UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
DC 20549
FORM
8-K
CURRENT
REPORT
Pursuant
to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of
Report (Date of earliest event reported): April 7, 2010
PHARMATHENE,
INC.
(Exact
name of registrant as specified in its charter)
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Delaware
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001-32587
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20-2726770
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(State
or other jurisdiction
of
incorporation)
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(Commission
File
Number)
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(IRS
Employer
Identification
No.)
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One Park Place, Suite 450, Annapolis,
Maryland
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21401
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(Address
of principal executive offices)
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(Zip
Code)
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Registrant’s
telephone number including area code: (410) 269-2600
(Former
name or former address, if changed since last report)
Check the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions:
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¨
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Written
communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
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Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
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Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))
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¨
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Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))
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Item
1.01
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Entry
Into a Material Definitive
Agreement.
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As of
April 7, 2010, PharmAthene, Inc. (the “Company”) entered into a placement agency
agreement (the “Placement Agency Agreement”) with Roth Capital Partners, LLC
(the “Placement Agent”), relating to the Company’s registered offer and sale of
shares of its common stock and warrants to purchase its common
stock. A copy of the Placement Agency Agreement is attached as
Exhibit 1.1 to this Current Report on Form 8-K, and is incorporated herein by
reference.
The
Company also entered into a Securities Purchase Agreement (the “Securities
Purchase Agreement”) with an institutional
investor. The Securities Purchase Agreement relates to the
issuance and sale to such investor in a registered offering by the Company of an
aggregate of 1,666,668 shares of its common stock, at a price of $1.50 per share
(each a “Share,” and, collectively, the “Shares”) and warrants (the “Warrants”)
to purchase up to an additional 500,000 shares of common
stock. The Company expects to receive gross proceeds of
approximately $2.5 million before placement agent fees and other
expenses. The Securities Purchase Agreement contains an
agreement by the Company limiting future sales of its common stock and other
securities convertible into or exercisable or exchangeable for common stock
(except
for indebtedness which is convertible into or exchangeable for common stock)
at prices
below the offering price for a period of forty-five (45) days after the offering
as set forth in
the Securities Purchase Agreement. The
Company has also agreed to provide investors in this offering with certain
rights to participate in additional offerings for a period of one
year. The Securities Purchase Agreement also contains
representations, warranties, and covenants of the Company and the
investor that are customary for transactions of this type. The Securities
Purchase Agreement is attached as Exhibit 10.1 to this Current Report on Form
8-K, and is incorporated herein by reference.
The
Warrants are exercisable beginning 6 months after their initial issuance at an
exercise price of $1.89 per share until 5 years
after they become exercisable. The exercise price and number of shares
issuable upon exercise are subject to adjustment in the event of stock splits or
dividends, business combinations, sale of assets or other similar
transactions. A copy of the form of Warrant is attached as Exhibit
10.2 to this Current Report on Form 8-K, and is incorporated herein by
reference.
Pursuant
to the Placement Agency Agreement, the Placement Agent will receive an aggregate
fee of 7.0% of the gross proceeds from the offering. The aggregate
amount of placement fees payable to the Placement Agent is estimated to be
$175,000. In addition, the Company will reimburse the Placement Agent
for expenses incurred in connection with the offering (including reasonable
attorney’s fees and expenses) in an amount not to exceed the lesser of (x)
$25,000 and (y) 8% of the gross proceeds raised in the offering, less the
Placement Agent’s
fees.
The
description of the offering provided herein is qualified in its entirety by
reference to the Placement Agency Agreement and the Securities Purchase
Agreement. The Company has filed with the Securities and Exchange
Commission (the “Commission”) the Placement Agency Agreement and the Securities
Purchase Agreement in order to provide investors and the Company’s stockholders
with information regarding their respective terms and in accordance with
applicable rules and regulations of the Commission. Each agreement
contains representations and warranties that the parties made to, and solely for
the benefit of, the other in the context of all of the terms and conditions of
that agreement and in the context of the specific relationship between the
parties. The provisions of the Placement Agency Agreement and the
Securities Purchase Agreement, including the representations and warranties
contained therein, are not for the benefit of any party other than the parties
to such agreements and are not intended as documents for investors and the
public to obtain factual information about the current state of affairs of the
parties to those documents and agreements. Rather, investors and the public
should look to other disclosures contained in the Company’s filings with the
Commission.
The
Shares are being issued pursuant to a prospectus supplement dated April 7, 2010,
filed with the Commission pursuant to Rule 424(b) under the Securities Act, as
part of a shelf takedown from the Company’s registration statement on Form S-3
(File No. 333-156997), including a related prospectus, which was declared
effective by the Securities and Exchange Commission on February 12,
2009.
On April
8, 2010, the Company issued a press release announcing the execution of the
Placement Agency Agreement and the Securities Purchase Agreement and the general
terms of the securities being offered. The text of the press release
is included as Exhibit 99.1 to this Form 8-K and is incorporated herein by
reference.
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Item
9.01
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Financial Statements and Exhibits |
(d) The
following exhibits are filed herewith:
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No.
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Description
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1.1
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Placement
Agency Agreement dated as of April 7, 2010 by and among the Company and
Roth Capital Partners, LLC
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10.1
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Form
of Securities Purchase Agreement dated as of April 7, 2010 between the
Company and the Investor
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10.2
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Form
of Warrant
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99.1
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Press
Release dated April 8, 2010
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SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the Registrant has
duly caused this report to be signed on its behalf by the undersigned hereunto
duly authorized.
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PHARMATHENE,
INC.
(Registrant)
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Date: April
8, 2010
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By:
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/s/ Charles A. Reinhart
III
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Charles
A. Reinhart III
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Senior
Vice President and Chief Financial Officer
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April 7, 2010
CONFIDENTIAL
Roth
Capital Partners, LLC
24
Corporate Plaza
Newport
Beach, CA 92660
Ladies
and Gentlemen:
This
letter (the “Agreement”)
constitutes the agreement between Roth Capital Partners, LLC (in such capacity,
“Roth” or the
“Placement
Agent”) and PharmAthene, Inc. (the
“Company”) that Roth shall
serve, on a “best efforts” basis, as the exclusive placement agent for the
Company in connection with the proposed public offering placement (the “Placement”) of
registered securities of the Company, consisting of shares (the “Shares”) of the
Company’s common stock, par value $0.0001 per share (the “Common Stock”) and
warrants (the “Warrants”) to
purchase shares of the Company’s Common Stock. The terms of such
Placement and the Securities shall be mutually agreed upon by the Company and
the purchasers (each a “Purchaser” and,
collectively, the “Purchasers”), and
nothing herein constitutes an agreement of the parties that Roth would have the
power or authority to bind the Company or any Purchaser or an obligation for the
Company to issue any Securities or complete the Placement. The shares
of Common Stock issuable upon exercise of the Warrants are hereinafter referred
to as the “Warrant
Shares” and the Shares, the Warrants and the Warrant Shares are
hereinafter referred to as the “Securities.” The
sale of the Securities shall be made pursuant to securities purchase agreement
in the form included as Exhibit A hereto (the
“Purchase
Agreement”), on the terms described on Exhibit B
hereto. The Warrants shall be in substantially the form of Exhibit A
to the Purchase Agreement. The Securities are more fully described in
the Prospectus Supplement (as defined below). This Agreement and the documents
executed and delivered by the Company and the Purchasers in connection with the
Placement shall be collectively referred to herein as the “Transaction
Documents.” The date of the closing of the Placement shall be
referred to herein as the “Closing
Date.” The Company expressly acknowledges and agrees that
Roth’s obligations hereunder are on a commercially reasonable best efforts basis
only and that the execution of this Agreement neither constitutes a commitment
by Roth to purchase the Securities nor ensures the successful placement of the
Securities or any portion thereof.
SECTION 1. COMPENSATION AND OTHER
FEES.
As
compensation for the services provided by Roth hereunder, the Company agrees as
follows:
(A) As
compensation for services rendered, on the Closing Date the Company shall (i)
pay to the Placement Agent by wire transfer of immediately available funds to an
account or accounts designated by the Placement Agent, a cash fee (the “Placement Agent’s
Fee”) equal to seven percent (7.0%) of the gross proceeds received by the
Company from the sale of the Shares and Warrants on such Closing
Date.
