Securities Purchase Agreement
EXHIBIT 10.1
SECURITIES PURCHASE AGREEMENT
This SECURITIES PURCHASE AGREEMENT
(this “Agreement”), dated as of December 11, 2012, is by and among Aradigm Corporation, a California corporation with offices located at 3929 Point Eden Way, Hayward, CA 94545 (the “Company”), and the investors
listed on the Schedule of Buyers attached hereto (individually, a “Buyer” and collectively, the “Buyers”).
RECITALS
A. The Company and each Buyer is executing and delivering
this Agreement in reliance upon the exemption from securities registration afforded by Section 4(2) of the Securities Act of 1933, as amended (the “1933 Act”), and Rule 506 of Regulation D (“Regulation D”)
as promulgated by the United States Securities and Exchange Commission (the “SEC”) under the 1933 Act.
B.
Each Buyer wishes to purchase, and the Company wishes to sell, upon the terms and conditions stated in this Agreement, the aggregate number of shares of common stock, no par value, of the Company (the “Common Stock”) as set forth
opposite such Buyer’s name in column (3) on the Schedule of Buyers (which aggregate amount for all Buyers shall be 50,000,000 shares of Common Stock and shall collectively be referred to herein as the “Common Shares”). For
avoidance of doubt, each Buyer is acting separately in the exercise of its rights hereunder and all of its commitments and liabilities are undertaken on a several and not joint and several basis.
C. At the Closing, the parties hereto shall execute and deliver a Registration Rights Agreement, in the form attached hereto as
Exhibit A (the “Registration Rights Agreement”), pursuant to which the Company has agreed to provide certain registration rights with respect to the Registrable Securities (as defined in the Registration Rights
Agreement), under the 1933 Act and the rules and regulations promulgated thereunder, and applicable state securities laws.
AGREEMENT
NOW, THEREFORE, in consideration of the premises and the mutual covenants contained herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the
Company and each Buyer hereby agree as follows:
1. PURCHASE AND SALE OF COMMON SHARES.
(a) Common Shares. Subject to the satisfaction (or waiver) of the conditions set forth in Sections 6 and 7 below, the Company shall
issue and sell to each Buyer, and each Buyer severally, but not jointly, shall purchase from the Company on the Closing Date (as defined below), such aggregate number of Common Shares as is set forth opposite such Buyer’s name in column
(3) on the Schedule of Buyers.
(b) Closing. The closing (the “Closing”) of the purchase of the
Common Shares by the Buyers shall occur at the offices of Morrison & Foerster LLP, 425 Market Street, San
Francisco, CA 94105. The date and time of the Closing (the “Closing Date”) shall be 10:00 a.m., New York time, on the first (1st) Business Day on which the conditions to the Closing set forth
in Sections 6 and 7 below are satisfied or waived (or such later date as is mutually agreed to by the Company and each Buyer). As used herein “Business Day” means any day other than a Saturday, Sunday or other day on which
commercial banks in New York, New York are required by law to remain closed.
(c) Purchase Price. The price per Common
Share shall be $0.12. The aggregate purchase price for the Common Shares to be purchased by each Buyer (the “Purchase Price”) shall be the amount set forth opposite such Buyer’s name in column (4) on the Schedule of
Buyers.
(d) Form of Payment. On or prior to the Closing Date, (i) the Company shall deliver to each Buyer
certificates representing such aggregate number of Common Shares to the address and in the manner as is set forth opposite such Buyer’s name in column (3) of the Schedule of Buyers, duly executed on behalf of the Company and registered in
the name of such Buyer or its and (ii) upon confirmation that the certificates representing such aggregate number of Common Shares has been received by each fund’s respective custodian, each Buyer shall pay its respective Purchase Price to
the Company for the Common Shares to be issued and sold to such Buyer at the Closing, by wire transfer of immediately available funds in accordance with the Company’s written wire instructions.
2. BUYER’S REPRESENTATIONS AND WARRANTIES.
Each Buyer, severally and not jointly, represents and warrants to the Company with respect to only itself that, as of the date hereof and as of the Closing Date:
(a) Organization; Authority. Such Buyer is an entity duly organized, validly existing and in good standing under the laws of the
jurisdiction of its organization with the requisite power and authority to enter into and to consummate the transactions contemplated by the Transaction Documents (as defined below) to which it is a party and otherwise to carry out its obligations
hereunder and thereunder.
(b) No Public Sale or Distribution. Such Buyer is acquiring its Common Shares for its own
account and not with a view towards, or for resale in connection with, the public sale or distribution thereof in violation of applicable securities laws, except pursuant to sales registered or exempted under the 1933 Act; provided, however, by
making the representations herein, such Buyer does not agree, or make any representation or warranty, to hold any of the Common Shares for any minimum or other specific term and reserves the right to dispose of the Common Shares at any time in
accordance with or pursuant to a registration statement or an exemption under the 1933 Act. Such Buyer is acquiring the Common Shares hereunder in the ordinary course of its business. Such Buyer does not presently have any agreement or
understanding, directly or indirectly, with any Person to distribute any of the Common Shares in violation of applicable securities laws.
(c) Accredited Investor Status. At the time such Buyer was offered the Common Shares, such Buyer was, and as of the date hereof such Buyer is, an “accredited investor” as that
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term is defined in Rule 501(a) of Regulation D. Such Buyer is not a registered broker-dealer under Section 15 of the Securities Exchange Act of 1934, as amended (the “1934
Act”). Such Buyer, 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 such investment. Such Buyer
is able to bear the economic risk of an investment in the Common Shares.
(d) Reliance on Exemptions. Such Buyer
understands that the Common Shares are being offered and sold to it in reliance on specific exemptions from the registration requirements of United States federal and state securities laws and that the Company is relying in part upon the truth and
accuracy of, and such Buyer’s compliance with, the representations, warranties, agreements, acknowledgments and understandings of such Buyer set forth herein in order to determine the availability of such exemptions and the eligibility of such
Buyer to acquire the Common Shares.
(e) Information. Such Buyer and its advisors, if any, have been furnished with all
materials relating to the business, finances and operations of the Company and materials relating to the offer and sale of the Common Shares which have been requested by such Buyer. Such Buyer and its advisors, if any, have been afforded the
opportunity to ask questions of the Company. Neither such inquiries nor any other due diligence investigations conducted by such Buyer or its advisors, if any, or its representatives shall modify, amend or affect such Buyer’s right to rely on
the Company’s representations and warranties contained herein or any representations and warranties contained in any other Transaction Document or any other document or instrument executed and/or delivered in connection with this Agreement or
the consummation of the transaction contemplated hereby. Such Buyer understands that its investment in the Common Shares involves a high degree of risk. Such Buyer has sought such accounting, legal and tax advice as it has considered necessary to
make an informed investment decision with respect to its acquisition of the Common Shares.
(f) No Governmental Review.
Such Buyer understands that no United States federal or state agency or any other government or governmental agency has passed on or made any recommendation or endorsement of the Common Shares or the fairness or suitability of the investment in the
Common Shares nor have such authorities passed upon or endorsed the merits of the offering of the Common Shares.
(g)
Transfer or Resale. Such Buyer understands that except as provided in the Registration Rights Agreement and Section 4(g) hereof: (i) the Common Shares have not been and are not being registered under the 1933 Act or any state
securities laws, and may not be offered for sale, sold, assigned or transferred unless (A) subsequently registered thereunder, (B) such Buyer shall have delivered to the Company (if requested by the Company) an opinion of counsel to such
Buyer, in a form reasonably acceptable to the Company, to the effect that such Common Shares to be sold, assigned or transferred may be sold, assigned or transferred pursuant to an exemption from such registration, or (C) such Buyer provides
the Company with reasonable assurance that such Common Shares can be sold, assigned or transferred pursuant to Rule 144 or Rule 144A promulgated under the 1933 Act (or a successor rule thereto) (collectively, “Rule 144”);
(ii) any sale of the Common Shares made in reliance on Rule 144 may be made only in accordance with the terms of Rule 144, and further, if Rule 144 is not
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applicable, any resale of the Common Shares under circumstances in which the seller (or the Person (as defined below) through whom the sale is made) may be deemed to be an underwriter (as that
term is defined in the 1933 Act) may require compliance with some other exemption under the 1933 Act or the rules and regulations of the SEC promulgated thereunder; and (iii) neither the Company nor any other Person is under any obligation to
register the Common Shares under the 1933 Act or any state securities laws or to comply with the terms and conditions of any exemption thereunder.
(h) Validity; Enforcement. This Agreement and the Registration Rights Agreement have been duly and validly authorized, executed and delivered on behalf of such Buyer and constitute the legal, valid
and binding obligations of such Buyer enforceable against such Buyer in accordance with their respective terms, except as such enforceability may be limited by general principles of equity or to applicable bankruptcy, insolvency, reorganization,
moratorium, liquidation and other similar laws relating to, or affecting generally, the enforcement of applicable creditors’ rights and remedies.
(i) No Conflicts. The execution, delivery and performance by such Buyer of this Agreement and the Registration Rights Agreement and the consummation by such Buyer of the transactions contemplated
hereby and thereby will not (i) result in a violation of the organizational documents of such Buyer or (ii) conflict with, or constitute a default (or an event which with notice or lapse of time or both would become a default) under, or
give to others any rights of termination, amendment, acceleration or cancellation of, any agreement, indenture or instrument to which such Buyer is a party, or (iii) result in a violation of any law, rule, regulation, order, judgment or decree
(including federal and state securities laws) applicable to such Buyer, except in the case of clauses (ii) and (iii) above, for such conflicts, defaults, rights or violations which would not, individually or in the aggregate, reasonably be
expected to have a material adverse effect on the ability of such Buyer to perform its obligations hereunder.
(j)
Residency. Such Buyer is a resident of the jurisdiction specified below its address on the Schedule of Buyers.
(k)
Certain Trading Activities. Such Buyer has not directly or indirectly, nor has any person acting on behalf of or pursuant to any understanding with such Buyer, engaged in any transactions in the securities of the Company (including, without
limitation, Short Sales involving the Company’s securities) since the time that such Buyer was first contacted by the Company regarding the investment in the Company contemplated herein. “Short Sales” include, without
limitation, all “short sales” as defined in Rule 200 promulgated under Regulation SHO under the 1934 Act and all types of direct and indirect stock pledges, forward sales contracts, options, puts, calls, swaps and similar arrangements
(including on a total return basis), and sales and other transactions through non-U.S. broker dealers or foreign regulated brokers (but shall not be deemed to include the location and/or reservation of borrowable shares of Common Stock).
(l) General Solicitation. Such Buyer is not purchasing the Common Shares as a result of any advertisement, article, notice or
other communication regarding the Common Shares published in any newspaper, magazine or similar media or broadcast over television or radio or presented at any seminar.
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3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company represents and warrants to each of the Buyers that, as of the date hereof and as of the Closing Date and except as set forth
in the Schedules prepared by the Company and attached hereto:
(a) Organization and Qualification; Subsidiaries. Each of
the Company and the Subsidiaries (as defined below) is an entity duly organized and validly existing and in good standing under the laws of the jurisdiction in which they are formed, and has the requisite power and authorization to own their
properties and to carry on their business as now being conducted and as presently proposed to be conducted. Each of the Company and the Subsidiaries is duly qualified as a foreign entity to do business and is in good standing in every jurisdiction
in which its ownership of property or the nature of the business conducted by it makes such qualification necessary, except to the extent that the failure to be so qualified or be in good standing would not have a Material Adverse Effect. As used in
this Agreement, “Material Adverse Effect” means any material adverse effect on (i) the business, properties, assets, liabilities, operations (including results thereof), condition (financial or otherwise) or prospects of the Company
and the Subsidiaries, taken as a whole, (ii) the transactions contemplated hereby or in any of the other Transaction Documents or (iii) the authority or ability of the Company to perform any of its respective obligations under any of the
Transaction Documents. The Company has the Subsidiaries set forth on Schedule 3(a) (each a “Subsidiary” and collectively the “Subsidiaries”). “Subsidiary” means any Person in which the Company, directly or indirectly,
(I) owns at least fifty percent (50% of the outstanding capital stock or holds at least fifty percent (50%) of the equity or similar interest of such Person or (II) controls or operates all or any part of the business, operations or
administration of such Person.
