisfactory to the Company of such loss, theft
or destruction. The applicant for a new certificate or instrument
under such circumstances shall also pay any reasonable third-party
costs (including customary indemnity) associated with the issuance
of such replacement Securities.
5.15 Remedies.
In addition to being entitled to exercise all rights provided
herein or granted by law, including recovery of damages, the
Purchaser and the Company will be entitled to specific performance
under the Transaction Documents. The parties agree that monetary
damages may not be adequate compensation for any loss incurred by
reason of any breach of obligations contained in the Transaction
Documents and hereby agree to waive and not to assert in any Action
for specific performance of any such obligation the defense that a
remedy at law would be adequate.
5.16 Payment
Set Aside. To the extent that
the Company makes a payment or payments to the Purchaser pursuant
to any Transaction Document or the Purchaser enforces or exercises
its rights thereunder, and such payment or payments or the proceeds
of such enforcement or exercise or any part thereof are
subsequently invalidated, declared to be fraudulent or
preferential, set aside, recovered from, disgorged by or are
required to be refunded, repaid or otherwise restored to the
Company, a trustee, receiver or any other Person under any law
(including, without limitation, any bankruptcy law, state or
federal law, common law or equitable cause of action), then to the
extent of any such restoration the obligation or part thereof
originally intended to be satisfied shall be revived and continued
in full force and effect as if such payment had not been made or
such enforcement or setoff had not occurred.
5.17 Independent
Nature of Purchaser’s Obligations and
Rights. The Purchaser has been
represented by its own separate legal counsel in its review and
negotiation of the Transaction Documents. For reasons of
administrative convenience only, the Purchaser and its respective
counsel have chosen to communicate with the Company through Haynes
and Boone. Haynes and Boone does not represent the Purchaser and
only represents the Placement Agent.
-31-
5.18 Liquidated
Damages. The
Company’s obligations to pay any partial liquidated damages
or other amounts owing under the Transaction Documents is a
continuing obligation of the Company and shall not terminate until
all unpaid partial liquidated damages and other amounts have been
paid notwithstanding the fact that the instrument or security
pursuant to which such partial liquidated damages or other amounts
are due and payable shall have been canceled.
5.19 Saturdays,
Sundays, Holidays, etc. If the last or appointed day for the taking of any
action or the expiration of any right required or granted herein
shall not be a Business Day, then such action may be taken or such
right may be exercised on the next succeeding Business
Day.
5.20 Construction.
The parties agree that each of them and/or their respective counsel
have reviewed and had an opportunity to revise the Transaction
Documents and, therefore, the normal rule of construction to the
effect that any ambiguities are to be resolved against the drafting
party shall not be employed in the interpretation of the
Transaction Documents or any amendments thereto. In addition, each
and every reference to share prices and shares of Common Stock in
any Transaction Document shall be subject to adjustment for reverse
and forward stock splits, stock dividends, stock combinations and
other similar transactions of the Common Stock that occur after the
date of this Agreement.
5.21 WAIVER
OF JURY TRIAL.
IN ANY
ACTION, SUIT, OR PROCEEDING IN ANY JURISDICTION BROUGHT BY ANY
PARTY AGAINST ANY OTHER PARTY, THE PARTIES EACH KNOWINGLY AND
INTENTIONALLY, TO THE GREATEST EXTENT PERMITTED BY APPLICABLE LAW,
HEREBY ABSOLUTELY, UNCONDITIONALLY, IRREVOCABLY AND EXPRESSLY
WAIVES FOREVER TRIAL BY JURY.
(Signature Pages Follow)
-32-
IN
WITNESS WHEREOF, the parties hereto have caused this Securities
Purchase Agreement to be duly executed by their respective
authorized signatories as of the date first indicated
above.
|
AZURRX BIOPHARMA, INC.
|
Address
for Notice:
|
|
By:
/s/ James
Sapirstein
Name: James Sapirstein
Title: Chief Executive Officer
With a
copy to (which shall not constitute notice):
|
Email:
Fax:
|
|
|
|
[REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK
SIGNATURE
PAGE FOR PURCHASER FOLLOWS]
-33-
[PURCHASER
SIGNATURE PAGES TO AZRX SECURITIES PURCHASE AGREEMENT]
IN
WITNESS WHEREOF, the undersigned have caused this Securities
Purchase Agreement to be duly executed by their respective
authorized signatories as of the date first indicated
above.
Name of
Purchaser:
________________________________________________________
Signature of Authorized Signatory of
Purchaser: __________________________________
Name of
Authorized Signatory:
____________________________________________________
Title
of Authorized Signatory:
_____________________________________________________
Email
Address of Authorized Signatory:
______________________________________________
Address
for Notice to Purchaser:
Address
for Delivery of Securities to Purchaser (if not same as address for
notice):
Subscription
Amount: $_________________
Warrant
Shares: __________________
Registered
Preferred Shares: __________________
Unregistered
Preferred Shares: __________________
EIN
Number: _______________________
[SIGNATURE
PAGES CONTINUE]
EXHIBIT A
FORM
OF CERTIFICATE OF DESIGNATION
EXHIBIT
A CERTIFICATE OF THE DESIGNATIONS, POWERS, PREFERENCES AND
RIGHTS
OF
SERIES
C 9.00% CONVERTIBLE JUNIOR PREFERRED STOCK OF
AZURRX
BIOPHARMA, INC.
(Pursuant to
Section 151 of the Delaware General Corporation Law)
AzurRx
BioPharma, Inc., a corporation organized and existing under the
laws of the State of Delaware (the “Company”), hereby
certifies that, pursuant to authority vested in the Board of
Directors of the Company (the “Board of Directors”) by
Article FOURTH of the Amended and Restated Certificate of
Incorporation, as amended (the “Certificate of
Incorporation”), of the Company, the following resolutions
were adopted on December 31, 2020 by the Board of Directors
pursuant to Section 151 of the Delaware General Corporation Law
(the “DGCL”), and in accordance with the provisions of
Section 103 of the DGCL, does hereby submit the
following:
WHEREAS, the
Company’s Certificate of Incorporation authorizes the
issuance of 10,000,000 shares of preferred stock, par value $0.0001
per share (the “Preferred Stock”), from time to time in
one or more classes or series;
WHEREAS, the Board
of Directors is authorized to divide the Preferred Stock into any
number of shares and to fix the designations, relative rights,
preferences and limitations of any wholly unissued series of
preferred stock; and
WHEREAS, it is the
desire of the Board of Directors, pursuant to its authority as
aforesaid, to fix the designation and number of, and determine the
designation, relative rights, preferences, and limitations relating
to a series of the Preferred Stock, which shall consist of up to
75,000.0000 shares of the Preferred Stock which the Company has the
authority to issue, as follows:
“RESOLVED
that, pursuant to authority vested in the Board of Directors of the
Company by ARTICLE FOURTH of the Company’s Certificate of
Incorporation, out of the total authorized number of 10,000,000
shares of Preferred Stock, there shall be designated a series of
75,000.0000 shares which shall be issued in and constitute a single
series to be known as “Series C 9.00% Convertible Junior
Preferred Stock” (hereinafter called the “Series C
Preferred Stock”). The Board of Directors hereby resolves
that the shares of Series C Preferred Stock shall have the
designations, relative rights, preferences and the limitations
thereof, set forth below:
TERMS
OF SERIES C PREFERRED STOCK
Section 1. Definitions. For the purposes
hereof, the following terms shall have the following
meanings:
“Affiliate” means any
Person that, directly or indirectly through one or more
intermediaries, controls or is controlled by or is under common
control with a Person, as such terms are used in and construed
under Rule 405 of the Securities Act.
“Alternate Consideration”
shall have the meaning set forth in Section 7(e).
“Bankruptcy Event” means
any of the following events: (a) the Company or any Significant
Subsidiary (as such term is defined in Rule 1-02(w) of Regulation
S-X) thereof commences a case or other proceeding under any
bankruptcy, reorganization, arrangement, adjustment of debt, relief
of debtors, dissolution, insolvency or liquidation or similar law
of any jurisdiction relating to the Company or any Significant
Subsidiary thereof, (b) there is commenced against the Company or
any Significant Subsidiary thereof any such case or proceeding that
is not dismissed within 60 days after commencement, (c) the Company
or any Significant Subsidiary thereof is adjudicated insolvent or
bankrupt or any order of relief or other order approving any such
case or proceeding is entered, (d) the Company or any Significant
Subsidiary thereof suffers any appointment of any custodian or the
like for it or any substantial part of its property that is not
discharged or stayed within 60 calendar days after such
appointment, (e) the Company or any Significant Subsidiary thereof
makes a general assignment for the benefit of creditors, (f) the
Company or any Significant Subsidiary thereof calls a meeting of
its creditors with a view to arranging a composition, adjustment or
restructuring of its debts, or (g) the Company or any Significant
Subsidiary thereof, by any act or failure to act, expressly
indicates its consent to, approval of or acquiescence in any of the
foregoing or takes any corporate or other action for the purpose of
effecting any of the foregoing.
“Beneficial Ownership
Limitation” shall have the meaning set forth in
Section 6(e).
“Business Day” means any
day except any Saturday, any Sunday, any day which is a federal
legal holiday in the United States or any day on which banking
institutions in the State of New York are authorized or required by
law or other governmental action to close.
“Buy-In” shall have the
meaning set forth in Section 6(d)(iv).
“Change of Control
Transaction” means the occurrence after the date
hereof of any of (a) an acquisition after the date hereof by an
individual or legal entity or “group” (as described in
Rule 13d-5(b)(1) promulgated under the Exchange Act) of effective
control (whether through legal or beneficial ownership of capital
stock of the Company, by contract or otherwise) of in excess of 50%
of the voting securities of the Company
(other
than by means of conversion or exercise of Series C Preferred Stock
and the Securities issued together with the Series C Preferred
Stock), (b) the Company merges into or consolidates with any other
Person, or any Person merges into or consolidates with the Company
and, after giving effect to such transaction, the stockholders of
the Company immediately prior to such transaction own less than 50%
of the aggregate voting power of the Company or the successor
entity of such transaction, (c) the Company sells or transfers all
or substantially all of its assets to another Person and the
stockholders of the Company immediately prior to such transaction
own less than 66% of the aggregate voting power of the acquiring
entity immediately after the transaction, (d) a replacement at one
time or within a one year period of more than one-half of the
members of the Board of Directors which is not approved by a
majority of those individuals who are members of the Board of
Directors on the Original Issue Date (or by those individuals who
are serving as members of the Board of Directors on any date whose
nomination to the Board of Directors was approved by a majority of
the members of the Board of Directors who are members on the
Original Issue Date), or (e) the execution by the Company of an
agreement to which the Company is a party or by which it is bound,
providing for any of the events set forth in clauses (a) through
(d) above.
“Closing” means the
initial closing of the purchase and sale of the Series C Preferred
Stock and the Warrants pursuant to Section 2.1 of the Initial
Purchase Agreement.
“Commission” means the
United States Securities and Exchange Commission.
“Common Stock” means the
Company’s common stock, par value $0.0001 per share, and
stock of any other class of securities into which such securities
may hereafter be reclassified or changed.
“Common Stock Equivalents”
means any securities of the Company or the Subsidiaries which would
entitle the holder thereof to acquire at any time Common Stock,
including, without limitation, any debt, preferred stock, rights,
options, warrants or other instrument that is at any time
convertible into or exercisable or exchangeable for, or otherwise
entitles the holder thereof to receive, Common Stock.
“Conversion Amount” means
the sum of the Stated Value at issue.
“Conversion Date” shall
have the meaning set forth in Section 6(a).
“Conversion Price” shall
have the meaning set forth in Section 6(c).
“Conversion Shares” means,
collectively, the shares of Common Stock issuable upon conversion
of the shares of Series C Preferred Stock in accordance with the
terms hereof.
“Conversion Shares Registration
Statement” means a registration statement that
registers the resale of all of the Conversion Shares by the
Holders, which shall be named as “selling stockholders”
therein, and meets the requirements of the Registration Rights
Agreement.
“Covered Securities” means
any shares of Common Stock underlying (x) any shares of preferred
stock issuable to First Wave Bio, Inc., as consideration for the
First Wave License Agreement (if other than the Series C Preferred
Stock), (y) any warrants issuable as placement agent compensation,
as a result of with the transactions contemplated by the
Transaction Documents, and (z) any securities issuable to holders
of the exchange rights set forth in Section 8 of the Series B
Certificate of Designations, as a result of the transactions
contemplated the Transaction Documents.
“Dividend Payment Date”
shall have the meaning set forth in Section 3(a).
“Effective Date” means the
date that the Conversion Shares Registration Statement filed by the
Company pursuant to the Registration Rights Agreement is first
declared effective by the Commission.
“Exchange Act” means the
Securities Exchange Act of 1934, as amended, and the rules and
regulations promulgated thereunder.
[“First
Wave License Agreement” means the License Agreement,
dated as of December 31, 2020, by and between First Wave Bio, Inc.
and the Company, as amended, modified or supplemented from time to
time in accordance with its terms.]
[“First
Wave Purchase Agreement” means any Securities Purchase
Agreement relating to the purchase of Series C Preferred Stock to
be entered into by and between First Wave Bio, Inc. and the Company
pursuant to the terms of the First Wave License Agreement, as
amended, modified or supplemented from time to time in accordance
with its terms.]
“Fundamental Transaction”
shall have the meaning set forth in Section 7(e).
“GAAP” means United States
generally accepted accounting principles.
“Holder” shall have the
meaning given such term in Section 2.
“Initial Closing Date”
means the Trading Day on which the Investor Purchase Agreement has
been executed and delivered by the applicable parties thereto and
all conditions precedent to (i) each Holder’s obligations to
pay the Subscription Amount and (ii)
the Company’s
obligations to deliver the Series C Preferred Stock and the
Warrants have been satisfied or waived.
“Investor Purchase
Agreement” means the Securities Purchase Agreement,
dated as of December 31, 2020, by and among the Company and the
original Holders signatory thereto, as amended, modified or
supplemented from time to time in accordance with its
terms.
“Issuable Maximum” shall
have the meaning set forth in Section 6(f).
“Issue Date” means, with
respect to any Purchase Agreement, the date of first issuance of
shares of the Series C Preferred Stock pursuant to such Purchase
Agreement, regardless of the number of transfers of any particular
shares of Series C Preferred Stock and regardless of the number of
certificates which may be issued to evidence such Series C
Preferred Stock.
“Junior Securities” means
the Common Stock and all other Common Stock Equivalents of the
Company other than those securities which are explicitly senior or
pari passu to the Series C Preferred
Stock in dividend rights or liquidation preference.
“Liquidation” shall have
the meaning set forth in Section 5.
“MFN Purchase Agreement”
means any agreement pursuant to which shares of Series B Preferred
Stock are exchanged for shares of Series C Preferred Stock in
accordance with the exchange rights set forth in Section 8 of the
Series B Certificate of Designations.
“New York Courts” shall
have the meaning set forth in Section 8(d).
“Notice of Conversion”
shall have the meaning set forth in Section 6(a).
“Original Issue Date”
means the date of the first issuance of any shares of the Series C
Preferred Stock regardless of the number of transfers of any
particular shares of Series C Preferred Stock and regardless of the
number of certificates which may be issued to evidence such Series
C Preferred Stock.
“Person” means an
individual or corporation, partnership, trust, incorporated or
unincorporated association, joint venture, limited liability
company, joint stock company, government (or an agency or
subdivision thereof) or other entity of any kind.
“Prefunded Warrant” means
a prefunded warrant or similar instrument, with a similar
Beneficial Ownership Limitation as specified in Section
6(e).
“Purchase Agreement” means
the Investor Purchase Agreement[, the First Wave Purchase
Agreement] or any MFN Purchase Agreement, as
applicable.
“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.
“Series B Preferred Stock”
means the Series B Convertible Preferred Stock, par value $0.001
per share, of the Company.
“Series B Certificate of
Designations” means the Certificate of Designations,
Powers, Preferences and Rights of the Series B Convertible
Preferred Stock.
“Series C Preferred Stock”
shall have the meaning set forth in Section 2.
“Securities” means the
Series C Preferred Stock, the Warrants, the Warrant Shares and the
Conversion Shares.
“Securities Act” means the
Securities Act of 1933, as amended, and the rules and regulations
promulgated thereunder.
“Senior Securities” means
the Company’s Series B Preferred Stock.
“Share Delivery Date”
shall have the meaning set forth in Section 6(c\d).
“Stated Value” shall have
the meaning set forth in Section 2, as the same may be increased
pursuant to Section 3.
