PREFERRED STOCK AND WARRANT PURCHASE AGREEMENT by and among Access Pharmaceuticals, Inc. and the parties named herein on Schedule 1, as Purchasers November 7, 2007
EXHIBIT
10.23
_____________________________________________________________________________
by
and
among
Access
Pharmaceuticals, Inc.
and
the
parties named herein on Schedule 1, as Purchasers
November
7, 2007
_____________________________________________________________________________
This
PREFERRED
STOCK AND WARRANT PURCHASE AGREEMENT
(this
“Agreement”)
is
dated as of November 7, 2007, among Access Pharmaceuticals, Inc., a Delaware
corporation (the “Company”),
and
the purchasers identified on Schedule
1
hereto
(each a “Purchaser”
and
collectively the “Purchasers”).
WHEREAS,
subject to the terms and conditions set forth in this Agreement and pursuant
to
Section 4(2) of the Securities Act (as defined below), and Rule 506 promulgated
thereunder, the Company desires to issue and sell to the Purchasers, and the
Purchasers, severally and not jointly, desire to purchase from the Company,
in
the aggregate, (i) up to 3,227.3617 shares of the Company’s Series A Cumulative
Convertible Preferred Stock, and (ii) Common Stock Purchase Warrants (the
“Warrants”)
entitling the holders thereof to purchase up to 3,440,882 shares
of
the Company’s Common Stock as more fully set forth herein.
NOW,
THEREFORE, in consideration of the mutual covenants contained in this Agreement,
and for other good and valuable consideration the receipt and adequacy of which
are hereby acknowledged, the Company and each Purchaser agree as
follows:
ARTICLE
I
DEFINITIONS
AND TERMS OF PREFERRED STOCK AND WARRANTS
1.1 Certain
Definitions; Terms of Preferred Stock and Warrants.
In
addition to the terms defined elsewhere in this Agreement, for all purposes
of
this Agreement, the following terms have the meanings indicated in this Section
1.1:
“Action”
shall
have the meaning ascribed to such term in Section
3.1(j).
“Affiliate”
means
any Person that, directly or indirectly through one or more intermediaries,
controls or is controlled by or is under common control with a Person, as such
terms are used in and construed under Rule 144. With respect to a Purchaser,
any
investment fund or managed account that is managed on a discretionary basis
by
the same investment manager as such Purchaser will be deemed to be an Affiliate
of such Purchaser.
“Agreement”
shall
have the meaning ascribed to such term in the Preamble.
“Business
Day”
means
any day except Saturday, Sunday and any day which shall be a federal legal
holiday or a day on which banking institutions in the State of Texas are
authorized or required by law or other governmental action to
close.
“Certificate
of Designation”
shall
have the meaning ascribed to such term in Section 1.2.
“Closing”
shall
have the meaning ascribed to such term in Section 2.1(a).
“Closing
Date”
shall
have the meaning ascribed to such term in Section 2.1(a).
“Closing
Escrow Agreement”
shall
have the meaning ascribed to such term in Section 2.1(b).
2
“Commission”
means
the Securities and Exchange Commission.
“Common
Stock”
means
the common stock of the Company, $0.01 par value per share, and any securities
into which such common stock may hereafter be reclassified.
“Common
Stock Equivalents”
means
any securities of the Company or the Subsidiaries which would entitle the holder
thereof to acquire at any time Common Stock, including without limitation,
any
debt, preferred stock, rights, options, warrants or other instrument that is
at
any time convertible into or exchangeable for, or otherwise entitles the holder
thereof to receive, Common Stock.
“Company”
shall
have the meaning ascribed to such term in the Preamble.
“Conversion
Shares”
means
the shares of Common Stock issuable or issued upon conversion of the Preferred
Stock.
“Disclosure
Schedules”
means
the Disclosure Schedules concurrently delivered herewith.
“Effective
Date”
means
the date that the Registration Statement is first declared effective by the
Commission.
“Environmental
Laws”
shall
have the meaning ascribed to such term in Section 3.1(y).
“Exchange
Act”
means
the Securities Exchange Act of 1934, as amended.
“FDC
Act”
shall
have the meaning ascribed to such term in Section 3.1(m).
“GAAP”
shall
have the meaning ascribed to such term in Section 3.1(h).
“Governmental
Authorizations”
shall
have the meaning ascribed to such term in Section 3.1(m).
“Hazardous
Substances”
shall
have the meaning ascribed to such term in Section 3.1(y).
“Indemnified
Party”
shall
have the meaning ascribed to such term in Section 5.3.
“Indemnifying
Party”
shall
have the meaning ascribed to such term in Section 5.3.
“Intellectual
Property”
shall
have the meaning ascribed to such term in Section 3.1(o).
“Investor
Rights Agreement”
means
the Investor Rights Agreement, dated as of the date of this Agreement, between
the Company and each of the Purchasers, in the form of Exhibit
A
hereto.
“Lien”
means
a
lien, charge, security interest, encumbrance, right of first refusal or other
restriction, except for a lien for current taxes not yet due and payable and
a
minor imperfection of title, if any, not material in nature or amount and not
materially detracting from the value or impairing the use of the property
subject thereto or impairing the operations or proposed operations of the
Company.
3
“Material
Adverse Effect”
shall
have the meaning ascribed to such term in Section 3.1(b).
“Per
Share Purchase Price”
equals
$10,000.
“Person”
means
an individual or corporation, partnership, trust, incorporated or unincorporated
association, joint venture, limited liability company, joint stock company,
government (or an agency or subdivision thereof) or other entity of any kind.
“Placement
Agents”
means
▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, LLC and ▇▇▇▇▇▇ ▇▇▇▇▇ Securities, Inc.
“Placement
Agent Warrants”
shall
mean the common stock purchase warrants to be issued to the Placement Agents
and/or their designees as compensation for services rendered in connection
with
the transaction set forth herein as provided on Schedule
1
attached
hereto, which warrants shall be in the form of Exhibit
D
hereto.
“Preferred
Shares”
means
the shares of Preferred Stock issued to each Purchaser pursuant to this
Agreement.
“Preferred
Stock”
means
the Company’s Series A Cumulative Convertible Preferred Stock, par value $0.01
per share.
“Premises”
shall
have the meaning ascribed to such term in Section 3.1(y).
“Promissory
Notes”
shall
have shall have the meaning ascribed to such term in Section
2.1(c).
“Purchase
Price”
means
the aggregate purchase price paid by each Purchaser for the shares of Preferred
Stock and Warrants purchased by such Purchaser hereunder.
“Purchaser”
shall
have the meaning ascribed to such term in the Preamble.
“Registration
Statement”
means
a
registration statement meeting the requirements set forth in the Investor Rights
Agreement and covering the resale by the Purchasers of the Conversion Shares
and
the Warrant Shares.
“Required
Minimum”
means,
as of any date, the maximum aggregate number of shares of Common Stock then
issued or potentially issuable in the future pursuant to the Transaction
Documents, including any Underlying Shares issuable upon exercise or conversion
in full of all Warrants and shares of Preferred Stock, ignoring any conversion
or exercise limits set forth therein, and assuming that any previously
unconverted shares of Preferred Stock are held until the fifth anniversary
of
the Closing Date and all dividends are paid in shares of Common Stock until
such
fifth anniversary
“Rights”
shall
have the meaning ascribed to such term in Section 3.1(o).
4
“Rule
144”
means
Rule 144 promulgated by the Commission pursuant to the Securities Act, as such
Rule may be amended from time to time, or any similar rule or regulation
hereafter adopted by the Commission having substantially the same effect as
such
Rule.
“SEC
Reports”
shall
have the meaning ascribed to such term in Section 3.1(h).
“Securities”
means
the Preferred Shares, the Conversion Shares, the Warrants and the Warrant
Shares.
“Securities
Act”
means
the Securities Act of 1933, as amended.
“Short
Sales”
means
all “short sales” as defined in Rule 200 of Regulation SHO under the Exchange
Act (but shall not be deemed to include the location and/or reservation of
borrowable shares of Common Stock).
“Subscription
Amount”
means,
as to each Purchaser, the amount set forth beside such Purchaser's name on
Schedule
1
hereto,
in United States dollars and in immediately available funds.
“Subsidiary”
means,
with respect to any entity, any corporation or other organization of which
securities or other ownership interests having ordinary voting power to elect
a
majority of the board of directors or other persons performing similar
functions, are directly or indirectly owned by such entity or of which such
entity is a partner or is, directly or indirectly, the beneficial owner of
50%
or more of any class of equity securities or equivalent profit participation
interests.
“Trading
Day”
means
(i) a day on which the Common Stock is traded on a Trading Market, or (ii)
if
the Common Stock is not listed on a Trading Market, a day on which the Common
Stock is traded on the over-the-counter market, as reported by the OTC Bulletin
Board, or (iii) if the Common Stock is not listed on a Trading Market or quoted
on the OTC Bulletin Board, a day on which the Common Stock is quoted in the
over-the-counter market as reported by Pink Sheets LLC (or any similar
organization or agency succeeding to its functions of reporting prices);
provided, that in the event that the Common Stock is not listed or quoted as
set
forth in (i), (ii) and (iii) hereof, then Trading Day shall mean a Business
Day.
“Trading
Market”
means
the following markets or exchanges on which the Common Stock is listed or quoted
for trading on the date in question: the American Stock Exchange, the New York
Stock Exchange, the Nasdaq National Market, the Nasdaq Capital Market or the
OTC
Bulletin Board.
“Transaction
Documents”
means
this Agreement, the Certificate of Designation, the Investor Rights Agreement,
the Warrants and any other documents or agreements executed in connection with
the transactions contemplated hereunder.
“Underlying
Shares”
means
the shares of Common Stock issued and issuable upon conversion of the Preferred
Stock, upon exercise of the Warrants and issued and issuable in lieu of the
cash
payment of dividends on the Preferred Stock in accordance with the terms of
the
Certificate of Designation.
5
“VWAP”
means,
for any date, the price determined by the first of the following clauses that
applies: (a) if the Common Stock is then listed or quoted on a Trading Market,
the daily volume weighted average price of the Common Stock for such date (or
the nearest preceding date) on the Trading Market on which the Common Stock
is
then listed or quoted as reported by Bloomberg L.P. (based on a Trading Day
from
9:30 a.m. (New York City time) to 4:02 p.m. (New York City time); (v) if the
Common Stock is not then quoted for trading on any Trading Market and if prices
for the Common Stock are then reported in the “Pink Sheets” published by Pink
Sheets, LLC (or a similar organization or agency succeeding to its functions
of
reporting prices), the most recent bid price per share of the Common Stock
so
reported; or (d) in all other cases, the fair market value of a share of
Common Stock as determined by an independent appraiser selected in good faith
by
the Purchasers of a majority in interest of the Securities then outstanding
and
reasonably acceptable to the Company.
“Warrants”
shall
have the meaning ascribed to such term in the recitals hereto. The Placement
Agent Warrants shall also constitute “Warrants” for all purposes hereunder and
the Placement Agents and/or their designees and such other persons or entities
shall constitute “Purchasers” for all purposes hereunder.
“Warrant
Shares”
means
the shares of Common Stock issuable upon exercise of the Warrants.
1.2 Terms
of the Preferred Stock and Warrants.
The
terms and provisions of the Preferred Stock are set forth in the form of
Certificate of Designations of Rights and Preferences of Series A Convertible
Preferred Stock, attached hereto as Exhibit B (the “Certificate
of Designation”).
The
terms and provisions of the Warrants are as set forth in the form of Common
Stock Purchase Warrant, attached hereto as Exhibit
C
(and
Exhibit
D
in the
case of the Placement Agent Warrants).
ARTICLE
II
PURCHASE
AND SALE
2.1 Closing.
(a) The
closing of the transactions contemplated under this Agreement (the “Closing”)
will
take place upon the execution of this Agreement by the Company and the
Purchasers immediately following satisfaction or waiver of the conditions set
forth in Sections 2.2 and 2.3 (other than those conditions which by their terms
are not to be satisfied or waived until the Closing), at the offices of ▇▇▇▇▇▇
and ▇▇▇▇ LLP, ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ (or remotely via exchange
of documents and signatures) or at such other place or day as may be mutually
acceptable to the Purchasers and the Company. The date on which the Closing
occurs is the “Closing
Date”.
(b) At
the
Closing, the Purchasers shall purchase, severally and not jointly, and the
Company shall issue and sell, in the aggregate, 3,227.3617 shares of Preferred
Stock and Warrants to purchase 3,440,882 shares of Common Stock. Each Purchaser
shall purchase from the Company, and the Company shall issue and sell to each
Purchaser, a number of Preferred Shares equal to such Purchaser's Subscription
Amount divided by the Per Share Purchase Price and a Warrant to purchase 50%
of
the number of Conversion Shares into which the Preferred Shares purchased by
such Purchaser are initially convertible. Except to the extent paid in the
form
of surrender and cancellation of Promissory Notes (as defined below) pursuant
to
Section 2.1(c), the Subscription Amount paid by each Purchaser shall be placed
in escrow pending the Closing pursuant to a Closing Escrow Agreement among
the
Company, SCO Capital Partners LLC and ▇▇▇▇▇▇ and ▇▇▇▇ LLP (the “Escrow
Agent”),
which
agreement shall be in the form attached hereto as Exhibit
E
(the
“Closing
Escrow Agreement”).
6
(c) All
or a
portion of the Subscription Amount payable by certain Purchasers for the
Preferred Stock and Warrants purchased pursuant to this Agreement shall be
payable by the surrender and cancellation of promissory notes of the Company
held by such Purchasers, representing an aggregate principal amount of
$10,015,000 plus accrued and unpaid interest thereon and described next to
such
Purchaser’s name in Schedule
1
hereto
(the “Promissory
Notes”),
with
the value of such Promissory Notes toward such Purchaser’s Subscription Amount
also described in Schedule
1.
The
value of each Promissory Note toward the Subscription Amount shall be determined
according to whether the Promissory Note is an “A” Promissory Note (a
“Category
A Note”)
or a
“B” Promissory Note (a “Category
B Note”),
in
each case, as set forth on Schedule
1
under
the heading “Promissory Note Category”. Category A Notes shall be valued toward
each applicable Purchaser’s Subscription Amount at a dollar amount equal to (i)
the number of shares of Common Stock into which such Category A Note is
convertible immediately prior to the Closing (without giving effect to any
limitations on beneficial ownership contained therein) multiplied by (ii) the
Conversion Value (as defined in the Certificate of Designation); provided that,
notwithstanding any other provision of this Agreement, the Warrants issuable
to
the Category A Note holders in respect of Category A Notes exchanged by them
shall be exercisable for a number of shares of Common Stock determined as if
the
principal and interest on such Category A Notes were exchanged on a
dollar-for-dollar basis and as set forth next to the name of such Category
A
Note holder on Schedule
1.
