Capitalization and Other Capital Stock Matters from Securities Purchase Agreement
This Securities Purchase Agreement (this Agreement) is made and entered into as of July 25, 2012, among A.P. Pharma, Inc., a Delaware corporation (the Company) and each entity that is listed on the signature page hereto. Each such entity, together with its successors and permitted assigns, is referred to herein as a Purchaser, and all such entities, together with their successors and permitted assigns, are collectively referred to herein as the Purchasers.
Capitalization and Other Capital Stock Matters. As of the date hereof, the authorized capital stock of the Company consists of 1,500,000,000 shares of Common Stock, par value $0.01 per share, and 2,500,000 shares of preferred stock, par value $0.01 per share (Preferred Stock). As of June 30, 2012, without giving effect to the Closing, there were: (i) 200,205,555 shares of Common Stock issued and outstanding, (ii) no shares of Preferred Stock issued and outstanding, (iii) up to 115,520,037 shares of Common Stock may be issued upon conversion of the outstanding principal amount owed under the Companys Senior Secured Convertible Notes due 2021 (the Notes), and (iv) 147,639,392 shares of Common Stock reserved for issuance upon exercise of options, warrants and other convertible securities outstanding (excluding the Notes). The foregoing does not include additional shares of Common Stock potentially issuable upon conversion of any principal balance that may be added to the Notes as a result of the payment in kind of interest due under the Notes. As of the date hereof, the Shares conform, and as of the Closing Date, will conform, in all material respects to the description thereof contained in the Companys registration statement on Form 8-A filed under the Exchange Act. All of the issued and outstanding shares of Common Stock have been duly authorized and validly issued, are fully paid and non-assessable and have been issued in compliance with federal and state securities laws. None of the outstanding shares of Common Stock were issued in violation of any preemptive rights, rights of first refusal or other similar rights to subscribe for or purchase Shares of the Company. There are no authorized or outstanding options, warrants, preemptive rights, rights of first refusal or other rights to purchase, or equity or debt securities convertible into or exchangeable or exercisable for, any capital stock of the Company other than those accurately described in the Companys periodic filings under the Exchange Act. As of the date hereof and as of the Closing Date, the description of the Companys stock option, stock bonus and other stock plans or arrangements, and the options or other rights granted thereunder, as set forth in the Companys periodic filings under the Exchange Act constitutes and will constitute an accurate summary of the material terms and related issuances with respect to such plans, arrangements, options and rights.
Capitalization and Other Capital Stock Matters from Purchase Agreement
Capitalization and Other Capital Stock Matters. Upon issuance and delivery of the Debentures and the Guarantees in accordance with this Agreement and the Indenture, the Debentures will be convertible at the option of the holder thereof into shares of Common Stock; the Conversion Shares have been duly authorized and reserved for issuance upon such conversion by all necessary corporate action and such Conversion Shares when issued upon such conversion will be validly issued, fully paid and non-assessable. Neither the offering nor sale of the Debentures and the Guarantees as contemplated by this Agreement gives rise to any rights, other than those which have been waived or satisfied, for or relating to the registration under the Securities Act of any shares of Common Stock except pursuant to the Registration Rights Agreement. As of March 31, 2006, the outstanding capital stock of the Company consists of 87,155,664 shares, 87,155,664 shares of which are common stock, $0.01 par value per share, and zero shares of which are preferred stock, $0.01 par value per share. As of March 31, 2006, the authorized capital stock of the Company consists of 1,900,000,000 shares of common stock and 200,000,000 shares of preferred stock. As of December 31, 2005, there were 74,038,257 shares of common stock issued and outstanding. There were no shares of preferred stock outstanding on March 31, 2006. Except as disclosed in the SEC Reports (as defined below), there has been no material change in the Companys capitalization since March 31, 2006. All outstanding shares of capital stock are duly authorized, validly issued, fully paid and nonassessable and have been issued in compliance with all applicable securities laws. Except as disclosed in the Disclosure Package there are no outstanding options, warrants, script rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities, rights or obligations convertible into or exercisable or exchangeable for, or giving any Person any right to subscribe for or acquire, any shares of Common Stock, or 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. Except as disclosed in Schedule IV, the issue and sale of the Debentures will not obligate the Company to issue shares of Common Stock or other securities to any person (other than the Initial Purchasers upon conversion of the Debentures) and will not result in a right of any holder of Company securities to adjust the exercise, conversion, exchange or reset price under such securities. To the knowledge of the Company, except as specifically disclosed in the proxy statement for the Companys annual meeting of stockholders held on May 12, 2006, no person or group of related persons beneficially owns (as determined pursuant to Rule 13d-3 under the Exchange Act), or has the right to acquire, by agreement with or by obligation binding upon the Company, beneficial ownership of in excess of 5% of the outstanding Common Stock, ignoring for such purposes any limitation on the number of shares of Common Stock that may be owned at any single time. The information set forth under the caption Capitalization in the Disclosure Package and the Offering Memorandum is true and correct in all material respects. The Debentures, the Guarantees, the Indenture, the Registration Rights Agreement and the Conversion Shares conform in all material respects to the descriptions thereof contained in the Disclosure Package and the Offering Memorandum.