(B) The
Company, whether or not the transactions contemplated hereunder are consummated
or this Agreement is terminated, will pay or reimburse if paid by the Placement
Agent all actual out-of-pocket costs and expenses incident to the performance of
the obligations of the Company under this Agreement and in connection with the
transactions contemplated hereby, including but not limited to costs and
expenses of or relating to (i) the preparation, printing, filing, delivery and
shipping of the Registration Statement and the Prospectus Supplement, and any
amendment or supplement to any of the foregoing and the printing and furnishing
of copies of each thereof to the Placement Agent and dealers (including costs of
mailing and shipment), (ii) the registration, issue, sale and delivery of the
Securities including any stock or transfer taxes and stamp or similar duties
payable upon the sale, issuance or delivery of the Securities and the printing,
delivery, and shipping of the certificates representing the Securities, (iii)
the fees and expenses of any transfer agent or registrar for the Shares and
Warrant Shares, (iv) the filing fees required to be paid by the Placement Agent
or the Company with the Financial Industry Regulatory Authority (“FINRA”) (including
all COBRADesk fees), (v) fees, disbursements and other charges of counsel to the
Company (vi) listing fees, if any, for the listing or quotation of the Shares
and Warrant Shares on the NYSE Amex, (vii) fees and disbursements of the
Company’s auditor, and (viii) reasonable fees and disbursements of counsel to
the Placement Agent. Notwithstanding the foregoing, the expenses of the
Placement Agent (other than the filing fees set forth in clause (iv) above),
including attorneys fees and expenses, which the Company shall be obligated to
reimburse hereunder shall not exceed the lesser of (x) an amount equal to
$25,000 in the aggregate or (y) eight percent (8%) of the gross proceeds
received by the Company from the sale of the Securities, less the Placement
Agent’s Fee if the Placement is consummated.
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SECTION 2. REGISTRATION
STATEMENT.
The
Company represents and warrants to, and agrees with, the Placement Agent as
follows:
(A) The
Company has filed with the Securities and Exchange Commission (the “Commission”) a
registration statement on Form S-3 (Registration File No. 333-156997) under the
Securities Act of 1933, as amended (the “Securities Act”),
which became effective on February 12, 2009, for the registration under the
Securities Act of the Shares and Warrants. At the time of
such filing, the Company met the requirements of Form S-3 under the
Securities Act. Such registration statement meets the requirements
set forth in Rule 415(a)(1)(x) under the Securities Act and complies with
said rule. The Company will file with the Commission, pursuant to
Rule 424(b) under the Securities Act, and the rules and regulations (the
“Rules and
Regulations”) of the Commission promulgated under this Act, a supplement
to the form of prospectus included in such registration statement relating to
the placement of the Shares and Warrants and the plan of distribution
thereof and has advised the Placement Agent of all further information
(financial and other) with respect to the Company required to be set forth
therein. Such registration statement, including the exhibits thereto,
as amended at the date of this Agreement, is hereinafter called the “Registration
Statement”; such prospectus in the form in which it appears in the
Registration Statement is hereinafter called the “Base Prospectus”; and
the supplemented form of prospectus, in the form in which it will be filed with
the Commission pursuant to Rule 424(b) (including the Base Prospectus as so
supplemented), is hereinafter called the “Prospectus
Supplement.” Any reference in this Agreement to the
Registration Statement, the Base Prospectus or the Prospectus Supplement shall
be deemed to refer to and include the documents incorporated by reference
therein (the “Incorporated
Documents”) pursuant to Item 12 of Form S-3 which were filed
under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), on or
before the date of this Agreement or the issue date of the Base Prospectus or
the Prospectus Supplement, as the case may be; and any reference in this
Agreement to the terms “amend,” “amendment” or “supplement,” with
respect to the Registration Statement, the Base Prospectus or the Prospectus
Supplement, shall be deemed to refer to and include the filing of any document
under the Exchange Act after the date of this Agreement or the issue date of the
Base Prospectus or the Prospectus Supplement, as the case may be, deemed to be
incorporated therein by reference. All references in this Agreement
to financial statements and schedules and other information that is “contained,” “included,” “described,” “referenced,” “set forth” or “stated” in the
Registration Statement, the Base Prospectus or the Prospectus Supplement (and
all other references of like import) shall be deemed to mean and include all
such financial statements and schedules and other information that is, or is
deemed to be, incorporated by reference in the Registration Statement, the Base
Prospectus or the Prospectus Supplement, as the case may be. No stop
order suspending the effectiveness of the Registration Statement or the use of
the Base Prospectus has been issued, and no proceeding for any such purpose is
pending or has been initiated or, to the Company's knowledge, is threatened by
the Commission. For purposes of this Agreement, “Time of Sale
Prospectus” means the preliminary prospectus supplement used in
connection with the Placement, including any documents incorporated by reference
therein.
Page
3
(B) The
Registration Statement (and any further documents to be filed in connection
therewith by the Company with the Commission) contains all exhibits and
schedules as required by the Securities Act. The Registration
Statement, at the time it became effective, complied in all material respects
with the Securities Act and the applicable Rules and Regulations and did
not—and, as amended or supplemented, if applicable, will not, as of the
effective date of such amendment or supplement, contain any untrue statement of
a material fact or omit to state a material fact required to be stated therein
or necessary to make the statements therein not misleading; provided, however, that this
representation and warranty shall not apply to any written statements or
omissions made in reliance upon information furnished to the Company by Roth
expressly for use therein. The Base Prospectus, the Time of Sale
Prospectus, if any, and the Prospectus Supplement, each as of its respective
date, comply in all material respects with the Securities Act and the applicable
Rules and Regulations. Each of the Base Prospectus, the Time of Sale
Prospectus, if any, and the Prospectus Supplement, as amended or supplemented,
did not and will not contain as of the date thereof any untrue statement of a
material fact or omit to state a material fact necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading; provided, however, that this
representation and warranty shall not apply to any statements or omissions made
in reliance upon written information furnished to the Company by Roth expressly
for use therein. The Incorporated Documents, when they were filed
with the Commission, conformed in all material respects to the requirements of
the Exchange Act and the applicable Rules and Regulations, and none of such
documents, when filed with the Commission, contained any untrue statement of a
material fact or omitted to state a material fact necessary to make the
statements therein (with respect to Incorporated Documents incorporated by
reference in the Base Prospectus or Prospectus Supplement), in light of the
circumstances under which they were made, not misleading; and any further
documents so filed and incorporated by reference in the Base Prospectus, the
Time of Sale Prospectus, if any, or Prospectus Supplement, when such documents
are filed with the Commission, will conform in all material respects to the
requirements of the Exchange Act and the applicable Rules and Regulations, as
applicable, and will not contain any untrue statement of a material fact or omit
to state a material fact necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading; provided, however, that this
representation and warranty shall not apply to any statements or omissions made
in reliance upon written information furnished to the Company by Roth expressly
for use therein. No post-effective amendment to the Registration
Statement reflecting any facts or events arising after the date thereof but
prior to the date hereof that represent, individually or in the aggregate, a
fundamental change in the information set forth therein is required to be filed
with the Commission. There are no documents required to be filed with
the Commission in connection with the Placement that (x) have not been filed as
required pursuant to the Securities Act or (y) will not be filed within the
requisite time period. There are no contracts or other documents
required to be described in the Base Prospectus, the Time of Sale Prospectus, if
any, or Prospectus Supplement, or to be filed as exhibits or schedules to the
Registration Statement, that have not been described or filed as
required.
(C) The
Company has delivered, or will as promptly as practicable deliver, to the
Placement Agent complete conformed copies of the Registration Statement and of
each consent and certificate of experts, as applicable, filed as a part thereof,
and conformed copies of the Registration Statement (without exhibits), the Base
Prospectus, the Time of Sale Prospectus and the Prospectus Supplement, as
amended or supplemented, in such quantities and at such places as the Placement
Agent reasonably requests. Neither the Company nor any of its directors and
officers has distributed, and none of them will distribute, prior to the Closing
Date, any offering material in connection with the offering and sale of the
Shares and Warrants other than the Base Prospectus, the Time of Sale Prospectus,
the Prospectus Supplement, the Registration Statement, copies of the documents
incorporated by reference therein and any other materials permitted by the
Securities Act.
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4
SECTION 3. REPRESENTATIONS AND
WARRANTIES.
Except as
set forth under the corresponding section of the Disclosure Schedules, which
shall be deemed a part hereof, the Company hereby makes the representations and
warranties set forth below to the Placement Agent.
(A) Organization and
Qualification. All of the direct and indirect subsidiaries
(individually, a “Subsidiary”) of the
Company are set forth on Schedule 3(A). The Company owns, directly or
indirectly, all of the capital stock or other equity interests of each
Subsidiary free and clear of any “Liens” (which, for
purposes of this Agreement, shall mean a lien, charge, security interest,
encumbrance, right of first refusal, preemptive right or other restriction), and
all the issued and outstanding shares of capital stock of each Subsidiary are
validly issued and are fully paid, non-assessable and free of preemptive and
similar rights to subscribe for or purchase securities. Each of the
Company and each Subsidiary 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 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 or default of any of the provisions of its
respective certificate or articles of incorporation, bylaws or other
organizational or charter documents. Each of the Company and the
Subsidiaries is duly qualified to conduct business and is in good standing as a
foreign corporation or other entity in each jurisdiction in which the nature of
the business conducted or property owned by it makes such qualification
necessary, except where the failure to be so qualified or in good standing, as
the case may be, could not have or reasonably be expected to result in (i) a
material adverse effect on the legality, validity or enforceability of any
Transaction Document, (ii) a material adverse effect on the results of
operations, assets, business or condition (financial or otherwise) of the
Company and the Subsidiaries, taken as a whole, or (iii) a material adverse
effect on the Company’s ability to perform, in any material respect and on a
timely basis, its obligations under any Transaction Document (any of clauses
(i), (ii) or (iii), a “Material Adverse
Effect”, and no “Proceeding” (which,
for purposes of this Agreement, shall mean any action, claim, suit,
investigation or proceeding (including, without limitation, an investigation or
partial proceeding, such as a deposition), whether commenced or, to the
Company’s knowledge, threatened) has been instituted in any such jurisdiction
revoking, limiting or curtailing, or seeking to revoke, limit or curtail, such
power and authority or qualification.