Category B Notes shall be valued toward each applicable Purchaser’s Subscription
Amount at a dollar amount equal to the outstanding principal amount of such
Category B Note plus all accrued and unpaid interest thereon. Each Purchaser
surrendering Promissory Notes for cancellation in payment of any portion of
such
Purchaser’s Subscription Amount hereby agrees that such Promissory Notes shall
be cancelled and that all liens held by such Purchaser in connection with such
Promissory Notes shall be terminated, in each case, as of the
Closing.
2.2 Conditions
to Obligations of Purchasers to Effect the Closing.
The
obligations of each Purchaser to effect the Closing and the transactions
contemplated by this Agreement shall be subject to the satisfaction at or prior
to the Closing of each of the following conditions, any of which may be waived,
in writing, by such Purchaser:
(a) At
the
Closing (unless otherwise specified below) the Company shall deliver or cause
to
be delivered to each Purchaser the following:
(i)
this
Agreement, duly executed by the Company;
(ii)
a
certificate evidencing a number of Preferred Shares equal to such Purchaser's
Subscription Amount divided by the Per Share Purchase Price as set forth on
Schedule
1
hereto,
registered in the name of such Purchaser;
7
(iii)
a
Warrant, registered in the name of such Purchaser, pursuant to which such
Purchaser shall have the right to acquire up to the number of shares of Common
Stock equal to 50% of the shares of Common Stock initially issuable upon
conversion of the Preferred Shares to be issued to such Purchaser at such
Closing (except with respect to Warrants issued upon exchange of Category A
Notes, the number of which shall be determined in accordance with Section
2.1(c)), as set forth on Schedule
1
hereto;
(iv)
the
Investor Rights Agreement, duly executed by the Company;
(v)
a
legal opinion of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ LLP, counsel
to the Company, in the form of Exhibit
F
hereto;
(vii)
a
certificate of the Secretary of the Company (the “Secretary’s
Certificate”),
attaching a true copy of the Certificate of Incorporation and Bylaws of the
Company, as amended to the Closing Date, and attaching true and complete copies
of the resolutions of the Board of Directors of the Company authorizing the
execution, delivery and performance of this Agreement and the other Transaction
Documents; and
(vii) evidence
satisfactory to the Purchasers that the Certificate of Designation was duly
filed with, and accepted by, the Secretary of State of the State of
Delaware.
(b) The
Company shall have entered into the Closing Escrow Agreement.
(c) All
representations and warranties of the Company contained herein shall remain
true
and correct as of the Closing Date as though such representations and warranties
were made on such date (except those representations and warranties that address
matters only as of a particular date will remain true and correct as of such
date).
(d) All
of
the Promissory Notes shall have been surrendered for cancellation in partial
payment of the Subscription Amount for the Purchasers holding such
notes;
(e) As
of the
Closing Date, there shall have been no Material Adverse Effect with respect
to
the Company since the date hereof.
(f) From
the
date hereof to the Closing Date, trading in the Common Stock shall not have
been
suspended by the Commission (except for any suspension of trading of limited
duration agreed to by the Company, which suspension shall be terminated prior
to
the Closing), and, at any time prior to the Closing Date, trading in securities
generally as reported by Bloomberg Financial Markets shall not have been
suspended or limited, or minimum prices shall not have been established on
securities whose trades are reported by such service, or on any Trading Market,
nor shall a banking moratorium have been declared either by the United States
or
New York State authorities.
(g)
All
Purchasers surrendering Promissory Notes for cancellation in payment of any
portion of their Subscription Amount shall have executed this
Agreement.
(i) The
minimum aggregate cash Subscription Amount hereunder shall be
$7,500,000.
8
2.3. Conditions
to Obligations of the Company to Effect the Closing.
The
obligations of the Company to effect the Closing and the transactions
contemplated by this Agreement shall be subject to the satisfaction at or prior
to the Closing of each of the following conditions, any of which may be waived,
in writing, by the Company.
(a)
At
the Closing, each Purchaser shall deliver or cause to be delivered to the
Company the following:
(i)
this
Agreement, duly executed by such Purchaser;
(ii)
such
Purchaser's Subscription Amount, as applicable, (A) by wire transfer of
immediately available funds as provided in the Closing Escrow Agreement and/or
(B) in the case of Purchasers paying all or a portion of their Subscription
Amount by the cancellation of the Promissory Notes held by them, by the
cancellation of such Promissory Notes pursuant to Section 2.1(c);
and
(iii)
the
Investor Rights Agreement, duly executed by such Purchaser.
(b) All
representations and warranties of each of the Purchasers contained herein shall
remain true and correct as of the Closing Date as though such representations
and warranties were made on such date.
(c) The
Certificate of Designation shall have been duly filed with, and accepted by,
the
Secretary of State of the State of Delaware.
ARTICLE
III
REPRESENTATIONS
AND WARRANTIES
3.1 Representations
and Warranties of the Company.
Except
as
set forth under the corresponding section of the Disclosure Schedules delivered
concurrently herewith, the Company hereby makes the following representations
and warranties as of the date hereof and as of the Closing Date to each
Purchaser:
(a)
Subsidiaries.
Except
as listed in Schedule 3.1(a), the Company has no direct or indirect
Subsidiaries.
(b)
Organization
and Qualification.
Each of
the Company and the Subsidiaries is an entity duly incorporated or otherwise
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation or organization (as applicable), with the
requisite corporate power and authority to own and use its properties and assets
and to carry on its business as currently conducted. Neither the Company nor
any
Subsidiary is in violation of any of the provisions of its respective
certificate or articles of incorporation, bylaws or other organizational or
charter documents. Each of the Company and the Subsidiaries is duly qualified
to
conduct business and is in good standing as a foreign corporation or other
entity in each jurisdiction in which the nature of the business conducted or
property owned by it makes such qualification necessary, except where the
failure to be so qualified or in good standing, as the case may be, would not
have or result in (i) a material adverse effect on the legality, validity or
enforceability of any Transaction Document, (ii) a material adverse effect
on
the business or financial condition of the Company and the Subsidiaries, taken
as a whole, or (iii) a material adverse effect on the Company's ability to
perform in any material respect on a timely basis its obligations under any
Transaction Document (any of (i), (ii) or (iii), a “Material
Adverse Effect”).
9
(c)
Authorization;
Enforceability.
The
Company has the requisite corporate power and authority to enter into and to
consummate the transactions contemplated by each of the Transaction Documents
and otherwise to carry out its obligations thereunder. The execution and
delivery of each of the Transaction Documents by the Company and the
consummation by it of the transactions contemplated thereby (including, but
not
limited to, the sale and delivery of the Preferred Stock and Warrants) have
been
duly authorized by all necessary corporate action on the part of the Company
and
no further corporate action is required by the Company in connection therewith.
The issuance and delivery of the Conversion Shares upon conversion of the
Preferred Stock and the Warrant Shares upon exercise of the Warrants have been
duly authorized by all necessary action on the part of the Company and no
further action is required by the Company in connection therewith. Each
Transaction Document has been (or upon delivery will have been) duly executed
by
the Company and, when delivered in accordance with the terms hereof, will
constitute the valid and binding obligation of the Company enforceable against
the Company in accordance with its terms, subject to laws of general application
relating to bankruptcy, insolvency, reorganization, moratorium or other similar
laws affecting creditors’ rights generally and rules of law governing specific
performance, injunctive relief, or other equitable remedies.
(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 thereby
do
not and will not (i) conflict with or violate any provision of the Company's
or
any Subsidiary's certificate or articles of incorporation, bylaws or other
organizational or charter documents, or (ii) conflict with, or constitute a
default (or an event that with notice or lapse of time or both would become
a
default) under, or give to others any rights of termination, amendment,
acceleration or cancellation (with or without notice, lapse of time or both)
of,
any agreement, credit facility, debt or other instrument (evidencing a Company
or Subsidiary debt or otherwise) or other understanding to which the Company
or
any Subsidiary is a party or by which any property or asset of the Company
or
any Subsidiary is bound or affected, or (iii) result in a violation of any
law,
rule, regulation, order, judgment, injunction, decree or other restriction
of
any court or governmental authority to which the Company or a Subsidiary is
subject (including federal and state securities laws and regulations), or by
which any property or asset of the Company or a Subsidiary is bound or affected,
except, in the cases of clause (ii), where such conflict, default or violation
would not have or result in a Material Adverse Effect.
(e)
Filings,
Consents and Approvals.
The
Company is not required to obtain any consent, waiver, authorization or order
of, give any notice to, or make any filing or registration with, any court
or
other federal, state, local or other governmental authority or other Person
in
connection with the execution, delivery and performance by the Company of the
Transaction Documents, other than (i) the filing with the Commission of the
Registration Statement, the application(s) to each Trading Market for the
listing of the Conversion Shares and Warrant Shares for trading thereon in
the
time and manner required thereby, Form D and applicable Blue Sky filings, (ii)
such as have already been obtained or such exemptive filings as are required
to
be made under applicable securities laws and (iii) the filing of the Certificate
of Designation with the Secretary of State of the State of
Delaware.
10
(f)
Issuance
of the Securities.
The
Securities are duly authorized and, when issued and paid for in accordance
with
the Transaction Documents, will be duly and validly issued, fully paid and
nonassessable, free and clear of all Liens, other than any Liens created by
or
imposed on the holders thereof through no action of the Company. The Company
has
reserved from its duly authorized capital stock (i) the maximum number of shares
of Preferred Stock issuable pursuant to this Agreement and (ii) the maximum
number of shares of Common Stock issuable upon conversion of the Preferred
Stock
and exercise of the Warrants.
(g)
Capitalization.
(i) The
authorized and outstanding capitalization of the Company is set forth on
Schedule 3.1(g) hereto. All shares of the Company’s issued and outstanding
capital stock have been duly authorized, are validly issued and outstanding,
and
are fully paid and nonassessable. No securities issued by the Company from
March
1, 2002 to the date hereof were issued in violation of any statutory or common
law preemptive rights. There are no dividends which have accrued or been
declared but are unpaid on the capital stock of the Company. All taxes required
to be paid by the Company in connection with the issuance and any transfers
of
the Company’s capital stock have been paid. The holders of the Company’s Common
Stock have certain rights under the company’s Rights Agreement dated as of
October 31, 2001 by and between the Company and American Stock Transfer as
Rights Agent. All outstanding securities of the Company have been issued in
all
material respects in accordance with the provisions of all applicable securities
and other laws.
(ii) No
Person
has any right of first refusal, preemptive right, right of participation, or
any
similar right to participate in the transactions contemplated by the Transaction
Documents. Except as a result of the purchase and sale of the Securities and
except for employee and director stock options under the Company's equity
compensation plans and as set forth on Schedule 3.1(h)(ii) hereto, there are
no
outstanding options, warrants, rights to subscribe to, calls or commitments
of
any character whatsoever relating to, or securities, rights or obligations
convertible into or exchangeable for, or giving any Person any right to
subscribe for or acquire, any shares of Common Stock, or contracts, commitments,
understandings or arrangements by which the Company or any Subsidiary is or
may
become bound to issue additional shares of Common Stock, or securities or rights
convertible or exchangeable into shares of Common Stock. The issue and sale
of
the Securities will not obligate the Company to issue shares of Common Stock
or
other securities to any Person (other than the Purchasers) and will not result
in a right of any holder of Company securities other than the Purchasers to
adjust the exercise, conversion, exchange or reset price under such
securities.
(h) SEC
Reports; Financial Statements; Liabilities.
(i) The
Company has filed all reports required to be filed by it under the Securities
Act and the Exchange Act, including pursuant to Section 13(a) or 15(d) of the
Exchange Act, for the 24 months preceding the date hereof (or such shorter
period as the Company was required by law to file such material) (the foregoing
materials, including the exhibits thereto, being collectively referred to herein
as the “SEC
Reports”)
on a
timely basis or has received a valid extension of such time of filing and has
filed any such SEC Reports prior to the expiration of any such extension. As
of
their respective filing dates, the SEC Reports complied in all material respects
with the requirements of the Securities Act and the Exchange Act, as the case
may be, and the rules and regulations of the Commission promulgated thereunder,
as applicable, and none of the SEC Reports, as of their respective filing dates,
contained any untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading.
11
(ii) The
Company’s (A) audited financial statements for the fiscal years ended December
31, 2006 and 2005 included in the Company’s annual reports on Form 10-KSB and
Form 10-K, respectively, filed with the Commission and (B) the financial
statements included in the Company’s quarterly reports on Form 10-QSB filed with
the Commission for the first two fiscal quarters of 2007 comply with applicable
accounting requirements and the rules and regulations of the Commission with
respect thereto as in effect at the time of filing of such reports. Such
financial statements have been prepared in accordance with generally accepted
accounting principles in the United States, applied on a consistent basis during
the periods involved (“GAAP”),
except as may be otherwise specified in such financial statements or the notes
thereto and except that unaudited financial statements may not contain all
footnotes required by GAAP, subject to normal year-end audit adjustments. Such
financial statements fairly present in all material respects the financial
position of the Company and its consolidated subsidiaries, if any, as of and
for
the dates thereof and the results of operations and cash flows for the periods
then ended, subject, in the case of unaudited statements, to normal year-end
audit adjustments.
(iii) Except
for liabilities and obligations incurred since June 30, 2007 in the ordinary
course of business, consistent with past practice, as of the date hereof: (i)
the Company and its Subsidiaries do not have any material liabilities or
obligations (absolute, accrued, contingent or otherwise) and (ii) there has
not
been any aspect of the prior or current conduct of the business of the Company
or its Subsidiaries which may form the basis for any material claim by any
third
party which if asserted could result in a Material Adverse Effect.
(i)
Material
Changes.
Except
as set forth on Schedule 3.1(i), since June 30, 2007, the Company has conducted
its business only in the ordinary course, consistent with past practice, and
since such date there has not occurred:
(i) any
event, occurrence or development that has had or that could reasonably be
expected to result in a Material Adverse Effect on the Company or any of its
Subsidiaries;
(ii) any
amendments or changes in the charter documents of the Company and its
Subsidiaries;
(iii) any:
(A)
incurrence, assumption or guarantee by the Company or its Subsidiaries of any
debt for borrowed money other than (i) equipment leases made in the ordinary
course of business, consistent with past practice and (ii) any such incurrence,
assumption or guarantee with respect to an amount of $25,000 or less that has
been disclosed in the SEC Reports;
12
(B)
other
than as set forth on Schedule 3.1(i)(iii)(A) hereto, issuance or sale of any
securities convertible into or exchangeable for securities of the Company other
than to directors, employees and consultants pursuant to existing equity
compensation or stock purchase plans of the Company;
(C)
issuance or sale of options or other rights to acquire from the Company or
its
Subsidiaries, directly or indirectly, securities of the Company or any
securities convertible into or exchangeable for any such securities, other
than
options issued to directors, employees and consultants in the ordinary course
of
business, consistent with past practice;
(D)
issuance or sale of any stock, bond or other corporate security other than
to
directors, employees and consultants pursuant to existing equity compensation
or
stock purchase plans of the Company;
(E)
discharge or satisfaction of any material Lien;
(F)
declaration or making any payment or distribution to stockholders or purchase
or
redemption of any share of its capital stock or other security other than to
directors, officers and employees of the Company or its Subsidiaries as
compensation for services rendered to the Company or its Subsidiary (as
applicable) or for reimbursement of expenses incurred on behalf of the Company
or its Subsidiary (as applicable);
(G)
sale,
assignment or transfer of any of its intangible assets except in the ordinary
course of business, consistent with past practice, or cancellation of any debt
or claim except in the ordinary course of business, consistent with past
practice;
(H)
waiver of any right of substantial value whether or not in the ordinary course
of business;
(I)
material change in officer compensation, except in the ordinary course of
business and consistent with past practice; or
(J)
other
commitment (contingent or otherwise) to do any of the foregoing.