(b) Authorization; Enforcement; Validity.
The Company has the requisite power and authority to enter into and perform its obligations under this Agreement and the other
Transaction Documents and to issue the Common Shares in accordance with the terms hereof and thereof. Each Subsidiary has the requisite power and authority to enter into and perform its obligations under the Transaction Documents to which it is a
party. The execution and delivery of this Agreement and the other Transaction Documents by the Company, and the consummation by the Company of the transactions contemplated hereby and thereby (including, without limitation, the issuance of the
Common Shares) have been duly authorized by the Company’s board of directors and (other than the filing with the SEC of one or more Registration Statements in accordance with the requirements of the Registration Rights Agreement, a Form D with
the SEC and any other filings as may be required by any state securities agencies) no further filing, consent or authorization is required by the Company or its board of directors or its shareholders or other governing body. This Agreement has been,
and the other Transaction Documents will be prior to the Closing, duly executed and delivered by the Company or its agent, and each constitutes the legal, valid and binding obligations of the Company, enforceable against the Company in accordance
with its respective terms, except as such enforceability may be limited by general principles of equity or applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or similar laws relating to, or affecting generally, the
enforcement of applicable creditors’ rights and remedies and except as rights to indemnification and to contribution may be limited by federal or state
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securities law. “Transaction Documents” means, collectively, this Agreement, the Registration Rights Agreement, and each of the other agreements and instruments entered into or
delivered by any of the parties hereto in connection with the transactions contemplated hereby and thereby, as may be amended from time to time.
(c) Issuance of Common Shares. The Common Shares, when issued, will be validly issued, fully paid and nonassessable and free from all preemptive or similar rights, taxes, liens, charges and other
encumbrances with respect to the issue thereof, with the holders being entitled to all rights accorded to a holder of Common Stock. Subject to the accuracy of the representations and warranties of the Buyers in this Agreement, the offer and issuance
by the Company of the Common Shares is exempt from registration under the 1933 Act.
(d) No Conflicts. The execution,
delivery and performance of the Transaction Documents by the Company and the consummation by the Company of the transactions contemplated hereby and thereby (including, without limitation, the issuance of the Common Shares) will not (i) result
in a violation of the Articles of Incorporation (as defined below) or the Bylaws (as defined below), (ii) conflict with, or constitute a default (or an event which with notice or lapse of time or both would become a default) under, or give to
others any rights of termination, amendment, acceleration or cancellation of, any agreement, indenture or instrument to which the Company or any Subsidiary is a party, or (iii) result in a violation of any law, rule, regulation, order, judgment
or decree (including foreign, federal and state securities laws and regulations and the rules and regulations of the OTC Bulletin Board (the “Principal Market”) and including all applicable federal laws, rules and regulations)
applicable to the Company or any Subsidiary or by which any property or asset of the Company or any Subsidiary is bound or affected except, in the case of clause (ii) or (iii) above, to the extent such violations that could not reasonably
be expected to have a Material Adverse Effect.
(e) Consents. Neither the Company nor any Subsidiary is required to
obtain any consent from, authorization or order of, or make any filing or registration with (other than the filing with the SEC of one or more Registration Statements in accordance with the requirements of the Registration Rights Agreement, a Form D
with the SEC and any other filings as may be required by any state securities agencies), any court, governmental agency or any regulatory or self-regulatory agency or any other Person in order for it to execute, deliver or perform any of its
respective obligations under or contemplated by the Transaction Documents, in each case, in accordance with the terms hereof or thereof. All consents, authorizations, orders, filings and registrations which the Company or any Subsidiary is required
to obtain pursuant to the preceding sentence have been obtained or effected on or prior to the Closing Date, and neither the Company nor any Subsidiary is aware of any facts or circumstances which might prevent the Company or any Subsidiary from
obtaining or effecting any of the registration, application or filings contemplated by the Transaction Documents. The Company is not in violation of the requirements of the Principal Market and has no knowledge of any facts or circumstances which
could reasonably lead to delisting or suspension of the Common Stock in the foreseeable future.
(f) Acknowledgment
Regarding Buyer’s Purchase of Common Shares. The Company acknowledges and agrees that, to its actual knowledge, each Buyer is acting solely in the capacity of an arm’s length purchaser with respect to the Transaction Documents and the
transactions contemplated hereby and thereby and that no Buyer is an officer or director of the
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Company or any Subsidiary. The Company further acknowledges that no Buyer is acting as a financial advisor or fiduciary of the Company or any Subsidiary (or in any similar capacity) with respect
to the Transaction Documents and the transactions contemplated hereby and thereby, and any advice given by a Buyer or any of its representatives or agents in connection with the Transaction Documents and the transactions contemplated hereby and
thereby is merely incidental to such Buyer’s purchase of the Common Shares. The Company further represents to each Buyer that the Company’s decision to enter into the Transaction Documents to which it is a party has been based solely on
the independent evaluation by the Company and its representatives.
(g) No General Solicitation; Placement Agent’s
Fees. Neither the Company, nor any Subsidiary or affiliates, nor any Person acting on its or their behalf, has engaged in any form of general solicitation or general advertising (within the meaning of Regulation D) in connection with the offer
or sale of the Common Shares. The Company shall be responsible for the payment of any placement agent’s fees, financial advisory fees, or brokers’ commissions (other than for Persons engaged by any Buyer or its investment advisor) relating
to or arising out of the transactions contemplated hereby. Other than Ladenburg Thalmann & Co. Inc. (the “Placement Agent”), neither the Company nor any Subsidiary has engaged any placement agent or other agent in
connection with the sale of the Common Shares.
(h) No Integrated Offering. None of the Company, any Subsidiary or any
of their affiliates, nor any Person acting on 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 require registration of the issuance of any
of the Common Shares under the 1933 Act, whether through integration with prior offerings or otherwise, or cause this offering of the Common Shares to require approval of shareholders of the Company under any applicable shareholder approval
provisions, including, without limitation, under the rules and regulations of any exchange or automated quotation system on which any of the securities of the Company are listed or designated. None of the Company, any Subsidiary, their affiliates
nor any Person acting on their behalf will take any action or steps that would require registration of the issuance of any of the Common Shares under the 1933 Act or cause the offering of any of the Common Shares hereunder to be integrated with
other offerings.
(i) Application of Takeover Protections; Rights Agreement. The Company and its board of directors
have taken all necessary action, if any, in order to render inapplicable any control share acquisition, interested shareholder, business combination, poison pill (including any distribution under a rights agreement) or other similar anti-takeover
provision under the Articles of Incorporation, Bylaws or other organizational documents or the laws of the jurisdiction of its incorporation or otherwise which is or could become applicable to any Buyer solely as a result of the transactions
contemplated by this Agreement, including, without limitation, the Company’s issuance of the Common Shares and any Buyer’s ownership of the Common Shares. The Company and its board of directors have taken all necessary action, if any, in
order to render inapplicable any shareholder rights plan or similar arrangement relating to accumulations of beneficial ownership of the Common Shares or a change in control of the Company or any Subsidiary, in each case, solely as a result of the
transactions contemplated by this Agreement.
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(j) SEC Documents; Financial Statements. During the two (2) years prior to the
date hereof, the Company has timely filed all reports, schedules, forms, statements and other documents required to be filed by it with the SEC pursuant to the reporting requirements of the 1934 Act (all of the foregoing filed prior to the date
hereof and all exhibits included therein and financial statements, notes and schedules thereto and documents incorporated by reference therein being hereinafter referred to as the “SEC Documents”). As of their respective dates, the
SEC Documents complied in all material respects with the requirements of the 1934 Act and the rules and regulations of the SEC promulgated thereunder applicable to the SEC Documents, and none of the SEC Documents, at the time they were filed with
the SEC, 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. As of their respective dates, the financial statements of the Company included in the SEC Documents complied as to form in all material respects with applicable accounting requirements and the published rules and regulations of the SEC
with respect thereto as in effect as of the time of filing. Such financial statements have been prepared in accordance with generally accepted accounting principles, consistently applied, during the periods involved (except (i) as may be
otherwise indicated in such financial statements or the notes thereto, or (ii) in the case of unaudited interim statements, to the extent they may exclude footnotes or may be condensed or summary statements) and fairly present in all material
respects the financial position of the Company as of the dates thereof and the results of its operations and cash flows for the periods then ended (subject, in the case of unaudited statements, to normal year-end audit adjustments which will not be
material, either individually or in the aggregate). No other information provided by or on behalf of the Company to the Buyers which is not included in the SEC Documents (including, without limitation, information referred to in Section 2(e) of
this Agreement) contains any untrue statement of a material fact or omits to state any material fact necessary in order to make the statements therein not misleading, in the light of the circumstance under which they are or were made.
(k) Absence of Certain Changes. Except as set forth in the SEC Documents, there has been no material adverse change and no material adverse
development in the business, assets, liabilities, properties, operations (including results thereof), condition (financial or otherwise) or prospects of the Company and the Subsidiaries, taken as a whole. Since the date of the Company’s most
recent audited financial statements contained in a Form 10-K, neither the Company nor any Subsidiary has (i) declared or paid any dividends, (ii) sold any assets, individually or in the aggregate, outside of the ordinary course of business
or (iii) made any material capital expenditures, individually or in the aggregate. Neither the Company nor any Subsidiary has taken any steps to seek protection pursuant to any law or statute relating to bankruptcy, insolvency, reorganization,
receivership, liquidation or winding up, nor does the Company or any Subsidiary have any knowledge or reason to believe that any of their respective creditors intend to initiate involuntary bankruptcy proceedings or any actual knowledge of any fact
which would reasonably lead a creditor to do so. The Company is not as of the date hereof, and after giving effect to the transactions contemplated hereby to occur at the Closing, will not be Insolvent (as defined below). For purposes of this
Section 3(k), “Insolvent” means (I) with respect to the Company and the Subsidiaries, on a consolidated basis, (i) the present fair saleable value of the Company’s and the Subsidiaries’ assets is less than
the amount required to pay the Company’s and the Subsidiaries’ total Indebtedness (as defined below), (ii) the Company and the Subsidiaries are unable to pay their debts and liabilities, subordinated, contingent or otherwise,
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as such debts and liabilities become absolute and matured or (iii) the Company and the Subsidiaries intend to incur or believe that they will incur debts that would be beyond their ability
to pay as such debts mature; and (II) with respect to the Company and each Subsidiary, individually, (i) the present fair saleable value of the Company’s assets is less than the amount required to pay the Company’s total Indebtedness,
(ii) the Company is unable to pay its debts and liabilities, subordinated, contingent or otherwise, as such debts and liabilities become absolute and matured or (iii) the Company intends to incur or believes that it will incur debts that
would be beyond its ability to pay as such debts mature. Neither the Company nor any Subsidiary has engaged in any business or in any transaction, and is not about to engage in any business or in any transaction, for which the Company’s or any
Subsidiary’s remaining assets constitute unreasonably small capital.