(B) Authorization;
Enforcement. 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
hereunder and thereunder. The execution and delivery of each of the
Transaction Documents by the Company and the consummation by it of the
transactions contemplated thereby have been duly authorized by all necessary
action on the part of the Company, and no further action is required by the
Company, the Company’s board of directors (the “Board of Directors”)
or the Company’s stockholders in connection therewith other than in connection
with the Required Approvals (as defined in subsection 3(D)
below). 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 and thereof, will constitute the valid and binding obligation
of the Company enforceable against the Company in accordance with its terms
except (i) as limited by applicable bankruptcy, insolvency, reorganization,
moratorium and other laws of general application affecting enforcement of
creditors’ rights generally, (ii) as limited by laws relating to the
availability of specific performance, injunctive relief or other equitable
remedies and (iii) insofar as indemnification and contribution provisions may be
limited by applicable law.
(C) No
Conflicts. The execution, delivery and performance of the
Transaction Documents by the Company, the issuance and sale of
the Shares and Warrants and the consummation by the Company of the
other transactions contemplated hereby and thereby do not and will not (i)
conflict with or violate any provision of the Company’s or any Subsidiary’s
certificate or articles of incorporation, bylaws or other organizational or
charter documents, or (ii) result in the creation of any Lien upon any of the
properties or assets of the Company or any Subsidiary, or give to others any
rights of termination, amendment, acceleration or cancellation (with or without
notice, lapse of time or both) of, or conflict with, or constitute a default (or
an event that with notice or lapse of time or both would become a default)
under, any agreement, credit facility, debt or other instrument (evidencing a
Company or Subsidiary debt or otherwise) or other understanding to which the
Company or any Subsidiary is a party or by which any property or asset of the
Company or any Subsidiary is bound or affected, or (iii) subject to the Required
Approvals, conflict with or result in a violation of any law, rule, regulation,
order, judgment, injunction, decree or other restriction of any court or
governmental authority to which the Company or a Subsidiary is subject
(including federal and state securities laws and regulations), or by which any
property or asset of the Company or a Subsidiary is bound or affected, except,
in the case of each of clauses (ii) and (iii), such as could not have or
reasonably be expected to result in a Material Adverse Effect.
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(D) 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 individual, 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, including, without limitation, any Trading Market
(as defined below) (collectively, “Persons”) in
connection with the execution, delivery and performance by the Company of the
Transaction Documents, other than such filings as are required to be made under
applicable federal and state securities laws (collectively, the “Required
Approvals”).
(E) Issuance of the Securities;
Registration. The Shares and Warrants are duly authorized and,
when issued and paid for in accordance with the applicable Transaction Documents
(i) the Shares will be duly and validly issued, fully paid and nonassessable,
free and clear of all Liens imposed by the Company and (ii) the Warrants will be
duly and validly issued, free and clear of all Liens imposed by the
Company. The Warrant Shares, when issued in accordance with the terms
of the Warrants, will be validly issued, fully paid and nonassessable, free and
clear of all Liens imposed by the Company. The Company has reserved
from its duly authorized capital stock the maximum number of shares of Common
Stock issuable pursuant to the Transaction Documents. The issuance by
the Company of the Securities has been registered under the Securities Act and
all of the Securities, when issued in accordance with the Transaction Documents
and the plan of distribution described in the Registration Statement, Base
Prospectus and Time of Sale Prospectus, will be freely transferable and tradable
by the Purchasers without restriction (other than any restrictions arising
solely from an act or omission of a Purchaser). The Registration
Statement is effective and available for the issuance of the Securities
thereunder, and the Company has not received any notice that the Commission has
issued or intends to issue a stop order with respect to the Registration
Statement or that the Commission otherwise has suspended or withdrawn the
effectiveness of the Registration Statement, either temporarily or permanently,
or intends or has threatened in writing to do so. The “Plan of
Distribution” section under the Registration Statement, as amended or
supplemented by a post-effective amendment thereto or by the Base Prospectus and
Time of Sale Prospectus, permits the issuance and sale of the Securities as
contemplated hereunder. Upon issuance of the Securities on the terms
set forth in the Purchase Agreement, the Purchasers will have good and
marketable title to such Securities and the Shares will be listed and authorized
for trading on the “Trading Market”
(which, for purposes of this Agreement, shall mean the following markets or
exchanges on which the Common Stock is listed or quoted for trading on the date
in question: the Nasdaq Capital Market, the NYSE Amex, the New York Stock
Exchange, the Nasdaq National Market or the OTC Bulletin Board).
(F) Capitalization. The
capitalization of the Company is as set forth on Schedule 3(F). The
Company has not issued any capital stock since its most recently filed periodic
report under the Exchange Act, other than pursuant to the exercise of stock
options under the Company’s stock option plans, the issuance of shares of Common
Stock to employees pursuant to the Company’s employee stock purchase plan and
pursuant to the conversion or exercise of securities exercisable, exchangeable
or convertible into Common Stock (“Common Stock
Equivalents”). 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 described
in the Company’s SEC Reports, there are no outstanding options, warrants, scrip
rights to subscribe to, calls or commitments of any character whatsoever
relating to, or securities, rights or obligations convertible into or
exercisable or exchangeable for, or giving any Person any right to subscribe for
or acquire, any shares of Common Stock, or contracts, commitments,
understandings or arrangements by which the Company or any Subsidiary is or may
become bound to issue additional shares of Common Stock or Common Stock
Equivalents, other than as a result of the purchase and sale of
the Shares and Warrants. The issuance and sale of
the Shares and Warrants 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 to adjust the
exercise, conversion, exchange or reset price under such
securities. All of the outstanding shares of capital stock of the
Company are validly issued, fully paid and nonassessable. No
further approval or authorization of any stockholder, the Board of Directors or
others is required for the issuance and sale of the Securities. There
are no stockholders agreements, voting agreements or other similar agreements
with respect to the Company’s capital stock to which the Company is a party or,
to the knowledge of the Company, between or among any of the Company’s
stockholders that are not described in the SEC Reports.
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6
(G) SEC Reports; Financial
Statements. The Company has complied in all material respects
with requirements to file all reports, schedules, forms, statements and other
documents required to be filed by it under the Exchange Act, including pursuant
to Section 13(a) or 15(d) thereof, for the two years preceding the date hereof
(or such shorter period as the Company was required by law to file such
material) (the foregoing materials, including the exhibits thereto and documents
incorporated by reference therein, being collectively referred to herein as the
“SEC Reports”)
on a timely basis or has received a valid extension of such time of filing and
has filed any such SEC Reports prior to the expiration of any such
extension. As of their respective dates, the SEC Reports complied in
all material respects with the requirements of the Exchange Act and the rules
and regulations of the Commission promulgated thereunder, and none of the SEC
Reports, when filed, contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary in
order to make the statements therein, in the light of the circumstances under
which they were made, not misleading. The financial statements of the
Company included in the SEC Reports comply in all material respects with
applicable accounting requirements and the rules and regulations of the
Commission with respect thereto as in effect at the time of
filing. Such financial statements have been prepared in accordance
with United States generally accepted accounting principles applied on a
consistent basis during the periods involved (“GAAP”), except as may
be otherwise specified in such financial statements or the notes thereto and
except to the extent that unaudited financial statements may not contain all
footnotes required by GAAP, and such statements fairly present in all material
respects the financial position of the Company and its consolidated subsidiaries
as of and for the dates thereof and the results of operations and cash flows for
the periods then ended, subject, in the case of unaudited statements, to normal,
immaterial, year-end audit adjustments.
(H) Material Changes;
Undisclosed Events, Liabilities or Developments. Since the
date of the latest audited financial statements included the SEC Reports, except
as specifically disclosed in a subsequent SEC Report filed prior to the date
hereof, (i) there has been no event, occurrence or development that has had, or
that could reasonably be expected to result in, a Material Adverse Effect, (ii)
the Company has not incurred any liabilities (contingent or otherwise) other
than (A) trade payables and accrued expenses incurred in the ordinary course of
business consistent with past practice and (B) liabilities not required to be
reflected in the Company’s financial statements pursuant to GAAP or required to
be disclosed in filings made with the Commission, (iii) the Company has not
altered its method of accounting, (iv) the Company has not declared or made any
dividend or distribution of cash or other property to its stockholders or
purchased, redeemed or made any agreements to purchase or redeem any shares of
its capital stock and (v) the Company has not issued any equity securities to
any officer, director or “Affiliate” (defined
as 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 under the Securities Act), except
pursuant to existing Company stock option plans. As of the date
hereof, the Company does not have pending before the Commission any request for
confidential treatment of information. Except for the issuance of the
Securities contemplated by this Agreement or as set forth on Schedule 3(H), no
event, liability or development has occurred or exists, with respect to the
Company or its Subsidiaries or their respective business, properties, operations
or financial condition, that would be required to be disclosed by the Company
under applicable securities laws at the time this representation is made that
has not been publicly disclosed at least one Trading Day (defined as a day on
which the applicable Trading Market is open for trading) prior to the date on
which this representation is made.