(iv) other
than as set forth on Schedule 3(i)(iv) hereto, any creation, sufferance or
assumption by the Company or any of its Subsidiaries of any Lien on any asset
or
any making of any loan, advance or capital contribution to or investment in
any
Person, in an aggregate amount which exceeds $25,000 outstanding at any
time;
13
(v) any
entry
into, amendment of, relinquishment, termination or non-renewal by the Company
or
its Subsidiaries of any material contract, license, lease, transaction,
commitment or other right or obligation, other than in the ordinary course
of
business, consistent with past practice; or
(vi)
other than as set forth on Schedule 3(i)(vi) hereto, any transfer or grant
of a
right with respect to the patents, trademarks, trade names, service marks,
trade
secrets, copyrights or other intellectual property rights owned or licensed
by
the Company or its Subsidiaries, except as among the Company and its
Subsidiaries.
(j)
Litigation.
There
is no action, suit, inquiry, notice of violation, proceeding or, to the
knowledge of the Company, investigation pending nor, to the knowledge of the
Company, is any of the above threatened against the Company, any Subsidiary
or
any of their respective properties before or by any court, arbitrator,
governmental or administrative agency or regulatory authority (federal, state,
county, local or foreign) (collectively, an “Action”)
which
(i) adversely affects or challenges the legality, validity or enforceability
of
any of the Transaction Documents or the Securities or (ii) could, if there
were
an unfavorable decision, have or result in a Material Adverse Effect. Neither
the Company nor any Subsidiary, nor, to the knowledge of the Company, any
director or officer thereof, is or has been the subject of any Action involving
a claim of violation of or liability under federal or state securities laws
or a
claim of breach of fiduciary duty within the past five (5) years. To the
knowledge of the Company, there has not been and there is not pending or
contemplated, any investigation by the Commission involving the Company or
any
current or former director or officer of the Company. The Commission has not
issued any stop order or other order suspending the effectiveness of any
registration statement filed by the Company or any Subsidiary under the Exchange
Act or the Securities Act within the past eight (8) years.
(k)
Labor
Relations.
No
material labor dispute exists or, to the knowledge of the Company, is imminent
with respect to any of the employees of the Company which could have or result
in a Material Adverse Effect.
(l)
Compliance.
Neither
the Company nor any Subsidiary (i) is in default under or in violation of (and
no event has occurred that has not been waived that, with notice or lapse of
time or both, would result in a default by the Company or any Subsidiary under),
nor has the Company or any Subsidiary received notice of a claim that it is
currently in default under or that it is in violation of, any indenture, loan
or
credit agreement or any other agreement or instrument to which it is a party
or
by which it or any of its properties is bound (whether or not such default
or
violation has been waived), (ii) is in violation of any order of any court,
arbitrator or governmental body, or (iii) is or has been in violation of any
statute, rule or regulation of any governmental authority, including without
limitation all foreign, federal, state and local laws applicable to its
business, except in the case of clauses (i) and (iii) as would not have or
reasonably be expected to result in a Material Adverse Effect.
(m)
Licenses;
Compliance With FDA and Other Regulatory Requirements.
(i)
The
Company holds all material authorizations, consents, approvals, franchises,
licenses and permits required under applicable law or regulation for the
operation of the business of the Company and its Subsidiaries as presently
operated (the “Governmental
Authorizations”).
All
the Governmental Authorizations have been duly issued or obtained and are in
full force and effect, and the Company and its Subsidiaries are in material
compliance with the terms of all the Governmental Authorizations. The Company
and its Subsidiaries have not engaged in any activity that, to their knowledge,
would cause revocation or suspension of any such Governmental Authorizations.
Neither the execution, delivery nor performance of this Agreement shall
adversely affect the status of any of the Governmental
Authorizations.
14
(ii) Without
limiting the generality of the representations and warranties made in
sub-paragraph (i) above, the Company represents and warrants that (i) the
Company and each of its Subsidiaries is in material compliance with all
applicable provisions of the United States Federal Food, Drug, and Cosmetic
Act
and the rules and regulations promulgated thereunder (the “FDC
Act”)
and
equivalent laws, rules and regulations in jurisdictions outside the United
States in which the Company or its Subsidiaries do business, (ii) its products
and those of each of its Subsidiaries that are in the Company’s control are not
adulterated or misbranded and are in lawful distribution, (iii) all of the
products marketed by and within the control of the Company comply in all
material respects with any conditions of approval and the terms of the
application by the Company to the appropriate Regulatory Authorities, (iv)
no
Regulatory Authority has initiated legal action with respect to the
manufacturing of the Company’s products, such as seizures or required recalls,
and the Company is in compliance with applicable good manufacturing practice
regulations, (v) its products are labeled and promoted by the Company and its
representatives in substantial compliance with the applicable terms of the
marketing applications submitted by the Company to the Regulatory Authorities
and the provisions of the FDC Act and foreign equivalents, (vi) all adverse
events that were known to and required to be reported by Company to the
Regulatory Authorities have been reported to the Regulatory Authorities in
a
timely manner, (vii) neither the Company nor any of its Subsidiaries is, to
their knowledge, employing or utilizing the services of any individual who
has
been debarred under the FDC Act or foreign equivalents, (viii) all stability
studies required to be performed for products distributed by the Company or
any
of its Subsidiaries have been completed or are ongoing in material compliance
with the applicable Regulatory Authority requirements, (ix) any products
exported by the Company or any of its Subsidiaries have been exported in
compliance with the FDC Act and (x) the Company and its Subsidiaries are in
compliance in all material respects with all applicable provisions of the
Controlled Substances Act. For purposes of this Section 3.1(m), “Regulatory
Authority”
means
any governmental authority in a country or region that regulates the manufacture
or sale of Company’s products, including, but not limited to, the United States
Food and Drug Administration.
(n)
Title
to Assets.
The
Company and the Subsidiaries do not own any real property, and have good and
marketable title to all personal property owned by them that is material to
the
business of the Company and the Subsidiaries, taken as a whole, in each case
free and clear of all Liens, except those, if any, reflected in the Company’s
financial statements or incurred in the ordinary course of business consistent
with past practice or which would not cause a Material Adverse Effect. Any
real
property and facilities held under lease by the Company and the Subsidiaries
are
held by them under valid, subsisting and enforceable leases (subject to laws
of
general application relating to bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting creditors’ rights generally and rules
of law governing specific performance, injunctive relief, or other equitable
remedies) with which the Company and the Subsidiaries are in material
compliance.
(o) Intellectual
Property.
(i) The
Company or a Subsidiary thereof has the right to use or is the sole and
exclusive owner of all right, title and interest in and to all material foreign
and domestic patents, patent rights, trademarks, service marks, trade names,
brands and copyrights (whether or not registered and, if applicable, including
pending applications for registration) owned, used or controlled by the Company
and its Subsidiaries (collectively, the “Rights”)
and in
and to each material invention, software, trade secret, technology, product,
composition, formula and method of process used by the Company or its
Subsidiaries (the Rights and such other items, the “Intellectual
Property”),
and,
to the Company’s knowledge, has the right to use the same, free and clear of any
claim or conflict with the rights of others (subject to the provisions of any
applicable license agreement) except as would not cause a Material Adverse
Effect;
15
(ii) other
than in the ordinary course of business, no royalties or fees (license or
otherwise) are payable by the Company or its Subsidiaries to any Person by
reason of the ownership or use of any of the Intellectual Property;
(iii) there
have been no written claims made against the Company or its Subsidiaries
asserting the invalidity, abuse, misuse, or unenforceability of any of the
Intellectual Property, and, to the best of the Company’s knowledge, there are no
reasonable grounds for any such claims which would cause a Material Adverse
Effect;
(iv) neither
the Company nor its Subsidiaries have made any claim of any violation or
infringement by others of its rights in the Intellectual Property, and to the
best of the Company’s knowledge, no reasonable grounds for such claims exist;
and
(v) neither
the Company nor its Subsidiaries have received written notice that it is in
conflict with or infringing upon the asserted rights of others in connection
with the Intellectual Property which would cause a Material Adverse
Effect.
(p) Insurance.
The
Company and the Subsidiaries are insured by insurers of recognized financial
responsibility against such losses and risks and in such amounts as are prudent
and customary in the businesses in which the Company and the Subsidiaries are
engaged, including, but not limited to, directors and officers insurance
coverage in the amount set forth on Schedule
3.1(p)
attached
hereto. All of the insurance policies of the Company and its Subsidiaries are
in
full force and effect and are valid and enforceable in accordance with their
terms, and the Company and its Subsidiaries have complied with all material
terms and conditions thereof. Neither the Company nor any Subsidiary has any
reason to believe that it will not be able to renew its existing insurance
coverage as and when such coverage expires or to obtain similar coverage from
similar insurers as may be necessary to continue its business without a
significant increase in cost.
(q) Transactions
With Affiliates and Employees.
Except
as provided in the SEC Reports, none of the officers or directors of the Company
and, to the knowledge of the Company, none of the employees of the Company
is
presently a party to any transaction with the Company or any Subsidiary (other
than for services as employees, officers and directors), including any contract,
agreement or other arrangement providing for the furnishing of services to
or
by, providing for rental of real or personal property to or from, or otherwise
requiring payments to or from any officer, director or such employee or, to
the
knowledge of the Company, any entity in which any officer, director, or any
such
employee has a substantial interest or is an officer, director, trustee or
partner, other than (a) for payment of salary or consulting fees for services
rendered, (b) reimbursement for expenses incurred on behalf of the Company
and
(c) for other employee benefits, including stock option agreements and other
stock awards under any equity compensation plan of the Company.
16
(r)
Internal
Accounting Controls.
The
Company is in material compliance with all provisions of the ▇▇▇▇▇▇▇▇-▇▇▇▇▇
Act
of 2002 which are applicable to it as of the Closing Date. The Company and
each
of the Subsidiaries maintains a system of internal accounting controls
sufficient in the judgment of the Company’s management to provide reasonable
assurance that (i) transactions are executed in accordance with management's
general or specific authorizations, (ii) transactions are recorded as necessary
to permit preparation of financial statements in conformity with GAAP and to
maintain asset accountability, (iii) access to assets is permitted only in
accordance with management's general or specific authorization, and (iv) the
recorded accountability for assets is compared with the existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences. The Company has established disclosure controls and procedures
(as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the Company and
designed such disclosure controls and procedures to ensure that the Company
is
able to collect the information that it is required to disclose in the reports
it files with the Commission and to process, summarize and disclose this
information in the time periods specified in the Commission’s rules. The
Company's certifying officers have evaluated the effectiveness of the Company's
controls and procedures as of June 30, 2007 (such date, the “Evaluation
Date”).
The
Company presented in its Form 10-QSB for the quarter ended June 30, 2007, the
conclusions of the certifying officers about the effectiveness of the disclosure
controls and procedures based on their evaluations as of the Evaluation Date.
Since the Evaluation Date, there have been no significant changes in the
Company's internal control over financial reporting (as such term is defined
in
Exchange Act Rule 13a-15) or, to the Company's knowledge, in other factors
that
could significantly affect the Company's internal controls.
(s)
Certain
Fees.
Except
for fees payable to the Placement Agents, no brokerage or finder's fees or
commissions are or will be payable by the Company to any broker, financial
advisor or consultant, finder, placement agent, investment banker, bank or
other
Person with respect to the transactions contemplated by this Agreement. The
Purchasers shall have no obligation with respect to any fees or with respect
to
any claims made by or on behalf of other Persons for fees of a type contemplated
in this Section that may be due in connection with the transactions contemplated
by this Agreement.
(t)
Private
Placement; Integrated Offering.
Assuming the accuracy of the Purchasers representations and warranties set
forth
in Section 3.2, no registration under the Securities Act is required for the
offer and sale of the Securities by the Company to the Purchasers as
contemplated hereby. The issuance and sale of the Securities hereunder does
not
contravene the rules and regulations of the Trading Market. Neither the Company,
nor any of its Affiliates, nor any Person acting on its or their behalf has,
directly or indirectly, made any offers or sales of any security or solicited
any offers to buy any security, under circumstances that would cause this
offering of the Securities to be integrated with prior offerings by the Company
for purposes of the Securities Act and would as a result require registration
under the Securities Act or trigger 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.
(u)
Charter,
Bylaws and Corporate Records.
The
minute books of the Company and its Subsidiaries contain in all material
respects complete and accurate records of all meetings and other corporate
actions of the board of directors, committees of the board of directors,
incorporators and stockholders of the Company and its Subsidiaries from the
date
of incorporation of each such entity to the date hereof. All material corporate
decisions and actions have been validly made or taken. All corporate books,
including without limitation the share transfer register, comply in all material
respects with applicable laws and regulations and have been regularly
updated.
17
(v)
Registration
Rights.
Except
as set forth in Schedule 3.1(v), no Person has any right to cause the Company
to
effect the registration under the Securities Act of any securities of the
Company.
(w)
Listing
and Maintenance Requirements.
Except
as set forth on Schedule 3(w), the Company has not, in the 12 months preceding
the date hereof, received notice from any Trading Market on which the Common
Stock is or has been listed or quoted to the effect that the Company is not
in
compliance with the listing or maintenance requirements of such Trading Market.
The Company is, and has no reason to believe that it will not in the foreseeable
future continue to be, in compliance with all such listing and maintenance
requirements.
(x) Taxes.