“Stockholder Approval”
means such approval as may be required from the stockholders of the
Company in accordance with applicable law, the applicable rules and
regulations of the Nasdaq Stock Market (or any successor entity),
the Company’s certificate of incorporation and bylaws and the
General Corporate Law of the State of Delaware with respect to the
transactions contemplated by the Transaction Documents, including
(x) an increase in the number of authorized shares of Common Stock
above 150,000,000 and (y) the issuance of any Underlying Shares or
other Covered Securities in excess of the Issuable
Maximum.
“Subscription Amount”
shall mean, as to each Holder who is a party to the Investor
Purchase Agreement, the aggregate amount to be paid for the Series
C Preferred Stock purchased pursuant to the Investor Purchase
Agreement, as specified below such Holder’s name on the
signature page of such Purchase Agreement and next to the heading
“Subscription Amount,” in United States dollars and in
immediately available funds.
“Subsidiary” means any
subsidiary of the Company as set forth on Schedule 3.1(a) of the Investor Purchase
Agreement and shall, where applicable, also include any direct or
indirect subsidiary of the Company formed or acquired after the
date of the Investor Purchase Agreement.
“Successor Entity” shall
have the meaning set forth in Section 7(e).
“Trading Day” means a day
on which the principal Trading Market is open for
business.
“Trading Market” means any
of the following markets or exchanges on which the Common Stock is
listed or quoted for trading on the date in question: the NYSE
American, the Nasdaq Capital Market, the Nasdaq Global Market, the
Nasdaq Global Select Market, or the New York Stock Exchange (or any
successors to any of the foregoing).
“Transaction Documents”
means any Purchase Agreement, the Warrants, the Registration Rights
Agreement, all exhibits and schedules thereto and hereto and any
other documents or agreements executed in connection with the
transactions contemplated pursuant to any Purchase
Agreement.
“Transfer Agent” means
Colonial Stock Transfer Company, Inc., the current transfer agent
of the Company, with a mailing address of 66 Exchange Place, 1st
Floor, Salt Lake City, Utah 84111, and any successor transfer agent
of the Company.
“Underlying Shares” means,
collectively, the shares of Common Stock issued and issuable upon
conversion of the Series C Preferred Stock, and upon exercise of
the Warrants.
“Warrants” means,
collectively, the Common Stock purchase warrants delivered to the
Holder at the Closing in accordance with Section 2.2(a) of the
Investor Purchase Agreement.
“Warrant Shares” means the
shares of Common Stock issuable upon exercise of the
Warrants.
Section 2. Designation, Amount and Par
Value. The series of preferred stock shall be designated as
its Series C 9.00% Convertible Junior Preferred Stock (the
“Series
C Preferred
Stock”) and the number of shares so designated shall
be up to 75,000.0000 (which shall not be subject to increase
without the written consent of all of the holders of the Series C
Preferred Stock (each, a “Holder” and collectively,
the “Holders”)). Each share of
Series C Preferred Stock shall have a par value of $0.0001 per
share and a stated value equal to $750.00, subject to increase set forth
in Section 3 below (the “Stated Value”).
Section 3.
Dividends.
a) Accrual
and Payment of Dividends. From and after its applicable
Issue Date, subject to the rights the holders of the Senior
Securities, cumulative dividends on the Series C Preferred Stock
shall accrue, whether or not declared by the Board and whether or
not there are funds legally available for the payment of dividends,
on a daily basis in arrears at the rate of 9.00% per annum on the
sum of the Stated Value thereof plus all unpaid accrued and
accumulated dividends thereon. All accrued dividends on
any
Series
C Preferred Stock shall be paid in cash only when, as and if
declared by the Board of Directors out of funds legally available
therefor or upon a Liquidation in accordance with the provisions of
Section 5; provided, that to the extent not paid on the last day of
March, June, September and December of each calendar year (each
such date, a “Dividend Payment Date”),
all accrued dividends on any share shall accumulate and compound on
the applicable Dividend Payment Date whether or not declared by the
Board of Directors and shall remain accumulated, compounding
dividends until paid pursuant hereto or converted pursuant to
Section 6. All accrued and accumulated dividends on the Series C
Preferred Stock shall be prior and in preference to any dividend on
any Junior Securities and shall be fully declared and paid before
any dividends are declared and paid, or any other distributions or
redemptions are made, on any Junior Securities, other than to (a)
declare or pay any dividend or distribution payable on the Common
Stock in shares of Common Stock or (b) repurchase Common Stock held
by employees or consultants of the Company upon termination of
their employment or services pursuant to agreements providing for
such repurchase.
b) Partial
Dividend Payments. Except as otherwise provided herein, if
at any time the Company pays less than the total amount of
dividends then accrued and accumulated with respect to the Series C
Preferred Stock, such payment shall be distributed pro rata among
the Holders thereof based upon the aggregate accrued and
accumulated but unpaid dividends on the Series C Preferred Stock
held by each such Holder.
Section 4. Voting Rights. Except as
otherwise provided herein or as otherwise required by law, the
Series C Preferred Stock shall have no voting rights. However, as
long as any shares of Series C Preferred Stock are outstanding, the
Company shall not, without the affirmative vote of the Holders of a
majority of the then outstanding shares of the Series C Preferred
Stock, (a) alter or change adversely the powers, preferences or
rights given to the Series C Preferred Stock or alter or amend this
Certificate of Designation, (b) authorize or create any class of
stock ranking as to dividends, redemption or distribution of assets
upon a Liquidation (as defined in Section 5) senior to, or
otherwise pari
passu with, the
Series C Preferred Stock, (c) amend its certificate of
incorporation or other charter documents in any manner that
adversely affects any rights of the Holders, (d) increase the
number of authorized shares of Series C Preferred Stock, or (e)
enter into any agreement with respect to any of the
foregoing.
Section 5. Liquidation. Upon any
liquidation, dissolution or winding-up of the Company, whether
voluntary or involuntary (a “Liquidation”), after
payment in full of any liquidation preference to the holders of the
Senior Securities, the Holders shall be entitled to receive out of
the assets, whether capital or surplus, of the Company an amount
equal to the Stated Value, plus any accrued and unpaid dividends
thereon and any other fees or liquidated damages then due and owing
thereon under this Certificate of Designation, for each share of
Series C Preferred Stock before any distribution or payment shall
be made to the holders of any Junior Securities, and if the assets
of the Company shall be insufficient to pay in full such amounts,
then the entire assets to be distributed to the Holders shall be
ratably distributed among
the
Holders in accordance with the respective amounts that would be
payable on such shares if all amounts payable thereon were paid in
full. A Fundamental Transaction or Change of Control Transaction
shall be deemed a Liquidation for purposed of this Section 5. The
Company shall mail written notice of any such Liquidation, not less
than 45 days prior to the payment date stated therein, to each
Holder.
Section
6.
Conversion.
a) Conversions
at Option of Holder. Each share of Series C Preferred Stock
shall be convertible, at any time and from time to time at the
option of the Holder thereof, into that number of shares of Common
Stock (subject to the limitations set forth in Section 6(e), except
to the extent the Company makes reasonable provision for the
issuance of Prefunded Warrants in lieu of Common Stock, and Section
6(f)) determined by dividing (x) the sum of (i) the Stated Value of
such share of Series C Preferred Stock and (ii) all accrued and
accumulated and unpaid dividends on such share of Series C
Preferred Stock to be converted by (y) the Conversion Price.
Holders shall effect conversions by providing the Company with the
form of conversion notice attached hereto as Annex A (a “Notice of Conversion”).
Each Notice of Conversion shall specify the number of shares of
Series C Preferred Stock to be converted, the number of shares of
Series C Preferred Stock owned prior to the conversion at issue,
the number of shares of Series C Preferred Stock owned subsequent
to the conversion at issue and the date on which such conversion is
to be effected, which date may not be prior to the date the
applicable Holder delivers such Notice of Conversion to the Company
pursuant to Section
8(a) (such date, the “Conversion Date”). If no
Conversion Date is specified in a Notice of Conversion, the
Conversion Date shall be the date that such Notice of Conversion to
the Company is deemed delivered hereunder. No ink-original Notice
of Conversion shall be required, nor shall any medallion guarantee
(or other type of guarantee or notarization) of any Notice of
Conversion form be required. The calculations and entries set forth
in the Notice of Conversion shall control in the absence of
manifest or mathematical error. To effect conversions of shares of
Series C Preferred Stock, a Holder shall not be required to
surrender the certificate(s) representing the shares of Series C
Preferred Stock to the Company unless all of the shares of Series C
Preferred Stock represented thereby are so converted, in which case
such Holder shall deliver the certificate representing such shares
of Series C Preferred Stock promptly following the Conversion Date
at issue. Shares of Series C Preferred Stock converted into Common
Stock (or Prefunded Warrants, as applicable) or redeemed in
accordance with the terms hereof shall be canceled and shall not be
reissued.
b) Conversions
at Option of Company. Each share of Series C Preferred Stock
shall be convertible, at any time and from time to time at the
option of the Company, into that number of shares of Common Stock
(subject to the limitations set forth in Section 6(e), except to
the extent the Company makes reasonable provision for the issuance
of Prefunded Warrants in lieu of Common Stock, and Section 6(f))
determined by dividing (x) the sum of (i) the Stated Value of such
share of Series C Preferred Stock and (ii) all accrued and
accumulated and unpaid dividends on such share
of
Series C Preferred Stock to be converted by (y) the Conversion
Price. The Company shall send each Holder written notice of such
event and of the date of effectiveness thereof. Promptly after
receipt of such notice, each Holder shall surrender any certificate
or certificates representing such shares of Series C Preferred
Stock to the Company at its principal office (or such other office
or agency of the Company as the Company may designate by notice in
writing to the holder or holders of the Series C Preferred Stock),
together with a properly completed statement of the name or names
(with address), subject to compliance with applicable laws to the
extent such designation shall involve a transfer, in which the
certificate or certificates for shares of Common Stock (or
Prefunded Warrants, as applicable) shall be issued, at any time
during its usual business hours, as of the date set forth in such
notice.
c) Conversion
Price. The conversion price for the Series C Preferred Stock
shall equal $0.75, subject
to adjustment herein (the “Conversion
Price”).
d)
Mechanics of
Conversion.
i. Delivery
of Conversion Shares Upon Conversion. Not later than the
earlier of (i) two (2) Trading Days and (ii) the number of Trading
Days comprising the Standard Settlement Period (as defined below)
after each Conversion Date (the “Share Delivery Date”),
the Company shall deliver, or cause to be delivered, to the
converting Holder the number of Conversion Shares being acquired
upon the conversion of the Series C Preferred Stock which, if (A)
there is an effective registration statement permitting the
issuance of the Conversion Shares to or resale of the Conversion
Shares by such Holder or (B) the Conversion Shares are eligible for
resale by the Holder without volume or manner-of-sale limitations
pursuant to Rule 144, shall be free of restrictive legends and
trading restrictions (other than those which may then be required
by any Purchase Agreement). If (A) there is an effective
registration statement permitting the issuance of the Conversion
Shares to or resale of the Conversion Shares by such Holder
following a conversion of Series C Preferred Stock or (B) the
Conversion Shares issuable upon a conversion of Series C Preferred
Stock are eligible for resale by the Holder without volume or
manner-of-sale limitations pursuant to Rule 144, the Company shall
deliver the Conversion Shares required to be delivered by the
Company under this Section 6 electronically through the Depository
Trust Company or another established clearing corporation
performing similar functions. As used herein, “Standard Settlement
Period” means the standard settlement period,
expressed in a number of Trading Days, on the Company’s
primary Trading Market with respect to the Common Stock as in
effect on the date of delivery of the Notice of
Conversion.
ii. Failure
to Deliver Conversion Shares. If, in the case of any Notice
of Conversion, such Conversion Shares are not delivered to or as
directed by the applicable Holder by the Share Delivery Date, the
Holder shall be entitled to elect by written notice to the Company
at any time on or before its receipt of such
Conversion Shares,
to rescind such Conversion, in which event the Company shall
promptly return to the Holder any original Series C Preferred Stock
certificate delivered to the Company and the Holder shall promptly
return to the Company the Conversion Shares issued to such Holder
pursuant to the rescinded Conversion Notice.
iii. Obligation
Absolute; Partial Liquidated Damages. The Company’s
obligation to issue and deliver the Conversion Shares upon
conversion of Series C Preferred Stock in accordance with the terms
hereof are absolute and unconditional, irrespective of any action
or inaction by a Holder to enforce the same, any waiver or consent
with respect to any provision hereof, the recovery of any judgment
against any Person or any action to enforce the same, or any
setoff, counterclaim, recoupment, limitation or termination, or any
breach or alleged breach by such Holder or any other Person of any
obligation to the Company or any violation or alleged violation of
law by such Holder or any other person, and irrespective of any
other circumstance which might otherwise limit such obligation of
the Company to such Holder in connection with the issuance of such
Conversion Shares; provided, however, that such delivery
shall not operate as a waiver by the Company of any such action
that the Company may have against such Holder. In the event a
Holder shall elect to convert any or all of the Stated Value of its
Series C Preferred Stock, the Corporation may not refuse conversion
based on any claim that such Holder or any one associated or
affiliated with such Holder has been engaged in any violation of
law, agreement or for any other reason, unless an injunction from a
court, on notice to Holder, restraining and/or enjoining conversion
of all or part of the Series C Preferred Stock of such Holder shall
have been sought and obtained, and the Corporation posts a surety
bond for the benefit of such Holder in the amount of 150% of the
Stated Value of Series C Preferred Stock which is subject to the
injunction, which bond shall remain in effect until the completion
of arbitration/litigation of the underlying dispute and the
proceeds of which shall be payable to such Holder to the extent it
obtains judgment. In the absence of such injunction, the
Corporation shall issue Conversion Shares upon a properly noticed
conversion. If the Company fails to deliver to a Holder such
Conversion Shares pursuant to Section 6(d)(i) by the Share Delivery
Date applicable to such conversion, the Company shall pay to such
Holder, in cash, as liquidated damages and not as a penalty, for
each $5,000 of Stated Value of Series C Preferred Stock being
converted, $50 per Trading Day (increasing to $100 per Trading Day
on the third Trading Day and increasing to $200 per Trading Day on
the sixth Trading Day after such damages begin to accrue) for each
Trading Day after the Share Delivery Date until such Conversion
Shares are delivered or Holder rescinds such conversion. Nothing
herein shall limit a Holder’s right to pursue actual damages
for the Company’s failure to deliver Conversion Shares within
the period specified herein and such Holder shall have the right to
pursue all remedies available to it hereunder, at law or in equity
including, without limitation, a decree of specific performance
and/or injunctive relief. The exercise of any such rights shall not
prohibit a Holder from
seeking
to enforce damages pursuant to any other Section hereof or under
applicable law.
iv. Compensation
for Buy-In on Failure to Timely Deliver Conversion Shares Upon
Conversion. In addition to any other rights available to the
Holder, if the Company fails for any reason to deliver to a Holder
the applicable Conversion Shares by the Share Delivery Date
pursuant to Section 6(d)(i), and if after such Share Delivery Date
such Holder is required by its brokerage firm to purchase (in an
open market transaction or otherwise), or the Holder’s
brokerage firm otherwise purchases, shares of Common Stock to
deliver in satisfaction of a sale by such Holder of the Conversion
Shares which such Holder was entitled to receive upon the
conversion relating to such Share Delivery Date (a
“Buy-In”), then the
Company shall (A) pay in cash to such Holder (in addition to any
other remedies available to or elected by such Holder) the amount,
if any, by which (x) such Holder’s total purchase price
(including any brokerage commissions) for the Common Stock so
purchased exceeds (y) the product of (1) the aggregate number of
shares of Common Stock that such Holder was entitled to receive
from the conversion at issue multiplied by (2) the actual sale
price at which the sell order giving rise to such purchase
obligation was executed (including any brokerage commissions) and
(B) at the option of such Holder, either reissue (if surrendered)
the shares of Series C Preferred Stock equal to the number of
shares of Series C Preferred Stock submitted for conversion (in
which case, such conversion shall be deemed rescinded) or deliver
to such Holder the number of shares of Common Stock that would have
been issued if the Company had timely complied with its delivery
requirements under Section 6(d)(i). For example, if a Holder
purchases shares of Common Stock having a total purchase price of
$11,000 to cover a Buy- In with respect to an attempted conversion
of shares of Series C Preferred Stock with respect to which the
actual sale price of the Conversion Shares (including any brokerage
commissions) giving rise to such purchase obligation was a total
of
$10,000
under clause (A) of the immediately preceding sentence, the Company
shall be required to pay such Holder $1,000. The Holder shall
provide the Company written notice indicating the amounts payable
to such Holder in respect of the Buy-In and, upon request of the
Company, evidence of the amount of such loss. Nothing herein shall
limit a Holder’s right to pursue any other remedies available
to it hereunder, at law or in equity including, without limitation,
a decree of specific performance and/or injunctive relief with
respect to the Company’s failure to timely deliver the
Conversion Shares upon conversion of the shares of Series C
Preferred Stock as required pursuant to the terms
hereof.
v. Reservation
of Shares Issuable Upon Conversion. The Company covenants
that it will at all times reserve and keep available out of its
authorized and unissued shares of Common Stock for the sole purpose
of issuance upon conversion of the Series C Preferred Stock, free
from preemptive rights or any other actual contingent purchase
rights of Persons other than the Holder (and the other holders of
the Series C Preferred Stock), not less than such
aggregate
number
of shares of the Common Stock as shall (subject to the terms and
conditions set forth in any Purchase Agreement) be issuable (taking
into account the adjustments and restrictions of Sections 6(f) and
7) upon the conversion of the then outstanding shares of Series C
Preferred Stock, including all accrued and accumulated dividends.