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7
(I) Litigation. There
is no action, suit, inquiry, notice of violation, Proceeding or investigation
pending or, to the knowledge of the Company, threatened against or affecting the
Company, any Subsidiary or any of their respective properties before or by any
court, arbitrator, governmental or administrative agency or regulatory authority
(federal, state, county, local or foreign) (collectively, an “Action”) (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, reasonably be expected to result in a Material Adverse
Effect. Neither the Company nor any Subsidiary, nor 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. There has not been, and, to the knowledge
of the Company, there is not pending or contemplated, any investigation by the
Commission involving the Company or any current or former director or officer of
the Company. No executive officer, to the knowledge of the Company,
is, or is now expected to be, in violation of any material term of any
employment contract, confidentiality, disclosure or proprietary information
agreement or non-competition agreement, or any other contract or agreement or
any restrictive covenant, and the continued employment of each such executive
officer does not subject the Company or any of its Subsidiaries to any material
liability with respect to any of the foregoing matters. The Company
and its Subsidiaries are in compliance with all U.S. federal, state, local and
foreign laws and regulations relating to employment and employment practices,
terms and conditions of employment and wages and hours, except where the failure
to be in compliance could not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect.
(J) Labor
Relations. None of the Company’s or its Subsidiaries’
employees is a member of a union that relates to such employee’s relationship
with the Company, neither the Company nor any of its Subsidiaries is a party to
a collective bargaining agreement, and the Company and its Subsidiaries believe
that their relationships with their employees are good. No material
labor dispute exists or, to the knowledge of the Company, is imminent with
respect to any of the employees of the Company that could reasonably be expected
to result in a Material Adverse Effect.
(K) 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 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 and all such laws that affect the environment, except in each case as
could not reasonably be expected to have a Material Adverse Effect.
(L) Regulatory
Permits. The Company and the Subsidiaries possess all
certificates, authorizations and permits issued by the appropriate federal,
state, local or foreign regulatory authorities necessary to conduct their
respective businesses as described in the SEC Reports, except where the failure
to possess such permits could not reasonably be expected to result in a Material
Adverse Effect (“Material Permits”),
and neither the Company nor any Subsidiary has received any notice of
proceedings relating to the revocation or modification of any Material
Permit.
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8
(M) Title to
Assets. The Company and the Subsidiaries have good and
marketable title in fee simple to all real property owned by them that is
material to the business of the Company and the Subsidiaries and good and
marketable title to all personal property owned by them that is material to the
business of the Company and the Subsidiaries, in each case free and clear of all
Liens, except for Liens as do not materially affect the value of such property
and do not materially interfere with the use made and proposed to be made of
such property by the Company and the Subsidiaries and Liens for the payment of
federal, state or other taxes, the payment of which is neither delinquent nor
subject to penalties. Any real property and facilities held under
lease by the Company and the Subsidiaries are held by them under valid,
subsisting and enforceable leases of which the Company and the Subsidiaries are
in compliance with such exceptions as are not material and do not materially
interfere with the use made and proposed to be made of such property and
building by the Company and the Subsidiaries.
(N) Patents and
Trademarks. Except as set forth in the SEC Reports, to its
knowledge the Company and the Subsidiaries have, or have rights to use, all
patents, patent applications, trademarks, trademark applications, service marks,
trade names, trade secrets, inventions, copyrights, licenses and other similar
intellectual property rights necessary or material for use in connection with
their respective businesses as described in the SEC Reports and which the
failure to so have could reasonably be expected to have a Material Adverse
Effect (collectively, the “Intellectual Property
Rights”). Neither the Company nor any Subsidiary has received
a notice (written or otherwise) from a third party that the Intellectual
Property Rights used by the Company or any Subsidiary violates or infringes upon
the rights of such third party. The Company also has
no knowledge of existing infringement by another Person of
any of the Intellectual Property Rights of the Company or its
Subsidiaries. The Company and its Subsidiaries have taken reasonable
security measures to protect the secrecy and confidentiality of their
confidential information, except where the failure to do so could not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.
(O) Insurance. The
Company and the Subsidiaries are insured by insurers of recognized financial
responsibility against such losses and risks and in such amounts as are prudent
and customary in the businesses in which the Company and the Subsidiaries are
engaged, including, but not limited to, directors and officers insurance
coverage at least equal to the aggregate subscription amount under the
Transaction Documents. To the knowledge of the Company, such
insurance contracts and policies are accurate and complete. 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.
(P) Transactions with Affiliates
and Employees. Except as set forth in the SEC Reports, none of
the officers, directors or, to the knowledge of the Company, 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 (i) for payment of
salary or consulting fees for services rendered, (ii) reimbursement for expenses
incurred on behalf of the Company and (iii) for other employee benefits,
including stock option agreements under any stock option plan of the
Company.
(Q) Sarbanes-Oxley. The
Company is in material compliance with all provisions of the Sarbanes-Oxley Act
of 2002 that are applicable to it as of the date hereof and the Closing
Date.
(R) Certain
Fees. Except as otherwise provided in this Agreement, 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 the Transaction Documents. 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 the Transaction
Documents.
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9
(S) Trading Market
Rules. The issuance and sale of the Shares and
Warrants hereunder does not contravene the rules and regulations of the Trading
Market.
(T) Investment
Company. The Company is not, is not an Affiliate of and,
immediately after receipt of payment for the Shares and Warrants,
will not be, or be an Affiliate of, an “investment company” within the meaning
of the Investment Company Act of 1940, as amended.
(U) Registration
Rights. No Person has any right to cause the Company to effect
the registration under the Securities Act of any securities of the Company as a
result of the transactions contemplated by this Agreement.
(V) Listing and Maintenance
Requirements. The Company’s Common Stock is registered
pursuant to Section 12(b) or 12(g) of the Exchange Act, and the Company has
taken no action designed to, or that to its knowledge is likely to have the
effect of, terminating the registration of the Common Stock under the Exchange
Act, nor has the Company received any notification that the Commission is
contemplating terminating such registration. The Company has not, in
the twelve (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 in compliance
with all such listing and maintenance requirements. The issuance and
listing of the Shares on the NYSE Amex requires no further approval of the
Company’s shareholders.
(W) Application of Takeover
Protections. The Company and the Board of Directors will take
all action the Board of Directors determines appropriate, 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 could
reasonably be expected to become applicable to the Purchasers as a result of the
Purchasers and the Company fulfilling their obligations or exercising their
rights under the Transaction Documents, including, without limitation, as a
result of the Company’s issuance of the Shares and Warrants and the
Purchasers’ ownership of the Shares and Warrants.
(X) Tax
Status. Except for matters that would not, individually or in
the aggregate, have or reasonably be expected to result in a Material Adverse
Effect, the Company and each Subsidiary has filed all necessary federal, state
and foreign income and franchise tax returns and has paid or accrued all taxes
shown as due thereon, and the Company has no knowledge of a tax deficiency that
has been asserted or threatened against the Company or any
Subsidiary.
(Y) Foreign Corrupt
Practices. Neither the Company nor, to the knowledge of the
Company, any agent or other person acting on behalf of the Company has (i)
directly or indirectly, used any funds for unlawful contributions, gifts,
entertainment or other unlawful expenses related to foreign or domestic
political activity, (ii) made any unlawful payment to foreign or domestic
government officials or employees or to any foreign or domestic political
parties or campaigns from corporate funds, (iii) failed to disclose fully any
contribution made by the Company (or made by any person acting on its behalf of
which the Company is aware) that is in violation of law or (iv) violated in any
material respect any provision of the Foreign Corrupt Practices Act of 1977, as
amended.
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10
(Z) Accountants. The
Company’s independent registered public accounting firm is identified on
Schedule 3(Z) of the Disclosure Schedule and such firm is a registered public
accounting firm as required by the Securities Act.
(AA) 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 (other than for the placement
agent’s placement of the Securities) or (iii) paid or agreed to pay to any
person any compensation for soliciting another to purchase any other securities
of the Company.
(BB) FINRA
Affiliations. There are no affiliations with any FINRA member
firm among the Company’s officers, directors or, to the Company’s knowledge, any
five percent (5%) or greater stockholder of the Company, except as set forth in
the Base Prospectus.
SECTION 4. INDEMNIFICATION. The
Company agrees to the indemnification and other agreements set forth in the
Indemnification Provisions (the “Indemnification”)
attached hereto as Addendum A, the provisions of which are incorporated herein
by reference and shall survive the termination or expiration of this
Agreement.