(l) No Undisclosed Events, Liabilities,
Developments or Circumstances. Except as set forth in the SEC Documents or as disclosed to the Investors, no event, liability, development or circumstance has occurred or exists, or is reasonably expected to exist or occur with respect to the
Company, the Subsidiaries or their respective business, properties, liabilities, prospects, operations (including results thereof) or condition (financial or otherwise), that (i) would be required to be disclosed by the Company under applicable
securities laws on a registration statement on Form S-3 filed with the SEC relating to an issuance and sale by the Company of its Common Stock and which has not been publicly announced, other than as has been disclosed to the Investors,
(ii) would reasonably be expected to have a Material Adverse Effect or (iii) would reasonably be expected to have a material adverse effect on any Buyer’s investment hereunder.
(m) Conduct of Business; Regulatory Permits. Neither the Company nor any Subsidiary is in violation of any term of or in
default under its Articles of Incorporation, Bylaws, any certificate of designation, preferences or rights of any other outstanding series of preferred stock of the Company or the Subsidiaries or their organizational charter, certificate of
formation or certificate of incorporation or bylaws, respectively. Neither the Company nor any Subsidiary is in violation of any judgment, decree or order or any statute, ordinance, rule or regulation applicable to the Company or any Subsidiary, and
neither the Company nor any Subsidiary will conduct its business in violation of any of the foregoing, except in all cases for possible violations which could not, individually or in the aggregate, have a Material Adverse Effect. Without limiting
the generality of the foregoing, the Company is not in violation of any of the rules, regulations or requirements of the Principal Market and has no knowledge of any facts or circumstances that could reasonably lead to delisting or suspension of the
Common Stock by the Principal Market in the foreseeable future. Since January 1, 2008, other than as set forth in the SEC Documents, (i) the Common Stock has been listed or designated for quotation on the Principal Market,
(ii) trading in the Common Stock has not been suspended by the SEC or the Principal Market and (iii) the Company has received no communication, written or oral, from the SEC or the Principal Market regarding the suspension or delisting of
the Common Stock from the Principal Market. The Company and the Subsidiaries possess all certificates, authorizations and permits issued by the appropriate regulatory authorities necessary to conduct their respective businesses, except where the
failure to possess such certificates, authorizations or permits would not have, individually or in the aggregate, a Material Adverse Effect, and neither the Company nor any Subsidiary has received any notice of proceedings relating to the revocation
or modification of any such certificate, authorization or permit.
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(n) Foreign Corrupt Practices. Neither the Company nor any Subsidiary nor, to the
Company’s knowledge, any director, officer, agent, employee or other Person acting on behalf of the Company or any Subsidiary has, in the course of its actions for, or on behalf of, the Company or any Subsidiary (i) used any corporate
funds for any unlawful contribution, gift, entertainment or other unlawful expenses relating to political activity; (ii) made any direct or indirect unlawful payment to any foreign or domestic government official or employee from corporate
funds; (iii) violated or is in violation of any provision of the U.S. Foreign Corrupt Practices Act of 1977, as amended; or (iv) made any unlawful bribe, rebate, payoff, influence payment, kickback or other unlawful payment to any foreign
or domestic government official or employee.
(o) Sarbanes-Oxley Act. Other than as disclosed in the SEC Documents, the
Company and each Subsidiary is in compliance with all applicable requirements of the Sarbanes-Oxley Act of 2002 that are effective as of the date hereof, and all applicable rules and regulations promulgated by the SEC thereunder that are effective
as of the date hereof.
(p) Transactions With Affiliates. Other than as disclosed in the SEC Documents, none of the
officers, directors or employees of the Company or any Subsidiary is presently a party to any transaction with the Company or any Subsidiary (other than for ordinary course services as employees, officers or 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, or otherwise requiring payments to or from any such officer, director or employee or, to the knowledge of
the Company or any Subsidiary, any corporation, partnership, trust or other Person in which any such officer, director, or employee has a substantial interest or is an employee, officer, director, trustee or partner.
(q) Equity Capitalization. As of the date hereof, the authorized capital stock of the Company consists of (i) 297,527,214
shares of Common Stock, of which 201,346,385 are issued and outstanding and 14,016,138 shares are reserved for issuance pursuant to securities exercisable or exchangeable for, or convertible into, shares of Common Stock and (ii) 5,000,000
shares of Preferred Stock, no par value, of which none are outstanding. No shares of Common Stock are held in treasury. All of such outstanding shares are duly authorized and have been, or upon issuance will be, validly issued and are fully paid and
nonassessable. None of the Company’s or any Subsidiary’s capital stock is subject to preemptive rights or any other similar rights or any liens or encumbrances suffered or permitted by the Company or any Subsidiary. Except as disclosed in
the SEC Documents, there are no outstanding options, warrants, scrip, rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities or rights convertible into, or exercisable or exchangeable for, any capital
stock of the Company or any Subsidiary, or contracts, commitments, understandings or arrangements by which the Company or any Subsidiary is or may become bound to issue additional capital stock of the Company or any Subsidiary or options, warrants,
scrip, rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities or rights convertible into, or exercisable or exchangeable for, any capital stock of the Company or any Subsidiary. Except as disclosed in the
SEC Documents, there are no outstanding debt securities, notes, credit agreements, credit facilities or other agreements, documents or instruments evidencing Indebtedness of the Company or any Subsidiary or by which the Company or any Subsidiary is
or may become bound. There are no financing statements securing obligations in any amounts filed in connection with the Company or any Subsidiary. There are no agreements or
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arrangements under which the Company or any Subsidiary is obligated to register the sale of any of their securities under the 1933 Act (except pursuant to the Registration Rights Agreement, the
Company’s registration rights agreement dated June 21, 2010 and the Company’s registration rights agreement dated July 5, 2011). Except as disclosed in the SEC Documents, there are no outstanding securities or instruments of the
Company or the Subsidiaries which 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 any Subsidiary. There are no securities or instruments containing anti-dilution or similar provisions that will be triggered by the issuance of the Common Shares. Neither the Company nor any Subsidiary has any stock appreciation rights or
“phantom stock” plans or agreements or any similar plan or agreement. Neither the Company nor any Subsidiary has any liabilities or obligations required to be disclosed in the SEC Documents which are not so disclosed in the SEC Documents,
other than those incurred in the ordinary course of the Company’s or the Subsidiaries’ respective businesses and which, individually or in the aggregate, do not or could not have a Material Adverse Effect. Copies of the Company’s
Articles of Incorporation, as amended and as in effect on the date hereof (the “Articles of Incorporation”), and the Company’s bylaws, as amended and as in effect on the date hereof (the “Bylaws”), have been
filed as exhibits with the SEC and are available on the SEC’s website at www.sec.gov.
(r) Indebtedness and Other
Contracts. Except as disclosed in the SEC Documents, neither the Company nor any Subsidiary (i) has any outstanding Indebtedness (as defined below), (ii) is a party to any contract, agreement or instrument, the violation of which, or
default under which, by the other party(ies) to such contract, agreement or instrument could reasonably be expected to result in a Material Adverse Effect, (iii) is in violation of any term of, or in default under, any contract, agreement or
instrument relating to any Indebtedness, except where such violations and defaults would not result, individually or in the aggregate, in a Material Adverse Effect, or (iv) is a party to any contract, agreement or instrument relating to any
Indebtedness, the performance of which, in the judgment of the Company’s officers, has or is expected to have a Material Adverse Effect. For purposes of this Agreement: (x) “Indebtedness” of any Person means, without
duplication (A) all indebtedness for borrowed money, (B) all obligations issued, undertaken or assumed as the deferred purchase price of property or services (including, without limitation, “capital leases” in accordance with
generally accepted accounting principles) (other than trade payables entered into in the ordinary course of business), (C) all reimbursement or payment obligations with respect to letters of credit, surety bonds and other similar instruments,
(D) all obligations evidenced by notes, bonds, debentures or similar instruments, including obligations so evidenced incurred in connection with the acquisition of property, assets or businesses, (E) all indebtedness created or arising
under any conditional sale or other title retention agreement, or incurred as financing, in either case with respect to any property or assets acquired with the proceeds of such indebtedness (even though the rights and remedies of the seller or bank
under such agreement in the event of default are limited to repossession or sale of such property), (F) all monetary obligations under any leasing or similar arrangement which, in connection with generally accepted accounting principles,
consistently applied for the periods covered thereby, is classified as a capital lease, (G) all indebtedness referred to in clauses (A) through (F) above secured by (or for which the holder of such Indebtedness has an existing right,
contingent or otherwise, to be secured by) any mortgage, lien, pledge, charge, security interest or
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other encumbrance upon or in any property or assets (including accounts and contract rights) owned by any Person, even though the Person which owns such assets or property has not assumed or
become liable for the payment of such indebtedness, and (H) all Contingent Obligations in respect of indebtedness or obligations of others of the kinds referred to in clauses (A) through (G) above; (y) “Contingent
Obligation” means, as to any Person, any direct or indirect liability, contingent or otherwise, of that Person with respect to any indebtedness, lease, dividend or other obligation of another Person if the primary purpose or intent of the
Person incurring such liability, or the primary effect thereof, is to provide assurance to the obligee of such liability that such liability will be paid or discharged, or that any agreements relating thereto will be complied with, or that the
holders of such liability will be protected (in whole or in part) against loss with respect thereto; and (z) “Person” means an individual, a limited liability company, a partnership, a joint venture, a corporation, a trust, an
unincorporated organization, any other entity and a government or any department or agency thereof.
(s) Absence of
Litigation. Except as disclosed in the SEC Documents, there is no action, suit, proceeding, inquiry or investigation before or by the Principal Market, any court, public board, government agency, self-regulatory organization or body pending or,
to the knowledge of the Company, threatened against or affecting the Company or the Subsidiaries, the Common Stock or any of the Company’s or the Subsidiaries’ officers or directors which is outside of the ordinary course of business or
individually or in the aggregate material to the Company or the Subsidiaries. There has not been, and to the knowledge of the Company, there is not pending or contemplated, any investigation by the SEC involving the Company, the Subsidiaries or any
current or former director or officer of the Company or any Subsidiary. The SEC has not issued any stop order or other order suspending the effectiveness of any registration statement filed by the Company under the 1933 Act or the 1934 Act.
(t) Insurance. The Company and the Subsidiaries are insured by insurers of recognized financial responsibility against
such losses and risks and in such amounts as management of the Company believes to be prudent and customary in the businesses in which the Company and the Subsidiaries are engaged. Neither the Company nor any Subsidiary has been refused any
insurance coverage sought or applied for, and neither the Company nor any Subsidiary has any reason to believe that it will be unable to renew its existing insurance coverage as and when such coverage expires or to obtain similar coverage from
similar insurers as may be necessary to continue its business at a cost that would not have a Material Adverse Effect.
(u)
Employee Relations. Neither the Company nor any Subsidiary is a party to any collective bargaining agreement or employs any member of a union. The Company believes that its and its Subsidiaries’ relations with their respective employees
are good. No executive officer (as defined in Rule 501(f) promulgated under the 1933 Act) or other key employee of the Company or any Subsidiary has notified the Company or any Subsidiary that such officer intends to leave the Company or any
Subsidiary or otherwise terminate such officer’s employment with the Company or any Subsidiary. To the Company’s knowledge, no executive officer or other key employee 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, non-competition agreement, or any other contract or agreement or any restrictive covenant, and the continued employment of
each such executive officer or other key employee
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(as the case may be), to the Company’s knowledge, does not subject the Company or the Subsidiaries to any liability with respect to any of the foregoing matters. The Company and the
Subsidiaries are in compliance with all federal, state, local and foreign laws and regulations respecting labor, employment and employment practices and benefits, terms and conditions of employment and wages and hours, except where failure to be in
compliance would not, either individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect.