The Company covenants that all shares of Common Stock that shall be
so issuable shall, upon issue, be duly authorized, validly issued,
fully paid and nonassessable.
vi. Fractional
Shares. No fractional shares or scrip representing
fractional shares of Common Stock (or Prefunded Warrants to
purchase fractional shares of Common Stock, as applicable) shall be
issued upon the conversion of the Series C Preferred Stock. As to
any fraction of a share of Common Stock which the Holder would
otherwise be entitled to purchase upon such conversion, the Company
shall at its election, either pay a cash adjustment in respect of
such final fraction in an amount equal to such fraction multiplied
by the Conversion Price or round up to the next whole
share.
vii. Transfer
Taxes and Expenses. The issuance of Conversion Shares on
conversion of this Series C Preferred Stock shall be made without
charge to any Holder for any documentary stamp or similar taxes
that may be payable in respect of the issue or delivery of such
Conversion Shares, provided that the Company shall not be required
to pay any tax that may be payable in respect of any transfer
involved in the issuance and delivery of any such Conversion Shares
upon conversion in a name other than that of the Holders of such
shares of Series C Preferred Stock and the Company shall not be
required to issue or deliver such Conversion Shares unless or until
the Person or Persons requesting the issuance 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. The Company shall pay all Transfer Agent fees required
for same-day processing of any Notice of Conversion and all fees to
the Depository Trust Company (or another established clearing
corporation performing similar functions) required for same-day
electronic delivery of the Conversion Shares.
e) Beneficial
Ownership Limitation. The Company shall not effect any
conversion of the Series C Preferred Stock, and a Holder shall not
have the right to convert any portion of the Series C Preferred
Stock, to the extent that, after giving effect to the conversion
set forth on the applicable Notice of Conversion, such Holder
(together with such Holder’s Affiliates, and any Persons
acting as a group together with such Holder or any of such
Holder’s Affiliates (such Persons, “Attribution Parties”))
would beneficially own in excess of the Beneficial Ownership
Limitation (as defined below). For purposes of the foregoing
sentence, the number of shares of Common Stock beneficially owned
by such Holder and its Affiliates and Attribution Parties shall
include the number of shares of Common Stock issuable upon
conversion of the Series C Preferred Stock with respect to which
such determination is being made, but shall exclude the number of
shares of Common Stock which are issuable upon (i)
conversion
of the
remaining, unconverted Series C Preferred Stock beneficially owned
by such Holder or any of its Affiliates or Attribution Parties and
(ii) exercise or conversion of the unexercised or unconverted
portion of any other securities of the Company subject to a
limitation on conversion or exercise analogous to the limitation
contained herein (including, without limitation, the Series C
Preferred Stock or the Warrants) beneficially owned by such Holder
or any of its Affiliates or Attribution Parties. Except as set
forth in the preceding sentence, for purposes of this Section 6(e),
beneficial ownership shall be calculated in accordance with Section
13(d) of the Exchange Act and the rules and regulations promulgated
thereunder. To the extent that the limitation contained in this
Section 6(e) applies, the determination of whether the Series C
Preferred Stock is convertible (in relation to other securities
owned by such Holder together with any Affiliates and Attribution
Parties) and of how many shares of Series C Preferred Stock are
convertible shall be in the sole discretion of such Holder, and the
submission of a Notice of Conversion shall be deemed to be such
Holder’s determination of whether the shares of Series C
Preferred Stock may be converted (in relation to other securities
owned by such Holder together with any Affiliates and Attribution
Parties) and how many shares of the Series C Preferred Stock are
convertible, in each case subject to the Beneficial Ownership
Limitation. To ensure compliance with this restriction, each Holder
will be deemed to represent to the Company each time it delivers a
Notice of Conversion that such Notice of Conversion has not
violated the restrictions set forth in this paragraph and the
Company shall have no obligation to verify or confirm the accuracy
of such determination. In addition, a determination as to any group
status as contemplated above shall be determined in accordance with
Section 13(d) of the Exchange Act and the rules and regulations
promulgated thereunder. For purposes of this Section 6(e), in
determining the number of outstanding shares of Common Stock, a
Holder may rely on the number of outstanding shares of Common Stock
as stated in the most recent of the following: (i) the
Company’s most recent periodic or annual report filed with
the Commission, as the case may be, (ii) a more recent public
announcement by the Company or (iii) a more recent written notice
by the Company or the Transfer Agent setting forth the number of
shares of Common Stock outstanding. Upon the written or oral
request of a Holder, the Company shall within two Trading Days
confirm orally and in writing to such Holder the number of shares
of Common Stock then outstanding. In any case, the number of
outstanding shares of Common Stock shall be determined after giving
effect to the conversion or exercise of securities of the Company,
including the Series C Preferred Stock, by such Holder or its
Affiliates or Attribution Parties since the date as of which such
number of outstanding shares of Common Stock was reported. The
“Beneficial
Ownership Limitation” shall be 4.99% of the number of
shares of the Common Stock outstanding immediately after giving
effect to the issuance of shares of Common Stock issuable upon
conversion of Series C Preferred Stock held by the applicable
Holder. A Holder, upon notice to the Company, may increase or
decrease the Beneficial Ownership Limitation provisions of this
Section 6(e) applicable to its Series C Preferred Stock provided
that the Beneficial Ownership Limitation in no event exceeds 9.99%
of the number of shares of the Common Stock outstanding immediately
after giving effect to the issuance of shares of Common Stock upon
conversion of this Series C Preferred Stock held by the Holder and
the provisions of this Section 6(e) shall continue
to
apply. Any such increase in the Beneficial Ownership Limitation
will not be effective until the 61st day after such notice is
delivered to the Company and shall only apply to such Holder and no
other Holder. The provisions of this paragraph shall be construed
and implemented in a manner otherwise than in strict conformity
with the terms of this Section 6(e) to correct this paragraph (or
any portion hereof) which may be defective or inconsistent with the
intended Beneficial Ownership Limitation contained herein or to
make changes or supplements necessary or desirable to properly give
effect to such limitation. The limitations contained in this
paragraph shall apply to a successor holder of Series C Preferred
Stock.
f) Issuance
Limitations. Notwithstanding anything herein to the
contrary, except to the extent the Company has previously obtained
effective Stockholder Approval, the Company may not issue, upon
conversion of the Series C Preferred Stock, a number of shares of
Common Stock (or Prefunded Warrants covering a number of shares of
Common Stock, as applicable) which would exceed 6,186,966 shares of
Common Stock in the aggregate, subject to adjustment for forward
and reverse stock splits, recapitalizations and the like (such
number of shares, the “Issuable
Maximum”).
Section
7.
Certain
Adjustments.
a) Stock
Dividends and Stock Splits. If the Company, at any time
while this Series C Preferred Stock is outstanding: (i) pays a
stock dividend or otherwise makes a distribution or distributions
payable in shares of Common Stock on shares of Common Stock or any
other Common Stock Equivalents (which, for avoidance of doubt,
shall not include any shares of Common Stock issued by the Company
upon conversion of, or payment of a dividend on, this Series C
Preferred Stock), (ii) subdivides outstanding shares of Common
Stock into a larger number of shares, (iii) combines (including by
way of a reverse stock split) outstanding shares of Common Stock
into a smaller number of shares, or (iv) issues, in the event of a
reclassification of shares of the Common Stock, any shares of
capital stock of the Company, then the Conversion Price shall be
multiplied by a fraction of which the numerator shall be the number
of shares of Common Stock (excluding any treasury shares of the
Company) outstanding immediately before such event, and of which
the denominator shall be the number of shares of Common Stock
outstanding immediately after such event. Any adjustment made
pursuant to this Section 7(a) shall become effective immediately
after the record date for the determination of stockholders
entitled to receive such dividend or distribution and shall become
effective immediately after the effective date in the case of a
subdivision, combination or re-classification.
b) [Intentionally
Omitted].
c) Subsequent
Rights Offerings. In addition to any adjustments pursuant to
Section 7(a) above, if at any time the Company grants, issues or
sells any Common Stock Equivalents or rights to purchase stock,
warrants, securities or other property pro rata to the record
holders of any class of shares of Common Stock (the
“Purchase
Rights”), then
each
Holder of Series C Preferred Stock will be entitled to acquire,
upon the terms applicable to such Purchase Rights, the aggregate
Purchase Rights which the Holder could have acquired if the Holder
had held the number of shares of Common Stock acquirable upon
complete conversion of such Holder’s Series C Preferred Stock
(without regard to any limitations on exercise hereof, including
without limitation, the Beneficial Ownership Limitation)
immediately before the date on which a record is taken for the
grant, issuance or sale of such Purchase Rights, or, if no such
record is taken, the date as of which the record holders of shares
of Common Stock are to be determined for the grant, issue or sale
of such Purchase Rights (provided, however, to the extent that the
Holder’s right to participate in any such Purchase Right
would result in the Holder exceeding the Beneficial Ownership
Limitation, then the Holder shall not be entitled to participate in
such Purchase Right to such extent (or beneficial ownership of such
shares of Common Stock as a result of such Purchase Right to such
extent) and such Purchase Right to such extent shall be held in
abeyance for the Holder until such time, if ever, as its right
thereto would not result in the Holder exceeding the Beneficial
Ownership Limitation).
d) Pro
Rata Distributions. During such time as this Series C
Preferred Stock is outstanding, if the Company declares or makes
any dividend or other distribution of its assets (or rights to
acquire its assets) to holders of shares of Common Stock, by way of
return of capital or otherwise (including, without limitation, any
distribution of cash, stock or other securities, property or
options by way of a dividend, spin off, reclassification, corporate
rearrangement, scheme of arrangement or other similar transaction)
(a “Distribution”), at any
time after the issuance of this Series C Preferred Stock, then, in
each such case, the Holder shall be entitled to participate in such
Distribution to the same extent that the Holder would have
participated therein if the Holder had held the number of shares of
Common Stock acquirable upon complete conversion of this Series C
Preferred Stock (without regard to any limitations on conversion
hereof, including without limitation, the Beneficial Ownership
Limitation) immediately before the date of which a record is taken
for such Distribution, or, if no such record is taken, the date as
of which the record holders of shares of Common Stock are to be
determined for the participation in such Distribution (provided, however, to the extent that the
Holder's right to participate in any such Distribution would result
in the Holder exceeding the Beneficial Ownership Limitation, then
the Holder shall not be entitled to participate in such
Distribution to such extent (or in the beneficial ownership of any
shares of Common Stock as a result of such Distribution to such
extent) and the portion of such Distribution shall be held in
abeyance for the benefit of the Holder until such time, if ever, as
its right thereto would not result in the Holder exceeding the
Beneficial Ownership Limitation).
e) Fundamental
Transaction. If, at any time while this Series C Preferred
Stock is outstanding, (i) the Company, directly or indirectly, in
one or more related transactions effects any merger or
consolidation of the Company with or into another Person, (ii) the
Company, directly or indirectly, effects any sale, lease, license,
assignment, transfer, conveyance or other disposition of all or
substantially all of its
assets
in one or a series of related transactions, (iii) any, direct or
indirect, purchase offer, tender offer or exchange offer (whether
by the Company or another Person) is completed pursuant to which
holders of Common Stock are permitted to sell, tender or exchange
their shares for other securities, cash or property and has been
accepted by the holders of 50% or more of the outstanding Common
Stock, (iv) the Company, directly or indirectly, in one or more
related transactions effects any reclassification, reorganization
or recapitalization of the Common Stock or any compulsory share
exchange pursuant to which the Common Stock is effectively
converted into or exchanged for other securities, cash or property,
or (v) the Company, directly or indirectly, in one or more related
transactions consummates a stock or share purchase agreement or
other business combination (including, without limitation, a
reorganization, recapitalization, spin-off or scheme of
arrangement) with another Person whereby such other Person acquires
more than 50% of the outstanding shares of Common Stock (not
including any shares of Common Stock held by the other Person or
other Persons making or party to, or associated or affiliated with
the other Persons making or party to, such stock or share purchase
agreement or other business combination) (each a
“Fundamental
Transaction”), then, upon any subsequent conversion of
this Series C Preferred Stock, the Holders shall have the right to
receive, for each Conversion Share that would have been issuable
upon such conversion immediately prior to the occurrence of such
Fundamental Transaction (without regard to any limitation in
Section 6(e) and Section 6(f) on the conversion of this Series C
Preferred Stock), the number of shares of Common Stock of the
successor or acquiring corporation or of the Company, if it is the
surviving corporation, and any additional consideration (the
“Alternate
Consideration”) receivable as a result of such
Fundamental Transaction by a holder of the number of shares of
Common Stock for which this Series C Preferred Stock is convertible
immediately prior to such Fundamental Transaction (without regard
to any limitation in Section 6(e) and Section 6(f) on the
conversion of this Series C Preferred Stock). For purposes of any
such conversion, the determination of the Conversion Price shall be
appropriately adjusted to apply to such Alternate Consideration
based on the amount of Alternate Consideration issuable in respect
of one share of Common Stock in such Fundamental Transaction, and
the Company shall apportion the Conversion Price among the
Alternate Consideration in a reasonable manner reflecting the
relative value of any different components of the Alternate
Consideration. If holders of Common Stock are given any choice as
to the securities, cash or property to be received in a Fundamental
Transaction, then the Holders shall be given the same choice as to
the Alternate Consideration it receives upon any conversion of this
Series C Preferred Stock following such Fundamental Transaction. To
the extent necessary to effectuate the foregoing provisions, any
successor to the Company or surviving entity in such Fundamental
Transaction shall file a new Certificate of Designation with the
same terms and conditions and issue to the Holders new preferred
stock consistent with the foregoing provisions and evidencing the
Holders’ right to convert such preferred stock into Alternate
Consideration. The Company shall cause any successor entity in a
Fundamental Transaction in which the Company is not the survivor
(the “Successor
Entity”) to assume in writing all of the obligations
of the Company under this Certificate of Designation and the other
Transaction Documents in accordance with the provisions of this
Section 7(e) pursuant to written agreements in form and
substance
reasonably
satisfactory to the Holders and approved by the Holders (without
unreasonable delay) prior to such Fundamental Transaction and
shall, at the option of the holder of this Series C Preferred
Stock, deliver to the Holders in exchange for this Series C
Preferred Stock a security of the Successor Entity evidenced by a
written instrument substantially similar in form and substance to
this Series C Preferred Stock which is convertible for a
corresponding number of shares of capital stock of such Successor
Entity (or its parent entity) equivalent to the shares of Common
Stock acquirable and receivable upon conversion of this Series C
Preferred Stock (without regard to any limitations on the
conversion of this Series C Preferred Stock) prior to such
Fundamental Transaction, and with a conversion price which applies
the conversion price hereunder to such shares of capital stock (but
taking into account the relative value of the shares of Common
Stock pursuant to such Fundamental Transaction and the value of
such shares of capital stock, such number of shares of capital
stock and such conversion price being for the purpose of protecting
the economic value of this Series C Preferred Stock immediately
prior to the consummation of such Fundamental Transaction), and
which is reasonably satisfactory in form and substance to the
Holders. Upon the occurrence of any such Fundamental Transaction,
the Successor Entity shall succeed to, and be substituted for (so
that from and after the date of such Fundamental Transaction, the
provisions of this Certificate of Designation and the other
Transaction Documents referring to the “Company” shall
refer instead to the Successor Entity), and may exercise every
right and power of the Company and shall assume all of the
obligations of the Company under this Certificate of Designation
and the other Transaction Documents with the same effect as if such
Successor Entity had been named as the Company herein.
f) Calculations.