SECTION 5. ENGAGEMENT
TERM. Roth’s engagement hereunder will be for the period of
thirty (30) days. The engagement may be terminated by either the
Company or Roth at any time upon ten (10) days’ written
notice. Notwithstanding anything to the contrary contained herein,
the provisions concerning confidentiality, indemnification, contribution and the
Company’s obligations to pay fees actually earned and reimburse actual expenses
incurred and payable contained herein and the Company’s obligations contained in
the Indemnification Provisions will survive any expiration or termination of
this Agreement. Roth agrees not to use any confidential information
concerning the Company provided to them by the Company for any purposes other
than those contemplated under this Agreement.
SECTION 6. ROTH
INFORMATION. The Company agrees that any information or advice
rendered by Roth in connection with this engagement is for the confidential use
of the Company only in their evaluation of the Placement and that, except as
otherwise required by law, the Company will not disclose or otherwise refer to
such advice or information in any manner without Roth’s prior written consent.
Notwithstanding the foregoing, to the extent required, the Company may file this
Agreement and any Transaction Document with the Commission in any filing made by
the Company pursuant to the Securities Act, the Exchange Act or the rules and
regulations thereunder, and may refer to Roth’s engagement hereunder and the
terms of this Agreement in any such filing (including any exhibit
thereto).
SECTION 7. NO FIDUCIARY
RELATIONSHIP. This Agreement does not create, and shall not be
construed as creating rights enforceable by any person or entity not a party
hereto, except those entitled hereto by virtue of the Indemnification Provisions
hereof. The Company acknowledges and agrees that Roth is not and
shall not be construed as a fiduciary of the Company and shall have no duties or
liabilities to the equity holders or the creditors of the Company or any other
person by virtue of this Agreement or the retention of Roth hereunder, all of
which duties and liabilities are hereby expressly waived.
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11
SECTION 8. CLOSING. The
obligations of the Placement Agent, and the closing of the sale of
the Shares and Warrants hereunder are subject to the accuracy, when
made and on the Closing Date, of the representations and warranties on the part
of the Company and its Subsidiaries contained herein, to the accuracy of the
statements of the Company and its Subsidiaries made in any certificates pursuant
to the provisions hereof, to the performance by the Company and its Subsidiaries
of their obligations hereunder, and to each of the following additional terms
and conditions:
(A) No
stop order suspending the effectiveness of the Registration Statement shall have
been issued and no proceedings for that purpose shall have been initiated or
threatened by the Commission, and any request for additional information on the
part of the Commission (to be included in the Registration Statement, the Base
Prospectus or the Prospectus Supplement or otherwise) shall have been complied
with to the reasonable satisfaction of the Placement Agent.
(B) The
Placement Agent shall not have discovered and disclosed to the Company on or
prior to the Closing Date that the Registration Statement, the Base Prospectus
or the Prospectus Supplement or any amendment or supplement thereto contains an
untrue statement of a fact which is material or omits to state any fact which is
material and is required to be stated therein or is necessary to make the
statements therein not misleading.
(C) All
corporate proceedings and other legal matters incident to the authorization,
form, execution, delivery and validity of each of this Agreement, the
Securities, the Registration Statement, the Base Prospectus and the Prospectus
Supplement and all other legal matters relating to this Agreement and the
transactions contemplated hereby shall be reasonably satisfactory in all
material respects to counsel for the Placement Agent, and the Company shall have
furnished to such counsel all documents and information that they may reasonably
request to enable them to pass upon such matters.
(D) The
Placement Agent shall have received from outside counsel to the Company such
counsel’s written opinion, addressed to the Placement Agent and the Purchasers
dated as of the Closing Date, in form and substance reasonably satisfactory to
the Placement Agent and a customary “negative assurances” statement from such
counsel.
(E) (i)
Neither the Company nor any of its Subsidiaries shall have sustained, since the
date of the latest audited financial statements included or incorporated by
reference in the Base Prospectus, any loss or interference with its business
from fire, explosion, flood, terrorist act or other calamity, whether or not
covered by insurance, or from any labor dispute or court or governmental action,
order or decree, otherwise than as set forth in or contemplated by the Base
Prospectus, and (ii) since such date there shall not have been any change in the
capital stock or long-term debt of the Company or any of its Subsidiaries or any
change, or any development involving a prospective change, in or affecting the
business, general affairs, management, financial position, stockholders’ equity
or results of operations of the Company and its Subsidiaries, otherwise than as
set forth in or contemplated by the Base Prospectus, the effect of which, in any
such case described in clause (i) or (ii), is, in the judgment of the Placement
Agent, so material and adverse as to make it impracticable or inadvisable to
proceed with the sale or delivery of the Shares and Warrants on the
terms and in the manner contemplated by the Base Prospectus, the Time of Sale
Prospectus and the Prospectus Supplement.
(F) The
Common Stock is registered under the Exchange Act, and, as of the Closing Date,
the Shares shall be listed and admitted and authorized for trading on the NYSE
Amex, and satisfactory evidence of such actions shall have been provided to the
Placement Agent. The Company shall have taken no action designed to
terminate, or likely to have the effect of terminating, the registration of the
Common Stock under the Exchange Act or delist or suspend, or likely to have the
effect of delisting or suspending, from trading the Common Stock from the NYSE
Amex, nor has the Company received any information suggesting that the
Commission or the NYSE Amex is contemplating terminating such registration or
listing.
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12
(G) Subsequent
to the execution and delivery of this Agreement, there shall not have occurred
any of the following: (i) trading in securities generally on the New York Stock
Exchange, the Nasdaq National Market or the NYSE Amex or in the over-the-counter
market, or trading in any securities of the Company on any exchange or in the
over-the-counter market, shall have been suspended or minimum or maximum prices
or maximum ranges for prices shall have been established on any such exchange or
such market by the Commission, by such exchange or by any other regulatory body
or governmental authority having jurisdiction, (ii) a banking moratorium shall
have been declared by federal or state authorities or a material disruption has
occurred in commercial banking or securities settlement or clearance services in
the United States, (iii) the United States shall have become engaged in
hostilities in which it is not currently engaged or the subject of an act of
terrorism, there shall have been an escalation in hostilities involving the
United States, or there shall have been a declaration of a national emergency or
war by the United States or (iv) there shall have occurred any other calamity or
crisis or any change in general economic, political or financial conditions in
the United States or elsewhere, if the effect of any such event in clause (iii)
or (iv) makes it, in the reasonable judgment of the Placement Agent,
impracticable or inadvisable to proceed with the sale or delivery of
the Shares and Warrants on the terms and in the manner contemplated
by the Base Prospectus, the Time of Sale Prospectus and the Prospectus
Supplement.
(H) No
action shall have been taken, and no statute, rule, regulation or order shall
have been enacted, adopted or issued by any governmental agency or body, that
would, as of the Closing Date, prevent the issuance or sale of
the Shares and Warrants or materially and adversely affect or
potentially materially and adversely affect the business or operations of the
Company; and no injunction, restraining order or order of any other nature by
any federal or state court of competent jurisdiction shall have been issued as
of the Closing Date that would prevent the issuance or sale of
the Shares and Warrants or materially and adversely affect or
potentially materially and adversely affect the business or operations of the
Company.
(I) The
Company shall have prepared and filed with the Commission a Current Report on
Form 8-K with respect to the Placement, including as an exhibit thereto this
Agreement.
(J) The
Company shall have entered into subscription agreements with each of the
Purchasers and such agreements shall be in full force and effect and shall
contain representations and warranties of the Company as agreed between the
Company and the Purchasers.
(K)FINRA
shall have raised no objection to the fairness and reasonableness of the terms
and arrangements of this Agreement. In addition, the Company shall,
if requested by the Placement Agent, make or authorize Placement Agent’s counsel
to make, on the Company’s behalf, an Issuer Filing with FINRA pursuant to FINRA
Rule 5110 with respect to the Registration Statement and pay all filing fees
required in connection therewith.
(L) Prior
to the Closing Date, the Company shall have furnished to the Placement Agent
such further information, certificates and documents as the Placement Agent may
reasonably request.
All
opinions, letters, evidence and certificates mentioned above or elsewhere in
this Agreement shall be deemed to be in compliance with the provisions hereof
only if they are in form and substance reasonably satisfactory to counsel for
the Placement Agent.