(v) Title. The Company and the Subsidiaries have good and marketable title in fee simple to all real property, and have good and
marketable title to all personal property (exclusive of intellectual property), owned by them which is material to the business of the Company and the Subsidiaries, in each case, free and clear of all liens, encumbrances and defects except such as
do not materially affect the value of such property and do not interfere with the use made and proposed to be made of such property by the Company and the Subsidiaries. Any real property and facilities held under lease by the Company or the
Subsidiaries are held by them under valid, subsisting and enforceable leases with such exceptions as are not material and do not interfere with the use made and proposed to be made of such property and buildings by the Company or the Subsidiaries.
(w) Intellectual Property Rights. The Company and the Subsidiaries own or possess adequate rights or licenses to use
all trademarks, trade names, service marks, service mark registrations, service names, patents, patent rights, copyrights, original works, inventions, licenses, approvals, governmental authorizations, trade secrets and other intellectual property
rights and all applications and registrations therefor (“Intellectual Property Rights”) necessary to conduct their respective businesses as now conducted and as presently proposed to be conducted. None of the Company’s or any
Subsidiary’s Intellectual Property Rights necessary to conduct their respective businesses as now conducted and as presently proposed to be conducted have expired, terminated or been abandoned, or are expected to expire, terminate or be
abandoned, within three years from the date of this Agreement. The Company has no knowledge of any infringement by the Company or any Subsidiary of Intellectual Property Rights of others. There is no claim, action or proceeding being made or
brought, or to the knowledge of the Company or any Subsidiary, being threatened, against the Company or any Subsidiary regarding their Intellectual Property Rights except as disclosed in the SEC Documents. The Company is not aware of any facts or
circumstances which might give rise to any of the foregoing infringements or claims, actions or proceedings. The Company and the Subsidiaries have taken reasonable security measures to protect the secrecy, confidentiality and value of all of their
Intellectual Property Rights.
(x) Environmental Laws. The Company and the Subsidiaries (i) are in compliance with
all Environmental Laws (as defined below), (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 of the foregoing clauses (i), (ii) and (iii), the failure to so comply could be reasonably expected to have, individually or in the aggregate, a Material Adverse Effect. The
term “Environmental Laws” means all federal, state, local or foreign laws relating to pollution or protection of human health or the environment (including, without limitation, ambient air, surface water, groundwater, land surface
or subsurface strata), including, without limitation, laws relating to emissions, discharges, releases or threatened releases of chemicals, pollutants,
13
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.
(y) Subsidiary Rights. The Company has the
unrestricted right to vote, and (subject to limitations imposed by applicable law) to receive dividends and distributions on, all capital securities of the Subsidiaries as owned by the Company.
(z) Tax Status. The Company and the Subsidiaries (i) has timely made or filed all foreign, federal and state income and all
other tax returns, reports and declarations required by any jurisdiction to which it is subject, (ii) has timely paid all taxes and other governmental assessments and charges that are material in amount, shown or determined to be due on such
returns, reports and declarations, except those being contested in good faith and (iii) has set aside on its books provision reasonably adequate for the payment of all taxes for periods subsequent to the periods to which such returns, reports
or declarations apply except in each case where the failure to file, pay or set aside would not have a Material Adverse Effect. 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 and the Subsidiaries know of no basis for any such claim. The Company is not operated in such a manner as to qualify as a passive foreign investment company, as defined in Section 1297 of the U.S. Internal Revenue Code
of 1986, as amended.
(aa) Internal Accounting and Disclosure Controls. The Company and the Subsidiaries maintain
internal control over financial reporting (as such term is defined in Rule 13a-15(f) under the 1934 Act) that is effective to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements
for external purposes in accordance with generally accepted accounting principles, including 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 generally accepted accounting principles and to maintain asset and liability accountability, (iii) access to assets or incurrence of liabilities is permitted only in
accordance with management’s general or specific authorization and (iv) the recorded accountability for assets and liabilities is compared with the existing assets and liabilities at reasonable intervals and appropriate action is taken
with respect to any difference. The Company maintains disclosure controls and procedures (as such term is defined in Rule 13a-15(e) under the 1934 Act) that are effective in ensuring that information required to be disclosed by the Company in the
reports that it files or submits under the 1934 Act is recorded, processed, summarized and reported, within the time periods specified in the rules and forms of the SEC, including, without limitation, controls and procedures designed to ensure that
information required to be disclosed by the Company in the reports that it files or submits under the 1934 Act is accumulated and communicated to the Company’s management, including its principal executive officer or officers and its principal
financial officer or officers, as appropriate, to allow timely decisions regarding required disclosure. Since January 1, 2008, neither the Company nor any Subsidiary has received any notice or correspondence from any accountant relating to any
potential material weakness in any part of the internal controls over financial reporting of the Company or any Subsidiary.
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(bb) Off Balance Sheet Arrangements. There is no transaction, arrangement, or other
relationship between the Company or any Subsidiary and an unconsolidated or other off balance sheet entity that is required to be disclosed by the Company in its 1934 Act filings and is not so disclosed or that otherwise could be reasonably likely
to have a Material Adverse Effect.
(cc) Investment Company Status. The Company is not, and upon consummation of the
sale of the Common Shares will not be, an “investment company,” an affiliate of an “investment company,” a company controlled by an “investment company” or an “affiliated person” of, or “promoter” or
“principal underwriter” for, an “investment company” as such terms are defined in the Investment Company Act of 1940, as amended.
(dd) Acknowledgement Regarding Buyers’ Trading Activity. It is understood and acknowledged by the Company that: (i) other than as contemplated by Section 2(k), following the public
disclosure of the transactions contemplated by the Transaction Documents, in accordance with the terms thereof, none of the Buyers have been asked by the Company or any Subsidiary to agree, nor has any Buyer agreed with the Company or any
Subsidiary, to desist from effecting any transactions in or with respect to (including, without limitation, purchasing or selling, long and/or short) any securities of the Company, or “derivative” securities based on securities issued by
the Company or to hold the Common Shares for any specified term; (ii) any Buyer, and counterparties in “derivative” transactions to which any such Buyer is a party, directly or indirectly, presently may have a “short”
position in the Common Stock which was established prior to such Buyer’s knowledge of the transactions contemplated by the Transaction Documents; and (iii) each Buyer shall not be deemed to have any affiliation with or control over any
arm’s length counterparty in any “derivative” transaction. The Company further understands and acknowledges that following the public disclosure of the transactions contemplated by the Transaction Documents pursuant to the Press
Release (as defined below) (a) or more Buyers may engage in hedging and/or trading activities at various times during the period that the Common Shares are outstanding and (b) hedging and/or trading activities, if any, can reduce the value
of the existing shareholders’ equity interest in the Company both at and after the time the hedging and/or trading activities are being conducted. The Company acknowledges that such aforementioned hedging and/or trading activities do not
constitute a breach of this Agreement or any other Transaction Document or any of the documents executed in connection herewith or therewith.
(ee) Manipulation of Price. Neither the Company nor any Subsidiary has, and, to the knowledge of the Company, no Person acting on their behalf has, directly or indirectly, (i) taken any action
designed to cause or to result in the stabilization or manipulation of the price of any security of the Company or any Subsidiary to facilitate the sale or resale of any of the Common Shares, (ii) sold, bid for, purchased, or paid any
compensation for soliciting purchases of, any of the Common Shares (other than the Placement Agent), or (iii) paid or agreed to pay to any Person any compensation for soliciting another to purchase any other securities of the Company or any
Subsidiary.
(ff) U.S. Real Property Holding Corporation. Neither the Company nor any Subsidiary is, or has ever been,
and so long as any of the Common Shares are held by any of the Buyers, shall become, a U.S. real property holding corporation within the meaning of Section 897 of the Internal Revenue Code of 1986, as amended, and the Company and each
Subsidiary
15
shall so certify upon any Buyer’s request.
(gg) Registration
Eligibility. The Company is eligible to register the Registrable Securities for resale by the Buyers using Form S-1 promulgated under the 1933 Act.
(hh) Transfer Taxes. On the Closing Date, all stock transfer or other taxes (other than income or similar taxes) which are required to be paid in connection with the issuance, sale and transfer of
the Common Shares to be sold to each Buyer hereunder will be, or will have been, fully paid or provided for by the Company, and all laws imposing such taxes will be or will have been complied with.
(ii) Bank Holding Company Act. Neither the Company nor any Subsidiary 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 Subsidiary 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 (25%) or more of the total equity of a bank or any equity that is subject to the BHCA and to regulation by the Federal Reserve.
Neither the Company nor any Subsidiary 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.
(jj) Public Utility Holding Act. None of the Company nor any Subsidiary is a “holding company,” or an
“affiliate” of a “holding company,” as such terms are defined in the Public Utility Holding Act of 2005.
(kk) Federal Power Act. None of the Company nor any Subsidiary is subject to regulation as a “public utility” under the
Federal Power Act, as amended.
(ll) No Additional Agreements. The Company does not have any agreement or understanding
with any Buyer with respect to the transactions contemplated by the Transaction Documents other than as specified in the Transaction Documents.
(mm) Disclosure. All disclosure provided to the Buyers regarding the Company and the Subsidiaries, their businesses and the transactions contemplated hereby, including the schedules to this
Agreement, furnished by or on behalf of the Company or the Subsidiaries 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. No event or circumstance has occurred or information exists with respect to the Company or the Subsidiaries or its or their business, properties, liabilities, prospects,
operations (including results thereof) or conditions (financial or otherwise), which, under applicable law, rule or regulation, requires public disclosure at or before the date hereof or announcement by the Company but which has not been so publicly
disclosed. The Company acknowledges and agrees that no Buyer makes or has made any representations or warranties with respect to the transactions contemplated hereby other than those specifically set forth in Section 2.
(nn) Shell Company Status. The Company is not, and has never been, an issuer identified in, or subject to, Rule 144(i) of the 1933
Act.
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(oo) No Other Registration Rights. There are no agreements or arrangements under
which the Company or any Subsidiary is obligated to register the sale of any of their securities under the 1933 Act (except pursuant to the Registration Rights Agreement, the Company’s registration rights agreement dated June 21, 2010 and
the Company’s registration rights agreement dated July 5, 2011).
(pp) FDA Matters. 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 relating to registration, investigational use, premarket clearance, licensure, or application
approval, good manufacturing practices, good laboratory practices, good clinical practices, product listing, quotas, labeling, advertising, record keeping and filing of reports, except where the failure to be in compliance would not have or
reasonably be expected to result in 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) contests the premarket clearance, licensure, registration, or approval of, the uses of, the distribution of, the manufacturing or packaging of, the testing of, the sale of, or the labeling and promotion of any Pharmaceutical Product,
(ii) withdraws its approval of, requests the recall, suspension, or seizure of, or withdraws or orders the withdrawal of advertising or sales promotional materials relating to, any Pharmaceutical Product, (iii) imposes a clinical hold on
any clinical investigation by the Company or any of its Subsidiaries, (iv) enjoins production at any facility of the Company or any of its Subsidiaries, (v) enters or proposes to enter into a consent decree of permanent injunction with the
Company or any of its Subsidiaries, or (vi) 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 or reasonably be expected to
result in a Material Adverse Effect. The properties, business and operations of the Company have been and are being conducted in all material respects in accordance with all applicable laws, rules and regulations of the FDA. The Company has not been
informed by the FDA that the FDA will prohibit the marketing, sale, license or use in the United States of any product proposed to be developed, produced or marketed by the Company nor has the FDA expressed any concern as to approving or clearing
for marketing any product being developed or proposed to be developed by the Company.