All calculations under this Section 7 shall be made to the nearest
cent or the nearest 1/100th of a share, as the case may be. For
purposes of this Section 7, the number of shares of Common Stock
deemed to be issued and outstanding as of a given date shall be the
sum of the number of shares of Common Stock (excluding any treasury
shares of the Company) issued and outstanding.
g) Notice
to the Holders.
i. Adjustment
to Conversion Price. Whenever the Conversion Price is
adjusted pursuant to any provision of this Section 7, the Company
shall promptly deliver to each Holder a notice pursuant to
Section 8(a)
setting forth the Conversion Price after such adjustment and
setting forth a brief statement of the facts requiring such
adjustment.
ii. Notice
to Allow Conversion by Holder. If (A) the Company shall
declare a dividend (or any other distribution in whatever form) on
the Common Stock, (B) the Company shall declare a special
nonrecurring cash dividend on or a redemption of the Common Stock,
(C) the Company shall authorize the granting to all holders of the
Common Stock of rights or warrants to subscribe for or purchase any
shares of capital stock of any class or of any rights, (D) the
approval of any stockholders of the Company shall be required in
connection with any reclassification of the Common Stock, any
consolidation or merger to which the
Company
is a party, any sale or transfer of all or substantially all of the
assets of the Company, or any compulsory share exchange whereby the
Common Stock is converted into other securities, cash or property
or (E) the Company shall authorize the voluntary or involuntary
dissolution, liquidation or winding up of the affairs of the
Company, then, in each case, the Company shall cause to be filed at
each office or agency maintained for the purpose of conversion of
this Series C Preferred Stock, and shall cause to be delivered by
to each Holder at its last e-mail address or address as it shall
appear upon the stock books of the Company, at least twenty (20)
calendar days prior to the applicable record or effective date
hereinafter specified, a notice stating (x) the date on which a
record is to be taken for the purpose of such dividend,
distribution, redemption, rights or warrants, or if a record is not
to be taken, the date as of which the holders of the Common Stock
of record to be entitled to such dividend, distributions,
redemption, rights or warrants are to be determined or (y) the date
on which such reclassification, consolidation, merger, sale,
transfer or share exchange is expected to become effective or
close, and the date as of which it is expected that holders of the
Common Stock of record shall be entitled to exchange their shares
of the Common Stock for securities, cash or other property
deliverable upon such reclassification, consolidation, merger,
sale, transfer or share exchange; provided that the failure to
deliver such notice or any defect therein or in the delivery
thereof shall not affect the validity of the corporate action
required to be specified in such notice. To the extent that any
notice provided hereunder constitutes, or contains, material,
non-public information regarding the Company or any of the
Subsidiaries, the Company shall simultaneously file such notice
with the Commission pursuant to a Current Report on Form 8-K. The
Holder shall remain entitled to convert the Conversion Amount of
this Series C Preferred Stock (or any part hereof) during the
20-day period commencing on the date of such notice through the
effective date of the event triggering such notice except as may
otherwise be expressly set forth herein.
Section 8.
Miscellaneous.
a) Notices.
Any and all notices or other communications or deliveries to be
provided by the Holders hereunder including, without limitation,
any Notice of Conversion, shall be in writing and delivered
personally or by e-mail attachment, or sent by a nationally
recognized overnight courier service, addressed to the Company, at
the address set forth above Attention: , e-mail
address , or
such other e-mail address or address as the Company may specify for
such purposes by notice to the Holders delivered in accordance with
this Section 8. Any and all notices or other communications or
deliveries to be provided by the Company hereunder shall be in
writing and delivered personally, by or e-mail attachment, or sent
by a nationally recognized overnight courier service addressed to
each Holder at the e-mail address or address of such Holder
appearing on the books of the Company, or if no such e-mail address
or address appears on the books of the Company, at the principal
place of
business of such
Holder, as set forth in the Purchase Agreement applicable to such
Holder. Any notice or other communication or deliveries hereunder
shall be deemed given and effective on the earliest of (i) the date
of transmission, if such notice or communication is delivered via
e-mail attachment at the e-mail address set forth in this Section
prior to 5:30 p.m. (New York City time) on any date, (ii) the next
Trading Day after the date of transmission, if such notice or
communication is delivered via e-mail attachment at the e-mail
address set forth in this Section on a day that is not a Trading
Day or later than 5:30 p.m. (New York City time) on any Trading
Day, (iii) the second Trading Day following the date of mailing, if
sent by U.S. nationally recognized overnight courier service, or
(iv) upon actual receipt by the party to whom such notice is
required to be given.
b) Absolute
Obligation. Except as expressly provided herein, no
provision of this Certificate of Designation shall alter or impair
the obligation of the Company, which is absolute and unconditional,
to pay liquidated damages, accrued dividends and accrued interest,
as applicable, on the shares of Series C Preferred Stock at the
time, place, and rate, and in the coin or currency, herein
prescribed.
c) Lost
or Mutilated Preferred Stock Certificate. If a
Holder’s Series C Preferred Stock certificate shall be
mutilated, lost, stolen or destroyed, the Company shall execute and
deliver, in exchange and substitution for and upon cancellation of
a mutilated certificate, or in lieu of or in substitution for a
lost, stolen or destroyed certificate, a new certificate for the
shares of Series C Preferred Stock so mutilated, lost, stolen or
destroyed, but only upon receipt of evidence of such loss, theft or
destruction of such certificate, and of the ownership hereof
reasonably satisfactory to the Company.
d) Governing
Law. All questions concerning the construction, validity,
enforcement and interpretation of this Certificate of Designation
shall be governed by and construed and enforced in accordance with
the internal laws of the State of Delaware, without regard to the
principles of conflict of laws thereof. Each party agrees that all
legal proceedings concerning the interpretation, enforcement and
defense of the transactions contemplated by this Certificate of
Designation and any of the Transaction Documents (whether brought
against a party hereto or its respective Affiliates, directors,
officers, stockholders, employees or agents) shall be commenced in
the state and federal courts sitting in the City of New York,
Borough of Manhattan (the “New York Courts”). Each
party hereto hereby irrevocably submits to the exclusive
jurisdiction of the New York Courts for the adjudication of any
dispute hereunder or in connection herewith or with any transaction
contemplated hereby or discussed herein (including with respect to
the enforcement of this Certificate of Designation any of the
Transaction Documents), and hereby irrevocably waives, and agrees
not to assert in any suit, action or proceeding, any claim that it
is not personally subject to the jurisdiction of such New York
Courts, or such New York Courts are improper or inconvenient venue
for such proceeding. Each party hereby irrevocably waives personal
service of process and consents to process being served in any such
suit, action or proceeding by mailing a copy thereof via registered
or certified mail or overnight delivery (with evidence of delivery)
to such party
at the
address in effect for notices to it under this Certificate of
Designation and agrees that such service shall constitute good and
sufficient service of process and notice thereof. Nothing contained
herein shall be deemed to limit in any way any right to serve
process in any other manner permitted by applicable law. Each party
hereto hereby irrevocably waives, to the fullest extent permitted
by applicable law, any and all right to trial by jury in any legal
proceeding arising out of or relating to this Certificate of
Designation or the transactions contemplated hereby. If any party
shall commence an action or proceeding to enforce any provisions of
this Certificate of Designation, then the prevailing party in such
action or proceeding shall be reimbursed by the other party for its
attorneys’ fees and other costs and expenses incurred in the
investigation, preparation and prosecution of such action or
proceeding.
e) Waiver.
Any waiver by the Company or a Holder of a breach of any provision
of this Certificate of Designation shall not operate as or be
construed to be a waiver of any other breach of such provision or
of any breach of any other provision of this Certificate of
Designation or a waiver by any other Holders. The failure of the
Company or a Holder to insist upon strict adherence to any term of
this Certificate of Designation on one or more occasions shall not
be considered a waiver or deprive that party (or any other Holder)
of the right thereafter to insist upon strict adherence to that
term or any other term of this Certificate of Designation on any
other occasion. Any waiver by the Company or a Holder must be in
writing.
f) Severability.
If any provision of this Certificate of Designation is invalid,
illegal or unenforceable, the balance of this Certificate of
Designation shall remain in effect, and if any provision is
inapplicable to any Person or circumstance, it shall nevertheless
remain applicable to all other Persons and circumstances. If it
shall be found that any interest or other amount deemed interest
due hereunder violates the applicable law governing usury, the
applicable rate of interest due hereunder shall automatically be
lowered to equal the maximum rate of interest permitted under
applicable law.
g) Next
Business Day. Whenever any payment or other obligation
hereunder shall be due on a day other than a Business Day, such
payment shall be made on the next succeeding Business
Day.
h) Headings.
The headings contained herein are for convenience only, do not
constitute a part of this Certificate of Designation and shall not
be deemed to limit or affect any of the provisions
hereof.
i) Status
of Converted or Redeemed Preferred Stock. If any shares of
Series C Preferred Stock shall be converted, redeemed or reacquired
by the Company, such shares shall resume the status of authorized
but unissued shares of preferred stock and shall no longer be
designated as Series C 9.00% Convertible Junior Preferred
Stock.
j) Fractional Shares. Series C
Preferred Stock may not be issued in fractional shares or scrip
representing fractional shares of more than four decimal places. As
to any fraction of a share of Series C Preferred Stock to be issued
pursuant to any provision hereof, the Company shall at its
election, either pay a cash adjustment in respect of such final
fraction in an amount equal to such fraction multiplied by the
Stated Value or round up to the next ten-thousandth of a
share.
*********************
RESOLVED, FURTHER,
that the Chairman, the president or any vice-president, and the
secretary or any assistant secretary, of the Company be and they
hereby are authorized and directed to prepare and file this
Certificate of Designation of Preferences, Rights and Limitations
in accordance with the foregoing resolution and the provisions of
Delaware law.
IN
WITNESS WHEREOF, the undersigned have executed this Certificate
this day of December, 2020.
|
Name:
Title:
|
Name:
Title:
|
ANNEX A
NOTICE
OF CONVERSION
(TO BE
EXECUTED BY THE REGISTERED HOLDER IN ORDER TO CONVERT SHARES OF
Series C PREFERRED STOCK)
The
undersigned hereby elects to convert the number of shares of Series
C 9.00% Convertible Junior Preferred Stock indicated below into
shares of common stock, par value $0.0001 per share (the
“Common
Stock”), of AzurRx BioPharma, Inc., a Delaware
corporation (the “Company”), according to
the conditions hereof, as of the date written below. If shares of
Common Stock are to be issued in the name of a Person other than
the undersigned, the undersigned will pay all transfer taxes
payable with respect thereto and is delivering herewith such
certificates and opinions as may be required by the Company in
accordance with the applicable Purchase Agreement. No fee will be
charged to any Holder for any conversion, except for any such
transfer taxes.
Conversion
calculations:
|
Date to
Effect Conversion:
|
|
Number
of shares of Series C Preferred Stock owned prior to Conversion:
_
|
|
Number
of shares of Series C Preferred Stock to be Converted:
|
|
Stated
Value of shares of Series C Preferred Stock to be Converted:
|
|
Number
of shares of Common Stock to be Issued:
|
|
Applicable
Conversion
Price:
|
|
Number
of shares of Preferred Stock subsequent to Conversion:
|
|
Address
for Delivery: or
DWAC
Instructions: Broker no: Account no: _
|
|
[HOLDER]
By:
Name:
Title:
|
EXHIBIT B
FORM
OF REGISTRATION RIGHTS AGREEMENT
[See
Attached]
EXHIBIT C
FORM
OF COMMON STOCK PURCHASE WARRANT
[See
Attached]
EXHIBIT D-1
FORM
OF REGISTERED PREFUNDED WARRANT
[See
Attached]
EXHIBIT D-2
FORM
OF UNREGISTERED PREFUNDED WARRANT
[See
Attached]
Exhibit 10.2
REGISTRATION RIGHTS AGREEMENT
This
Registration Rights Agreement (this “Agreement”) is made and
entered into as of December 31, 2020, between AzurRx Biopharma,
Inc., a Delaware corporation (the “Company”), and the
purchaser identified on the signature page hereto (the
“Purchaser”).
This
Agreement is made pursuant to the Securities Purchase Agreement,
dated as of the date hereof, between the Company and the Purchaser
(the “Purchase
Agreement”).
The
Company and the Purchaser hereby agree as follows:
1.
Definitions.
Capitalized
terms used and not otherwise defined herein that are defined in the
Purchase Agreement shall have the meanings given such terms in the
Purchase Agreement. As used in this Agreement, the following
terms shall have the following meanings:
“Advice”
shall have the meaning set forth in Section 6(d).
“Effectiveness Date”
means, with respect to the Initial Registration Statement required
to be filed hereunder, the 60th calendar day
following the date hereof (or, in the event of a “full
review” by the Commission, the 120th calendar day
following the date hereof) and with respect to any additional
Registration Statements which may be required pursuant to Section
2(c) or Section 3(c), the 60th calendar day
following the date on which an additional Registration Statement is
required to be filed hereunder (or, in the event of a “full
review” by the Commission, the 120th calendar day
following the date such additional Registration Statement is
required to be filed hereunder); provided, however, that in the event the
Company is notified by the Commission that one or more of the above
Registration Statements will not be reviewed or is no longer
subject to further review and comments, the Effectiveness Date as
to such Registration Statement shall be the fifth (5th) Trading Day
following the date on which the Company is so notified if such date
precedes the dates otherwise required above, provided, further, if
such Effectiveness Date falls on a day that is not a Trading Day,
then the Effectiveness Date shall be the next succeeding Trading
Day.
“Effectiveness Period”
shall have the meaning set forth in Section 2(a).
“Event” shall have the
meaning set forth in Section 2(d).
“Event Date” shall have
the meaning set forth in Section 2(d).
“Filing Date” means, with
respect to the Initial Registration Statement required hereunder,
the 30th
calendar day following the date hereof and, with respect to any
additional Registration Statements which may be required pursuant
to Section 2(c) or Section 3(c), the earliest practical date on
which the Company is permitted by SEC Guidance to file such
additional Registration Statement related to the Registrable
Securities.
“Holder” or
“Holders” means the holder
or holders, as the case may be, from time to time of Registrable
Securities.
“Indemnified Party” shall
have the meaning set forth in Section 5(c).
“Indemnifying Party” shall
have the meaning set forth in Section 5(c).
“Initial Registration
Statement” means the initial Registration Statement
filed pursuant to this Agreement.
-1-
“Losses” shall have the
meaning set forth in Section 5(a).
“Plan of Distribution”
shall have the meaning set forth in Section 2(a).
“Prospectus” means the
prospectus included in a Registration Statement (including, without
limitation, a prospectus that includes any information previously
omitted from a prospectus filed as part of an effective
registration statement in reliance upon Rule 430A promulgated by
the Commission pursuant to the Securities Act), as amended or
supplemented by any prospectus supplement, with respect to the
terms of the offering of any portion of the Registrable Securities
covered by a Registration Statement, and all other amendments and
supplements to the Prospectus, including post-effective amendments,
and all material incorporated by reference or deemed to be
incorporated by reference in such Prospectus.
“Registrable Securities”
means, as of any date of determination, (a) all Unregistered
Conversion Shares, (b) all Warrant Shares then issued and issuable
upon exercise of the Warrants (assuming on such date the Warrants
are exercised in full without regard to any exercise limitations
therein) and (c) any securities issued or then issuable upon any
stock split, dividend or other distribution, recapitalization or
similar event with respect to the foregoing; provided, however, that any such
Registrable Securities shall cease to be Registrable Securities
(and the Company shall not be required to maintain the
effectiveness of any, or file another, Registration Statement
hereunder with respect thereto) for so long as (a) a Registration
Statement with respect to the sale of such Registrable Securities
is declared effective by the Commission under the Securities Act
and such Registrable Securities have been disposed of by the Holder
in accordance with such effective Registration Statement, (b) such
Registrable Securities have been previously sold in accordance with
Rule 144, or (c) such securities become eligible for resale without
volume or manner-of-sale restrictions and without current public
information pursuant to Rule 144 as set forth in a written opinion
letter to such effect, addressed, delivered and acceptable to the
Transfer Agent and the affected Holders (assuming that such
securities and any securities issuable upon exercise, conversion or
exchange of which, or as a dividend upon which, such securities
were issued or are issuable, were at no time held by any Affiliate
of the Company, and all Warrants and Unregistered Prefunded
Warrants are exercised by “cashless exercise” as
provided in Section 2(c) of each of the Warrants and Unregistered
Prefunded Warrants), as reasonably determined by the Company, upon
the advice of counsel to the Company.
“Registration Statement”
means any registration statement required to be filed hereunder
pursuant to Section 2(a) and any additional registration statements
contemplated by Section 2(c) or Section 3(c), including (in each
case) the Prospectus, amendments and supplements to any such
registration statement or Prospectus, including pre- and
post-effective amendments, all exhibits thereto, and all material
incorporated by reference or deemed to be incorporated by reference
in any such registration statement.
“Rule
415” means Rule 415 promulgated by the Commission
pursuant to the Securities Act, as such Rule may be amended or
interpreted from time to time, or any similar rule or regulation
hereafter adopted by the Commission having substantially the same
purpose and effect as such Rule.