All
tax
returns and tax reports required to be filed with respect to the income,
operations, business or assets of the Company and its Subsidiaries have been
timely filed (or appropriate extensions have been obtained) with the appropriate
governmental agencies in all jurisdictions in which such returns and reports
are
required to be filed, and all of the foregoing as filed are, in all material
respects, correct and complete and, in all material respects, reflect accurately
all liability for taxes of the Company and its Subsidiaries for the periods
to
which such returns relate, and all amounts shown as owing thereon have been
paid. All income, profits, franchise, sales, use, value added, occupancy,
property, excise, payroll, withholding, FICA, FUTA and other taxes (including
interest and penalties), if any, collectible or payable by the Company and
its
Subsidiaries or relating to or chargeable against any of its material assets,
revenues or income or relating to any employee, independent contractor,
creditor, stockholder or other third party through the Closing Date, were fully
collected and paid by such date if due by such date or provided for by adequate
reserves in the financial statements contained in the SEC Reports as of and
for
the periods ended September 30, 2005 (other than taxes accruing after such
date)
and all similar items due through the Closing Date will have been fully paid
by
that date or provided for by adequate reserves, whether or not any such taxes
were reported or reflected in any tax returns or filings. No taxation authority
has sought to audit the records of the Company or any of its Subsidiaries for
the purpose of verifying or disputing any tax returns, reports or related
information and disclosures provided to such taxation authority, or for the
Company’s or any of its Subsidiaries’ alleged failure to provide any such tax
returns, reports or related information and disclosure. No material claims
or
deficiencies have been asserted against or inquiries raised with the Company
or
any of its Subsidiaries with respect to any taxes or other governmental charges
or levies which have not been paid or otherwise satisfied, including claims
that, or inquiries whether, the Company or any of its Subsidiaries has not
filed
a tax return that it was required to file, and, to the best of the Company’s
knowledge, there exists no reasonable basis for the making of any such claims
or
inquiries. Neither the Company nor any of its Subsidiaries has waived any
restrictions on assessment or collection of taxes or consented to the extension
of any statute of limitations relating to taxation.
18
(y) Environmental
Matters. None
of
the premises or any properties owned, occupied or leased by the Company or
its
Subsidiaries (the “Premises”)
has
been used by the Company or the Subsidiaries or, to the Company’s knowledge, by
any other Person, to manufacture, treat, store, or dispose of any substance
that
has been designated to be a “hazardous substance” under applicable Environmental
Laws (hereinafter defined) (“Hazardous
Substances”)
in
violation of any applicable Environmental Laws. To its knowledge, the Company
has not disposed of, discharged, emitted or released any Hazardous Substances
which would require, under applicable Environmental Laws, remediation,
investigation or similar response activity. No Hazardous Substances are present
as a result of the actions of the Company or, to the Company’s knowledge, any
other Person, in, on or under the Premises which would give rise to any
liability or clean-up obligations of the Company under applicable Environmental
Laws. The Company and, to the Company’s knowledge, any other Person for whose
conduct it may be responsible pursuant to an agreement or by operation of law,
are in compliance with all laws, regulations and other federal, state or local
governmental requirements, and all applicable judgments, orders, writs, notices,
decrees, permits, licenses, approvals, consents or injunctions in effect on
the
date of this Agreement relating to the generation, management, handling,
transportation, treatment, disposal, storage, delivery, discharge, release
or
emission of any Hazardous Substance (the “Environmental
Laws”).
Neither the Company nor, to the Company’s knowledge, any other Person for whose
conduct it may be responsible pursuant to an agreement or by operation of law
has received any written complaint, notice, order, or citation of any actual,
threatened or alleged noncompliance with any of the Environmental Laws, and
there is no proceeding, suit or investigation pending or, to the Company’s
knowledge, threatened against the Company or, to the Company’s knowledge, any
such Person with respect to any violation or alleged violation of the
Environmental Laws, and, to the knowledge of the Company, there is no basis
for
the institution of any such proceeding, suit or investigation.
(z)
Disclosure.
The
Company confirms that neither the Company nor any other Person acting on its
behalf and at the direction of the Company, has provided any Purchaser or its
agents or counsel with any information that in the Company’s reasonable
judgment, at the time such information was furnished, constitutes or might
constitute material, non-public information, other than information relating
to
the fact that the Company was considering and engaged in the transactions
contemplated by the Transaction Documents and unless prior thereto such
Purchaser shall have consented in writing to the receipt of such information.
The Company understands and confirms that the Purchasers will rely on the
foregoing representations and covenants in effecting transactions in securities
of the Company. All disclosure provided to the Purchasers regarding the Company,
its business and the transactions contemplated hereby, including the Disclosure
Schedules to this Agreement, furnished by or on behalf of the Company are true
and correct in all material respects and do not contain any untrue statement
of
a material fact or omit to state any material fact necessary in order to make
the statements made therein, in light of the circumstances under which they
were
made, not misleading.
(aa) No
Additional Representations.
Each
Purchaser acknowledges and agrees that the Company does not make and has not
made any representations or warranties with respect to the transactions
contemplated hereby other than those specifically set forth in this Section
3.1
or in any Transaction Document.
(bb)
Poison
Pill.
The
Company and its Board of Directors have taken all necessary action, if any,
in
order to render inapplicable any control share acquisition, business
combination, poison pill (including any distribution under a rights agreement)
or other similar anti-takeover provision under the Company’s Certificate of
Incorporation (or similar charter documents) or the laws of its state of
incorporation that is or could become applicable to the Purchasers as a result
of the Purchasers and the Company fulfilling their obligations or exercising
their rights under this Agreement and the Transaction Documents, including
without limitation the Company's issuance of the Securities and the Purchasers’
ownership of the Securities.
19
(cc) Solvency.
Based on
the consolidated financial condition of the Company as of the Closing Date
after
giving effect to the receipt by the Company of the proceeds from the sale of
the
Securities hereunder, (i) the fair saleable value of the Company’s assets
exceeds the amount that will be required to be paid on or in respect of the
Company’s existing debts and other liabilities (including known contingent
liabilities) as they mature, (ii) the Company’s assets do not constitute
unreasonably small capital to carry on its business as now conducted and as
proposed to be conducted including its capital needs taking into account the
particular capital requirements of the business conducted by the Company, and
projected capital requirements and capital availability thereof, and (iii)
the
current cash flow of the Company, together with the proceeds the Company would
receive, were it to liquidate all of its assets, after taking into account
all
anticipated uses of the cash, would be sufficient to pay all amounts on or
in
respect of its liabilities when such amounts are required to be paid. The
Company does not intend to incur debts beyond its ability to pay such debts
as
they mature (taking into account the timing and amounts of cash to be payable
on
or in respect of its debt). The Company has no knowledge of any facts or
circumstances which lead it to believe that it will file for reorganization
or
liquidation under the bankruptcy or reorganization laws of any jurisdiction
within one year from the Closing Date. Schedule
3.1(cc)
sets
forth as of the date hereof all outstanding secured and unsecured Indebtedness
of the Company or any Subsidiary, or for which the Company or any Subsidiary
has
commitments. For the purposes of this Agreement, “Indebtedness”
means
(a) any liabilities for borrowed money or amounts owed in excess of $50,000
(other than trade accounts payable incurred in the ordinary course of business),
(b) all guaranties, endorsements and other contingent obligations in respect
of
indebtedness of others, whether or not the same are or should be reflected
in
the Company’s balance sheet (or the notes thereto), except guaranties by
endorsement of negotiable instruments for deposit or collection or similar
transactions in the ordinary course of business; and (c) the present value
of
any lease payments
in excess of $50,000 due under leases required to be capitalized in accordance
with GAAP. Neither
the Company nor any Subsidiary is in default with respect to any
Indebtedness.
(dd) Accountants.
The
Company’s accounting firm is set forth on Schedule
3.1(dd)
of the
Disclosure Schedule. To the knowledge and belief of the Company, such accounting
firm (i) is a registered public accounting firm as required by the Exchange
Act
and (ii) shall express its opinion with respect to the financial statements
to
be included in the Company’s Annual Report for the year ending December 31,
2007.
(ee) Seniority.
As of
the Closing Date, no Indebtedness or other claim against the Company is senior
to the Preferred Stock in right of payment, whether with respect to interest
or
upon liquidation or dissolution, or otherwise, other than indebtedness secured
by purchase money security interests (which is senior only as to underlying
assets covered thereby) and capital lease obligations (which is senior only
as
to the property covered thereby).
(ff) No
Disagreements with Accountants and Lawyers.
There
are no disagreements of any kind presently existing, or reasonably anticipated
by the Company to arise, between the Company and the accountants and lawyers
formerly or presently employed by the Company and the Company is current with
respect to any fees owed to its accountants and lawyers which could affect
the
Company’s ability to perform any of its obligations under any of the Transaction
Documents.
20
(gg) Acknowledgment
Regarding Purchasers’ Purchase of Securities.
The
Company acknowledges and agrees that each of the Purchasers is acting solely
in
the capacity of an arm’s length purchaser with respect to the Transaction
Documents and the transactions contemplated thereby. The Company further
acknowledges that no Purchaser is acting as a financial advisor or fiduciary
of
the Company (or in any similar capacity) with respect to the Transaction
Documents and the transactions contemplated thereby and any advice given by
any
Purchaser or any of their respective representatives or agents in connection
with the Transaction Documents and the transactions contemplated thereby is
merely incidental to the Purchasers’ purchase of the Securities. The Company
further represents to each Purchaser that the Company’s decision to enter into
this Agreement and the other Transaction Documents has been based solely on
the
independent evaluation of the transactions contemplated hereby by the Company
and its representatives.
(hh) Acknowledgement
Regarding Purchasers’ Trading Activity.
Notwithstanding anything in this Agreement or elsewhere herein to the contrary,
it is understood and acknowledged by the Company that (i) none of the Purchasers
has been asked to agree by the Company, nor has any Purchaser agreed, to desist
from purchasing or selling, long and/or short, securities of the Company, or
“derivative” securities based on securities issued by the Company or to hold the
Securities for any specified term, (ii) past or future open market or other
transactions by any Purchaser, specifically including, without limitation,
Short
Sales or “derivative” transactions, before or after the closing of this or
future private placement transactions, may negatively impact the market price
of
the Company’s publicly-traded securities, (iii) any Purchaser, and
counter-parties in “derivative” transactions to which any such Purchaser is a
party, directly or indirectly, may presently have a “short” position in the
Common Stock; and (iv) each Purchaser shall not be deemed to have any
affiliation with or control over any arm’s length counter-party in any
“derivative” transaction. The Company further understands and acknowledges that
(a) one or more Purchasers may engage in hedging activities at various times
during the period that the Securities are outstanding, including, without
limitation, during the periods that the value of the Underlying Shares
deliverable with respect to Securities are being determined, and (b) such
hedging activities (if any) could reduce the value of the existing stockholders'
equity interests in the Company at and after the time that the hedging
activities are being conducted. The Company acknowledges that such
aforementioned hedging activities do not constitute a breach of any of the
Transaction Documents.
(ii) Regulation
M Compliance.
The Company has not, and to its knowledge no one acting on its behalf has,
(i)
taken, directly or indirectly, any action designed to cause or to result in
the
stabilization or manipulation of the price of any security of the Company to
facilitate the sale or resale of any of the Securities, (ii) sold, bid for,
purchased, or paid any compensation for soliciting purchases of, any of the
securities of the Company, or (iii) paid or agreed to pay to any Person any
compensation for soliciting another to purchase any other securities of the
Company, other than, in the case of clauses (ii) and (iii), compensation paid
to
the Company’s placement agent in connection with the placement of the
Securities.
21
(jj) No
General Solicitation.
Neither
the Company nor any person acting on behalf of the Company has offered or sold
any of the Securities by any form of general solicitation or general
advertising. The Company has offered the Securities for sale only to the
Purchasers and certain other “accredited investors” within the meaning of Rule
501 under the Securities Act.
(kk) Investment
Company.
The
Company is not, and is not an Affiliate of, and immediately after receipt of
payment for the Securities, will not be or be an Affiliate of, an “investment
company” within the meaning of the Investment Company Act of 1940, as amended.
The Company shall conduct its business in a manner so that it will not become
subject to the Investment Company Act of 1940, as amended.
3.2
Representations
and Warranties of the Purchasers.
Each
Purchaser hereby, for itself and for no other Purchaser, represents and warrants
as of the date hereof and as of the Closing Date to the Company as
follows:
(a)
Organization;
Authority; Enforceability.
Such
Purchaser (other than individuals) is an entity duly organized, validly existing
and in good standing under the laws of the jurisdiction of its organization
with
full power and authority to enter into and to consummate the transactions
contemplated by the Transaction Documents and otherwise to carry out its
obligations thereunder. The execution, delivery and performance by such
Purchaser of the transactions contemplated by this Agreement has been duly
authorized by all necessary corporate or similar action on the part of such
Purchaser. Each Transaction Document to which it is a party has been duly
executed by such Purchaser, and when delivered by such Purchaser in accordance
with the terms hereof, will constitute the valid and legally binding obligation
of such Purchaser, enforceable against it in accordance with its terms, subject
to laws of general application relating to bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting creditors’ rights
generally and rules of law governing specific performance, injunctive relief,
or
other equitable remedies.
(b)
General
Solicitation.
Such
Purchaser is not purchasing the Securities as a result of any advertisement,
article, notice or other communication regarding the Securities published in
any
newspaper, magazine or similar media or broadcast over television or radio
or
presented at any seminar or any other general solicitation or general
advertisement.
(c)
No
Public Sale or Distribution.
Such
Purchaser is (i) acquiring the Preferred Shares and Warrants and (ii) upon
conversion of the Preferred Stock will acquire the Conversion Shares and upon
exercise of the Warrants will acquire the Warrant Shares, as applicable, for
its
own account and not with a view towards, or for resale in connection with,
the
public sale or distribution thereof; provided,
however,
that by
making the representations herein, such Purchaser does not agree to hold any
of
the Securities for any minimum or other specific term and reserves the right
to
dispose of the Securities at any time in accordance with or pursuant to a
registration statement or an exemption under the Securities Act. Such Purchaser
is acquiring the Securities hereunder in the ordinary course of its business.
Such Purchaser does not have any agreement or understanding, directly or
indirectly, with any Person to distribute any of the Securities.
22
(d)
Accredited
Investor Status.
Such
Purchaser is an “accredited investor” as that term is defined in Rule 501(a) of
Regulation D.
(e)
Residency. Such
Purchaser is a resident of the jurisdiction set forth below such Purchaser’s
name on Schedule
1
attached
hereto.
(f)
Reliance
on Exemptions.
Such
Purchaser understands that the Preferred Shares and Warrants 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 Purchaser's
compliance with, the representations, warranties, agreements, acknowledgments
and understandings of such Purchaser set forth herein in order to determine
the
availability of such exemptions and the eligibility of such Purchaser to acquire
the Preferred Shares and Warrants.
(g)
Information.
Such
Purchaser and its advisors, if any, have been furnished with all publicly
available materials (or such materials have been made available to such
Purchaser) relating to the business, finances and operations of the Company
and
such other publicly available materials relating to the offer and sale of the
Preferred Shares and Warrants as have been requested by such Purchaser,
including without limitation the Company’s Form 10-KSB for the period ended
December 31, 2006, Forms 10-QSB for the periods ended March 31, 2007 and June
30, 2007 and Forms 8-K filed by the Company since January 1, 2007. Each
Purchaser acknowledges that it has read and understands the risk factors set
forth in such Form 10-KSB, Forms 10-QSB and Forms 8-K. Neither such review
nor
any other due diligence investigations conducted by such Purchaser or its
advisors, if any, or its representatives shall modify, amend or affect such
Purchaser's right to rely on the Company's representations and warranties
contained herein. Such Purchaser understands that its investment in the
Preferred Shares and Warrants involves a high degree of risk.