SECTION 9. GOVERNING
LAW. This Agreement will be governed by, and construed in
accordance with, the laws of the State of New York applicable to agreements made
and to be performed entirely in such State. This Agreement may not be
assigned by either party without the prior written consent of the other
party. This Agreement shall be binding upon and inure to the benefit
of the parties hereto, and their respective successors and permitted
assigns. Any right
to trial by jury with respect to any dispute arising under this Agreement or any
transaction or conduct in connection herewith is waived. Any
dispute arising under this Agreement may be brought into the courts of the State
of New York or into the Federal Court located in New York, New York, and, by
execution and delivery of this Agreement, the Company hereby accepts for itself
and in respect of its property, generally and unconditionally, the jurisdiction
of aforesaid courts. Each party hereto hereby irrevocably waives
personal service of process and consents to process being served in any such
suit, action or proceeding by delivering a copy thereof via overnight delivery
(with evidence of delivery) to such party at the address in effect for notices
to it under this Agreement and agrees that such service shall constitute good
and sufficient service of process and notice thereof. Nothing
contained herein shall be deemed to limit in any way any right to serve process
in any manner permitted by law. If either party shall commence an
action or proceeding to enforce any provisions of a Transaction Document, then
the prevailing party in such action or proceeding shall be reimbursed by the
other party for its attorneys fees and other costs and expenses incurred with
the investigation, preparation and prosecution of such action or
proceeding.
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13
SECTION
10. ENTIRE
AGREEMENT/MISC. This Agreement (including the attached
Indemnification Provisions) embodies the entire agreement and understanding
between the parties hereto, and supersedes all prior agreements and
understandings, relating to the subject matter hereof. If any
provision of this Agreement is determined to be invalid or unenforceable in any
respect, such determination will not affect such provision in any other respect
or any other provision of this Agreement, which will remain in full force and
effect. This Agreement may not be amended or otherwise modified or
waived except by an instrument in writing signed by both Roth and the
Company. The representations, warranties, agreements and covenants
contained herein shall survive the closing of the Placement and delivery and/or
exercise of the Shares and Warrants, as applicable. 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 or a .pdf format file, such signature shall create a
valid and binding obligation of the party executing (or on whose behalf such
signature is executed) with the same force and effect as if such facsimile or
..pdf signature page were an original thereof.
SECTION
11. 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 6:30 p.m. (New York City time) on a
business day, (b) the next business 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 business day or later
than 6:30 p.m. (New York City time) on any business day, (c) the business day
following the date of mailing, if sent by U.S. nationally recognized overnight
courier service, or (d) upon actual receipt by the party to whom such notice is
required to be given. The address for such notices and communications
shall be as set forth on the signature pages hereto.
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14
Please
confirm that the foregoing correctly sets forth our agreement by signing and
returning to Roth the enclosed copy of this Agreement.
|
Very
truly yours,
PHARMATHENE, INC.
|
|||
|
|
By:
|
/s/ Eric I. Richman | |
| Name: Eric I. Richman | |||
| Title: President | |||
| Address for notice: | |||
|
One
Park Place
Suite 450
Annapolis, MD 21401
Fax (410) 269-2601
Attention: General Counsel
|
|||
|
With
a copy to:
Sonnenschein
Nath & Rosenthal LLP
1221
Avenue of the Americas
New
York, NY 10020
Fax
(212) 768-6800
Attention: Jeffrey
A. Baumel
|
|||
Accepted
and Agreed to as of
the date
first written above:
ROTH
CAPITAL PARTNERS, LLC
By: /s/ Aaron M.
Gurewitz
Name:
Aaron M. Gurewitz
Title:
Head of Equity Capital Markets
Address for
notice:
Roth
Capital Partners, LLC
24
Corporate Plaza
Newport
Beach, CA 92660
Fax:
949-720-7227
Attention: Aaron
Gurewitz
with a
copy to:
Lowenstein
Sandler PC
1251
Avenue of the Americas
New York,
New York 10020
Fax:
973-597-2400
Attention:
John D. Hogoboom
ADDENDUM
A
INDEMNIFICATION
PROVISIONS
In connection with the engagement of
Roth Capital Partners, LLC (“Roth”), by PharmAthene, Inc.
(the “Company”), pursuant
to a letter agreement dated April 7, 2010, between the Company and Roth, as it
may be amended from time to time in writing (the “Agreement”), the
Company hereby agrees as follows:
|
1.
|
To
the extent permitted by law, the Company will indemnify Roth and its
affiliates, stockholders, directors, officers, employees and controlling
persons (within the meaning of Section 15 of the Securities Act of 1933,
as amended, or Section 20 of the Securities Exchange Act of 1934, as
amended) (each an “indemnified party”) against all losses, claims,
damages, expenses and liabilities, as the same are incurred (including the
reasonable fees and expenses of counsel), relating to or arising out of
its activities hereunder or pursuant to the Agreement, except to the
extent that any losses, claims, damages, expenses or liabilities (or
actions in respect thereof) are found in a final judgment (not subject to
appeal) by a court of law to have resulted primarily and directly from
Roth’s willful misconduct or gross negligence in performing the services
described herein.
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2.
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Promptly
after receipt by an indemnified party of notice of any claim or the
commencement of any action or proceeding with respect to which the
Indemnified party is entitled to indemnity hereunder, the indemnified
party will notify the Company in writing of such claim or of the
commencement of such action or proceeding, and the Company will assume the
defense of such action or proceeding and will employ counsel reasonably
satisfactory to the indemnified party and will pay the fees and expenses
of such counsel. Notwithstanding the preceding sentence, the
indemnified party will be entitled to employ counsel separate from counsel
for the Company and from any other party in such action if counsel for the
indemnified party reasonably determines that it would be inappropriate
under the applicable rules of professional responsibility for the same
counsel to represent both the Company and such indemnified
party. In such event, the reasonable fees and disbursements of
no more than one such separate counsel will be paid by the
Company. The Company will have the exclusive right to settle
the claim or proceeding; provided that the
Company will not settle any such claim, action or proceeding without the
prior written consent of the indemnified party, which consent will not be
unreasonably withheld.
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3.
|
The
Company agrees to notify Roth promptly of the assertion against it or any
other person of any claim or the commencement of any action or proceeding
relating to a transaction contemplated by the
Agreement.
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4.
|
If
for any reason the foregoing indemnity is unavailable to an indemnified
party or insufficient to hold the indemnified party harmless, then the
Company shall contribute to the amount paid or payable by such indemnified
party as a result of such losses, claims, damages or liabilities in such
proportion as is appropriate to reflect not only the relative benefits
received by the Company, on the one hand, and the indemnified party, on
the other, but also the relative fault of the Company, on the one hand,
and the indemnified party, on the other, that resulted in such losses,
claims, damages or liabilities, as well as any relevant equitable
considerations. The amounts paid or payable by a party in
respect of losses, claims, damages and liabilities referred to above shall
be deemed to include any legal or other fees and expenses incurred in
defending any litigation, proceeding or other action or
claim. Notwithstanding the provisions hereof, Roth’s share of
the liability hereunder shall not be in excess of the amount of fees
actually received, or to be received, by Roth under the Agreement
(excluding any amounts received as reimbursement of expenses incurred by
Roth).
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5.
|
These
Indemnification Provisions shall remain in full force and effect whether
or not the transaction contemplated by the Agreement is completed, shall
survive the termination of the Agreement and shall be in addition to any
liability that the Company might otherwise have to any indemnified party
under the Agreement or otherwise.
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PHARMATHENE, INC.
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By:
|
/s/ Eric I. Richman | |
| Name: Eric I. Richman | |||
| Title: President | |||
Accepted
and Agreed to as of
the date
first written above:
ROTH
CAPITAL PARTNERS, LLC
By: /s/ Aaron M.
Gurewitz
Name:
Aaron M. Gurewitz
Title:
Head of Equity Capital Markets
Exhibit
A
Form
of Securities Purchase Agreement
Exhibit B
Pricing
Information
Number of
Shares to be Sold: 1,666,668
Number of
Warrants to be Sold: 500,000
Offering
Price: $1.50
Exercise
Price of Warrants: $1.89
Aggregate
Placement Agency Fee: $175,000.14
Exhibit
C
Form
of Warrant
SECURITIES
PURCHASE AGREEMENT
This
Securities Purchase Agreement (this “Agreement”) is dated
as of April 7, 2010, between PharmAthene, Inc., a Delaware corporation (the
“Company”), and
the purchaser identified on the signature page hereto (including its successors
and assigns, the “Purchaser”).
WHEREAS,
subject to the terms and conditions set forth in this Agreement and pursuant to
an effective registration statement under the Securities Act of 1933, as amended
(the “Securities
Act”), the Company desires to issue and sell to the Purchaser, and the
Purchaser desires to purchase from the Company, securities of the Company as
more fully described in this Agreement.
NOW,
THEREFORE, IN CONSIDERATION of the mutual covenants contained in this Agreement,
and for other good and valuable consideration the receipt and adequacy of which
are hereby acknowledged, the Company and the Purchaser agree as
follows:
ARTICLE
I.
DEFINITIONS
1.1 Definitions. In
addition to the terms defined elsewhere in this Agreement, for all purposes of
this Agreement, the following terms have the meanings set forth in this Section
1.1:
“Action” shall have
the meaning ascribed to such term in Section 3.1(j).
“Affiliate” means any
Person that, directly or indirectly through one or more intermediaries, controls
or is controlled by or is under common control with a Person as such terms are
used in and construed under Rule 405 under the Securities Act.
“Board of Directors”
means the board of directors of the Company.