“Rule 424” means Rule 424
promulgated by the Commission pursuant to the Securities Act, as
such Rule may be amended or interpreted from time to time, or any
similar rule or regulation hereafter adopted by the Commission
having substantially the same purpose and effect as such
Rule.
“Selling Stockholder
Questionnaire” shall have the meaning set forth in
Section 3(a).
“SEC Guidance” means (i)
any publicly-available written or oral guidance of the Commission
staff, or any comments, requirements or requests of the Commission
staff and (ii) the Securities Act.
-2-
2.
Shelf
Registration.
(a) On or prior to each
Filing Date, the Company shall prepare and file with the Commission
a Registration Statement covering the resale of all of the
Registrable Securities that are not then registered on an effective
Registration Statement for an offering to be made on a continuous
basis pursuant to Rule 415. Each Registration Statement filed
hereunder shall be on Form S-3 (except if the Company is not then
eligible to register for resale the Registrable Securities on Form
S-3, in which case such registration shall be on another
appropriate form in accordance herewith, subject to the provisions
of Section 2(e)) and shall contain (unless otherwise directed by at
least 85% in interest of the Holders) substantially the
“Plan of
Distribution” attached hereto as Annex A and substantially the
“Selling
Stockholder” section attached hereto as Annex B; provided, however, that no Holder shall
be required to be named as an “underwriter” without
such Holder’s express prior written consent. Subject to the
terms of this Agreement, the Company shall use its best efforts to
cause a Registration Statement filed under this Agreement
(including, without limitation, under Section 3(c)) to be declared
effective under the Securities Act as promptly as possible after
the filing thereof, but in any event no later than the applicable
Effectiveness Date, and shall use its best efforts to keep such
Registration Statement continuously effective under the Securities
Act until the date that all Registrable Securities covered by such
Registration Statement (i) have been sold, thereunder or pursuant
to Rule 144, or (ii) may be sold without volume or manner-of-sale
restrictions pursuant to Rule 144 and without the requirement for
the Company to be in compliance with the current public information
requirement under Rule 144, as determined by the counsel to the
Company pursuant to a written opinion letter to such effect,
addressed and acceptable to the Transfer Agent and the affected
Holders (the “Effectiveness Period”).
The Company shall telephonically request effectiveness of a
Registration Statement as of 5:00 p.m. (New York City time) on a
Trading Day. The Company shall immediately notify the Holders by
e-mail of the effectiveness of a Registration Statement on the same
Trading Day that the Company telephonically confirms effectiveness
with the Commission, which shall be the date requested for
effectiveness of such Registration Statement. The Company shall, by
9:30 a.m. (New York City time) on the Trading Day after the
effective date of such Registration Statement, file a final
Prospectus with the Commission as required by Rule 424. Failure to
so notify the Holder within one (1) Trading Day of such
notification of effectiveness or failure to file a final Prospectus
as foresaid shall be deemed an Event under Section
2(d).
(b) Notwithstanding
the registration obligations set forth in Section 2(a), if the
Commission informs the Company that all of the Registrable
Securities cannot, as a result of the application of Rule 415, be
registered for resale as a secondary offering on a single
registration statement, the Company agrees to promptly inform each
of the Holders thereof and use its commercially reasonable efforts
to file amendments to the Initial Registration Statement as
required by the Commission, covering the maximum number of
Registrable Securities permitted to be registered by the
Commission, on Form S-3 or such other form available to register
for resale the Registrable Securities as a secondary offering,
subject to the provisions of Section 2(e), with respect to filing
on Form S-3 or other appropriate form, and subject to the
provisions of Section 2(d) with respect to the payment of
liquidated damages; provided, however, that prior to filing
such amendment, the Company shall be obligated to use diligent
efforts to advocate with the Commission for the registration of all
of the Registrable Securities in accordance with the SEC Guidance,
including without limitation, Compliance and Disclosure
Interpretation 612.09.
(c) Notwithstanding
any other provision of this Agreement and subject to the payment of
liquidated damages pursuant to Section 2(d), if the Commission or
any SEC Guidance sets forth a limitation on the number of
Registrable Securities permitted to be registered on a particular
Registration Statement as a secondary offering (and notwithstanding
that the Company used diligent efforts to advocate with the
Commission for the registration of all or a greater portion of
Registrable Securities), unless otherwise directed in writing by a
Holder as to its Registrable Securities, the number of Registrable
Securities to be registered on such Registration Statement will be
reduced as follows:
-3-
a.
First, the Company
shall reduce or eliminate any securities to be included other than
Registrable Securities;
b.
Second, the
Company shall reduce Registrable Securities represented by Warrant
Shares (applied, in the case that some Warrant Shares may be
registered, to the Holders on a pro rata basis based on the total
number of unregistered Warrant Shares held by such Holders);
and
c.
Third, the Company
shall reduce Registrable Securities represented by Unregistered
Conversion Shares (applied, in the case that some Unregistered
Conversion Shares may be registered, to the Holders on a pro rata
basis based on the total number of unregistered Unregistered
Conversion Shares held by such Holders).
In the
event of a cutback hereunder, the Company shall give the Holder at
least five (5) Trading Days prior written notice along with the
calculations as to such Holder’s allotment. In the event the
Company amends the Initial Registration Statement in accordance
with the foregoing, the Company will use its best efforts to file
with the Commission, as promptly as allowed by the Commission or
SEC Guidance provided to the Company or to registrants of
securities in general, one or more registration statements on Form
S-3 or such other form available to register for resale those
Registrable Securities that were not registered for resale on the
Initial Registration Statement, as amended.
(d) If: (i) the Initial
Registration Statement is not filed on or prior to its Filing Date
(if the Company files the Initial Registration Statement without
affording the Holders the opportunity to review and comment on the
same as required by Section 3(a) herein, the Company shall be
deemed to have not satisfied this clause (i)), or (ii) the Company
fails to file with the Commission a request for acceleration of a
Registration Statement in accordance with Rule 461 promulgated by
the Commission pursuant to the Securities Act, within five (5)
Trading Days of the date that the Company is notified (orally or in
writing, whichever is earlier) by the Commission that such
Registration Statement will not be “reviewed” or will
not be subject to further review, or (iii) prior to the effective
date of a Registration Statement, the Company fails to file a
pre-effective amendment and otherwise respond in writing to
comments made by the Commission in respect of such Registration
Statement within ten (10) calendar days after the receipt of
comments by or notice from the Commission that such amendment is
required in order for such Registration Statement to be declared
effective, or (iv) a Registration Statement registering for resale
all of the Registrable Securities is not declared effective by the
Commission by the Effectiveness Date of the Initial Registration
Statement, or (v) after the effective date of a Registration
Statement, such Registration Statement ceases for any reason to
remain continuously effective as to all Registrable Securities
included in such Registration Statement, or the Holders are
otherwise not permitted to utilize the Prospectus therein to resell
such Registrable Securities, for more than ten (10) consecutive
calendar days or more than an aggregate of fifteen (15) calendar
days (which need not be consecutive calendar days) during any
12-month period (any such failure or breach being referred to as an
“Event”, and for purposes
of clauses (i) and (iv), the date on which such Event occurs, and
for purpose of clause (ii) the date on which such five (5) Trading
Day period is exceeded, and for purpose of clause (iii) the date
which such ten (10) calendar day period is exceeded, and for
purpose of clause (v) the date on which such ten (10) or fifteen
(15) calendar day period, as applicable, is exceeded being referred
to as an “Event
Date”), then, in addition to any other rights the
Holders may have hereunder or under applicable law, on each such
Event Date and on each monthly anniversary of each such Event Date
(if the applicable Event shall not have been cured by such date)
until the applicable Event is cured, the Company shall pay to each
Holder an amount in cash, as partial liquidated damages and not as
a penalty, equal to the product of 2.0% multiplied by the aggregate
Subscription Amount paid by such Holder pursuant to the Purchase
Agreement. If the Company fails to pay any partial liquidated
damages pursuant to this Section in full within seven (7) days
after the date payable, the Company will pay interest thereon at a
rate of 18% per annum (or such lesser maximum amount that is
permitted to be paid by applicable law) to the Holder, accruing
daily from the date such partial liquidated damages are due until
such amounts, plus all such interest thereon, are paid in full. The
partial liquidated damages pursuant to the terms hereof shall apply
on a daily pro rata basis for any portion of a month prior to the
cure of an Event.
-4-
(e) If Form S-3 is not
available for the registration of the resale of Registrable
Securities hereunder, the Company shall (i) register the resale of
the Registrable Securities on another appropriate form and (ii)
undertake to register the Registrable Securities on Form S-3 as
soon as such form is available, provided that the Company shall
maintain the effectiveness of the Registration Statement then in
effect until such time as a Registration Statement on Form S-3
covering the Registrable Securities has been declared effective by
the Commission.
(f) Notwithstanding
anything to the contrary contained herein, in no event shall the
Company be permitted to name any Holder or affiliate of a Holder as
any underwriter without the prior written consent of such
Holder.
3.
Registration
Procedures.
In
connection with the Company’s registration obligations
hereunder, the Company shall:
(a) Not less than five
(5) Trading Days prior to the filing of each Registration Statement
and not less than one (1) Trading Day prior to the filing of any
related Prospectus or any amendment or supplement thereto
(including any document that would be incorporated or deemed to be
incorporated therein by reference), the Company shall (i) furnish
to each Holder copies of all such documents proposed to be filed,
which documents (other than those incorporated or deemed to be
incorporated by reference) will be subject to the review of such
Holders, and (ii) cause its officers and directors, counsel and
independent registered public accountants to respond to such
inquiries as shall be necessary, in the reasonable opinion of
respective counsel to each Holder, to conduct a reasonable
investigation within the meaning of the Securities Act. The Company
shall not file a Registration Statement or any such Prospectus or
any amendments or supplements thereto to which the Holders of a
majority of the Registrable Securities shall reasonably object in
good faith, provided that, the Company is notified of such
objection in writing no later than five (5) Trading Days after the
Holders have been so furnished copies of a Registration Statement
or one (1) Trading Day after the Holders have been so furnished
copies of any related Prospectus or amendments or supplements
thereto. Each Holder agrees to furnish to the Company a completed
questionnaire in the form attached to this Agreement as
Annex C (a
“Selling Stockholder
Questionnaire”) on a date that is not less than two
(2) Trading Days prior to the Filing Date or by the end of the
fourth (4th) Trading Day
following the date on which such Holder receives draft materials in
accordance with this Section.
(b) (i) Prepare and
file with the Commission such amendments, including post-effective
amendments, to a Registration Statement and the Prospectus used in
connection therewith as may be necessary to keep a Registration
Statement continuously effective as to the applicable Registrable
Securities for the Effectiveness Period and prepare and file with
the Commission such additional Registration Statements in order to
register for resale under the Securities Act all of the Registrable
Securities, (ii) cause the related Prospectus to be amended or
supplemented by any required Prospectus supplement (subject to the
terms of this Agreement), and, as so supplemented or amended, to be
filed pursuant to Rule 424, (iii) respond as promptly as reasonably
possible to any comments received from the Commission with respect
to a Registration Statement or any amendment thereto and provide as
promptly as reasonably possible to the Holders true and complete
copies of all correspondence from and to the Commission relating to
a Registration Statement (provided that, the Company shall excise
any information contained therein which would constitute material
non-public information regarding the Company or any of its
Subsidiaries), and (iv) comply in all material respects with the
applicable provisions of the Securities Act and the Exchange Act
with respect to the disposition of all Registrable Securities
covered by a Registration Statement during the applicable period in
accordance (subject to the terms of this Agreement) with the
intended methods of disposition by the Holders thereof set forth in
such Registration Statement as so amended or in such Prospectus as
so supplemented.
(c) If during the
Effectiveness Period, the number of Registrable Securities at any
time exceeds 100% of the number of shares of Common Stock then
registered in a Registration Statement, then the Company shall file
as soon as reasonably practicable, but in any case prior to the
applicable Filing Date, an additional Registration Statement
covering the resale by the Holders of not less than the number of
such Registrable Securities.
-5-
(d) Notify the Holders
of Registrable Securities to be sold (which notice shall, pursuant
to clauses (iii) through (vi) hereof, be accompanied by an
instruction to suspend the use of the Prospectus until the
requisite changes have been made) as promptly as reasonably
possible (and, in the case of (i)(A) below, not less than one (1)
Trading Day prior to such filing) and (if requested by any such
Person) confirm such notice in writing no later than one (1)
Trading Day following the day (i)(A) when a Prospectus or any
Prospectus supplement or post-effective amendment to a Registration
Statement is proposed to be filed, (B) when the Commission notifies
the Company whether there will be a “review” of such
Registration Statement and whenever the Commission comments in
writing on such Registration Statement, and (C) with respect to a
Registration Statement or any post-effective amendment, when the
same has become effective, (ii) of any request by the Commission or
any other federal or state governmental authority for amendments or
supplements to a Registration Statement or Prospectus or for
additional information, (iii) of the issuance by the Commission or
any other federal or state governmental authority of any stop order
suspending the effectiveness of a Registration Statement covering
any or all of the Registrable Securities or the initiation of any
Proceedings for that purpose, (iv) of the receipt by the Company of
any notification with respect to the suspension of the
qualification or exemption from qualification of any of the
Registrable Securities for sale in any jurisdiction, or the
initiation or threatening of any Proceeding for such purpose, (v)
of the occurrence of any event or passage of time that makes the
financial statements included in a Registration Statement
ineligible for inclusion therein or any statement made in a
Registration Statement or Prospectus or any document incorporated
or deemed to be incorporated therein by reference untrue in any
material respect or that requires any revisions to a Registration
Statement, Prospectus or other documents so that, in the case of a
Registration Statement or the Prospectus, as the case may be, it
will not contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary
to make the statements therein, in light of the circumstances under
which they were made, not misleading, and (vi) of the occurrence or
existence of any pending corporate development with respect to the
Company that the Company believes may be material and that, in the
determination of the Company, makes it not in the best interest of
the Company to allow continued availability of a Registration
Statement or Prospectus; provided, however, that in no event shall
any such notice contain any information which would constitute
material, non-public information regarding the Company or any of
its Subsidiaries.
(e) Use its best
efforts to avoid the issuance of, or, if issued, obtain the
withdrawal of (i) any order stopping or suspending the
effectiveness of a Registration Statement, or (ii) any suspension
of the qualification (or exemption from qualification) of any of
the Registrable Securities for sale in any jurisdiction, at the
earliest practicable moment.
(f) Furnish to each
Holder, without charge, at least one conformed copy of each such
Registration Statement and each amendment thereto, including
financial statements and schedules, all documents incorporated or
deemed to be incorporated therein by reference to the extent
requested by such Person, and all exhibits to the extent requested
by such Person (including those previously furnished or
incorporated by reference) promptly after the filing of such
documents with the Commission, provided that any such item which is
available on the EDGAR system (or successor thereto) need not be
furnished in physical form.
(g) Subject to the
terms of this Agreement, the Company hereby consents to the use of
such Prospectus and each amendment or supplement thereto by each of
the selling Holders in connection with the offering and sale of the
Registrable Securities covered by such Prospectus and any amendment
or supplement thereto, except after the giving of any notice
pursuant to Section 3(d).
(h) Prior to any
resale of Registrable Securities by a Holder, use its commercially
reasonable efforts to register or qualify or cooperate with the
selling Holders in connection with the registration or
qualification (or exemption from the registration or qualification)
of such Registrable Securities for the resale by the Holder under
the securities or Blue Sky laws of such jurisdictions within the
United States as any Holder reasonably requests in writing, to keep
each registration or qualification (or exemption therefrom)
effective during the Effectiveness Period and to do any and all
other acts or things reasonably necessary to enable the disposition
in such jurisdictions of the Registrable Securities covered by each
Registration Statement, provided that the Company shall not be
required to qualify generally to do business in any jurisdiction
where it is not then so qualified, subject the Company to any
material tax in any such jurisdiction where it is not then so
subject or file a general consent to service of process in any such
jurisdiction.
-6-
(i) If requested by a
Holder, cooperate with such Holder to facilitate the timely
preparation and delivery of certificates representing Registrable
Securities to be delivered to a transferee pursuant to a
Registration Statement, which certificates shall be free, to the
extent permitted by the Purchase Agreement, of all restrictive
legends, and to enable such Registrable Securities to be in such
denominations and registered in such names as any such Holder may
request.