(h)
No
Governmental Review.
Such
Purchaser 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 Preferred Shares and Warrants or the fairness or suitability
of the investment in the Preferred Shares and Warrants, nor have such
authorities passed upon or endorsed the merits of the offering of the Preferred
Shares and Warrants.
(i)
Experience
of Such Purchaser.
Such
Purchaser, either alone or together with its representatives, has such
knowledge, sophistication and experience in business and financial matters,
including investing in companies engaged in the business in which the Company
is
engaged, so as to be capable of evaluating the merits and risks of the
prospective investment in the Preferred Shares and Warrants, and has so
evaluated the merits and risks of such investment. Such Purchaser is able to
bear the economic risk of an investment in the Preferred Shares and Warrants
and, at the present time, is able to afford a complete loss of such
investment.
The
Company acknowledges and agrees that each Purchaser does not make
or has not made any representations or warranties with respect to the
transactions contemplated hereby other than those specifically set forth in
this
Section 3.2.
23
ARTICLE
IV
OTHER
AGREEMENTS OF THE PARTIES
4.1 Transfer
Restrictions.
(a) The
Securities may only be disposed of in compliance with state and federal
securities laws. In connection with any transfer of Securities other than
pursuant to an effective registration statement, to the Company, to an Affiliate
of a Purchaser (who is an accredited investor and executes a customary
representation letter) or in connection with a pledge as contemplated in Section
4.1(b), the Company may require the transferor thereof to provide to the Company
an opinion of counsel selected by the transferor and reasonably satisfactory
to
the Company (it being understood that ▇▇▇▇▇▇ and ▇▇▇▇ LLP is reasonably
satisfactory), the form and substance of which opinion shall be reasonably
satisfactory to the Company, to the effect that such transfer does not require
registration of such transferred Securities under the Securities
Act,
provided, however,
that in
the case of a transfer pursuant to Rule 144, no opinion shall be required if
the
transferor provides the Company with a customary seller’s representation letter,
and if such sale is not pursuant to subsection (k) of Rule 144, a customary
broker’s representation letter and a Form 144.
Any such
transferee that agrees in writing to be bound by the terms of this Agreement
and
the Investor Rights Agreement shall have the rights of a Purchaser under this
Agreement and the Investor Rights Agreement. Except as required by federal
securities laws and the securities law of any state or other jurisdiction within
the United States, the Securities may be transferred, in whole or in part,
by
any of the Purchasers at any time. The Company shall reissue certificates
evidencing the Securities upon surrender of certificates evidencing the
Securities being transferred in accordance with this Section
4.1(a).
(b) The
Purchasers agree to the imprinting, so long as is required by this Section
4.1(b), of a legend on any of the Securities in substantially the following
form:
THESE
SECURITIES HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION
OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES
ACT”),
AND,
ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE
EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE
SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR
TO
SUCH EFFECT, SUCH COUNSEL AND THE SUBSTANCE OF SUCH OPINION SHALL BE REASONABLY
ACCEPTABLE TO THE COMPANY. UNLESS PROHIBITED BY APPLICABLE LAW, RULE OR
REGULATION, THESE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE
MARGIN ACCOUNT WITH A REGISTERED BROKER-DEALER OR OTHER LOAN WITH A FINANCIAL
INSTITUTION THAT IS AN “ACCREDITED
INVESTOR”
AS
DEFINED IN RULE 501(a) UNDER THE SECURITIES ACT.
24
The
Company acknowledges and agrees that, unless prohibited by applicable law,
rule
or regulation, a Purchaser may from time to time pledge pursuant to a bona
fide
margin agreement with a registered broker-dealer or grant a security interest
in
some or all of the Securities to a financial institution that is an “accredited
investor” as defined in Rule 501(a) under the Securities Act and, if required
under the terms of such arrangement, such Purchaser may transfer pledged or
secured Securities to the pledgees or secured parties. Such a pledge or transfer
would not be subject to approval of the Company and no legal opinion of legal
counsel of the pledgee, secured party or pledgor shall be required in connection
therewith; provided, however, that such Purchaser shall provide the Company
with
such documentation as is reasonably requested by the Company to ensure that
the
pledge is pursuant to a bona fide margin agreement with a registered
broker-dealer or a security interest in some or all of the Securities to a
financial institution that is an “accredited investor” as defined in Rule 501(a)
under the Securities Act. The Company will execute and deliver such
documentation as a pledgee or secured party of Securities may reasonably request
in connection with a pledge or transfer of the Securities, including the
preparation and filing of any required prospectus supplement under Rule
424(b)(3) under the Securities Act or other applicable provision of the
Securities Act to appropriately amend the list of selling stockholders
thereunder.
(c) Certificates
evidencing the Conversion Shares and the Warrant Shares shall not contain any
legend (including the legend set forth in Section 4.1(b) hereof): (i) while
a
registration statement (including the Registration Statement) covering the
resale of such security is effective under the Securities Act, or (ii) following
any sale of such Underlying Shares pursuant to Rule 144, or (iii) if such
Underlying Shares are eligible for sale under Rule 144(k), or (iv) if such
legend is not required under applicable requirements of the Securities Act
(including judicial interpretations and pronouncements issued by the staff
of
the Commission). The Company shall cause its counsel to issue a legal opinion
to
the Transfer Agent promptly after the Effective Date if required by the Transfer
Agent to effect the removal of the legend hereunder. If all or any shares of
Preferred Stock or any portion of a Warrant is converted or exercised (as
applicable) at a time when there is an effective registration statement to
cover
the resale of the Underlying Shares, or if such Underlying Shares may be sold
under Rule 144(k) or if such legend is not otherwise required under applicable
requirements of the Securities Act (including judicial interpretations and
pronouncements issued by the staff of the Commission) then such Underlying
Shares shall be issued free of all legends. The Company agrees that following
the Effective Date or at such time as such legend is no longer required under
this Section 4.1(c), it will, no later than three Trading Days following the
delivery by a Purchaser to the Company or the Transfer Agent of a certificate
representing Underlying Shares, as applicable, issued with a restrictive legend
(such third Trading Day, the “Legend
Removal Date”),
deliver or cause to be delivered to such Purchaser a certificate representing
such shares that is free from all restrictive and other legends. The Company
may
not make any notation on its records or give instructions to the Transfer Agent
that enlarge the restrictions on transfer set forth in this Section.
Certificates for Underlying Shares subject to legend removal hereunder shall
be
transmitted by the Transfer Agent to the Purchaser by crediting the account
of
the Purchaser’s prime broker with the Depository Trust Company System as
directed by such Purchaser.
(d) In
addition to such Purchaser’s other available remedies, the Company shall pay to
a Purchaser, in cash, as partial liquidated damages and not as a penalty, for
each $1,000 of Underlying Shares (based on the VWAP of the Common Stock on
the
date such Securities are submitted to the Transfer Agent) delivered for removal
of the restrictive legend and subject to Section 4.1(c), $10 per Trading Day
(increasing to $20 per Trading Day 5 Trading Days after such damages have begun
to accrue) for each Trading Day after the Legend Removal Date until such
certificate is delivered without a legend. Nothing herein shall limit such
Purchaser’s right to pursue actual damages for the Company’s failure to deliver
certificates representing any Securities as required by the Transaction
Documents, and such Purchaser shall have the right to pursue all remedies
available to it at law or in equity including, without limitation, a decree
of
specific performance and/or injunctive relief.
25
(e) Each
Purchaser, severally and not jointly, agrees that the removal of the restrictive
legend from certificates representing Securities as set forth in this Section
4.1 is predicated upon the Company's reliance on, and the Purchaser's agreement
that, and each Purchaser hereby agrees that, the Purchaser will not sell any
Securities except pursuant to either the registration requirements of the
Securities Act, including any applicable prospectus delivery requirements,
or an
exemption therefrom.
4.2
Furnishing
of Information.
As
long
as any Purchaser owns Securities, the Company covenants to timely file (or
obtain extensions in respect thereof and file within the applicable grace
period) all reports required to be filed by the Company after the date hereof
pursuant to the Exchange Act. Upon the request of any such holder of Securities,
the Company shall deliver to such holder a written certification of a duly
authorized officer as to whether it has complied with the preceding sentence.
As
long as any Purchaser owns Securities, if the Company is not required to file
reports pursuant to the Exchange Act, it will prepare and furnish to the
Purchasers and make publicly available in accordance with Rule 144(c), such
information as is required for the Purchasers to sell the Securities under
Rule
144. The Company further covenants that it will take such further action as
any
holder of Securities may reasonably request, all to the extent required from
time to time to enable such Person to sell such Securities without registration
under the Securities Act within the limitation of the exemptions provided by
Rule 144.
4.3 Integration.
The
Company shall not sell, offer for sale or solicit offers to buy or otherwise
negotiate in respect of any security (as defined in Section 2 of the Securities
Act) that would be integrated with the offer or sale of the Securities in a
manner that would require the registration under the Securities Act of the
sale
of the Securities to the Purchasers or that would be integrated with the offer
or sale of the Securities for purposes of the rules and regulations of any
Trading Market.
4.4 Publicity.
The
Company shall, by 8:30 a.m. (New York City time) on the Trading Day immediately
following the date hereof, issue a press release disclosing the material terms
of the transactions contemplated hereby, and within two Business Days following
the Closing Date, file a Current Report on Form 8-K, disclosing the transactions
contemplated hereby and make such other filings and notices in the manner and
time required by the Commission. The Company and the Placement Agents shall
consult with each other in issuing any press releases with respect to the
transactions contemplated hereby, and neither the Company nor any Purchaser
nor
any of the Placement Agents shall issue any such press release or otherwise
make
any such public statement without the prior consent of the Company, with respect
to any press release of any Purchaser or any of the Placement Agents, or without
the prior consent of the Placement Agents, with respect to any press release
of
the Company, except if such disclosure is required by applicable law, rule
or
regulation, in which case the disclosing party shall promptly provide the other
party with prior notice of such public statement or communication.
26
4.5 Non-Public
Information.
The
Company covenants and agrees that neither it nor any other Person acting on
its
behalf will provide any Purchaser or its agents or counsel with any information
that the Company believes constitutes material non-public information, unless
prior thereto such Purchaser shall have executed a written agreement regarding
the confidentiality and use of such information. The Company understands and
confirms that each Purchaser shall be relying on the foregoing covenant in
effecting transactions in securities of the Company.
4.6 Use
of Proceeds.
The
Company covenants and agrees that the proceeds from the sale of the Preferred
Stock and Warrants shall be used by the Company for working capital and general
corporate purposes; under no circumstances shall any portion of the proceeds
be
applied to:
(i) accelerated
repayment of debt existing on the date hereof (other than payment of trade
payables in the ordinary course of the Company’s business and consistent with
prior practices);
(ii) the
payment of dividends or other distributions on any capital stock of the Company;
(iii) the
purchase of debt or equity securities of any Person for cash, including the
Company and its Subsidiaries, except in connection with investment of excess
cash in high quality (A1/P1 or better) money market instruments having
maturities of one year or less;
(iv) any
expenditure not directly related to the business of the Company; or
(v) the
redemption of any Company equity or equity-equivalent securities.
4.7 Reservation
of Preferred Stock and Common Stock.
As
of the
date hereof, the Company has reserved and the Company shall continue to reserve
and keep available at all times, free of preemptive rights, a sufficient number
of shares of (a) Preferred Stock for the purpose of enabling the Company to
issue Preferred Shares pursuant to this Agreement and (b) Common Stock for
the
purpose of enabling the Company to issue Conversion Shares issuable upon
conversion of the Preferred Stock and Warrant Shares issuable upon exercise
of
the Warrants. If, on any date, the number of authorized but unissued (and
otherwise unreserved) shares of Common Stock plus the number of shares of
authorized but unissued Common Stock reserved for issuance upon conversion
of
the Preferred Stock and exercise of the Warrants is less than 130% of
(i) the Required Minimum on such date, minus (ii) the number of shares of
Common Stock previously issued pursuant to the Transaction Documents, then
the
Board of Directors shall use commercially reasonable efforts to amend the
Company’s certificate or articles of incorporation to increase the number of
authorized but unissued shares of Common Stock to at least the Required Minimum
at such time (minus the number of shares of Common Stock previously issued
pursuant to the Transaction Documents), as soon as possible and in any event
not
later than the 75th day after such date; provided that the Company will not
be
required at any time to authorize a number of shares of Common Stock greater
than the maximum remaining number of shares of Common Stock that could possibly
be issued after such time pursuant to the Transaction Documents.
27
4.8 Listing
of Common Stock.
The
Company hereby agrees that, from time to time, if the Company applies to have
the Common Stock traded on any Trading Market, it will include in such
application the Conversion Shares and the Warrant Shares, and will take such
other action as is necessary to cause the Conversion Shares and Warrant Shares
to be listed on such Trading Market as promptly as possible.
4.9 Business
Operations.
Until
the earlier of: (i) the third anniversary of the Closing Date and (ii) the
date
that the Purchasers own less than 10% of the Preferred Shares originally issued
pursuant to this Agreement or Conversion Shares issuable upon conversion
thereof, the Company shall comply with the following covenants:
(a) Insurance.
The
Company and its Subsidiaries shall maintain insurance policies such that the
representations contained in the first sentence of Section 3.1(p) hereof
continue to be true and correct and shall, from time to time upon the written
request of the Purchasers, promptly furnish or cause to be furnished to the
Purchasers evidence, in form and substance reasonably satisfactory to the
Purchasers, of the maintenance of all insurance maintained by it.
(b) Corporate
Existence; Licenses.
The
Company shall preserve and maintain and cause its Subsidiaries to preserve
and
maintain their corporate existence and good standing in the jurisdiction of
their incorporation and the rights, privileges and franchises of the Company
and
its Subsidiaries (except, in each case, in the event of a merger or
consolidation in which the Company or its Subsidiaries, as applicable, is not
the surviving entity) in each case where the failure to so preserve or maintain
could have a Material Adverse Effect on the financial condition, business or
operations of the Company and its Subsidiaries taken as a whole. The Company
shall, and shall cause its Subsidiaries to, maintain at all times all material
licenses or permits necessary to the conduct of its business and as required
by
any governmental agency or instrumentality thereof, including without limitation
all Food and Drug Administration clearances and approvals.
(c) Taxes
and Claims.