“Business Day” means
any day except any Saturday, any Sunday, any day which is a federal legal
holiday in the United States or any day on which banking institutions in the
State of New York are authorized or required by law or other governmental action
to close.
“Closing” means the
closing of the purchase and sale of the Shares and Warrants pursuant
to Section 2.1.
“Closing Date” means
the Trading Day on which all of the Transaction Documents have been executed and
delivered by the applicable parties thereto, and all conditions precedent to (i)
the Purchaser’s obligations to pay the Subscription Amount and (ii) the
Company’s obligations to deliver the Shares and Warrants, in each case, have
been satisfied or waived.
“Commission” means the
United States Securities and Exchange Commission.
“Common Stock” means
the common stock of the Company, no par value per share, and any other class of
securities into which such securities may hereafter be reclassified or
changed.
“Common Stock
Equivalents” means any securities of the Company or the Subsidiaries
which would entitle the holder thereof to acquire at any time Common Stock,
including, without limitation, preferred stock, rights, options, warrants or
other instrument that is at any time convertible into or exercisable or
exchangeable for, or otherwise entitles the holder thereof to receive, Common
Stock; provided, however, that “Common
Stock Equivalents” shall not include any indebtedness which is convertible into
or exchangeable for Common Stock.
“Company Counsel”
means Sonnenschein Nath & Rosenthal, LLP.
“Evaluation Date”
shall have the meaning ascribed to such term in Section 3.1(r).
“Exchange Act” means
the Securities Exchange Act of 1934, as amended, and the rules and regulations
promulgated thereunder.
“Exempt Issuance”
means the issuance of (a) shares of Common Stock or options to employees,
officers or directors of (or, commencing 45 days after the Closing Date,
consultants to) the Company pursuant to any stock or option plan duly adopted
for such purpose, by a majority of the non-employee members of the Board of
Directors or a majority of the members of a committee of non-employee directors
established for such purpose, including, but not limited to, the Company’s 2007
Long-Term Incentive Compensation Plan (b) securities upon the exercise or
exchange of or conversion of any Securities issued hereunder and/or other
securities issued and outstanding on the date of this Agreement that are
exercisable or exchangeable for or convertible into shares of Common Stock,
provided that such securities have not been amended since the date of this
Agreement to increase the number of such securities or to decrease the exercise
price, exchange price or conversion price of such securities, and (c) securities
issued pursuant to acquisitions or strategic transactions approved by a majority
of the disinterested directors of the Company, provided that any such issuance
shall only be to a Person (or to the equityholders of a Person) which is, itself
or through its subsidiaries, an operating company or an asset in a business
synergistic with the business of the Company and shall provide to the Company
additional benefits in addition to the investment of funds, but shall not
include a transaction in which the Company is issuing securities primarily for
the purpose of raising capital or to an entity whose primary business is
investing in securities.
“LS” means Lowenstein
Sandler PC with offices located at 1251 Avenue of the Americas, New York, New
York 10020.
“GAAP” shall have the
meaning ascribed to such term in Section 3.1(h).
“Indebtedness” shall
have the meaning ascribed to such term in Section 3.1(z).
“Intellectual Property
Rights” shall have the meaning ascribed to such term in Section
3.1(o).
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“Liens” means a lien,
charge, security interest, encumbrance, right of first refusal, preemptive right
or other restriction.
“Material Adverse
Effect” shall have the meaning assigned to such term in Section
3.1(b).
“Material Permits”
shall have the meaning ascribed to such term in
Section 3.1(m).
“Per Share Purchase
Price” equals $1.50, subject to adjustment for reverse and forward stock
splits, stock dividends, stock combinations and other similar transactions of
the Common Stock that occur after the date of this Agreement.
“Person” means an
individual or corporation, partnership, trust, incorporated or unincorporated
association, joint venture, limited liability company, joint stock company,
government (or an agency or subdivision thereof) or other entity of any kind,
including without limitation, any Trading Market.
“Proceeding” means an
action, claim, suit, investigation or proceeding (including, without limitation,
an informal investigation or partial proceeding, such as a deposition), whether
commenced or threatened.
“Prospectus” means the
prospectus filed with the Registration Statement.
“Prospectus
Supplement” means any preliminary prospectus supplement relating to the
offer and sale of the Shares, Warrants (and upon exercise of any
Warrant, the Warrant Shares), any free writing prospectus complying with Rule
433 under the Securities Act that is filed with the Commission and the final
supplement to the Prospectus complying with Rule 424(b) of the Securities Act
that is filed with the Commission and delivered by the Company to the Purchaser
at the Closing.
“Purchaser Party”
shall have the meaning ascribed to such term in Section 4.7.
“Registration
Statement” means the effective registration statement with Commission
file No. 333-156997 which registers the sale of the Shares, the Warrants and the
Warrant Shares to the Purchaser.
“Required Approvals”
shall have the meaning ascribed to such term in
Section 3.1(e).
“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.
“Rule 424” means Rule
424 promulgated by the Commission pursuant to the Securities Act, as such Rule
may be amended or interpreted from time to time, or any similar rule or
regulation hereafter adopted by the Commission having substantially the same
purpose and effect as such Rule.
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“SEC Reports” shall
have the meaning ascribed to such term in Section 3.1(h).
“Securities” means the
Shares, the Warrants and the Warrant Shares.
“Securities Act” means
the Securities Act of 1933, as amended, and the rules and regulations
promulgated thereunder.
“Shares” means the
shares of Common Stock issued or issuable to the Purchaser pursuant to this
Agreement.
“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 the aggregate amount to be paid for Shares and Warrants purchased
hereunder as specified below the Purchaser’s name on the signature page of this
Agreement and next to the heading “Subscription Amount,” in United States
dollars and in immediately available funds.
“Time of Sale
Prospectus” means the Prospectus together with any Prospectus Supplement
that is filed with the Commission, and any document incorporated by reference
into the Prospectus and any Prospectus Supplement, used in connection with the
sale of the Shares and Warrants.
“Trading Day” means a
day on which the principal Trading Market is open for trading.
“Trading Market” means
any of the following markets or exchanges on which the Common Stock is listed or
quoted for trading on the date in question: the NYSE Amex, the Nasdaq Capital
Market, the Nasdaq Global Market, the Nasdaq Global Select Market, the New York
Stock Exchange or the OTC Bulletin Board (or any successors to any of the
foregoing).
“Transaction
Documents” means this Agreement, the Warrants and any other documents or
agreements executed in connection with the transactions contemplated
hereunder.
“Transfer Agent” means
Continental Stock Transfer & Trust Company, the current transfer agent of
the Company, with a mailing address of 17 Battery Place, New York, NY 10004, and
any successor transfer agent of the Company.
“Warrants” means,
collectively, the Common Stock purchase warrants delivered to the Purchaser at
the Closing in accordance with Section 2.2(a) hereof, which Warrants shall be
exercisable beginning six (6) months after the Closing Date and have a term of
exercise equal to five and one-half (5-1/2) years, in the form of Exhibit A attached
hereto.
“Warrant Shares” means
the shares of Common Stock issuable upon exercise of the Warrants.
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ARTICLE
II.
PURCHASE
AND SALE
2.1 Closing. Upon
the terms and subject to the conditions set forth herein, the Company agrees to
sell, and the Purchaser agrees to purchase, on the Closing Date, 1,666,668
Shares and 500,000 Warrants. The Purchaser shall deliver to the
Company, via wire transfer or a certified check, immediately available funds
equal to the Purchaser’s Subscription Amount as set forth on the signature page
hereto executed by the Purchaser and the Company shall deliver to the Purchaser
its respective Shares and a Warrant as determined pursuant to Section 2.2(a),
and the Company and the Purchaser shall deliver the other items set forth in
Section 2.2 deliverable at the Closing. Upon satisfaction of the
covenants and conditions set forth in Sections 2.2 and 2.3, the Closing shall
occur at the offices of LS or such other location as the parties shall mutually
agree.
2.2 Deliveries.
(a) On
or prior to the Closing Date, the Company shall deliver or cause to be delivered
to the Purchaser the following:
(i) a
legal opinion of Company Counsel, substantially in the form agreed to by the
parties;
(ii) this
Agreement duly executed and delivered by the parties hereto;
(iii) a
copy of the irrevocable instructions to the Company’s transfer agent, duly
executed and delivered by the Company, instructing the transfer agent to deliver
via the Depository Trust Company Deposit Withdrawal Agent Commission System
(“DWAC”) Shares
equal to the Purchaser’s Subscription Amount divided by the Per Share Purchase
Price, registered in the name of the Purchaser;
(iv) a
Warrant, duly executed by the Company, registered in the name of the Purchaser
to purchase up to a number of shares of Common Stock equal to one-third (1/3) of
the number of Shares purchased by the Purchaser, with an exercise price equal to
$1.89, subject to adjustment therein (such Warrant certificate may be delivered
within three Trading Days of the Closing Date); and
(v) the
final Prospectus Supplement (which may be delivered in accordance with Rule 172
under the Securities Act) if required under the Securities Act.