(j) Upon the occurrence
of any event contemplated by Section 3(d), as promptly as
reasonably possible under the circumstances taking into account the
Company’s good faith assessment of any adverse consequences
to the Company and its stockholders of the premature disclosure of
such event, prepare a supplement or amendment, including a
post-effective amendment, to a Registration Statement or a
supplement to the related Prospectus or any document incorporated
or deemed to be incorporated therein by reference, and file any
other required document so that, as thereafter delivered, neither a
Registration Statement nor such Prospectus will contain an untrue
statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made,
not misleading. If the Company notifies the Holders in accordance
with clauses (iii) through (vi) of Section 3(d) above to suspend
the use of any Prospectus until the requisite changes to such
Prospectus have been made, then the Holders shall suspend use of
such Prospectus. The Company will use its best efforts to ensure
that the use of the Prospectus may be resumed as promptly as is
practicable. The Company shall be entitled to exercise its right
under this Section 3(j) to suspend the availability of a
Registration Statement and Prospectus, subject to the payment of
partial liquidated damages otherwise required pursuant to Section
2(d), for a period not to exceed sixty (60) calendar days (which
need not be consecutive days) in any 12-month period.
(k) Otherwise use
commercially reasonable efforts to comply with all applicable rules
and regulations of the Commission under the Securities Act and the
Exchange Act, including, without limitation, Rule 172 under the
Securities Act, file any final Prospectus, including any supplement
or amendment thereof, with the Commission pursuant to Rule 424
under the Securities Act, promptly inform the Holders in writing
if, at any time during the Effectiveness Period, the Company does
not satisfy the conditions specified in Rule 172 and, as a result
thereof, the Holders are required to deliver a Prospectus in
connection with any disposition of Registrable Securities and take
such other actions as may be reasonably necessary to facilitate the
registration of the Registrable Securities hereunder.
(l) The Company shall
use its best efforts to maintain eligibility for use of Form S-3
(or any successor form thereto) for the registration of the resale
of Registrable Securities.
(m) The Company may
require each selling Holder to furnish to the Company a certified
statement as to the number of shares of Common Stock beneficially
owned by such Holder and, if required by the Commission, the
natural persons thereof that have voting and dispositive control
over the shares. During any periods that the Company is unable to
meet its obligations hereunder with respect to the registration of
the Registrable Securities solely because any Holder fails to
furnish such information within three (3) Trading Days of the
Company’s request, any liquidated damages that are accruing
at such time as to such Holder only shall be tolled and any Event
that may otherwise occur solely because of such delay shall be
suspended as to such Holder only, until such information is
delivered to the Company.
-7-
4.
Registration
Expenses. All fees and expenses incident to the performance
of or compliance with, this Agreement by the Company shall be borne
by the Company whether or not any Registrable Securities are sold
pursuant to a Registration Statement. The fees and expenses
referred to in the foregoing sentence shall include, without
limitation, (i) all registration and filing fees (including,
without limitation, fees and expenses of the Company’s
counsel and independent registered public accountants) (A) with
respect to filings made with the Commission, (B) with respect to
filings required to be made with any Trading Market on which the
Common Stock is then listed for trading, and (C) in compliance with
applicable state securities or Blue Sky laws reasonably agreed to
by the Company in writing (including, without limitation, fees and
disbursements of counsel for the Company in connection with Blue
Sky qualifications or exemptions of the Registrable Securities),
(ii) printing expenses (including, without limitation, expenses of
printing certificates for Registrable Securities), (iii) messenger,
telephone and delivery expenses, (iv) fees and disbursements of
counsel for the Company, (v) Securities Act liability insurance, if
the Company so desires such insurance, and (vi) fees and expenses
of all other Persons retained by the Company in connection with the
consummation of the transactions contemplated by this Agreement. In
addition, the Company shall be responsible for all of its internal
expenses incurred in connection with the consummation of the
transactions contemplated by this Agreement (including, without
limitation, all salaries and expenses of its officers and employees
performing legal or accounting duties), the expense of any annual
audit and the fees and expenses incurred in connection with the
listing of the Registrable Securities on any securities exchange as
required hereunder. In no event shall the Company be responsible
for any broker or similar commissions of any Holder or, except to
the extent provided for in the Transaction Documents, any legal
fees or other costs of the Holders.
5.
Indemnification.
(a) Indemnification by the Company.
The Company shall, notwithstanding any termination of this
Agreement, indemnify and hold harmless each Holder, the officers,
directors, members, partners, agents, brokers (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 (and any other Persons
with a functionally equivalent role of a Person holding such
titles, notwithstanding a lack of such title or any other title) of
each of them, each Person who controls any such Holder (within the
meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act) and the officers, directors, members, stockholders,
partners, agents and employees (and any other Persons with a
functionally equivalent role of a Person holding such titles,
notwithstanding a lack of such title or any other title) of each
such controlling Person, to the fullest extent permitted by
applicable law, from and against any and all losses, claims,
damages, liabilities, costs (including, without limitation,
reasonable attorneys’ fees) and expenses (collectively,
“Losses”), as incurred,
arising out of or relating to (1) any untrue or alleged untrue
statement of a material fact contained in a Registration Statement,
any Prospectus or any form of prospectus or in any amendment or
supplement thereto or in any preliminary prospectus, or arising out
of or relating to any omission or alleged omission of a material
fact required to be stated therein or necessary to make the
statements therein (in the case of any Prospectus or supplement
thereto, in light of the circumstances under which they were made)
not misleading or (2) any violation or alleged violation by the
Company of the Securities Act, the Exchange Act or any state
securities law, or any rule or regulation thereunder, in connection
with the performance of its obligations under this Agreement,
except to the extent, but only to the extent, that (i) such untrue
statements or omissions are based solely upon information regarding
such Holder furnished in writing to the Company by such Holder
expressly for use therein, or to the extent that such information
relates to such Holder or such Holder’s proposed method of
distribution of Registrable Securities and was reviewed and
expressly approved in writing by such Holder expressly for use in a
Registration Statement, such Prospectus or in any amendment or
supplement thereto (it being understood that the Holder has
approved Annex A and Annex B hereto for this purpose) or (ii) in
the case of an occurrence of an event of the type specified in
Section 3(d)(iii)-(vi), the use by such Holder of an outdated,
defective or otherwise unavailable Prospectus after the Company has
notified such Holder in writing that the Prospectus is outdated,
defective or otherwise unavailable for use by such Holder and prior
to the receipt by such Holder of the Advice contemplated in Section
6(d). The Company shall notify the Holders promptly of the
institution, threat or assertion of any Proceeding arising from or
in connection with the transactions contemplated by this Agreement
of which the Company is aware. Such indemnity shall remain in full
force and effect regardless of any investigation made by or on
behalf of such indemnified person and shall survive the transfer of
any Registrable Securities by any of the Holders in accordance with
Section 6(h).
-8-
(b) Indemnification by Holders.
Each Holder shall, severally and not jointly, indemnify and hold
harmless the Company, its directors, officers, agents and
employees, each Person who controls the Company (within the meaning
of Section 15 of the Securities Act and Section 20 of the Exchange
Act), and the directors, officers, agents or employees of such
controlling Persons, to the fullest extent permitted by applicable
law, from and against all Losses, as incurred, to the extent
arising out of or based solely upon: any untrue or alleged untrue
statement of a material fact contained in any Registration
Statement, any Prospectus, or in any amendment or supplement
thereto or in any preliminary prospectus, or arising out of or
relating to any omission or alleged omission of a material fact
required to be stated therein or necessary to make the statements
therein (in the case of any Prospectus or supplement thereto, in
light of the circumstances under which they were made) not
misleading (i) to the extent, but only to the extent, that such
untrue statement or omission is contained in any information so
furnished in writing by such Holder to the Company expressly for
inclusion in such Registration Statement or such Prospectus or (ii)
to the extent, but only to the extent, that such information
relates to such Holder’s information provided in the Selling
Stockholder Questionnaire or the proposed method of distribution of
Registrable Securities and was reviewed and expressly approved in
writing by such Holder expressly for use in a Registration
Statement (it being understood that the Holder has approved Annex A
hereto for this purpose), such Prospectus or in any amendment or
supplement thereto. In no event shall the liability of a selling
Holder be greater in amount than the dollar amount of the proceeds
(net of all expenses paid by such Holder in connection with any
claim relating to this Section 5 and the amount of any damages such
Holder has otherwise been required to pay by reason of such untrue
statement or omission) received by such Holder upon the sale of the
Registrable Securities included in the Registration Statement
giving rise to such indemnification obligation.
(c) Conduct of Indemnification
Proceedings. If any Proceeding shall be brought or asserted
against any Person entitled to indemnity hereunder (an
“Indemnified
Party”), such Indemnified Party shall promptly notify
the Person from whom indemnity is sought (the “Indemnifying Party”) in
writing, and the Indemnifying Party shall have the right to assume
the defense thereof, including the employment of counsel reasonably
satisfactory to the Indemnified Party and the payment of all fees
and expenses incurred in connection with defense thereof, provided
that the failure of any Indemnified Party to give such notice shall
not relieve the Indemnifying Party of its obligations or
liabilities pursuant to this Agreement, except (and only) to the
extent that it shall be finally determined by a court of competent
jurisdiction (which determination is not subject to appeal or
further review) that such failure shall have materially and
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 or Parties unless: (1) the Indemnifying
Party has agreed in writing to pay such fees and expenses, (2) the
Indemnifying Party shall have failed promptly to assume the defense
of such Proceeding and to employ counsel reasonably satisfactory to
such Indemnified Party in any such Proceeding, or (3) the named
parties to any such Proceeding (including any impleaded parties)
include both such Indemnified Party and the Indemnifying Party, and
counsel to the Indemnified Party shall reasonably believe that a
material conflict of interest is likely to exist if the same
counsel were to represent such Indemnified Party and the
Indemnifying Party (in which case, if such Indemnified Party
notifies the Indemnifying Party in writing that it elects to employ
separate counsel at the expense of the Indemnifying Party, the
Indemnifying Party shall not have the right to assume the defense
thereof and the reasonable fees and expenses of no more than one
separate counsel shall be at the expense of the Indemnifying
Party). The Indemnifying Party shall not be liable for any
settlement of any such Proceeding effected without its written
consent, which consent shall not be unreasonably withheld or
delayed. No Indemnifying Party shall, without the prior written
consent of the Indemnified Party, effect any settlement of any
pending Proceeding in respect of which any Indemnified Party is a
party, unless such settlement includes an unconditional release of
such Indemnified Party from all liability on claims that are the
subject matter of such Proceeding.
-9-
Subject
to the terms of this Agreement, all reasonable fees and expenses of
the Indemnified Party (including reasonable fees and expenses to
the extent incurred in connection with investigating or preparing
to defend such Proceeding in a manner not inconsistent with this
Section) shall be paid to the Indemnified Party, as incurred,
within ten Trading Days of written notice thereof to the
Indemnifying Party, provided that the Indemnified Party shall
promptly reimburse the Indemnifying Party for that portion of such
fees and expenses applicable to such actions for which such
Indemnified Party is finally determined by a court of competent
jurisdiction (which determination is not subject to appeal or
further review) not to be entitled to indemnification
hereunder.
(d) Contribution. If the
indemnification under Section 5(a) or 5(b) is unavailable to an
Indemnified Party or insufficient to hold an Indemnified Party
harmless for any Losses, then each Indemnifying Party shall
contribute to the amount paid or payable by such Indemnified Party,
in such proportion as is appropriate to reflect the relative fault
of the Indemnifying Party and Indemnified Party in connection with
the actions, statements or omissions that resulted in such Losses
as well as any other relevant equitable considerations. The
relative fault of such Indemnifying Party and Indemnified Party
shall be determined by reference to, among other things, whether
any action in question, including any untrue 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, subject to the limitations set
forth in this Agreement, any reasonable attorneys’ or other
fees or expenses incurred by such party in connection with any
Proceeding to the extent such party would have been indemnified for
such fees or expenses if the indemnification provided for in this
Section was available to such party in accordance with its
terms.
The
parties hereto agree that it would not be just and equitable if
contribution pursuant to this Section 5(d) were determined by pro
rata allocation or by any other method of allocation that does not
take into account the equitable considerations referred to in the
immediately preceding paragraph. In no event shall the contribution
obligation of a Holder of Registrable Securities be greater in
amount than the dollar amount of the proceeds (net of all expenses
paid by such Holder in connection with any claim relating to this
Section 5 and the amount of any damages such Holder has otherwise
been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission) received by it upon the
sale of the Registrable Securities giving rise to such contribution
obligation.
The
indemnity and contribution agreements contained in this Section are
in addition to any liability that the Indemnifying Parties may have
to the Indemnified Parties.
6.
Miscellaneous.
(a) Remedies. In the event of a
breach by the Company or by a Holder of any of their respective
obligations under this Agreement, each Holder or the Company, as
the case may be, in addition to being entitled to exercise all
rights granted by law and under this Agreement, including recovery
of damages, shall be entitled to specific performance of its rights
under this Agreement. Each of the Company and each Holder agrees
that monetary damages would not provide adequate compensation for
any losses incurred by reason of a breach by it of any of the
provisions of this Agreement and hereby further agrees that, in the
event of any action for specific performance in respect of such
breach, it shall not assert or shall waive the defense that a
remedy at law would be adequate.
(b) No Piggyback on Registrations;
Prohibition on Filing Other Registration Statements. Neither
the Company nor any of its security holders (other than the Holders
in such capacity pursuant hereto) may include securities of the
Company in any Registration Statements other than the Registrable
Securities. The Company shall not file any other registration
statements until all Registrable Securities are registered pursuant
to a Registration Statement that is declared effective by the
Commission, provided that this Section 6(b) shall not prohibit the
Company from filing amendments to registration statements filed
prior to the date of this Agreement.
-10-
(c) [RESERVED]
(d) Discontinued Disposition. By
its acquisition of Registrable Securities, each Holder agrees that,
upon receipt of a notice from the Company of the occurrence of any
event of the kind described in Section 3(d)(iii) through (vi), such
Holder will forthwith discontinue disposition of such Registrable
Securities under a Registration Statement until it is advised in
writing (the “Advice”) by the Company
that the use of the applicable Prospectus (as it may have been
supplemented or amended) may be resumed. The Company will use its
best efforts to ensure that the use of the Prospectus may be
resumed as promptly as is practicable. The Company agrees and
acknowledges that any periods during which the Holder is required
to discontinue the disposition of the Registrable Securities
hereunder shall be subject to the provisions of Section
2(d).
(e) Piggy-Back Registrations. If,
at any time during the Effectiveness Period, there is not an
effective Registration Statement covering all of the Registrable
Securities and the Company shall determine to prepare and file with
the Commission a registration statement relating to an offering for
its own account or the account of others under the Securities Act
of any of its equity securities, other than on Form S-4 or Form S-8
(each as promulgated under the Securities Act) or their then
equivalents relating to equity securities to be issued solely in
connection with any acquisition of any entity or business or equity
securities issuable in connection with the Company’s stock
option or other employee benefit plans, then the Company shall
deliver to each Holder a written notice of such determination and,
if within fifteen days after the date of the delivery of such
notice, any such Holder shall so request in writing, the Company
shall include in such registration statement all or any part of
such Registrable Securities such Holder requests to be registered;
provided,
however, that the
Company shall not be required to register any Registrable
Securities pursuant to this Section 6(e) that are eligible for
resale pursuant to Rule 144 (without volume restrictions or current
public information requirements) promulgated by the Commission
pursuant to the Securities Act or that are the subject of a then
effective Registration Statement that is available for resales or
other dispositions by such Holder.
(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 Holders of 50.1% or more of the then outstanding
Registrable Securities (for purposes of clarification, this
includes any Registrable Securities issuable upon exercise or
conversion of any Security), provided that, if any amendment,
modification or waiver disproportionately and adversely impacts a
Holder (or group of Holders), the consent of such
disproportionately impacted Holder (or group of Holders) shall be
required. If a Registration Statement does not register all of the
Registrable Securities pursuant to a waiver or amendment done in
compliance with the previous sentence, then the number of
Registrable Securities to be registered for each Holder shall be
reduced pro rata among all Holders and each Holder shall have the
right to designate which of its Registrable Securities shall be
omitted from such Registration Statement. Notwithstanding the
foregoing, a waiver or consent to depart from the provisions hereof
with respect to a matter that relates exclusively to the rights of
a Holder or some Holders and that does not directly or indirectly
affect the rights of other Holders may be given only by such Holder
or Holders of all of the Registrable Securities to which such
waiver or consent relates; provided, however, that the provisions of
this sentence may not be amended, modified, or supplemented except
in accordance with the provisions of the first sentence of this
Section 6(f). No consideration shall be offered or paid to any
Person to amend or consent to a waiver or modification of any
provision of this Agreement unless the same consideration also is
offered to all of the parties to this Agreement.
(g) Notices. Any and all notices or
other communications or deliveries required or permitted to be
provided hereunder shall be delivered as set forth in the Purchase
Agreement.
(h) Successors and Assigns. This
Agreement shall inure to the benefit of and be binding upon the
successors and permitted assigns of each of the parties and shall
inure to the benefit of each Holder. The Company may not assign
(except by merger) its rights or obligations hereunder without the
prior written consent of all of the Holders of the then outstanding
Registrable Securities. Each Holder may assign their respective
rights hereunder in the manner and to the Persons as permitted
under Section 5.7 of the Purchase Agreement.