The
Company and its Subsidiaries shall duly pay and discharge (a) all taxes,
assessments and governmental charges upon or against the Company or its
properties or assets prior to the date on which penalties attach thereto, unless
and to the extent that such taxes are being diligently contested in good faith
and by appropriate proceedings, and appropriate reserves therefor have been
established, and (b) all lawful claims, whether for labor, materials, supplies,
services or anything else which might or could, if unpaid, become a lien or
charge upon the properties or assets of the Company or its Subsidiaries, unless
and to the extent only that the same are being contested in good faith and
by
appropriate proceedings and appropriate reserves therefor have been
established.
28
(d) Affiliate
Transactions.
Except
for transactions approved by the Company’s Audit Committee or a majority of the
disinterested members of the board of directors of the Company, neither the
Company nor any of its Subsidiaries shall enter into any transaction with any
(i) director, officer, employee or holder of more than 5% of the outstanding
capital stock of any class or series of capital stock of the Company or any
of
its Subsidiaries, (ii) member of the immediate family of any such person, or
(iii) corporation, partnership, trust or other entity in which any such person,
or member of the immediate family of any such person, is a director, officer,
trustee, partner or holder of more than 5% of the outstanding capital stock
thereof.
4.10 Securities
Law Compliance.
(a) Securities
Act.
The
Company shall timely prepare and file with the Securities and Exchange
Commission the form of notice of the sale of securities pursuant to the
requirements of Regulation D regarding the sale of the Preferred Stock and
Warrants under this Agreement.
(b) State
Securities Law Compliance -- Sale.
The
Company shall timely prepare and file such applications, consents to service
of
process (but not including a general consent to service of process) and similar
documents and take such other steps and perform such further acts as shall
be
required by the state securities law requirements of each jurisdiction where
a
Purchaser resides, as indicated on Schedule
1,
with
respect to the sale of the Preferred Stock and Warrants under this Agreement.
(c) State
Securities Law Compliance --Resale.
Beginning no later than 30 days following any date, from time to time, on which
the Common Stock is no longer a “covered security” under Section 18(b)(1)(A) of
the Securities Act and continuing until either (i) the Purchasers have sold
all
of their Conversion Shares and Warrant Shares under a registration statement
pursuant to the Investor Rights Agreement or (ii) the Common Stock becomes
a
“covered security” under Section 18(b)(1)(A) of the Securities Act, the Company
shall maintain within either ▇▇▇▇▇’▇ Industrial Manual or Standard and Poor’s
Standard Corporation Descriptions (or any successors to these manuals which
are
similarly qualified as “recognized securities manuals” under state Blue Sky
laws) an updated listing containing (i) the names of the officers and directors
of the Company, (ii) a balance sheet of the Company as of a date that is at
no
time older than eighteen months and (iii) a profit and loss statement of the
Company for either the preceding fiscal year or the most recent year of
operations.
4.11
Poison
Pill.
From
time to time, for as long as any Purchaser holds any Securities, the Company
and
its Board of Directors shall take all necessary action, if any, in order to
render inapplicable any control share acquisition, business combination, poison
pill (including any distribution under a rights agreement) or other similar
anti-takeover provision under the Company’s Certificate of Incorporation (or
similar charter documents) or the laws of its state of incorporation that is
or
could become applicable to the Purchasers as a result of the Purchasers and
the
Company fulfilling their obligations or exercising their rights under this
Agreement and the Transaction Documents, including without limitation the
Company's issuance of the Securities and the Purchasers’ ownership of the
Securities.
4.12
Surrender
of Promissory Notes.
Each
Purchaser surrendering Promissory Notes for cancellation in payment of any
portion of such Purchaser’s Subscription Amount that does not deliver such
original Promissory Notes to the Company prior to the Closing, hereby covenants
to deliver such original Promissory Notes to the Company as soon as practicable
following the Closing Date.
29
4.13 Subsequent
Equity Sales.
(a) From
the
date hereof until 45 days after the Effective Date, neither the Company nor
any
Subsidiary shall issue shares of Common Stock or Common Stock Equivalents;
provided, however, the 45 day period set forth in this Section 4.13 shall be
extended for the number of Trading Days during such period in which (i) trading
in the Common Stock is suspended by any Trading Market, or (ii) following the
Effective Date, the Registration Statement is not effective or the prospectus
included in the Registration Statement may not be used by the Purchasers for
the
resale of the Underlying Shares; provided,
however
that the
Company may issue shares of Common Stock or Common Stock Equivalents, with
an
aggregate purchase price not to exceed $15,000,000 (including the purchase
price
of the Securities sold pursuant to this Agreement) and on terms that are no
less
favorable to the Company than the terms of the transactions contemplated by
this
Agreement, at any time from the date hereof until the date that the Initial
Registration Statement (as defined in the Investor Rights Agreement) is filed.
(b) From
the
date hereof until such time as no Purchaser holds any of the Securities, the
Company shall be prohibited from effecting or entering into an agreement to
effect any Subsequent Financing involving a Variable Rate Transaction.
“Variable
Rate Transaction”
means
a
transaction in which the Company issues or sells (i) any debt or equity
securities that are convertible into, exchangeable or exercisable for, or
include the right to receive additional shares of Common Stock either (A) at
a
conversion, exercise or exchange rate or other price that is based upon and/or
varies with the trading prices of or quotations for the shares of Common Stock
at any time after the initial issuance of such debt or equity securities, or
(B)
with a conversion, exercise or exchange price that is subject to being reset
at
some future date after the initial issuance of such debt or equity security
or
upon the occurrence of specified or contingent events directly or indirectly
related to the business of the Company or the market for the Common Stock or
(ii) enters into any agreement, including, but not limited to, an equity line
of
credit, whereby the Company may sell securities at a future determined price.
4.14 Equal
Treatment of Purchasers.
No
consideration shall be offered or paid to any Person to amend or consent to
a
waiver or modification of any provision of any of the Transaction Documents
unless the same consideration is also offered to all of the parties to the
Transaction Documents. For clarification purposes, this provision constitutes
a
separate right granted to each Purchaser by the Company and negotiated
separately by each Purchaser, and is intended for the Company to treat the
Purchasers as a class and shall not in any way be construed as the Purchasers
acting in concert or as a group with respect to the purchase, disposition or
voting of Securities or otherwise.
30
ARTICLE
V
INDEMNIFICATION,
TERMINATION AND DAMAGES
5.1 Survival
of Representations.
Except
as
otherwise provided herein, the representations and warranties of the Company
and
the Purchasers contained in or made pursuant to this Agreement shall survive
the
execution and delivery of this Agreement and the Closing Date and shall continue
in full force and effect for a period of three (3) years from the Closing Date.
The Company’s and the Purchasers’ warranties and representations shall in no way
be affected or diminished in any way by any investigation of (or failure to
investigate) the subject matter thereof made by or on behalf of the Company
or
the Purchasers.
5.2 Indemnification.
The
Company agrees to indemnify and hold harmless the Purchasers, their Affiliates,
each of their officers, directors, employees and agents and their respective
successors and assigns, from and against any losses, damages, or expenses which
are caused by or arise out of (i) any breach or default in the performance
by
the Company of any covenant or agreement made by the Company in this Agreement
or in any of the Transaction Documents; (ii) any breach of warranty or
representation made by the Company in this Agreement or in any of the
Transaction Documents; (iii) any and all third party actions, suits,
proceedings, claims, demands, judgments, costs and expenses (including
reasonable legal fees and expenses) incident to any of the foregoing; and/or(iv)
any action instituted against a Purchaser in any capacity, or any of them or
their respective Affiliates, by any stockholder of the Company who is not an
Affiliate of such Purchaser, with respect to any of the transactions
contemplated by the Transaction Documents (unless such action is based upon
a
breach of such Purchaser’s representations, warranties or covenants under the
Transaction Documents or any agreements or understandings such Purchaser may
have with any such stockholder or any violations by the Purchaser of state
or
federal securities laws or any conduct by such Purchaser which constitutes
fraud, gross negligence, willful misconduct or malfeasance).
5.3 Indemnity
Procedure.
A
party
or parties hereto agreeing to be responsible for or to indemnify against any
matter pursuant to this Agreement is referred to herein as the “Indemnifying
Party”
and
the
other party or parties claiming indemnity is referred to as the “Indemnified
Party”.
An
Indemnified Party under this Agreement shall, with respect to claims asserted
against such party by any third party, give written notice to the Indemnifying
Party of any liability which might give rise to a claim for indemnity under
this
Agreement within sixty (60) Business Days of the receipt of any written claim
from any such third party, but not later than twenty (20) days prior to the
date
any answer or responsive pleading is due, and with respect to other matters
for
which the Indemnified Party may seek indemnification, give prompt written notice
to the Indemnifying Party of any liability which might give rise to a claim
for
indemnity; provided,
however,
that
any failure to give such notice will not waive any rights of the Indemnified
Party except to the extent the rights of the Indemnifying Party are materially
prejudiced.
31
The
Indemnifying Party shall have the right, at its election, to take over the
defense or settlement of such claim by giving written notice to the Indemnified
Party at least fifteen (15) days prior to the time when an answer or other
responsive pleading or notice with respect thereto is required. If the
Indemnifying Party makes such election, it may conduct the defense of such
claim
through counsel of its choosing (subject to the Indemnified Party’s approval of
such counsel, which approval shall not be unreasonably withheld or delayed),
shall be solely responsible for the expenses of such defense and shall be bound
by the results of its defense or settlement of the claim. The Indemnifying
Party
shall not settle any such claim without prior notice to and consultation with
the Indemnified Party, and no such settlement involving any equitable relief
or
which might have an adverse effect on the Indemnified Party may be agreed to
without the written consent of the Indemnified Party (which consent shall not
be
unreasonably withheld or delayed). So long as the Indemnifying Party is
diligently contesting any such claim in good faith, the Indemnified Party may
pay or settle such claim only at its own expense and the Indemnifying Party
will
not be responsible for the fees of separate legal counsel to the Indemnified
Party, unless the named parties to any proceeding include both parties or
representation of both parties by the same counsel would be inappropriate in
the
reasonable opinion of counsel to the Indemnified Party, due to conflicts of
interest or otherwise. If the Indemnifying Party does not make such election,
or
having made such election does not, in the reasonable opinion of the Indemnified
Party proceed diligently to defend such claim, then the Indemnified Party may
(after written notice to the Indemnifying Party), at the expense of the
Indemnifying Party, elect to take over the defense of and proceed to handle
such
claim in its discretion and the Indemnifying Party shall be bound by any defense
or settlement that the Indemnified Party may make in good faith with respect
to
such claim. In connection therewith, the Indemnifying Party will fully cooperate
with the Indemnified Party should the Indemnified Party elect to take over
the
defense of any such claim. The parties agree to cooperate in defending such
third party claims and the Indemnified Party shall provide such cooperation
and
such access to its books, records and properties (subject to the execution
of
appropriate non-disclosure agreements) as the Indemnifying Party shall
reasonably request with respect to any matter for which indemnification is
sought hereunder; and the parties hereto agree to cooperate with each other
in
order to ensure the proper and adequate defense thereof.
With
regard to claims of third parties for which indemnification is payable
hereunder, such indemnification shall be paid by the Indemnifying Party upon
the
earlier to occur of: (i) the entry of a judgment against the Indemnified Party
and the expiration of any applicable appeal period, or if earlier, five (5)
days
prior to the date that the judgment creditor has the right to execute the
judgment; (ii) the entry of an unappealable judgment or final appellate decision
against the Indemnified Party; or (iii) a settlement of the claim.
Notwithstanding the foregoing, the reasonable expenses of counsel to the
Indemnified Party shall be reimbursed on a current basis by the Indemnifying
Party. With regard to other claims for which indemnification is payable
hereunder, such indemnification shall be paid promptly by the Indemnifying
Party
upon demand by the Indemnified Party.
32
ARTICLE
VI
MISCELLANEOUS
6.1 Fees
and Expenses.
The
Company shall be responsible for the payment of the Purchasers’ reasonable and
documented legal fees and other third-party expenses relating to the
preparation, negotiation and execution of this Agreement and the Transaction
Documents and the consummation of the transactions contemplated
herein.
6.2 Entire
Agreement.
The
Transaction Documents, together with the exhibits and schedules thereto, contain
the entire understanding of the parties with respect to the subject matter
hereof and supersede all prior agreements and understandings, oral or written,
with respect to such matters, which the parties acknowledge have been merged
into such documents, exhibits and schedules.
6.3 Notices.
Any
and
all notices or other communications or deliveries required or permitted to
be
provided hereunder shall be in writing and shall be deemed given and effective
on the earliest of (a) the date of transmission, if such notice or communication
is delivered via facsimile at the facsimile number specified on the signature
pages attached hereto prior to 5:00 p.m. (New York City time) on a Trading
Day,
(b) the next Trading Day after the date of transmission, if such notice or
communication is delivered via facsimile at the facsimile number on the
signature pages attached hereto on a day that is not a Trading Day or later
than
5:00 p.m. (New York City time) on any Trading Day, (c) the Trading Day following
the date of mailing, if sent by U.S. nationally recognized overnight courier
service, or (d) upon actual receipt by the party to whom such notice is required
to be given. The address for such notices and communications shall be as
follows:
If
to the
Purchasers, at each Purchaser’s address set forth under its name on Schedule
1
attached
hereto, or with respect to the Company, addressed to:
Access
Pharmaceuticals, Inc.
▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇▇
Attention:
President
Facsimile
No.: (▇▇▇) ▇▇▇-▇▇▇▇
or
to
such other address or addresses or facsimile number or numbers as any such
party
may most recently have designated in writing to the other parties hereto by
such
notice. Copies of notices to the Company shall be sent to:
▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ LLP
▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention:
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, III
Facsimile
No.: (▇▇▇) ▇▇▇-▇▇▇▇
Copies
of
notices to any Purchaser shall be sent to the addresses, if any, listed on
Schedule
1
attached
hereto.
33
6.4 Amendments;
Waivers.
No
provision of this Agreement may be waived or amended except in a written
instrument signed, in the case of an amendment, by the Company and the
Purchasers holding 66% in interest of the Securities then outstanding or, in
the
case of a waiver, by the party against whom enforcement of any such waiver
is
sought; provided, however that any such amendment or waiver that has a
disproportionately adverse effect on any Purchaser shall require the consent
of
such Purchaser. No waiver of any default with respect to any provision,
condition or requirement of this Agreement shall be deemed to be a continuing
waiver in the future or a waiver of any subsequent default or a waiver of any
other provision, condition or requirement hereof, nor shall any delay or
omission of either party to exercise any right hereunder in any manner impair
the exercise of any such right.
6.5 Construction.
The
headings herein are for convenience only, do not constitute a part of this
Agreement and shall not be deemed to limit or affect any of the provisions
hereof. 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.
6.6 Successors
and Assigns.