4. COVENANTS.
(a) Efforts. Each Buyer shall use its reasonable best efforts to timely satisfy each of the conditions to be satisfied by it as
provided in Section 6 of this Agreement. The Company shall use its reasonable best efforts to timely satisfy each of the conditions to be satisfied by it as provided in Section 7 of this Agreement.
(b) Form D and Blue Sky. The Company agrees to file with the SEC a Form D with
17
respect to the Common Shares as required under Regulation D and to provide a copy thereof to each Buyer promptly after such filing. The Company shall, on or before the Closing Date, take such
action as the Company shall reasonably determine is necessary in order to obtain an exemption for, or to, qualify the Common Shares for sale to the Buyers at the Closing pursuant to this Agreement under applicable securities or “Blue Sky”
laws of the states of the United States (or to obtain an exemption from such qualification), and shall provide evidence of any such action so taken to the Buyers on or prior to the Closing Date. The Company shall make any filings and reports
relating to the offer and sale of the Common Shares required under applicable securities or “Blue Sky” laws of the states of the United States following the Closing Date.
(c) Use of Proceeds. The Company shall use the proceeds from the sale of the Common Shares for the payment of the fees and
expenses described in Section 4(f) below and general corporate purposes.
(d) Financial Information. The Company
agrees to send the following to each Investor (as defined in the Registration Rights Agreement) during the Reporting Period, unless the following are filed with or furnished to the SEC through EDGAR and are available to the public through the EDGAR
system, within one (1) Business Day after the filing thereof with the SEC, a copy of its Annual Reports on Form 10-K and Quarterly Reports on Form 10-Q, any interim reports or any consolidated balance sheets, income statements,
stockholders’ equity statements and/or cash flow statements for any period other than annual that are made publicly available, any Current Reports on Form 8-K and any registration statements (other than on Form S-8) or amendments filed pursuant
to the 1933 Act.
(e) Listing. The Company shall use its reasonable best efforts to promptly secure the listing or
designation for quotation (as the case may be) of all of the Common Shares upon each national securities exchange and automated quotation system, if any, upon which the Common Stock is then listed or designated for quotation (as the case may be)
(subject to official notice of issuance) and shall maintain such listing or designation for quotation (as the case may be) of all Common Shares from time to time issuable under the terms of the Transaction Documents on such national securities
exchange or automated quotation system. The Company shall use its reasonable best efforts to maintain the Common Stock’s listing or authorization for quotation (as the case may be) on the Principal Market, the NYSE MKT, The New York Stock
Exchange, the Nasdaq Global Market, the Nasdaq Global Select Market or the Nasdaq Capital Market (each, an “Eligible Market”). The Company shall not take any action which could be reasonably expected to result in the delisting or
suspension of the Common Stock on an Eligible Market. The Company shall pay all fees and expenses in connection with satisfying its obligations under this Section 4(e).
(f) Fees. The Company shall be responsible for the payment of any placement agent’s fees, financial advisory fees, transfer agent fees, DTC (as defined below) fees or broker’s commissions
(other than for Persons engaged by any Buyer) relating to or arising out of the transactions contemplated hereby (including, without limitation, any fees payable to the Placement Agent, who is the Company’s sole placement agent in connection
with the transactions contemplated by this Agreement). The Company shall pay, and hold each Buyer harmless against, any liability, loss or expense (including, without limitation, reasonable attorneys’ fees and out-of-pocket expenses) arising in
connection with any claim relating to any
18
such payment. Except as otherwise set forth in the Transaction Documents, each party to this Agreement shall bear its own expenses in connection with the sale of the Common Shares to the Buyers.
(g) Pledge of Common Shares. Notwithstanding anything to the contrary contained in Section 2(g), the Company
acknowledges and agrees that the Common Shares may be pledged by a Buyer in connection with a bona fide margin agreement or other bona fide loan or financing arrangement that is secured by the Common Shares. The pledge of Common Shares shall not be
deemed to be a transfer, sale or assignment of the Common Shares hereunder except as may otherwise be required under applicable securities laws, and no Buyer effecting a pledge of Common Shares shall be required to provide the Company with any
notice thereof or otherwise make any delivery to the Company pursuant to this Agreement or any other Transaction Document. The Company hereby agrees to execute and deliver such documentation as a pledgee of the Common Shares may reasonably request
in connection with a pledge of the Common Shares to such pledgee by a Buyer.
(h) Disclosure of
Transactions and Other Material Information. The Company shall, on or before 9:00 a.m., New York time, on the first (1st) Business Day after the date of this Agreement, issue a press release (the “Press Release”)
reasonably acceptable to the Buyers disclosing all the material terms of the transactions contemplated by the Transaction Documents. On or before 5:30 p.m., New York time, on the first
(1st) Business Day following the date of this
Agreement, the Company shall file a Current Report on Form 8-K describing all the material terms of the transactions contemplated by the Transaction Documents in the form required by the 1934 Act and attaching all the material Transaction Documents
(including, without limitation, this Agreement (and all schedules to this Agreement) and the form of the Registration Rights Agreement) (including all attachments, the “8-K Filing”). The Company shall not, and the Company shall
cause each of its officers, directors, employees and agents not to, provide any Buyer with any material, non-public information regarding the Company or the Subsidiaries from and after the issuance of the Press Release without the express prior
written consent of such Buyer. Subject to the foregoing, neither the Company, any Subsidiary nor any Buyer shall issue any press releases or any other public statements with respect to the transactions contemplated hereby; provided,
however, (i) the Company shall be entitled, without the prior approval of any Buyer, to make any press release or other public disclosure with respect to such transactions (A) in substantial conformity with the 8-K Filing and
contemporaneously therewith and (B) as is required by applicable law and regulations (provided that in the case of clause (A) each Buyer shall receive an advanced draft of any such press release or other public disclosure prior to its
release) and (ii) each Buyer may make such filings as may be required under Section 13 and Section 16 of the 1934 Act. Without the prior written consent of the applicable Buyer and notwithstanding anything to the contrary in this
Agreement, the Company shall not (and shall cause the Subsidiaries and affiliates to not) disclose the name of such Buyer or any affiliate of the Buyer in any filing, announcement, release or otherwise, except as otherwise required by any law, rule
or regulation applicable to the Company after consultation with the Buyer.
(i) Additional Registration Statements.
Until the Applicable Date (as defined below) and at any time thereafter while any Registration Statement is not effective or the prospectus contained therein is not available for use, the Company shall not file a registration statement under the
1933 Act (other than any registration statement on Form S-8) unless such registration
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statement relates to the Registrable Securities (other than any registration statement on Form S-8); provided, however that this Section 4(i) shall not in any way prohibit the Company from
filing amendments to registration statements filed prior to the date of this Agreement so long as any such amendment does not increase the number of securities covered thereby or effect the issuance of any securities thereunder (other than pursuant
to any registration statement on Form S-8). “Applicable Date” means the earlier of (i) the first date on which the resale by the Buyers of all Registrable Securities is covered by one or more effective Registration Statements
(as defined in the Registration Rights Agreement) (and each prospectus contained therein is available for use on such date) and (ii) the date on which the Buyers of all Registrable Securities can freely sell such Registrable Securities under
Rule 144.
(j) Conduct of Business. The business of the Company and the Subsidiaries shall not be conducted in
violation of any law, ordinance or regulation of any governmental entity, except where such violations would not result, either individually or in the aggregate, in a Material Adverse Effect.
(k) Passive Foreign Investment Company. The Company shall conduct its business in such a manner as will ensure that the Company
will not be deemed to constitute a passive foreign investment company within the meaning of Section 1297 of the U.S. Internal Revenue Code of 1986, as amended.
5. TRANSFER AGENT INSTRUCTIONS; LEGEND.
(a) Transfer Agent
Instructions. The Company represents and warrants that no instruction other than any stop transfer instructions to give effect to Section 2(g) hereof, will be given by the Company to its transfer agent with respect to the Common Shares, and
that the Common Shares shall otherwise be freely transferable on the books and records of the Company, as applicable, to the extent provided in this Agreement and the other Transaction Documents. If a Buyer effects a sale, assignment or transfer of
the Common Shares in accordance with Section 2(g), the Company shall permit the transfer and shall promptly instruct its transfer agent to issue one or more certificates or credit shares to the applicable balance accounts at The Depository
Trust Company (“DTC”) in such name and in such denominations as specified by such Buyer to effect such sale, transfer or assignment. The Company acknowledges that a breach by it of its obligations hereunder will cause irreparable harm to a
Buyer. Accordingly, the Company acknowledges that the remedy at law for a breach of its obligations under this Section 5(a) will be inadequate and agrees, in the event of a breach or threatened breach by the Company of the provisions of this
Section 5(a), that a Buyer shall be entitled, in addition to all other available remedies, to seek an order and/or injunction restraining any breach and requiring immediate issuance and transfer, without the necessity of showing economic loss
and without any bond or other security being required. The Company shall cause its counsel to issue a legal opinion to the Company’s transfer agent promptly following each Effective Date (as defined in the Registration Rights Agreement)
regarding the registration of the Common Shares. Any fees (with respect to the transfer agent, counsel to the Company or otherwise) associated with the issuance of such opinion or the removal of any legends on any of the Common Shares shall be borne
by the Company.
(b) Legends. Each Buyer understands that the Common Shares have been issued
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pursuant to an exemption from registration or qualification under the 1933 Act and applicable state securities laws, and except as set forth below, the Common Shares shall bear any legend as
required by the “blue sky” laws of any state and a restrictive legend in substantially the following form (and a stop-transfer order may be placed against transfer of such stock certificates):
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE
SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN
OPINION OF COUNSEL TO THE HOLDER (IF REQUESTED BY THE COMPANY), IN A FORM REASONABLY ACCEPTABLE TO THE COMPANY, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD OR ELIGIBLE TO BE SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID
ACT. NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES.
(c) Removal of Legends. Certificates evidencing Common Shares shall not be required to contain the legend set forth in
Section 5(b) above or any other legend (i) while a registration statement (including a Registration Statement) covering the resale of such Common Shares is effective under the 1933 Act, (ii) following any sale of such Common Shares
pursuant to Rule 144 (assuming the transferor is not an affiliate of the Company), (iii) if such Common Shares are eligible to be sold, assigned or transferred under Rule 144 (provided that a Buyer provides the Company with reasonable
assurances that such Common Shares are eligible for sale, assignment or transfer under Rule 144 which shall not include an opinion of counsel), (iv) in connection with a sale, assignment or other transfer (other than under Rule 144), provided
that such Buyer provides the Company with an opinion of counsel to such Buyer, in a generally acceptable form, to the effect that such sale, assignment or transfer of the Common Shares may be made without registration under the applicable
requirements of the 1933 Act or (v) if such legend is not required under applicable requirements of the 1933 Act (including, without limitation, controlling judicial interpretations and pronouncements issued by the SEC). If a legend is not
required pursuant to the foregoing, the Company shall no later than three (3) Trading Days following the delivery by a Buyer to the Company or the transfer agent (with notice to the Company) of a legended certificate representing such Common
Shares (endorsed or with stock powers attached, signatures guaranteed, and otherwise in form necessary to affect the reissuance and/or transfer, if applicable), together with any other deliveries from such Buyer as may be required above in this
Section 5(c), as directed by such Buyer, either: (A) provided that the Company’s transfer agent is participating in the DTC Fast Automated Securities Transfer Program, credit the aggregate number of shares of Common Stock to which
such Buyer shall be entitled to such Buyer’s or its designee’s balance account with DTC through its
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Deposit/Withdrawal at Custodian system or (B) if the Company’s transfer agent is not participating in the DTC Fast Automated Securities Transfer Program, issue and deliver (via
reputable overnight courier) to such Buyer, a certificate representing such Common Shares that is free from all restrictive and other legends, registered in the name of such Buyer or its designee (the date by which such credit is so required to be
made to the balance account of such Buyer’s or such Buyer’s nominee with DTC or such certificate is required to be delivered to such Buyer pursuant to the foregoing is referred to herein as the “Required Delivery Date”).