-11-
(i) No Inconsistent Agreements.
Neither the Company nor any of its Subsidiaries has entered, as of
the date hereof, 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 would have the effect of
impairing the rights granted to the Holders in this Agreement or
otherwise conflicts with the provisions hereof. Except as set forth
on Schedule 6(i),
neither the Company nor any of its Subsidiaries has previously
entered into any agreement granting any registration rights with
respect to any of its securities to any Person that have not been
satisfied in full.
(j) Execution and Counterparts.
This Agreement may be executed in two or more counterparts, all of
which when taken together shall be considered one and the same
agreement and shall become effective when counterparts have been
signed by each party and delivered to the other party, it being
understood that both parties need not sign the same counterpart. In
the event that any signature is delivered by e-mail delivery of a
“.pdf” format data file, such signature shall create a
valid and binding obligation of the party executing (or on whose
behalf such signature is executed) with the same force and effect
as if such “.pdf” signature page were an original
thereof.
(k) Governing Law. All questions
concerning the construction, validity, enforcement and
interpretation of this Agreement shall be determined in accordance
with the provisions of the Purchase Agreement.
(l) Cumulative Remedies. The
remedies provided herein are cumulative and not exclusive of any
other 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, the remainder of the terms, provisions, covenants
and restrictions set forth herein shall remain in full force and
effect and shall in no way be affected, impaired or invalidated,
and the parties hereto shall use their commercially reasonable
efforts to find and employ an alternative means to achieve the same
or substantially the same result as that contemplated by such term,
provision, covenant or restriction. It is hereby stipulated and
declared to be the intention of the parties that they would have
executed the remaining terms, provisions, covenants and
restrictions without including any of such that may be hereafter
declared invalid, illegal, void or unenforceable.
(n) Headings. The headings in this
Agreement are for convenience only, do not constitute a part of the
Agreement and shall not be deemed to limit or affect any of the
provisions hereof.
(o) Independent Nature of Holders’
Obligations and Rights. The obligations of each Holder
hereunder are several and not joint with the obligations of any
other Holder hereunder, and no Holder shall be responsible in any
way for the performance of the obligations of any other Holder
hereunder. Nothing contained herein or in any other agreement or
document delivered at any closing, and no action taken by any
Holder pursuant hereto or thereto, shall be deemed to constitute
the Holders as a partnership, an association, a joint venture or
any other kind of group or entity, or create a presumption that the
Holders are in any way acting in concert or as a group or entity
with respect to such obligations or the transactions contemplated
by this Agreement or any other matters, and the Company
acknowledges that the Holders are not acting in concert or as a
group, and the Company shall not assert any such claim, with
respect to such obligations or transactions. Each Holder shall be
entitled to protect and enforce its rights, including without
limitation the rights arising out of this Agreement, and it shall
not be necessary for any other Holder to be joined as an additional
party in any proceeding for such purpose. The use of a single
agreement with respect to the obligations of the Company contained
was solely in the control of the Company, not the action or
decision of any Holder, and was done solely for the convenience of
the Company and not because it was required or requested to do so
by any Holder. It is expressly understood and agreed that each
provision contained in this Agreement is between the Company and a
Holder, solely, and not between the Company and the Holders
collectively and not between and among Holders.
********************
(Signature Pages Follow)
-12-
-13-
IN
WITNESS WHEREOF, the parties have executed this Registration Rights
Agreement as of the date first written above.
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AZURRX BIOPHARMA, INC.
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By:
/s/ James
Sapirstein
Name: James Sapirstein
Title:
Chief Executive Officer
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[SIGNATURE
PAGE OF HOLDERS FOLLOWS]
-14-
[SIGNATURE
PAGE OF HOLDERS TO AZRX RRA]
Name of
Holder: Armistice Capital Master Fund Ltd.
Signature of Authorized Signatory of
Holder: /s/ Steven Boyd
Name of
Authorized Signatory: Steven Boyd
Title
of Authorized Signatory: CIO of Armistice Capital, LLC, the
Investment Manager
[SIGNATURE PAGES
CONTINUE]
-15-
Annex A
Plan of Distribution
Each
Selling Stockholder (the “Selling Stockholders”) of
the securities and any of their pledgees, assignees and
successors-in-interest may, from time to time, sell any or all of
their securities covered hereby on the Nasdaq Capital Market or any
other stock exchange, market or trading facility on which the
securities are traded or in private transactions. These sales may
be at fixed or negotiated prices. A Selling Stockholder may use any
one or more of the following methods when selling
securities:
●
ordinary brokerage
transactions and transactions in which the broker-dealer solicits
purchasers;
●
block trades in
which the broker-dealer will attempt to sell the securities as
agent but may position and resell a portion of the block as
principal to facilitate the transaction;
●
purchases by a
broker-dealer as principal and resale by the broker-dealer for its
account;
●
an exchange
distribution in accordance with the rules of the applicable
exchange;
●
privately
negotiated transactions;
●
settlement of short
sales;
●
in transactions
through broker-dealers that agree with the Selling Stockholders to
sell a specified number of such securities at a stipulated price
per security;
●
through the writing
or settlement of options or other hedging transactions, whether
through an options exchange or otherwise;
●
a combination of
any such methods of sale; or
●
any other method
permitted pursuant to applicable law.
The
Selling Stockholders may also sell securities under Rule 144 or any
other exemption from registration under the Securities Act of 1933,
as amended (the “Securities Act”), if
available, rather than under this prospectus.
Broker-dealers
engaged by the Selling Stockholders may arrange for other
brokers-dealers to participate in sales. Broker-dealers may receive
commissions or discounts from the Selling Stockholders (or, if any
broker-dealer acts as agent for the purchaser of securities, from
the purchaser) in amounts to be negotiated, but, except as set
forth in a supplement to this Prospectus, in the case of an agency
transaction not in excess of a customary brokerage commission in
compliance with FINRA Rule 2440; and in the case of a principal
transaction a markup or markdown in compliance with FINRA
IM-2440.
In
connection with the sale of the securities or interests therein,
the Selling Stockholders may enter into hedging transactions with
broker-dealers or other financial institutions, which may in turn
engage in short sales of the securities in the course of hedging
the positions they assume. The Selling Stockholders may also sell
securities short and deliver these securities to close out their
short positions, or loan or pledge the securities to broker-dealers
that in turn may sell these securities. The Selling Stockholders
may also enter into option or other transactions with
broker-dealers or other financial institutions or create one or
more derivative securities which require the delivery to such
broker-dealer or other financial institution of securities offered
by this prospectus, which securities such broker-dealer or other
financial institution may resell pursuant to this prospectus (as
supplemented or amended to reflect such transaction).
A-1
The
Selling Stockholders and any broker-dealers or agents that are
involved in selling the securities may be deemed to be
“underwriters” within the meaning of the Securities Act
in connection with such sales. In such event, any commissions
received by such broker-dealers or agents and any profit on the
resale of the securities purchased by them may be deemed to be
underwriting commissions or discounts under the Securities Act.
Each Selling Stockholder has informed the Company that it does not
have any written or oral agreement or understanding, directly or
indirectly, with any person to distribute the
securities.
The
Company is required to pay certain fees and expenses incurred by
the Company incident to the registration of the securities. The
Company has agreed to indemnify the Selling Stockholders against
certain losses, claims, damages and liabilities, including
liabilities under the Securities Act.
We
agreed to keep this prospectus effective until the earlier of (i)
the date on which the securities may be resold by the Selling
Stockholders without registration and without regard to any volume
or manner-of-sale limitations by reason of Rule 144, without the
requirement for the Company to be in compliance with the current
public information under Rule 144 under the Securities Act or any
other rule of similar effect or (ii) all of the securities have
been sold pursuant to this prospectus or Rule 144 under the
Securities Act or any other rule of similar effect. The resale
securities will be sold only through registered or licensed brokers
or dealers if required under applicable state securities laws. In
addition, in certain states, the resale securities covered hereby
may not be sold unless they have been registered or qualified for
sale in the applicable state or an exemption from the registration
or qualification requirement is available and is complied
with.
Under
applicable rules and regulations under the Exchange Act, any person
engaged in the distribution of the resale securities may not
simultaneously engage in market making activities with respect to
the common stock for the applicable restricted period, as defined
in Regulation M, prior to the commencement of the distribution. In
addition, the Selling Stockholders will be subject to applicable
provisions of the Exchange Act and the rules and regulations
thereunder, including Regulation M, which may limit the timing of
purchases and sales of the common stock by the Selling Stockholders
or any other person. We will make copies of this prospectus
available to the Selling Stockholders and have informed them of the
need to deliver a copy of this prospectus to each purchaser at or
prior to the time of the sale (including by compliance with Rule
172 under the Securities Act).
A-2
Annex B
SELLING STOCKHOLDERS
The
common stock being offered by the selling stockholders are those
previously issued to the selling stockholders, and those issuable
to the selling stockholders, upon conversion of the Series C
preferred stock or exercise of the warrants. For additional
information regarding the issuances of those shares of common stock
and warrants, see “Private Placement of Series C Preferred
Stock and Warrants” above. We are registering the shares of
common stock in order to permit the selling stockholders to offer
the shares for resale from time to time. Except for the ownership
of the shares of common stock and the warrants, the selling
stockholders have not had any material relationship with us within
the past three years.
The
table below lists the selling stockholders and other information
regarding the beneficial ownership of the shares of common stock by
each of the selling stockholders. The second column lists the
number of shares of common stock beneficially owned by each selling
stockholder, based on its ownership of the shares of common stock,
shares of Series C preferred stock, [prefunded warrants] and
warrants, as of [________], 2021, assuming exercise of the warrants
held by the selling stockholders on that date, without regard to
any limitations on exercises.
The
third column lists the shares of common stock being offered by this
prospectus by the selling stockholders.
In
accordance with the terms of a registration rights agreement with
the selling stockholders, this prospectus generally covers the
resale of the sum of the maximum number of shares of common stock
issued or issuable to the selling stockholders upon conversion of
the Series C preferred stock or exercise of [the prefunded warrants
or] the warrants, in each case as described in the “Private
Placement of Series C Preferred Stock and Warrants” above,
determined as if such securities were converted or exercised in
full, each as of the trading day immediately preceding the
applicable date of determination, and all subject to adjustment as
provided in the registration right agreement, without regard to any
limitations on the conversion or exercise thereof. The fourth column assumes the sale
of all of the shares offered by the selling stockholders pursuant
to this prospectus.
Under
the terms of the Series C preferred stock, [the prefunded warrants]
and the warrants, a selling stockholder may not convert or exercise
such securities to the extent such conversion or exercise would
cause such selling stockholder, together with its affiliates and
attribution parties, to beneficially own a number of shares of
common stock which would exceed 9.99% of our then outstanding
common stock following such exercise, excluding for purposes of
such determination shares of common stock issuable upon conversion
or exercise of such securities which have not been exercised. The
number of shares in the second column does not reflect this
limitation. The selling stockholders may sell all, some or none of
their shares in this offering. See "Plan of
Distribution."
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Name of Selling Stockholder
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Number of shares
of Common Stock
Owned Prior to Offering
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Maximum Number of shares
of Common Stock to be Sold
Pursuant to this Prospectus
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Number of shares
of Common Stock
Owned After Offering
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B-1
Annex
C
AZURRX BIOPHARMA, INC.
Selling Stockholder Notice and Questionnaire
The
undersigned beneficial owner of common stock (the
“Registrable
Securities”) of AzurRx Biopharma, Inc., a Delaware
corporation (the “Company”), understands
that the Company has filed or intends to file with the Securities
and Exchange Commission (the “Commission”) a
registration statement (the “Registration Statement”)
for the registration and resale under Rule 415 of the Securities
Act of 1933, as amended (the “Securities Act”), of the
Registrable Securities, in accordance with the terms of the
Registration Rights Agreement (the “Registration Rights
Agreement”) to which this document is annexed. A copy
of the Registration Rights Agreement is available from the Company
upon request at the address set forth below. All capitalized terms
not otherwise defined herein shall have the meanings ascribed
thereto in the Registration Rights Agreement.
Certain
legal consequences arise from being named as a selling stockholder
in the Registration Statement and the related prospectus.
Accordingly, holders and beneficial owners of Registrable
Securities are advised to consult their own securities law counsel
regarding the consequences of being named or not being named as a
selling stockholder in the Registration Statement and the related
prospectus.
NOTICE
The
undersigned beneficial owner (the “Selling Stockholder”) of
Registrable Securities hereby elects to include the Registrable
Securities owned by it in the Registration Statement.
QUESTIONNAIRE
The
undersigned hereby provides the following information to the
Company and represents and warrants that such information is
accurate:
1.
Name.
(a)
Full Legal Name of
Selling Stockholder
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(b)
Full Legal Name of
Registered Holder (if not the same as (a) above) through which
Registrable Securities are held:
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(c)
Full Legal Name of
Natural Control Person (which means a natural person who directly
or indirectly alone or with others has power to vote or dispose of
the securities covered by this Questionnaire):
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C-1
2.
Address for Notices to Selling Stockholder:
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Telephone:
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Fax:
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Contact
Person:
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3.
Broker-Dealer Status:
(a)
Are you a
broker-dealer?
Yes
☐
No
☐
(b)
If
“yes” to Section 3(a), did you receive your Registrable
Securities as compensation for investment banking services to the
Company?
Yes
☐
No
☐
Note:
If “no”
to Section 3(b), the Commission’s staff has indicated that
you should be identified as an underwriter in the Registration
Statement.
(c)
Are you an
affiliate of a broker-dealer?
Yes
☐
No
☐
(d)
If you are an
affiliate of a broker-dealer, do you certify that you purchased the
Registrable Securities in the ordinary course of business, and at
the time of the purchase of the Registrable Securities to be
resold, you had no agreements or understandings, directly or
indirectly, with any person to distribute the Registrable
Securities?
Yes
☐
No
☐
Note:
If “no”
to Section 3(d), the Commission’s staff has indicated that
you should be identified as an underwriter in the Registration
Statement.
C-2
4.
Beneficial Ownership of Securities of the Company Owned by the
Selling Stockholder.
Except as set forth below in this Item 4, the undersigned is not
the beneficial or registered owner of any securities of the Company
other than the securities issuable pursuant to the Purchase
Agreement.
(a)
Type and Amount of
other securities beneficially owned by the Selling
Stockholder:
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5. Relationships with the Company:
Except as set forth below, neither the undersigned nor any of its
affiliates, officers, directors or principal equity holders (owners
of 5% of more of the equity securities of the undersigned) has held
any position or office or has had any other material relationship
with the Company (or its predecessors or affiliates) during the
past three years.
State any
exceptions here:
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The
undersigned agrees to promptly notify the Company of any material
inaccuracies or changes in the information provided herein that may
occur subsequent to the date hereof at any time while the
Registration Statement remains effective; provided, that the
undersigned shall not be required to notify the Company of any
changes to the number of securities held or owned by the
undersigned or its affiliates.
By
signing below, the undersigned consents to the disclosure of the
information contained herein in its answers to Items 1 through 5
and the inclusion of such information in the Registration Statement
and the related prospectus and any amendments or supplements
thereto. The undersigned understands that such information will be
relied upon by the Company in connection with the preparation or
amendment of the Registration Statement and the related prospectus
and any amendments or supplements thereto.
(Signature Pages Follow)
C-3
IN
WITNESS WHEREOF the undersigned, by authority duly given, has
caused this Notice and Questionnaire to be executed and delivered
either in person or by its duly authorized agent.
Date:
Beneficial Owner:
By:
Name:
Title:
PLEASE FAX A COPY (OR EMAIL A .PDF COPY) OF THE COMPLETED AND
EXECUTED NOTICE AND QUESTIONNAIRE TO:
C-4
Schedule 6(i)
Outstanding Registration Rights
Exhibit
99.1
AzurRx BioPharma Announces Exclusive
Worldwide License Agreement with First Wave Bio for Use of
Proprietary Niclosamide Formulations to Treat Immune Checkpoint
Inhibitor-Associated Colitis and COVID-19 Gastrointestinal
Infections
●
Agreement expands AzurRx’s pipeline of targeted, non-systemic
GI therapies
●
Clinical trials to initiate in 1H’21, with potential for
expedited FDA 505(b)(2) pathway for IND-approved COVID-19 and
breakthrough designation for immune checkpoint colitis
programs
●
Management to
discuss the agreement with First Wave Bio and the company’s
two new clinical programs on a call scheduled for
today, Monday, January 4, 2021, at 8:30 a.m. Eastern
Time
Delray Beach, FL – January 4, 2020 (GLOBE NEWSWIRE) --
AzurRx BioPharma, Inc. (NASDAQ: AZRX), (“AzurRx” or the
“Company”), a company specializing in
the development of non-systemic therapies
for gastrointestinal (GI) diseases, today announced
that it has signed an exclusive worldwide licensing agreement with
First Wave Bio, Inc. (“First Wave”) for the use of
their patented and proprietary oral and rectal formulations of
niclosamide for the treatment of immune checkpoint
inhibitor-associated colitis (ICI-AC) and COVID-19 GI
infections.