This
Agreement shall be binding upon and inure to the benefit of the parties and
their successors and permitted assigns. The Company may not assign this
Agreement or any rights or obligations hereunder without the prior written
consent of each Purchaser. Any Purchaser may assign any or all of its rights
under this Agreement to any Person, provided such transferee agrees in writing
to be bound, with respect to the transferred Securities, by the provisions
hereof that apply to the Purchasers.
6.7 No
Third-Party Beneficiaries.
This
Agreement is intended for the benefit of the parties hereto and their respective
successors and permitted assigns and is not for the benefit of, nor may any
provision hereof be enforced by, any other Person, except as otherwise set
forth
in Article V.
6.8 Governing
Law.
All
questions concerning the construction, validity, enforcement and interpretation
of the Transaction Documents shall be governed by and construed and enforced
in
accordance with the internal laws of the State of New York, without regard
to
the principles of conflicts of law thereof.
34
6.9
Jurisdiction;
Venue; Service of Process.
This
Agreement shall be subject to the exclusive jurisdiction of the ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ of New York and if such court does not have proper
jurisdiction, the State Courts of New York County, New York. The parties to
this
Agreement agree that any breach of any term or condition of this Agreement
shall
be deemed to be a breach occurring in the State of New York by virtue of a
failure to perform an act required to be performed in the State of New York
and
irrevocably and expressly agree to submit to the jurisdiction of the ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ of New York and if such court does not have
proper jurisdiction, the State Courts of New York County, New York for the
purpose of resolving any disputes among the parties relating to this Agreement
or the transactions contemplated hereby. The parties irrevocably waive, to
the
fullest extent permitted by law, any objection which they may now or hereafter
have to the laying of venue of any suit, action or proceeding arising out of
or
relating to this Agreement, or any judgment entered by any court in respect
hereof brought in New York County, New York, and further irrevocably waive
any
claim that any suit, action or proceeding brought in ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ of New York and if such court does not have proper
jurisdiction, the State Courts of New York County, New York has been brought
in
an inconvenient forum. Each of the parties hereto consents to process being
served in any such suit, action or proceeding, by mailing a copy thereof to
such
party at the address in effect for notices to it under this Agreement and agrees
that such service shall constitute good and sufficient service of process and
notice thereof. Nothing in this Section 6.9 shall affect or limit any right
to
serve process in any other manner permitted by law.
6.10
Execution.
This
Agreement may be executed in two or more counterparts, all of which when taken
together shall be considered one and the same agreement and shall become
effective when counterparts have been signed by each party and delivered to
the
other party, it being understood that both parties need not sign the same
counterpart. In the event that any signature is delivered by facsimile
transmission, such signature shall create a valid and binding obligation of
the
party executing (or on whose behalf such signature is executed) with the same
force and effect as if such facsimile signature page were an original
thereof.
6.11
Severability.
If
any
provision of this Agreement is held to be invalid or unenforceable in any
respect, the validity and enforceability of the remaining terms and provisions
of this Agreement shall not in any way be affected or impaired thereby and
the
parties will attempt to agree upon a valid and enforceable provision that is
a
reasonable substitute therefor, and upon so agreeing, shall incorporate such
substitute provision in this Agreement.
6.12 Replacement
of Securities.
If
any
certificate or instrument evidencing any of the Securities is mutilated, lost,
stolen or destroyed, the Company shall issue or cause to be issued in exchange
and substitution for and upon cancellation thereof, or in lieu of and
substitution therefor, a new certificate or instrument, but only upon receipt
of
evidence reasonably satisfactory to the Company of such loss, theft or
destruction and customary and reasonable indemnity (but no bond shall be
required), if requested by the Company.
35
6.13
Remedies.
In
addition to being entitled to exercise all rights provided herein or granted
by
law, including recovery of damages, each of the Purchasers and the Company
will
be entitled to specific performance under the Transaction Documents. The parties
agree that monetary damages may not be adequate compensation for any loss
incurred by reason of any breach of obligations described in the foregoing
sentence and hereby agrees to waive in any action for specific performance
of
any such obligation the defense that a remedy at law would be
adequate.
6.14 Payment
Set Aside.
To
the
extent that the Company makes a payment or payments to any Purchaser pursuant
to
any Transaction Document or a Purchaser enforces or exercises its rights
thereunder, and such payment or payments or the proceeds of such enforcement
or
exercise or any part thereof are subsequently invalidated, declared to be
fraudulent or preferential, set aside, recovered from, disgorged by or are
required to be refunded, repaid or otherwise restored to the Company, a trustee,
receiver or any other person under any law (including, without limitation,
any
bankruptcy law, state or federal law, common law or equitable cause of action),
then to the extent of any such restoration the obligation or part thereof
originally intended to be satisfied shall, to the extent permissible under
applicable law, 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.
6.15 Independent
Nature of Purchasers' Obligations and Rights.
The
obligations of each Purchaser under any Transaction Document are several and
not
joint with the obligations of any other Purchaser, and no Purchaser shall be
responsible in any way for the performance of the obligations of any other
Purchaser under any Transaction Document. Nothing contained herein or in any
Transaction Document, and no action taken by any Purchaser pursuant thereto,
shall be deemed to constitute the Purchasers as a partnership, an association,
a
joint venture or any other kind of entity, or create a presumption that the
Purchasers are in any way acting in concert or as a group with respect to such
obligations or the transactions contemplated by the Transaction Document. Each
Purchaser shall be entitled to independently protect and enforce its rights,
including without limitation, the rights arising out of this Agreement or out
of
the other Transaction Documents, and it shall not be necessary for any other
Purchaser to be joined as an additional party in any proceeding for such
purpose. Each Purchaser has been represented by its own separate legal counsel
in their review and negotiation of the Transaction Documents. For reasons of
administrative convenience only, Purchasers and their respective counsel have
chosen to communicate with the Company through ▇▇▇▇▇▇ and ▇▇▇▇ LLP, but such
counsel does not represent any of the Purchasers in this transaction other
than
SCO Capital Partners LLC. The Company has elected to provide all Purchasers
with
the same terms and Transaction Documents for the convenience of the Company
and
not because it was required or requested to do so by the
Purchasers.
36
6.16 Waiver
of Trial by Jury.
THE
PARTIES HERETO IRREVOCABLY WAIVE TRIAL BY JURY IN ANY SUIT, ACTION OR PROCEEDING
RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
6.17 Further
Assurances.
Each
party agrees to cooperate fully with the other parties and to execute such
further instruments, documents and agreements and to give such further written
assurances as may be reasonably requested by any other party to better evidence
and reflect the transactions described herein and contemplated hereby and to
carry into effect the intents and purposes of this Agreement, and further agrees
to take promptly, or cause to be taken, all actions, and to do promptly, or
cause to be done, all things necessary, proper or advisable under applicable
law
to consummate and make effective the transactions contemplated hereby, to obtain
all necessary waivers, consents and approvals, to effect all necessary
registrations and filings, and to remove any injunctions or other impediments
or
delays, legal or otherwise, in order to consummate and make effective the
transactions contemplated by this Agreement for the purpose of securing to
the
parties hereto the benefits contemplated by this Agreement.
6.18 Termination.
This Agreement may be terminated by any Purchaser, as to such Purchaser’s
obligations hereunder only and without any effect whatsoever on the obligations
between the Company and the other Purchasers, by written notice to the other
parties, if the Closing has not been consummated on or before the fifth business
day following the date hereof; provided, however, that such termination will
not
affect the right of any party to ▇▇▇ for any breach by the other party (or
parties).
[Signature
pages follow.]
37
IN
WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date
first above written.
COMPANY:
ACCESS
PHARMACEUTICALS, INC.
By:
/S/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Name:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title:
President and CEO
38
| PURCHASERS: | |
| Print Exact Name : | Beach Capital LLC |
| By: | /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ | |
| Name: | ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ | |
| Title: | Managing Member | |
| Address: | ▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇ | |
| ▇▇▇▇ ▇▇▇▇▇ | ||
| ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇ | ||
| Telephone: | ▇▇▇-▇▇▇-▇▇▇▇ | |
| Facsimile: | ▇▇▇-▇▇▇-▇▇▇▇ | |
| Email: | ▇▇▇▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇.▇▇▇ | |
| SSN/EIN: | ||
| Amount of Investment: | 7.5 % secured promissary note |
| # PN-2006-2 for $500,000.00 + accrued interest | |
[Omnibus
Access Pharmaceuticals, Inc.
Preferred
Stock and Warrant Purchase Agreement Signature Page]
39
| PURCHASERS: | |
| Print Exact Name : | Brio Capital L.P. |
| By: | /s/ ▇▇▇▇▇ ▇▇▇▇▇▇ | |
| Name: | ▇▇▇▇▇ ▇▇▇▇▇▇ | |
| Title: | Manager of the General Partner | |
| Address: | ▇▇▇ ▇ ▇▇▇▇ ▇▇. | |
| ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇ | ||
| ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇ | ||
| Telephone: | ▇▇▇-▇▇▇-▇▇▇▇ | |
| Facsimile: | ▇▇▇-▇▇▇-▇▇▇▇ | |
| Email: | ▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ | |
| SSN/EIN: | ||
| Amount of Investment: | $ 150,000.00 |
[Omnibus
Access Pharmaceuticals, Inc.
Preferred
Stock and Warrant Purchase Agreement Signature Page]
40
| PURCHASERS: | |
| Print Exact Name : | Catalytix Life Sciences Hedge AC |
| By: | /s/ ▇▇▇ ▇▇▇▇▇▇▇▇ | |
| Name: | ▇▇▇ ▇▇▇▇▇▇▇▇ | |
| Title: | PM, DIR | |
| Address: | c/o Array Capital Management | |
| ▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇ ▇▇▇ | ||
| ▇▇, ▇▇ ▇▇▇▇▇ | ||
| Telephone: | ▇▇▇-▇▇▇-▇▇▇▇ | |
| Facsimile: | 212-481-1396 | |
| Email: | ▇▇▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇.▇▇▇ | |
| SSN/EIN: | ||
| Amount of Investment: | 50,000.00 US |
[Omnibus
Access Pharmaceuticals, Inc.
Preferred
Stock and Warrant Purchase Agreement Signature Page]
41
| PURCHASERS: | |
| Print Exact Name : | Cobblestone Asset Management LLC |
| By: | /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ | |
| Name: | ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ | |
| Title: | Managing Member | |
| Address: | ▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇ | |
| ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ | ||
| Telephone: | ▇▇▇-▇▇▇-▇▇▇▇ | |
| Facsimile: | ▇▇▇-▇▇▇-▇▇▇▇ | |
| Email: | ▇▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ | |
| SSN/EIN: | ||
| Amount of Investment: | $ 250,000 |
[Omnibus
Access Pharmaceuticals, Inc.
Preferred
Stock and Warrant Purchase Agreement Signature Page]
42
| PURCHASERS: | |
| Print Exact Name : | Cranshire Capita, L.P. |
| By: | /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ | |
| Name: | ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ | |
| Title: | CFO-Downsview Capital, Inc. | |
| The General Partner | ||
| Address: | ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇ | |
| ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ | ||
| Telephone: | ▇▇▇-▇▇▇-▇▇▇▇ | |
| Facsimile: | ▇▇▇-▇▇▇-▇▇▇▇ | |
| Email: | ▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ | |
| SSN/EIN: | ||
| Amount of Investment: | $ 500,001.00 |
[Omnibus
Access Pharmaceuticals, Inc.
Preferred
Stock and Warrant Purchase Agreement Signature Page]
43
| PURCHASERS: | |
| Print Exact Name : | Credit Suisse Securities (USA) LLC |
| By: | /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ | |
| Name: | ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ | |
| Title: | Managing Director | |
| Address: | c/o ▇▇▇▇ ▇▇▇▇▇▇▇▇ | |
| ▇▇ ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇ ▇▇▇▇▇ | ||
| ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇ | ||
| Telephone: | ▇▇▇-▇▇▇-▇▇▇▇ | |
| Facsimile: | ▇▇▇-▇▇▇-▇▇▇▇ | |
| Email: | ▇▇▇▇▇▇▇.▇▇▇▇▇▇▇▇@▇▇▇▇▇▇-▇▇▇▇▇▇.▇▇▇ | |
| SSN/EIN: | ||
| Amount of Investment: | $ 1,000,000.00 |
[Omnibus
Access Pharmaceuticals, Inc.
Preferred
Stock and Warrant Purchase Agreement Signature Page]
44
| PURCHASERS: | |
| Print Exact Name : | Enable Growth Partners LP |
| By: | /s/ ▇▇▇▇▇▇▇ ▇'▇▇▇▇ | |
| Name: | ▇▇▇▇▇▇▇ ▇'▇▇▇▇ | |
| Title: | Prinicipal and Portfolio Manager | |
| Address: | ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇ | |
| ▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ | ||
| Telephone: | ▇▇▇-▇▇▇-▇▇▇▇ | |
| Facsimile: | ▇▇▇-▇▇▇-▇▇▇▇ | |
| Email: | ▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ | |
| SSN/EIN: | ||
| Amount of Investment: | $ 500,000 |
| Common Shares:166,666 | |
| Warrants: 83,333 | |
[Omnibus
Access Pharmaceuticals, Inc.
Preferred
Stock and Warrant Purchase Agreement Signature Page]
45
| PURCHASERS: | |
| Print Exact Name : | Lake End Capital LLC |
| By: | /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ | |
| Name: | ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ | |
| Title: | Managing Member | |
| Address: | ▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇. | |
| ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ | ||
| Telephone: | ▇▇▇-▇▇▇-▇▇▇▇ | |
| Facsimile: | ||
| Email: | ▇▇▇▇▇▇@▇▇▇▇▇▇▇▇.▇▇▇ | |
| SSN/EIN: | ||
| Amount of Investment: | $ 700,000.00 + |
| * Conversion of Outstanding notes into convertible preferred stock_________________ | |
| + To include Acumulated Interest ___________ | |
[Omnibus
Access Pharmaceuticals, Inc.
Preferred
Stock and Warrant Purchase Agreement Signature Page]
46
| PURCHASERS: | |
| Print Exact Name : | ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ |
| By: | /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ | |
| Name: | ||
| Title: | ||
| Address: | ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ #▇▇▇▇ | |
| ▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ | ||
| Telephone: | ▇▇▇-▇▇▇-▇▇▇▇ | |
| Facsimile: | ▇▇▇-▇▇▇-▇▇▇▇ | |
| Email: | dlavalle@________ | |
| SSN/EIN: | ||
| Amount of Investment: | $ 90,000.00 |
[Omnibus
Access Pharmaceuticals, Inc.
Preferred
Stock and Warrant Purchase Agreement Signature Page]
47
| PURCHASERS: | |
| Print Exact Name : | Midsummer Investment, Ltd. |
| By: | /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ | |
| Name: | ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ | |
| Title: | Director | |
| Address: | ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇ | |
| ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇ | ||
| Telephone: | ▇▇▇-▇▇▇-▇▇▇▇ | |
| Facsimile: | ▇▇▇-▇▇▇-▇▇▇▇ | |
| Email: | ▇▇@▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ | |
| SSN/EIN: | ||
| Amount of Investment: | $ 1,500,000 |
[Omnibus
Access Pharmaceuticals, Inc.