(d) Buy-In. If the Company fails to so properly deliver such unlegended certificates or so properly credit the balance
account of such Buyer’s or such Buyer’s nominee with DTC by the Required Delivery Date, and if on or after the Required Delivery Date such Buyer purchases (in an open market transaction or otherwise) shares of Common Stock to deliver in
satisfaction of a sale by such Buyer of shares of Common Stock that such Buyer anticipated receiving from the Company without any restrictive legend, then, in addition to all other remedies available to such Buyer, the Company shall, within three
(3) Trading Days after such Buyer’s request and in such Buyer’s sole discretion, either (i) pay cash to such Buyer in an amount equal to such Buyer’s total purchase price (including brokerage commissions, if any) for the
shares of Common Stock so purchased (the “Buy-In Price”), at which point the Company’s obligation to deliver such certificate or credit such Buyer’s balance account shall terminate and such shares shall be cancelled, or
(ii) promptly honor its obligation to deliver to such Buyer a certificate or certificates or credit such Buyer’s DTC account representing such number of shares of Common Stock that would have been issued if the Company timely complied with
its obligations hereunder and pay cash to such Buyer in an amount equal to the excess (if any) of the Buy-In Price over the product of (A) such number of shares of Common Shares that the Company was required to deliver to such Buyer by the
Required Delivery Date times (B) the Closing Sale Price of the Common Stock on the Trading Day immediately preceding the Required Delivery Date. As used herein, (x) “Closing Sale Price” means, for any security as of any
date, the last closing trade price for such security on the Principal Market, as reported by Bloomberg (as defined below), or, if the Principal Market begins to operate on an extended hours basis and does not designate the closing trade price then
the last trade price of such security prior to 4:00:00 p.m., New York time, as reported by Bloomberg, or, if the Principal Market is not the principal securities exchange or trading market for such security, the last trade price of such security on
the principal securities exchange or trading market where such security is listed or traded as reported by Bloomberg, or if the foregoing do not apply, the last trade price of such security in the over-the-counter market on the electronic bulletin
board for such security as reported by Bloomberg, or, if no last trade price is reported for such security by Bloomberg, the average of the ask prices of any market makers for such security as reported in the “pink sheets” by Pink Sheets
LLC (formerly the National Quotation Bureau, Inc.). If the Closing Sale Price cannot be calculated for a security on a particular date on any of the foregoing bases, the Closing Sale Price of such security on such date shall be the fair market value
as mutually determined by the Company and the Buyer. If the Company and the Buyer are unable to agree upon the fair market value of such security, then such dispute shall be resolved in accordance with the procedures in Section 5(e). All such
determinations shall be appropriately adjusted for any stock dividend, stock split, stock combination or other similar transaction during such period; (y) “Bloomberg” means Bloomberg Financial Markets.
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(e) Dispute Resolution. In the case of a dispute as to the determination of the
Closing Sale Price or fair market value (as the case may be), the Company or the Buyer (as the case may be) shall submit the disputed determinations via facsimile (i) within two (2) Business Days after receipt of the applicable notice
giving rise to such dispute to the Company or the Buyer (as the case may be) or (ii) if no notice gave rise to such dispute, at any time after the Buyer learned of the circumstances giving rise to such dispute. If the Buyer and the Company are
unable to agree upon such determination of the Closing Sale Price or fair market value (as the case may be) within three (3) Business Days of such disputed determination being submitted to the Company or the Buyer (as the case may be), then the
Company shall, within two (2) Business Days submit via facsimile the disputed determination of the Closing Sale Price or fair market value (as the case may be) to an independent, reputable investment bank selected by the Company and approved by
the Buyer. The Company shall cause at its expense the investment bank to perform the determinations and notify the Company and the Buyer of the results no later than ten (10) Business Days from the time it receives such disputed determinations.
Such investment bank’s determination shall be binding upon all parties absent demonstrable error.
6. CONDITIONS TO THE COMPANY’S
OBLIGATION TO SELL.
(a) The obligation of the Company hereunder to issue and sell the Common Shares to each Buyer at the
Closing is subject to the satisfaction, at or before the Closing Date, of each of the following conditions, provided that these conditions are for the Company’s sole benefit and may be waived by the Company at any time in its sole discretion by
providing each Buyer with prior written notice thereof:
(i) Such Buyer shall have executed each of the other
Transaction Documents to which it is a party and delivered the same to the Company.
(ii) Such Buyer and each
other Buyer shall have delivered to the Company the Purchase Price for the Common Shares being purchased by such Buyer at the Closing by wire transfer of immediately available funds pursuant to the wire instructions provided by the Company.
(iii) The representations and warranties of such Buyer shall be true and correct in all material respects as
of the date when made and as of the Closing Date as though originally made at that time (except for representations and warranties that speak as of a specific date, which shall be true and correct as of such date), and such Buyer shall have
performed, satisfied and complied in all material respects with the covenants, agreements and conditions required by this Agreement to be performed, satisfied or complied with by such Buyer at or prior to the Closing Date.
7. CONDITIONS TO EACH BUYER’S OBLIGATION TO PURCHASE.
(a) The obligation of each Buyer hereunder to purchase its Common Shares at the Closing is subject to the satisfaction, at or before the Closing Date, of each of the following conditions, provided that
these conditions are for each Buyer’s sole benefit and may be waived by such Buyer at any time in its sole discretion by providing the Company with prior written notice thereof:
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(i) The Company shall have duly executed and delivered to such Buyer each of
the Transaction Documents to which it is a party and the Company shall have duly executed and delivered to such Buyer the Common Shares in such aggregate number of Common Shares as is set forth across from such Buyer’s name in column
(3) of the Schedule of Buyers being purchased by such Buyer at the Closing pursuant to this Agreement.
(ii) Such Buyer shall have received the opinion of Morrison & Foerster LLP, the Company’s counsel, dated as
of the Closing Date, in the form reasonably acceptable to such Buyer.
(iii) The Company shall have delivered
to such Buyer a certified copy of the Articles of Incorporation as certified by the California Secretary of State.
(iv) The Company shall have delivered to such Buyer a certificate, in the form reasonably acceptable to such Buyer, duly executed by the Secretary of the Company and dated as of the Closing Date, as to
(i) the resolutions consistent with Section 3(a) as adopted by the Company’s board of directors, in a form reasonably acceptable to such Buyer, (ii) the Articles of Incorporation of the Company and (iii) the Bylaws of the
Company, each as in effect at the Closing.
(v) Each and every representation and warranty of the Company shall
be true and correct in all material respects as of the date when made and as of the Closing Date as though originally made at that time (except for representations and warranties that speak as of a specific date, which shall be true and correct as
of such date) and the Company shall have performed, satisfied and complied in all material respects with the covenants, agreements and conditions required to be performed, satisfied or complied with by the Company at or prior to the Closing Date.
Such Buyer shall have received a certificate, duly executed by either the Chief Executive Officer or the Chief Financial Officer of the Company, dated as of the Closing Date, to the foregoing effect and as to such other matters as may be reasonably
requested by such Buyer in the form reasonably acceptable to such Buyer.
(vi) The Company shall have delivered
to such Buyer a letter from the Company’s transfer agent certifying the number of shares of Common Stock outstanding on the Closing Date immediately prior to the Closing.
(vii) The Common Stock (I) shall be designated for quotation or listed on the Principal Market and (II) shall not
have been suspended, as of the Closing Date, by the SEC or the Principal Market from trading on the Principal Market nor shall suspension by the SEC or the Principal Market have been threatened, as of the Closing Date, either (A) in writing by
the SEC or the Principal Market or (B) by falling below the minimum maintenance requirements of the Principal Market.
(viii) The Company shall have obtained all governmental, regulatory or third party consents and approvals, if any, necessary for the sale of the Common Shares, including without limitation, those required
by the Principal Market.
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(ix) No statute, rule, regulation, executive order, decree, ruling or
injunction shall have been enacted, entered, promulgated or endorsed by any court or governmental authority of competent jurisdiction that prohibits the consummation of any of the transactions contemplated by the Transaction Documents.
(x) Since the date of execution of this Agreement, no event or series of events shall have occurred that reasonably would
have or result in a Material Adverse Effect.
(xi) Such Buyer shall have received a letter on the letterhead of
the Company, duly executed by either the Chief Executive Officer or the Chief Financial Officer of the Company, setting forth the wire instructions of the Company.
(xii) The Company shall have delivered to such Buyer such other documents relating to the transactions contemplated by
this Agreement as such Buyer or its counsel may reasonably request.
8. TERMINATION.
In the event that the Closing shall not have occurred with respect to a Buyer within five (5) business days of the date hereof, then
such Buyer shall have the right to terminate its obligations under this Agreement with respect to itself at any time on or after the close of business on such date without liability of such Buyer to any other party; provided, however, (i) the
right to terminate this Agreement under this Section 8 shall not be available to such Buyer if the failure of the transactions contemplated by this Agreement to have been consummated by such date is the result of such Buyer’s breach of
this Agreement and (ii) the abandonment of the sale and purchase of the Common Shares shall be applicable only to such Buyer providing such written notice, provided further that no such termination shall affect any obligation of the Company
under this Agreement to reimburse such Buyer for the expenses described in Section 4(f) above. Nothing contained in this Section 8 shall be deemed to release any party from any liability for any breach by such party of the terms and
provisions of this Agreement or the other Transaction Documents or to impair the right of any party to compel specific performance by any other party of its obligations under this Agreement or the other Transaction Documents.
9. MISCELLANEOUS.
(a) Governing Law; Jurisdiction; Jury Trial. All questions concerning the construction, validity, enforcement and interpretation of
this Agreement shall be governed by the internal laws of the State of New York, without giving effect to any choice of law or conflict of law provision or rule (whether of the State of New York or any other jurisdictions) that would cause the
application of the laws of any jurisdictions other than the State of New York. 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, and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not
personally subject to the jurisdiction of any such court, that such suit, action or proceeding is brought in an inconvenient forum or that the venue of such suit, action or proceeding is improper. Each party hereby irrevocably waives personal
service of process and
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consents to process being served in any such suit, action or proceeding by mailing a copy thereof to such party at the address for such notices to it under this Agreement and agrees that such
service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY
RIGHT IT MAY HAVE TO, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION WITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.
(b) Counterparts. This Agreement may be executed in two or more identical counterparts, all of which shall be considered one and
the same agreement and shall become effective when counterparts have been signed by each party and delivered to the other party. In the event that any signature is delivered by facsimile transmission or by an e-mail which contains a portable
document format (.pdf) file of an executed signature page, such signature page 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 signature
page were an original thereof.
(c) Headings; Gender. The headings of this Agreement are for convenience of reference
and shall not form part of, or affect the interpretation of, this Agreement. Unless the context clearly indicates otherwise, each pronoun herein shall be deemed to include the masculine, feminine, neuter, singular and plural forms thereof. The terms
“including,” “includes,” “include” and words of like import shall be construed broadly as if followed by the words “without limitation.” The terms “herein,” “hereunder,” “hereof”
and words of like import refer to this entire Agreement instead of just the provision in which they are found.