Niclosamide
is a small molecule drug that was approved by the FDA in 1982 for
the treatment of intestinal tapeworm infections and is on the World
Health Organization’s (WHO) list of essential medicines. It
has been safely used by millions of patients and is being
investigated as a potential new therapy for inflammatory diseases
and viral infections. Founded in 2015, First Wave has invested in
translational biology along with process development and
manufacturing to develop proprietary oral and rectal gut-targeted
formulations of niclosamide for the treatment of ICI-AC, COVID-19
GI-infections, and inflammatory bowel disease (IBD).
“The
acquisition of rights to niclosamide for these indications gives us
an opportunity to strategically expand our existing pipeline and
pursue multiple GI indications in the oncology and infectious
disease arenas," said James Sapirstein, President and Chief
Executive Officer of AzurRx. “We are impressed with First
Wave’s Phase 1b/2a clinical data, strong IP and patent
position, and the significant unmet medical needs and market
opportunities addressed by these two assets. We believe these
niclosamide formulations could offer significant advantages over
other currently available treatments. They are not systemically
absorbed, potentially allowing for higher local GI concentrations
of drug delivery and avoiding steroid-related immunosuppressant
complications.”
Mr.
Sapirstein continued, “With these new assets, combined with
our current pipeline, we believe 2021 will be a very exciting and
transformational year for AzurRx. AzurRx is on track to report
top-line data for its two Phase 2 MS1819 clinical trials in the
first and second quarters of 2021 and anticipates initiating both
the Phase 2 COVID-19 GI Infection trial and a Phase 1b/2a ICI-AC
trial in the first half of 2021.”
Gary D.
Glick, Ph.D., Co-Founder and Chief Executive Officer of First Wave
Bio, added “The license of our niclosamide technology for the
immune checkpoint inhibitor and COVID indications is a significant
milestone for our company and we are very pleased to have found a
clinical and commercial development partner in AzurRx. We look
forward to working with the AzurRx team to take our novel
niclosamide therapies to the clinic in 2021 and to rapidly bringing
these therapies to cancer and COVID-19
patients.”
Under
the terms of the agreement, AzurRx is granted a worldwide,
exclusive right to develop, manufacture, and commercialize First
Wave’s proprietary immediate release oral and enema
formulations of niclosamide for the treatment of ICI-AC and
COVID-19 GI infections. First Wave will receive an upfront payment
of $10.25 million in cash payable $9.0 million at closing and $1.25
million by June 30, 2021 and $3.0 million of Convertible Junior
Preferred Stock, which shall be convertible into common stock
following shareholder approval, and up to $74.0 million in
potential development and commercial milestones, as well as mid
single-digit royalties on product sales for the ICI-AC and COVID-19
GI indications.
H.C.
Wainwright & Co. is acting as financial advisor to AzurRx in
connection with the licensing transaction.
About Immune Checkpoint Inhibitor-Associated Colitis and
Diarrhea
Immune checkpoint inhibitors (ICIs) are monoclonal antibodies that
target down-regulators of the anti-cancer immune response and have
revolutionized the treatment of a variety of malignancies. However,
many immune-related adverse events, especially diarrhea and
colitis, limit their use. The incidence of immune-mediated colitis
(IMC) ranges from 1%-25% depending on the type of ICI and whether
they are used in combination used in
combination.1
Approximately
44% of patients with advanced and metastatic cancer tumors
(~260,000 patients) are eligible to receive immune checkpoint
inhibitors (ICIs).2
Approximately
30% of ICI patients develop diarrhea, which can progress to
colitis. The onset of diarrhea in ICI-AC patients occurs within 6-7
weeks and progressively worsens, and the progression to colitis is
rapid and unpredictable. For example, in patients taking ipilimumab
(Yervoy), between 25-30% of patients developed diarrhea and ~8-12%
developed colitis.2
Moreover, the
trend is towards the use of combination ICI therapies (e.g. Yervoy
and Opdivo) and this will lead to a concomitant increase in both
diarrhea and colitis.
Administration of corticosteroids, or treatment with certain
immunosuppressive biologics, while withholding ICI therapy are
recommended for grade 2 or more severe colitis (National Cancer
Institute 2020). The impact of this colitis complication and
treatment may reduce the goal of progression free cancer survival.
An oral, non-absorbed treatment, such as niclosamide, for grade 1
colitis (diarrhea) may prevent progression to grade 2 disease.
There currently is no approved treatment for grade 1
colitis.
About COVID-19 Gastrointestinal Infections
Gastrointestinal infection symptoms (severe diarrhea, vomiting and
abdominal pain) have been reported in ~18% of COVID-19
cases4.
Of the 19 million individuals who are reported to have contracted
COVID-19 in the United States, this would translate into 3.4
million patients having GI infection. Of the 81 million cases
globally, it would be 15 million.
There is some evidence to support the view that the GI tract is a
possible reservoir for recurrence and fecal spread of the COVID-19
virus as ACE-2, the entry receptor for COVID-19, is highly
expressed on GI cells.4
There currently
is no targeted treatment for COVID GI
infections.
Conference Call and Webcast Information
The management team will host a conference call today, Monday,
January 4, 2021 at 8:30 am Eastern Time to discuss the license
agreement with First Wave and the company’s two new clinical
programs that are launching in 2021. To participate in the call,
dial 877-407-0784 (domestic) or 201-689-8560 (international)
fifteen minutes before the conference call begins and reference the
conference passcode 13714501.
The live conference call can be accessed via audio webcast
at http://public.viavid.com/index.php?id=142841
A replay of the call will be available on
the “Investor
Relations”section of the
Company’s website (www.azurrx.com).
About AzurRx BioPharma, Inc.
AzurRx BioPharma, Inc. (NASDAQ: AZRX) is a biopharmaceutical
company specialized in the research and development of
non-systemic biologics for gastrointestinal disorders. The
Company is focused on the development of its lead
drug candidate, MS1819. AzurRx is currently conducting two
Phase 2 clinical trials of MS1819: the OPTION 2
monotherapy trial, and the Combination therapy
trial, consisting of MS1819 in conjunction with
porcine-derived pancreatic enzyme replacement therapy, the
current standard of care. The Company is headquartered in Delray
Beach, Florida with clinical operations in Hayward, California.
Additional information on the Company can be found
at www.azurrx.com.
About First Wave Bio, Inc.
First Wave Bio was founded to improve the lives of people living
with IBD. Recent discoveries in immune cell metabolism have opened
up the possibility of selectively targeting disease-causing immune
cells to treat inflammatory diseases without unwanted side effects
such as broad immunosuppression. First Wave has developed a suite
of MetaWave product candidates, gut-restricted small molecules that
target the metabolism of disease-causing Th17 cells. The
company’s first clinical MetaWave program, FW-424, has shown
benefits for patients with mild-to-moderate ulcerative colitis in a
Phase 1b/2a trial. First Wave is advancing FW-424 through
additional clinical studies in patients with mild-to-moderate IBD.
Given FW-424’s novel mechanisms of action and established
safety profile, First Wave believes that it has the potential to
replace current standard-of-care and improve the lives of patients
at all stages of IBD. For more information,
visit www.firstwavebio.com.
Forward-Looking Statements
This press release may contain certain statements relating to
future results which are forward-looking statements. These
statements are not historical facts, but instead represent only the
Company’s belief regarding future events, many of which, by
their nature, are inherently uncertain and outside of the
Company’s control. It is possible that the Company’s
actual results and financial condition may differ, possibly
materially, from the anticipated results and financial condition
indicated in these forward-looking statements, including whether
results obtained in preclinical and nonclinical studies and
clinical trials will be indicative of results obtained in future
clinical trials; whether preliminary or interim results from a
clinical trial such as the interim results presented will be
indicative of the final results of the trial. Additional
information concerning the Company and its business, including a
discussion of factors that could materially affect the
Company’s financial results, including those related to the
clinical development of its clinical assets, the results of its
clinical trials, and the impact of the coronavirus (COVID-19)
pandemic on the Company’s operations and current and planned
clinical trials, including, but not limited to delays in clinical
trial recruitment and participation are contained in the
Company’s Annual Report on Form 10-K for the year ended
December 31, 2019 under the heading “Risk
Factors,” as well as the Company’s subsequent
filings with the Securities and Exchange Commission. All
forward-looking statements included in this press release are made
only as of the date of this press release, and we do not undertake
any obligation to publicly update or correct any forward-looking
statements to reflect events or circumstances that subsequently
occur or of which we hereafter become aware.
For more information:
AzurRx BioPharma, Inc.
1615 South Congress Avenue
Suite 103
Delray
Beach, Florida 33445
Phone:
(646) 699-7855
info@azurrx.com
Investor Relations contact:
LifeSci Advisors, LLC.
Hans Vitzthum, Managing Director
1 International Place, Suite 1480
Boston, MA 02110
Phone: (617) 430-7578
hans@lifesciadvisors.com
1 Wang et al. Patients with ICPI-induced diarrhea or colitis have
improved survival outcomes.
J Immunother Cancer.
2018; 6: 37. Som et al.,
World J Clin Cases. Feb
26, 2019; 7(4): 405-418
2 Wang DY, Ye F, Zhao S, et al. Incidence of immune
checkpoint inhibitor-related colitis in solid tumor patients: a
systematic review and meta-analysis. Oncoimmunology 2017; 10:
e1344805; Som et al.,
World J Clin Cases. Feb
26, 2019; 7(4): 405-418
3 Wang et al. Patients with ICPI-induced diarrhea or colitis have
improved survival outcomes.
J Immunother Cancer.
2018; 6: 37.
4 Gut
Journal:
Vol 69, Issue 6: 2020; Gut
Journal:
Vol 69, Issue 6: 2020; JAMA
Network:
Vol 3, Issue 6: 2020; Lancet
Gastroenterol Hepatol: Vol 5, Issue 5: 2020;
Cheung Gastroenterology: Vol. 159, Issue 1:
2020.
Exhibit 99.2
AzurRx BioPharma Announces $8.0 Million
Offerings
Delray Beach, FL – January 4, 2021 (GLOBE NEWSWIRE) --
AzurRx BioPharma, Inc. (NASDAQ: AZRX), (“AzurRx” or the
“Company”), a
company specializing in the development of non-systemic,
recombinant therapies for gastrointestinal (GI)
diseases, today announced that in conjunction with entering
into an exclusive worldwide licensing agreement with First Wave
Bio, Inc. (“First Wave”) it has entered into a
securities purchase agreement (the “Purchase
Agreement”) with a single healthcare-focused institutional
investor, pursuant to which the Company agreed to sell
approximately $8.0 million of Series C 9.00% Convertible Junior
Preferred Stock (the “Series C Preferred Stock”) in a
registered direct offering and concurrent private placement. The
Company will also issue to the investor unregistered warrants (the
“Warrants”) to purchase up to an aggregate of
10,666,668 shares of common stock. The combined purchase price for
one share of Series C Preferred Stock and a Warrant is $750.00. The
Series C Preferred Stock will have an initial stated value of
$750.00 per share and conversion price of $0.75 per share, and will
initially be convertible into an aggregate of up to 10,666,668
shares of common stock (or pre-funded warrants to purchase common
stock in lieu thereof). The Warrants will have an exercise price of
$0.80 per share and an expiration term of five and one-half years
from the date of issuance. One-half of the shares of Series C
Preferred Stock, together with the underlying common stock (or
prefunded warrants, as applicable), are being sold in the
registered direct offering, and one-half of the shares of Series C
Preferred Stock and all of the Warrants, together with the
underlying common stock (or prefunded warrants, as applicable), are
being sold in the private placement.
H.C.
Wainwright & Co. is acting as exclusive placement agent for the
offering.
AzurRx
intends to use the net proceeds received from the offering to fund
the upfront cash payment to First Wave in connection with the
exclusive worldwide licensing agreement and for other general
corporate purposes.
The
registered direct offering and concurrent private placement are
expected to close on or about January 5, 2021, subject to the
satisfaction of customary closing conditions. The issuance of the
shares of common stock underlying the Series C Preferred Stock in
excess of certain thresholds, and underlying the Warrants sold in
the private placement, is subject to stockholder approval (i) of an
amendment to AzurRx’s certificate of incorporation to
increase its authorized shares of common stock above 150,000,000
and (i) to satisfy Nasdaq requirements with respect to the issuance
of such shares of common stock.
The
Series C Preferred Stock sold in the registered direct offering and
underlying shares of common stock (or pre-funded warrants, as
applicable) are being offered and sold in the registered direct
offering by AzurRx pursuant to a “shelf” registration
statement on Form S-3 (File No. 333-231954) including a base
prospectus, previously filed with and declared effective by
the Securities and Exchange Commission (the “SEC”)
on June 21, 2019. The registered direct offering is being made only
by means of a prospectus supplement that forms a part of the
registration statement. A final prospectus supplement and an
accompanying base prospectus relating to the registered direct
offering will be filed with the SEC and will be available
on the SEC’s website located at
http://www.sec.gov. Electronic copies of the prospectus
supplement may be obtained, when available, from H.C. Wainwright
& Co., 430 Park Avenue, New York, NY 10022 or via telephone at
(646) 975-6996 or email placements@hcwco.com.
The
Series C Preferred Stock and Warrants sold in the private placement
and underlying shares of common stock (or prefunded warrants, as
applicable) are being offered pursuant to an applicable exemption
from the registration requirements of the Securities Act of 1933,
as amended (the “Act”), and have not been registered
under the Act, or applicable state securities laws, and may not be
offered or sold in the United States absent registration with the
SEC or an applicable exemption from such registration
requirements.
About AzurRx BioPharma, Inc.
AzurRx
BioPharma, Inc. (NASDAQ: AZRX) is a biopharmaceutical
company specialized in the research and development of
non-systemic biologics for gastrointestinal disorders. The
Company is focused on the development of its lead
drug candidate, MS1819. AzurRx is currently conducting two
Phase 2 clinical trials of MS1819: the OPTION 2
monotherapy trial, and the Combination therapy
trial, consisting of MS1819 in conjunction with
porcine-derived pancreatic enzyme replacement therapy, the
current standard of care. The Company is headquartered in Delray
Beach, Florida with clinical operations in Hayward, California.
Additional information on the Company can be found
at www.azurrx.com.
Forward-Looking Statements
This press release may contain certain statements relating to
future results which are forward-looking statements. These
statements are not historical facts, but instead represent only the
Company’s belief regarding future events, many of which, by
their nature, are inherently uncertain and outside of the
Company’s control. Forward-looking statements include those
relating to the offering of the Company’s securities,
including as to the consummation of the offering described above,
the expected proceeds from the offering, the intended use of
proceeds and the timing of the closing of the offering, which may
be affected by, among others, delays in satisfying or failure to
satisfy closing conditions for the registered direct offering and
concurrent private placement and adverse changes in general
economic and market conditions. It is possible that the
Company’s actual results and financial condition may differ,
possibly materially, from the anticipated results and financial
condition indicated in these forward-looking statements, including
whether results obtained in preclinical and nonclinical studies and
clinical trials will be indicative of results obtained in future
clinical trials; whether preliminary or interim results from a
clinical trial such as the interim results presented will be
indicative of the final results of the trial. Additional
information concerning the Company and its business, including a
discussion of factors that could materially affect the
Company’s financial results, including those related to the
clinical development of its clinical assets, the results of its
clinical trials, and the impact of the coronavirus (COVID-19)
pandemic on the Company’s operations and current and planned
clinical trials, including, but not limited to delays in clinical
trial recruitment and participation are contained in the
Company’s Annual Report on Form 10-K for the year ended
December 31, 2019 under the heading “Risk
Factors,” as well as the Company’s subsequent
filings with the Securities and Exchange Commission. All
forward-looking statements included in this press release are made
only as of the date of this press release, and we do not undertake
any obligation to publicly update or correct any forward-looking
statements to reflect events or circumstances that subsequently
occur or of which we hereafter become aware.
For more information:
AzurRx
BioPharma, Inc.
1615
South Congress Avenue
Suite
103
Delray
Beach, Florida 33445
Phone:
(646) 699-7855
info@azurrx.com
Investor Relations contact:
LifeSci
Advisors, LLC.
Hans
Vitzthum, Managing Director
1
International Place, Suite 1480
Boston,
MA 02110
Phone:
(617) 430-7578
hans@lifesciadvisors.com