Preferred
Stock and Warrant Purchase Agreement Signature Page]
48
| PURCHASERS: | |
| Print Exact Name : | Oracle Institutional Partners L.P. |
| By: | /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇ | |
| Name: | ▇▇▇▇ ▇▇▇▇▇▇▇▇ | |
| Title: | Authorized Agent | |
| Address: | ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇ | |
| ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ | ||
| Telephone: | ▇▇▇-▇▇▇-▇▇▇▇ | |
| Facsimile: | ||
| Email: | ||
| SSN/EIN: | ||
| Amount of Investment: | $ 698,500.00 |
[Omnibus
Access Pharmaceuticals, Inc.
Preferred
Stock and Warrant Purchase Agreement Signature Page]
49
| PURCHASERS: | |
| Print Exact Name : | Oracle Offshore LTD |
| By: | /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇ | |
| Name: | ▇▇▇▇ ▇▇▇▇▇▇▇▇ | |
| Title: | Authorized Agent | |
| Address: | ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇ | |
| ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ | ||
| Telephone: | ▇▇▇-▇▇▇-▇▇▇▇ | |
| Facsimile: | ||
| Email: | ||
| SSN/EIN: | ||
| Amount of Investment: | $ 132,000 |
[Omnibus
Access Pharmaceuticals, Inc.
Preferred
Stock and Warrant Purchase Agreement Signature Page]
50
| PURCHASERS: | |
| Print Exact Name : | Oracle Partners, LP |
| By: | /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇ | |
| Name: | ▇▇▇▇ ▇▇▇▇▇▇▇▇ | |
| Title: | Authoriced Agent | |
| Address: | ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇ | |
| ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ | ||
| Telephone: | ▇▇▇-▇▇▇-▇▇▇▇ | |
| Facsimile: | ||
| Email: | ||
| SSN/EIN: | ||
| Amount of Investment: | $2,524,500 |
[Omnibus
Access Pharmaceuticals, Inc.
Preferred
Stock and Warrant Purchase Agreement Signature Page]
51
| PURCHASERS: | |
| Print Exact Name : | Perceptive Life Sciences Master Fund LTD |
| By: | /s/ __________________________ | |
| Name: | ||
| Title: | ||
| Address: | ▇▇▇ ▇▇▇▇ ▇▇▇, ▇▇▇▇ ▇▇ | |
| ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇ | ||
| Telephone: | ▇▇▇-▇▇▇-▇▇▇▇ | |
| Facsimile: | ▇▇▇-▇▇▇-▇▇▇▇ | |
| Email: | ▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ | |
| SSN/EIN: | ||
| Amount of Investment: | 2,000,000 |
[Omnibus
Access Pharmaceuticals, Inc.
Preferred
Stock and Warrant Purchase Agreement Signature Page]
52
| PURCHASERS: | |
| Print Exact Name : | ▇▇▇▇▇▇▇▇ Investment Master Fund Ltd. |
| By: | /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ | |
| Name: | ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ | |
| Title: | Managing Director | |
| Address: | c/▇ ▇▇▇▇▇▇▇▇ Capital LLC | |
| ▇▇▇ ▇ ▇▇▇▇ ▇▇. | ||
| ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇ | ||
| Telephone: | ▇▇▇-▇▇▇-▇▇▇▇ | |
| Facsimile: | ▇▇▇-▇▇▇-▇▇▇▇ | |
| Email: | ▇▇@▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ | |
| SSN/EIN: | ||
| Amount of Investment: | 500,000.00 |
[Omnibus
Access Pharmaceuticals, Inc.
Preferred
Stock and Warrant Purchase Agreement Signature Page]
53
| PURCHASERS: | |
| Print Exact Name : | SCO Capital Partners LLC |
| By: | /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ | |
| Name: | ||
| Title: | ||
| Address: | ▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇ | |
| ▇▇▇▇ ▇▇▇▇▇ | ||
| ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇ | ||
| Telephone: | ▇▇▇-▇▇▇-▇▇▇▇ | |
| Facsimile: | ▇▇▇-▇▇▇-▇▇▇▇ | |
| Email: | ▇▇▇▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇.▇▇▇ | |
| SSN/EIN: | ||
| Amount of Investment: | $ 1,000,000.00 |
[Omnibus
Access Pharmaceuticals, Inc.
Preferred
Stock and Warrant Purchase Agreement Signature Page]
54
| PURCHASERS: | |
| Print Exact Name : | SCO Capital Partners, L.P. |
| By: | ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ | |
| Name: | ||
| Title: | ||
| Address: | ▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇ | |
| ▇▇▇▇ ▇▇▇▇▇ | ||
| ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇ | ||
| Telephone: | ▇▇▇-▇▇▇-▇▇▇▇ | |
| Facsimile: | ▇▇▇-▇▇▇-▇▇▇▇ | |
| Email: | ▇▇▇▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇.▇▇▇ | |
| SSN/EIN: | ||
| Amount of Investment: | $2,000,000.00 |
[Omnibus
Access Pharmaceuticals, Inc.
Preferred
Stock and Warrant Purchase Agreement Signature Page]
55
| PURCHASERS: | |
| Print Exact Name : | ▇▇▇ Oracle Investments, Inc. |
| By: | /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇ | |
| Name: | ▇▇▇▇ ▇▇▇▇▇▇▇▇ | |
| Title: | Authorized Agent | |
| Address: | ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇ | |
| ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ | ||
| Telephone: | ▇▇▇-▇▇▇-▇▇▇▇ | |
| Facsimile: | ||
| Email: | ||
| SSN/EIN: | ||
| Amount of Investment: | $ 660,000.00 |
[Omnibus
Access Pharmaceuticals, Inc.
Preferred
Stock and Warrant Purchase Agreement Signature Page]
56
Schedule
1
to
Preferred Stock and Warrant Purchase Agreement
Purchasers,
Shares of Preferred Stock and Warrants
|
Name,
Address and Fax Number of Purchaser
|
Shares
of Preferred Stock Purchased
|
Common
Stock Underlying Warrants
|
Description
of Promissory Notes to be Cancelled including Actual Principal
Amount
|
Promissory
Note Category [Deemed Value of Notes for Purposes of Exchange for
Preferred Stock
|
Purchase
Price and Value of Promissory Notes Cancelled as
Applicable
|
|
Beach
Capital LLC
1285
Avenue of the ▇▇▇▇▇▇▇▇, ▇▇▇▇
▇▇.
▇▇▇
▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax:
▇▇▇-▇▇▇-▇▇▇▇
|
154.2898
|
94,288
|
Amended
and Restated 7.5% Secured Convertible Promissory Note Due November
15,
2007, Dated March 30, 2007 (No. PN-2006-2-1AR) (Original Principal
Amt:
$500.000.00) (Interest Amt: $65,729.17)
|
A
[$1,542,897.73]
|
$565,729.17
|
|
Brio
Capital L.P.
▇▇▇
▇. ▇▇▇▇
▇▇.
▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇
▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax:
▇▇▇-▇▇▇-▇▇▇▇
|
15
|
25,000
|
n/a
|
n/a
|
$150,000.00
|
|
Catalytix
LDC Life Science Hedge AC
CIBC
Bank and Trust Company (Cayman) Ltd.
CIBC
Financial Centre
11
Roy’s Drive
P.O.
Box 694 GT
Grand
Cayman
Cayman
Islands
B.W.I.
Attn:
▇▇▇▇▇▇ ▇▇▇▇▇▇▇
With
a copy to:
▇▇▇▇▇▇▇▇
▇. ▇▇▇▇▇
Array
Capital Management LLC
▇▇▇
▇▇▇
▇▇▇, ▇▇▇. ▇▇▇
▇▇▇
▇▇▇▇, ▇▇ ▇▇▇▇▇
|
5
|
8,333
|
n/a
|
n/a
|
$50,000.00
|
57
|
Cobblestone
Asset Management LLC
▇▇
▇▇▇▇▇▇▇▇ ▇▇▇.
▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax:
▇▇▇-▇▇▇-▇▇▇▇
|
25
|
41,667
|
n/a
|
n/a
|
$250,000.00
|
|
Cranshire
Capital, L.P.
▇▇▇▇
▇▇▇▇▇▇ ▇▇., #▇▇▇
▇▇▇▇▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇
Fax:
▇▇▇-▇▇▇-▇▇▇▇
|
50.0001
|
83,333
|
n/a
|
n/a
|
$500,001.00
|
|
Credit
Suisse Securities (USA) LLC
c/o
▇▇▇▇ ▇▇▇▇▇▇▇▇
11
Madison Ave., 3d Fl.
▇▇▇
▇▇▇▇, ▇▇ ▇▇▇▇▇▇
Fax:
▇▇▇-▇▇▇-▇▇▇▇
|
100
|
166,667
|
n/a
|
n/a
|
$1,000,000.00
|
|
Enable
Growth Partners LP
▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax:
▇▇▇-▇▇▇-▇▇▇▇
|
50
|
83,333
|
n/a
|
n/a
|
$500,000.00
|
58
|
Lake
End Capital LLC
▇▇
▇▇▇▇ ▇▇▇▇ ▇▇.
▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇
Fax:
|
154.2898
29.4375
29.1932
|
94,288
17,990
17,840
|
Amended
and Restated 7.5% Secured Convertible Promissory Note Due November
15,
2007, Dated March 30, 2007 (No. PN-2006-3-1AR) (Original Principal
Amt.:
$500,000.00) (Interest Amt: $ 65,729.17)
Amended
and Restated 7.5% Secured Convertible Promissory Note Due November
15,
2007, Dated March 30, 2007 (No. PN-2006-FO2-1AR) (Original Principal
Amt:
$100,000.00) (Interest Amt: $7937.50)
Amended
and Restated 7.5% Secured Convertible Promissory Note Due November
15,
2007, Dated March 30, 2007 (No. PN-2006-DEC-2-1AR) (Original Principal
Amt.: $100,000.00) (Interest Amt: $7,041.67)
|
A
[$1,542,897.73]
A
[$294,375.00]
A
[$291,931.83]
|
$565,729.17
107,937.50
107,041.67
|
|
▇▇▇▇▇▇
▇▇▇▇▇▇▇
▇▇▇▇
▇▇▇▇ ▇▇▇▇▇ #▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇
Fax:
▇▇▇-▇▇▇-▇▇▇▇
|
9
|
15,000
|
n/a
|
n/a
|
$90,000.00
|
|
Midsummer
Investment, Ltd.
▇▇▇
▇▇▇▇▇▇▇ ▇▇▇., ▇▇▇▇
▇▇.
▇▇▇
▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax:
▇▇▇-▇▇▇-▇▇▇▇
|
150
|
250,000
|
n/a
|
n/a
|
$1,500,000.00
|
|
Oracle
Institutional Partners LP
Oracle
Partners, LP
▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇.
▇▇▇▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇
Fax:
|
76.0800
|
126,800
|
7.0%
(Subject to Adjustment) Convertible Promissory Note Due November
16, 2007
(Original Principal Amt.: $698,500.00) (Interest Amt:
$62,300.38)
|
B
|
$760,800.38
|
|
Oracle
Offshore Ltd.
Oracle
Partners, LP
▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇.
▇▇▇▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇
Fax:
|
14.3773
|
23,962
|
7.0%
(Subject to Adjustment) Convertible Promissory Note Due November
16, 2007
(Original Principal Amt: $132,000.00) (Interest Amt.:
$11,773.50)
|
B
|
$143,773.30
|
|
Oracle
Partners, LP
▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇.
▇▇▇▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇
Fax:
|
274.9664
|
458,277
|
7.0%
(Subject to Adjustment) Convertible Promissory Note Due November
16, 2007
(Original Principal Amt.: $2,524,500.00) (Interest Amt.:
$225,164.36)
|
B
|
$2,749,664.36
|
|
Perceptive
Life Sciences Master Fund Ltd.
▇▇▇
▇▇▇▇ ▇▇▇., ▇▇▇▇
▇▇.
▇▇▇
▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax:
▇▇▇-▇▇▇-▇▇▇▇
|
200
|
333,333
|
n/a
|
n/a
|
$2,000,000.00
|
59
|
▇▇▇▇▇▇▇▇
Investment Master Fund Ltd.
c/▇
▇▇▇▇▇▇▇▇ Capital LLC ▇▇▇ ▇. ▇▇▇▇
▇▇.
▇▇▇
▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax:
▇▇▇-▇▇▇-▇▇▇▇
|
50
|
83,333
|
n/a
|
n/a
|
$500,000.00
|
|
▇▇▇
Oracle Investments, Inc.
Oracle
Partners, LP
▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇.
▇▇▇▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇
Fax:
|
71.8867
|
119,811
|
7.0%
(Subject to Adjustment) Covertible Promissory Note Due November 16,
2007
(Original Principal Amt.: $660,000.00) (Interest Amt.:
$58,866.50)
|
B
|
$718,866.50
|
|
SCO
Capital Partners LLC
▇▇▇▇
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Fax:
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With
a copy to:
▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, Esq.
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1,234.3182
117.7500
116.7727
100
|
754,306
71,958
71,361
166,667
|
Amended
and Restated 7.5% Secured Convertible Promissory Note Due November
15,
2007, Dated March 30, 2007 (No. PN-2006-1-1AR) (Original Principal
Amt.:
$4,000,000.00) (Interest Amt.: $525,833.33)
Amended
and Restated 7.5% Secured Convertible Promissory Note Due November
15,
2007, Dated March 30, 2007 (No. PN-2006-FO1-1AR) (Original Principal
Amt.:
$400,000.00) (Interest Amt.: $31,750.00)
Amended
and Restated 7.5% Secured Convertible Promissory Note Due November
15,
2007, Dated March 30, 2007 (No. PN-2006-DEC -1-1AR) (Original Principal
Amt.: $400,000.00) (Interest Amt.: $28,166.67)
n/a
|
A
[$12,343,181.81]
A
[$1,177,500.00]
A
[$1,167,727.28]
n/a
|
$4,525,833.33
$431,750.00
428,166.67
$1,000,000.00
|
|
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▇▇▇▇
▇▇▇▇▇▇ of the Americas
35th
Fl.
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▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax:
▇▇▇-▇▇▇-▇▇▇▇
With
a copy to:
▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, Esq.
▇▇▇
▇▇▇▇▇▇▇▇ ▇▇.
▇.▇.
▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇-▇▇▇▇
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200
|
333,333
|
n/a
|
n/a
|
$2,000,000.00
|
|
Totals:
|
3,227.3617
|
3,440,880
|
$20,645,293.05
|
60
|
Placement
Agent Warrants
|
||||
|
Name,
Address and Fax Number
|
Copies
of Notice to
|
Common
Stock Underlying Placement Agent Warrants
|
||
|
Totals:
|
61