(d)
Severability. If any provision of this Agreement is prohibited by law or otherwise determined to be invalid or unenforceable by a court of competent jurisdiction, the provision that would otherwise be prohibited, invalid or unenforceable
shall be deemed amended to apply to the broadest extent that it would be valid and enforceable, and the invalidity or unenforceability of such provision shall not affect the validity of the remaining provisions of this Agreement so long as this
Agreement as so modified continues to express, without material change, the original intentions of the parties as to the subject matter hereof and the prohibited nature, invalidity or unenforceability of the provision(s) in question does not
substantially impair the respective expectations or reciprocal obligations of the parties or the practical realization of the benefits that would otherwise be conferred upon the parties. The parties will endeavor in good faith negotiations to
replace the prohibited, invalid or unenforceable provision(s) with a valid provision(s), the effect of which comes as close as possible to that of the prohibited, invalid or unenforceable provision(s).
(e) Entire Agreement; Amendments. This Agreement, the other Transaction Documents and the schedules and exhibits attached hereto
and thereto and the instruments referenced herein and therein supersede all other prior oral or written agreements between the Buyers, the Company, their affiliates and Persons acting on their behalf solely with respect to the matters contained
herein and therein, and this Agreement, the other Transaction Documents, the schedules and exhibits attached hereto and thereto and the instruments referenced herein and therein contain the entire understanding of the parties solely with respect to
the matters covered herein and therein; provided, however, nothing contained in this Agreement or any other
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Transaction Document shall (or shall be deemed to) (i) have any effect on any agreements any Buyer has entered into with the Company prior to the date hereof with respect to any prior
investment made by such Buyer in the Company or (ii) waive, alter, modify or amend in any respect any obligations of the Company, or any rights of or benefits to any Buyer or any other Person, in any agreement entered into prior to the date
hereof between or among the Company and any Buyer and all such agreements shall continue in full force and effect. Except as specifically set forth herein or therein, neither the Company nor any Buyer makes any representation, warranty, covenant or
undertaking with respect to such matters. For clarification purposes, the Recitals are part of this Agreement. No provision of this Agreement may be amended or waived other than by an instrument in writing signed by the Company and the holders of at
least a majority of the Registrable Securities (excluding any Registrable Securities held by the Company or the Subsidiaries) issued hereunder, and any amendment or to, or waiver of any provision of, this Agreement made in conformity with the
provisions of this Section 9(e) shall be binding on all Buyers and holders of Common Shares, as applicable, provided that any party may give a waiver in writing as to itself. Notwithstanding anything to the contrary contained in this Agreement,
in the event that the Company shall deliver written or e-mail notice to a holder of Registrable Securities who is a natural person requesting such holder’s consent, approval or agreement with respect to any such requested amendment or waiver,
such holder shall be deemed to have consented, approved and agreed with respect to such amendment or waiver if such holder does not provide written or e-mail notice to the Company indicating such Holder’s non-consent within five
(5) Business Days of delivery by the Company of such written or e-mail notice. No such amendment or waiver (unless given pursuant to the foregoing proviso in the case of a waiver) shall be effective to the extent that it applies to less than
all of the Common Shares then held by the Buyers. The Company has not, directly or indirectly, made any agreements with any Buyers relating to the terms or conditions of the transactions contemplated by the Transaction Documents except as set forth
in the Transaction Documents. Without limiting the foregoing, the Company confirms that, except as set forth in this Agreement, no Buyer has made any commitment or promise or has any other obligation to provide any financing to the Company, any
Subsidiary or otherwise.
(f) Notices. Any notices, consents, waivers or other communications required or permitted to
be given under the terms of this Agreement must be in writing and will be deemed to have been delivered: (i) upon receipt, when delivered personally; (ii) upon receipt, when sent by facsimile (provided confirmation of transmission is
mechanically or electronically generated and kept on file by the sending party); or (iii) one (1) Business Day after deposit with an overnight courier service with next day delivery specified, in each case, properly addressed to the party
to receive the same. The addresses and facsimile numbers for such communications shall be:
If to the Company:
Aradigm Corporation
3929 Point Eden Way
Hayward, CA 94545 Telephone: (510) 265-9000
Facsimile: 510-265-0277
Attention: Chief Executive Officer
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With a copy (for informational purposes only) to:
Morrison & Foerster LLP
425 Market Street
San Francisco, CA 94105
Telephone: (415) 268-7197
Facsimile: (415) 268-7522
Attention: John W. Campbell, Esq.
If to a Buyer, to its address and facsimile number set forth on the Schedule of Buyers, with copies to such Buyer’s representatives as set forth on
the Schedule of Buyers,
or to such other address and/or facsimile number and/or to the attention of such other Person as the recipient party
has specified by written notice given to each other party five (5) days prior to the effectiveness of such change. Written confirmation of receipt (A) given by the recipient of such notice, consent, waiver or other communication,
(B) mechanically or electronically generated by the sender’s facsimile machine containing the time, date, recipient facsimile number and an image of the first page of such transmission or (C) provided by an overnight courier service
shall be rebuttable evidence of personal service, receipt by facsimile or receipt from an overnight courier service in accordance with clause (i), (ii) or (iii) above, respectively.
(g) Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties and their respective
successors and assigns, including any purchasers of any of the Common Shares. The Company shall not assign this Agreement or any rights or obligations hereunder without the prior written consent of holders of a majority of the Registrable Securities
(excluding any Registrable Securities held by the Company or the Subsidiaries) issued hereunder, including, without limitation, by way of a merger or consolidation. A Buyer shall not assign this Agreement or any rights or obligations hereunder
except to (a) an Affiliate of the Buyer who is an accredited investor within the meaning of Regulation D of the 1933 Act or (b) such other person upon the prior written consent of the Company. For purposes hereof, an
“Affiliate” means an entity controlling, controlled by, or under common control with the Buyer, and control means the power to control more than half of the voting power.
(h) No Third Party Beneficiaries. This Agreement is intended for the benefit of the parties hereto and their respective permitted
successors and assigns, and is not for the benefit of, nor may any provision hereof be enforced by, any other Person, other than the Indemnitees referred to in Section 9(k). Notwithstanding anything to the contrary contained herein or in any of
the other Transaction Documents, the Placement Agent shall be entitled to rely on the representations and warranties of the Company contained herein and in the other Transaction Documents.
(i) Survival. The representations, warranties, agreements and covenants shall survive the Closing. Each Buyer shall be responsible
only for its own representations, warranties, agreements and covenants hereunder.
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(j) Further Assurances. Each party shall do and perform, or cause to be done and
performed, all such further acts and things, and shall execute and deliver all such other agreements, certificates, instruments and documents, as any other party may reasonably request in order to carry out the intent and accomplish the purposes of
this Agreement and the consummation of the transactions contemplated hereby.
(k) Indemnification. In consideration of
each Buyer’s execution and delivery of the Transaction Documents and acquiring the Common Shares thereunder and in addition to all of the Company’s other obligations under the Transaction Documents, the Company shall defend, protect,
indemnify and hold harmless each Buyer and each holder of any Common Shares and all of their stockholders, partners, members, officers, directors, employees and direct or indirect investors and any of the foregoing Persons’ agents or other
representatives (including, without limitation, those retained in connection with the transactions contemplated by this Agreement) (collectively, the “Indemnitees”) from and against any and all actions, causes of action, suits,
claims, losses, costs, penalties, fees, liabilities and damages, and expenses in connection therewith (irrespective of whether any such Indemnitee is a party to the action for which indemnification hereunder is sought), and including reasonable
attorneys’ fees and disbursements (the “Indemnified Liabilities”), incurred by any Indemnitee as a result of, or arising out of, or relating to (a) any misrepresentation or breach of any representation or warranty made by
the Company in any of the Transaction Documents, (b) any breach of any covenant, agreement or obligation of the Company contained in any of the Transaction Documents or (c) any cause of action, suit or claim brought or made against such
Indemnitee by a third party (including for these purposes a derivative action brought on behalf of the Company or the Subsidiaries) and arising out of or resulting from (i) the execution, delivery, performance or enforcement of any of the
Transaction Documents, (ii) any transaction financed or to be financed in whole or in part, directly or indirectly, with the proceeds of the issuance of the Common Shares, (iii) any disclosure properly made pursuant to Section 4(h) or
(iv) the status of such Buyer or holder of the Common Shares as an investor in the Company pursuant to the transactions contemplated by the Transaction Documents. To the extent that the foregoing undertaking by the Company may be unenforceable
for any reason, the Company shall make the maximum contribution to the payment and satisfaction of each of the Indemnified Liabilities which is permissible under applicable law. Except as otherwise set forth herein, the mechanics and procedures with
respect to the rights and obligations under this Section 9(k) shall be the same as those set forth in Section 6 of the Registration Rights Agreement.
(l) Construction. The language used in this Agreement will be deemed to be the language chosen by the parties to express their mutual intent, and no rules of strict construction will be applied
against any party.
(m) Remedies. Each Buyer and each holder of any Common Shares shall have all rights and remedies
set forth in the Transaction Documents and all rights and remedies which such holders have been granted at any time under any other agreement or contract and all of the rights which such holders have under any law. Any Person having any rights under
any provision of this Agreement shall be entitled to enforce such rights specifically (without posting a bond or other security), to recover damages by reason of any breach of any provision of this Agreement and to exercise all other rights granted
by law. Furthermore, the Company recognizes that in the event that it fails to perform, observe, or discharge any or all of its obligations under the
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Transaction Documents, any remedy at law may prove to be inadequate relief to the Buyers. The Company therefore agrees that the Buyers shall be entitled to seek specific performance and/or
temporary, preliminary and permanent injunctive or other equitable relief from any court of competent jurisdiction in any such case without the necessity of proving actual damages and without posting a bond or other security.
(n) Withdrawal Right. Notwithstanding anything to the contrary contained in (and without limiting any similar provisions of) the
Transaction Documents, whenever any Buyer 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 such Buyer 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
(o) Payment Set Aside; Currency. To the extent that the Company makes a payment or payments to any Buyer hereunder or pursuant to
any of the other Transaction Documents or any of the Buyers enforce or exercise their rights hereunder or 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, foreign, 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. Unless otherwise expressly indicated, all dollar amounts referred to in this Agreement and the other Transaction Documents are in United States Dollars
(“U.S. Dollars”), and all amounts owing under this Agreement and all other Transaction Documents shall be paid in U.S. Dollars. All amounts denominated in other currencies (if any) shall be converted in the U.S. Dollar
equivalent amount in accordance with the Exchange Rate on the date of calculation. “Exchange Rate” means, in relation to any amount of currency to be converted into U.S. Dollars pursuant to this Agreement, the U.S. Dollar
exchange rate as published in the Wall Street Journal on the relevant date of calculation.
(q) Independent Nature of
Buyers’ Obligations and Rights. The obligations of each Buyer under the Transaction Documents are several and not joint with the obligations of any other Buyer, and no Buyer shall be responsible in any way for the performance of the
obligations of any other Buyer under any Transaction Document. Nothing contained herein or in any other Transaction Document, and no action taken by any Buyer pursuant hereto or thereto, shall be deemed to constitute the Buyers as, and the Company
acknowledges that the Buyers do not so constitute, a partnership, an association, a joint venture or any other kind of group or entity, or create a presumption that the Buyers are in any way acting in concert or as a group or entity with respect to
such obligations or the transactions contemplated by the Transaction Documents or any matters, and the Company acknowledges that the Buyers are not acting in concert or as a group, and the Company shall not assert any such claim, with respect to
such obligations or the transactions contemplated by the Transaction Documents. The decision of each Buyer to purchase Common Shares pursuant to the Transaction Documents has been made by such Buyer independently of any other Buyer. Each Buyer
acknowledges that no other Buyer has acted as
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agent for such Buyer in connection with such Buyer making its investment hereunder and that no other Buyer will be acting as agent of such Buyer in connection with monitoring such Buyer’s
investment in the Common Shares or enforcing its rights under the Transaction Documents. The Company and each Buyer confirms that each Buyer has independently participated with the Company and the Subsidiaries in the negotiation of the transaction
contemplated hereby with the advice of its own counsel and advisors. Each Buyer shall be entitled to independently protect and enforce its rights, including, without limitation, the rights arising out of this Agreement or out of any other
Transaction Documents, and it shall not be necessary for any other Buyer to be joined as an additional party in any proceeding for such purpose. The use of a single agreement to effectuate the purchase and sale of the Common Shares contemplated
hereby was solely in the control of the Company, not the action or decision of any Buyer, and was done solely for the convenience of the Company and the Subsidiaries and not because it was required or requested to do so by any Buyer. It is expressly
understood and agreed that each provision contained in this Agreement and in each other Transaction Document is between the Company, each Subsidiary and a Buyer, solely, and not between the Company, each Subsidiary and the Buyers collectively and
not between and among the Buyers.
(r) Judgment Currency.
(i) If for the purpose of obtaining or enforcing judgment against the Company in any court in any jurisdiction it becomes
necessary to convert into any other currency (such other currency being hereinafter in this Section 9(r) referred to as the “Judgment Currency”) an amount due in U.S. Dollars under this Agreement or any other Transaction
Document, the conversion shall be made at the Exchange Rate prevailing on the Trading Day immediately preceding: (1) the date of actual payment of the amount due, in the case of any proceeding in the courts of New York or in the courts of any
other jurisdiction that will give effect to such conversion being made on such date or (2) the date on which the foreign court determines, in the case of any proceeding in the courts of any other jurisdiction (the date as of which such
conversion is made pursuant to this Section 9(r)(i) being hereinafter referred to as the “Judgment Conversion Date”).
(ii) If in the case of any proceeding in the court of any jurisdiction referred to in Section 9(r)(i) above, there is a change in the Exchange Rate prevailing between the Judgment Conversion Date and
the date of actual payment of the amount due, the applicable party shall pay such adjusted amount as may be necessary to ensure that the amount paid in the Judgment Currency, when converted at the Exchange Rate prevailing on the date of payment,
will produce the amount of U.S. Dollars which could have been purchased with the amount of Judgment Currency stipulated in the judgment or judicial order at the Exchange Rate prevailing on the Judgment Conversion Date.
(iii) Any amount due from the Company under this provision shall be due as a separate debt and shall not be affected by
judgment being obtained for any other amounts due under or in respect of this Agreement or any other Transaction Document.
[signature pages follow]
31
IN WITNESS WHEREOF, each Buyer and the Company have caused their respective signature
page to this Agreement to be duly executed as of the date first written above.
|
|
|
| COMPANY: |
|
| ARADIGM CORPORATION |
|
|
| By: |
|
/s/ Nancy Pecota |
|
|
Name: Nancy Pecota |
|
|
Title: Vice President, Finance and Chief
Financial Officer
|
IN WITNESS WHEREOF, each Buyer and the Company have caused their respective signature
page to this Agreement to be duly executed as of the date first written above.
|
|
|
| BUYER: |
|
| FIRST EAGLE VALUE IN BIOTECHNOLOGY MASTER FUND, LTD. |
|
|
| By: |
|
/s/ Dan DeClue |
|
|
Name: Dan DeClue |
|
|
Title: Authorized Signatory
|
| TAX ID NO: [OMITTED] |
|
| ADDRESS AND CONTACT INFORMATION
(including for purposes of notice
under the Transaction Documents): |
| c/o: [OMITTED] |
| Street: [OMITTED] |
| City/State/Zip: [OMITTED] |
| Attention: [OMITTED] |
| Tel: [OMITTED] |
| Fax: [OMITTED] |
| E-mail: [OMITTED]
|
| NUMBER OF COMMON SHARES: 20,833,333 |
|
| NAME TO APPEAR ON STOCK CERTIFICATE: FIRST EAGLE
VALUE IN BIOTECHNOLOGY MASTER FUND, LTD. |
| AGGREGATE PURCHASE PRICE FOR BUYER’S COMMON SHARES: $2,499,999.96 |
IN WITNESS WHEREOF, each Buyer and the Company have caused their respective signature
page to this Agreement to be duly executed as of the date first written above.
|
|
|
| BUYER: |
|
| DEF ASSOCIATES LP |
|
|
| By: |
|
/s/ Michael M. Kellen |
|
|
Name: Michael M. Kellen |
|
|
Title: Authorized Signatory |
|
| TAX ID NO: [OMITTED] |
|
| ADDRESS AND CONTACT INFORMATION (including for purposes of notice under the Transaction Documents): |
| c/o: [OMITTED] |
| Street: [OMITTED] |
| City/State/Zip: [OMITTED] |
| Attention: [OMITTED] |
| Tel: [OMITTED] |
| Fax: [OMITTED] |
| E-mail: [OMITTED] |
|
| NUMBER OF COMMON SHARES: 1,041,667 |
|
| NAME TO APPEAR ON STOCK CERTIFICATE: DEF ASSOCIATES LP |
|
| AGGREGATE PURCHASE PRICE FOR BUYER’S COMMON SHARES: $125,000.04 |
IN WITNESS WHEREOF, each Buyer and the Company have caused their respective signature
page to this Agreement to be duly executed as of the date first written above.
|
|
|
| BUYER: |
|
| DEF ASSOCIATES LTD. |
|
|
| By: |
|
/s/ Michael M. Kellen |
|
|
Name: Michael M. Kellen |
|
|
Title: Authorized Signatory |
|
| TAX ID NO: [OMITTED] |
|
| ADDRESS AND CONTACT INFORMATION (including for purposes of notice under the Transaction Documents): |
| c/o: [OMITTED] |
| Street: [OMITTED] |
| City/State/Zip: [OMITTED] |
| Attention: [OMITTED] |
| Tel: [OMITTED] |
| Fax: [OMITTED] |
| E-mail: [OMITTED] |
|
| NUMBER OF COMMON SHARES: 3,125,000 |
|
| NAME TO APPEAR ON STOCK CERTIFICATE: DEF ASSOCIATES LTD. |
|
| AGGREGATE PURCHASE PRICE FOR BUYER’S COMMON SHARES: $375,000.00 |
IN WITNESS WHEREOF, each Buyer and the Company have caused their respective signature
page to this Agreement to be duly executed as of the date first written above.
|
|
|
| BUYER: |
|
| 21 APRIL FUND, LP |
|
|
| By: |
|
/s/ Michael M. Kellen |
|
|
Name: Michael M. Kellen |
|
|
Title: Authorized Signatory |
|
| TAX ID NO: [OMITTED] |
|
| ADDRESS AND CONTACT INFORMATION (including for purposes of notice under the Transaction Documents): |
| c/o: [OMITTED] |
| Street: [OMITTED] |
| City/State/Zip: [OMITTED] |
| Attention: [OMITTED] |
| Tel: [OMITTED] |
| Fax: [OMITTED] |
| E-mail: [OMITTED] |
|
| NUMBER OF COMMON SHARES: 3,333,333 |
|
| NAME TO APPEAR ON STOCK CERTIFICATE: 21 APRIL FUND, LP |
|
| AGGREGATE PURCHASE PRICE FOR BUYER’S COMMON SHARES: $399,999.96 |
IN WITNESS WHEREOF, each Buyer and the Company have caused their respective signature
page to this Agreement to be duly executed as of the date first written above.
|
|
|
| BUYER: |
|
| 21 APRIL FUND, LTD. |
|
|
| By: |
|
/s/ Michael M. Kellen |
|
|
Name: Michael M. Kellen |
|
|
Title: Authorized Signatory |
|
| TAX ID NO: [OMITTED] |
|
| ADDRESS AND CONTACT INFORMATION (including for purposes of notice under the Transaction Documents): |
| c/o: [OMITTED] |
| Street: [OMITTED] |
| City/State/Zip: [OMITTED] |
| Attention: [OMITTED] |
| Tel: [OMITTED] |
| Fax: [OMITTED] |
| E-mail: [OMITTED] |
|
| NUMBER OF COMMON SHARES: 13,333,334 |
|
| NAME TO APPEAR ON STOCK CERTIFICATE: 21 APRIL FUND, LTD. |
|
| AGGREGATE PURCHASE PRICE FOR BUYER’S COMMON SHARES: $1,600,000.08 |
IN WITNESS WHEREOF, each Buyer and the Company have caused their respective signature
page to this Agreement to be duly executed as of the date first written above.
|
|
|
| BUYER: |
|
|
| By: |
|
/s/ Laurence Lytton |
|
|
Laurence Lytton |
|
| TAX ID NO: [OMITTED] |
|
| ADDRESS AND CONTACT INFORMATION (including for purposes of notice under the Transaction Documents): |
| c/o: [OMITTED] |
| Street: [OMITTED] |
| City/State/Zip: [OMITTED] |
| Attention: [OMITTED] |
| Tel: [OMITTED] |
| Fax: [OMITTED] |
| E-mail: [OMITTED] |
|
| NUMBER OF COMMON SHARES: 8,333,333 |
|
| NAME TO APPEAR ON STOCK CERTIFICATE: LAURENCE W. LYTTON |
|
| AGGREGATE PURCHASE PRICE FOR BUYER’S COMMON SHARES: $999,999.96 |
Schedule of Buyers
|
|
|
|
|
|
|
|
|
|
|
| (1) |
|
(2) |
|
(3) |
|
|
(4) |
|
| Buyer |
|
Address and
Contact
Information |
|
Number of
Common
Shares |
|
|
Aggregate
Purchase Price
for
Buyer’s
Common Shares |
|
| FIRST EAGLE VALUE IN BIOTECHNOLOGY MASTER FUND, LTD |
|
[OMITTED] |
|
|
20,833,333 |
|
|
$ |
2,499,999.96 |
|
|
|
|
|
|
|
|
|
|
|
|
| DEF ASSOCIATES LP |
|
[OMITTED] |
|
|
1,041,667 |
|
|
$ |
125,000.04 |
|
|
|
|
|
|
|
|
|
|
|
|
| DEF ASSOCIATES LTD. |
|
[OMITTED] |
|
|
3,125,000 |
|
|
$ |
375,000.00 |
|
|
|
|
|
|
|
|
|
|
|
|
| 21 APRIL FUND, LP |
|
[OMITTED] |
|
|
3,333,333 |
|
|
$ |
399,999.96 |
|
|
|
|
|
|
|
|
|
|
|
|
| 21 APRIL FUND, LTD. |
|
[OMITTED] |
|
|
13,333,334 |
|
|
$ |
1,600.000.08 |
|
|
|
|
|
|
|
|
|
|
|
|
| Laurence W Lytton |
|
[OMITTED] |
|
|
8,333,333 |
|
|
$ |
999,999.96 |
|
|
|
|
|
|
|
|
|
|
|
|
| TOTAL |
|
|
|
|
50,000,000 |
|
|
$ |
6,000,000.00 |
|
|
|
|
|
|
|
|
|
|
|
|