(b) On
or prior to the Closing Date, the Purchaser shall deliver or cause to be
delivered to the Company the following:
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(i) the
Purchaser’s Subscription Amount by wire transfer to the account as specified in
writing by the Company; and
2.3 Closing
Conditions.
(a) The
obligations of the Company hereunder in connection with the Closing are subject
to the following conditions being met:
(i) all
obligations, covenants and agreements of the Purchaser required to be performed
at or prior to the Closing Date shall have been performed; and
(ii) the
delivery by the Purchaser of the items set forth in Section 2.2(b) of this
Agreement.
(b) The
respective obligations of the Purchaser hereunder in connection with the Closing
are subject to the following conditions being met:
(i) all
obligations, covenants and agreements of the Company required to be performed at
or prior to the Closing Date shall have been performed; and
(ii) the
delivery by the Company of the items set forth in Section 2.2(a) of this
Agreement.
ARTICLE
III.
REPRESENTATIONS
AND WARRANTIES
3.1 Representations and
Warranties of the Company. Except as set forth in the
Registration Statement, the Prospectus, the Prospectus Supplements or any
documents incorporated by reference therein, which such filings, writings and
documents shall qualify such representations and warranties to the extent of the
disclosures contained therein, the Company hereby makes the following
representations and warranties to the Purchaser:
(a) Subsidiaries. The
Company owns, directly or indirectly, all of the capital stock or other equity
interests of each of its direct and indirect subsidiaries free and clear of any
Liens, and all of the issued and outstanding shares of capital stock of each
such subsidiary are validly issued and are fully paid, non-assessable and free
of preemptive and similar rights to subscribe for or purchase securities, except
as set forth on Schedule 3.1(a) hereto. If the Company has no
subsidiaries, all other references to subsidiaries in the Transaction Documents
shall be disregarded.
(b) Organization and
Qualification. The Company and each of its subsidiaries is an
entity duly incorporated or otherwise organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation or
organization, with the requisite power and authority to own and use its
properties and assets and to carry on its business as currently
conducted. Neither the Company nor any subsidiary is in violation nor
default of any of the provisions of its respective certificate or articles of
incorporation, bylaws or other organizational or charter
documents. Each of the Company and the Subsidiaries is duly qualified
to conduct business and is in good standing as a foreign corporation or other
entity in each jurisdiction in which the nature of the business conducted or
property owned by it makes such qualification necessary, except where the
failure to be so qualified or in good standing, as the case may be, could not
have or reasonably be expected to result in: (i) a material adverse effect on
the legality, validity or enforceability of any Transaction Document, (ii) a
material adverse effect on the results of operations, assets, business,
prospects or condition (financial or otherwise) of the Company and the
Subsidiaries, taken as a whole, or (iii) a material adverse effect on the
Company’s ability to perform in any material respect on a timely basis its
obligations under any Transaction Document (any of (i), (ii) or (iii), a “Material Adverse
Effect”) and no Proceeding has been instituted in any such jurisdiction
revoking, limiting or curtailing or seeking to revoke, limit or curtail such
power and authority or qualification.
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(c) Authorization;
Enforcement. The Company has the requisite corporate power and
authority to enter into and to consummate the transactions contemplated by each
of the Transaction Documents and otherwise to carry out its obligations
hereunder and thereunder. The execution and delivery of each of the
Transaction Documents by the Company and the consummation by it of the
transactions contemplated hereby and thereby have been duly authorized by all
necessary action on the part of the Company and no further action is required by
the Company, the Board of Directors or the Company’s stockholders in connection
therewith other than in connection with the Required Approvals. Each
Transaction Document to which it is a party has been (or upon delivery will have
been) duly executed by the Company and, when delivered in accordance with the
terms hereof and thereof, will constitute the valid and binding obligation of
the Company enforceable against the Company in accordance with its terms, except
(i) as limited by general equitable principles and applicable bankruptcy,
insolvency, reorganization, moratorium and other laws of general application
affecting enforcement of creditors’ rights generally, (ii) as limited by laws
relating to the availability of specific performance, injunctive relief or other
equitable remedies and (iii) insofar as indemnification and contribution
provisions may be limited by applicable law.
(d) No
Conflicts. The execution, delivery and performance by the
Company of the Transaction Documents, the issuance and sale of
the Shares and Warrants and the consummation by it of the
transactions contemplated hereby and thereby to which it is a party 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) result in the creation of any Lien
upon any of the properties or assets of the Company or any subsidiary, or give
to others any rights of termination, amendment, acceleration or cancellation
(with or without notice, lapse of time or both) of or conflict with, or
constitute a default (or an event that with notice or lapse of time or both
would become a default) under, any agreement, credit facility, debt or other
instrument (evidencing a Company or subsidiary debt or otherwise) or other
understanding to which the Company or any subsidiary is a party or by which any
property or asset of the Company or any subsidiary is bound or affected, or
(iii) subject to the Required Approvals, conflict with or result in a violation
of any law, rule, regulation, order, judgment, injunction, decree or other
restriction of any Trading Market, court or governmental authority to which the
Company or a subsidiary is subject (including federal and state securities laws
and regulations and the regulations of any Trading Market), or by which any
property or asset of the Company or a subsidiary is bound or affected; except in
the case of each of clauses (ii) and (iii), such as could not have or reasonably
be expected to result in a Material Adverse Effect.
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(e) Filings, Consents and
Approvals. The Company is not required to obtain any consent,
waiver, authorization or order of, give any notice to, or make any filing or
registration with, any court or other federal, state, local or other
governmental authority or other Person in connection with the execution,
delivery and performance by the Company of the Transaction Documents, other
than: (i) the filings required pursuant to Section 4.3 of this Agreement, (ii)
the filing with the Commission of the Prospectus Supplement, (iii)
application(s) to each applicable Trading Market for the listing of the Shares
for trading thereon in the time and manner required thereby and (iv) such
filings as are required to be made under applicable state securities laws
(collectively, the “Required
Approvals”).
(f) Issuance of the Securities;
Registration. The Shares and Warrants are duly authorized and,
when issued and paid for in accordance with the applicable Transaction Documents
(i) the Shares will be duly and validly issued, fully paid and nonassessable,
free and clear of all Liens imposed by the Company and (ii) the Warrants will be
duly and validly issued, free and clear of all Liens imposed by the Company
.. The Warrant Shares, when issued in accordance with the terms of the
Warrants, will be validly issued, fully paid and nonassessable, free and clear
of all Liens imposed by the Company. The Company has reserved from
its duly authorized capital stock the maximum number of shares of Common Stock
issuable pursuant to this Agreement and the Warrants. The Company has prepared
and filed the Registration Statement in conformity with the requirements of the
Securities Act, which became effective on February 12, 2009 (the “Effective Date”),
including the Prospectus, and such amendments and supplements thereto as may
have been required to the date of this Agreement. The Registration
Statement is effective under the Securities Act and no stop order preventing or
suspending the effectiveness of the Registration Statement or suspending or
preventing the use of the Prospectus has been issued by the Commission and no
proceedings for that purpose have been instituted or, to the knowledge of the
Company, are threatened by the Commission. The Company, if required
by the rules and regulations of the Commission, proposes to file the final
Prospectus Supplement, with the Commission pursuant to Rule
424(b). At the time the Registration Statement and any amendments
thereto became effective, at the date of this Agreement and at the Closing Date,
the Registration Statement and any amendments thereto conformed and will conform
in all material respects to the requirements of the Securities Act and did not
and will not contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary to make the
statements therein not misleading; provided, however, that this representation
and warranty shall not apply to any statements or omissions made in reliance
upon information furnished to the Company by the Purchaser; and the Prospectus
and any amendments or supplements thereto, at time the Prospectus or any
amendment or supplement thereto was issued and at the Closing Date, conformed
and will conform in all material respects to the requirements of the Securities
Act and did not and will not contain an untrue statement of a material fact or
omit to state a material fact necessary in order to make the statements therein,
in light of the circumstances under which they were made, not misleading;
provided, however, that this representation and warranty shall not apply to any
statements or omissions made in reliance upon information furnished to the
Company by the Purchaser.
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(g) Capitalization. The
Company has not issued any capital stock since its most recently filed periodic
report under the Exchange Act, other than pursuant to the exercise of stock
options under the Company’s stock option plans, the issuance of shares of Common
Stock to employees pursuant to the Company’s employee stock purchase plans and
pursuant to the conversion and/or exercise of Common Stock Equivalents
outstanding as of the date of the most recently filed periodic report under the
Exchange Act. No Person has any right of first refusal, preemptive
right, right of participation, or any similar right to participate in the
transactions contemplated by the Transaction Documents. Except as
described in the Company’s SEC Reports, there are no outstanding options,
warrants, scrip rights to subscribe to, calls or commitments of any character
whatsoever relating to, or securities, rights or obligations convertible into or
exercisable or exchangeable for, or giving any Person any right to subscribe for
or acquire, any shares of Common Stock, or contracts, commitments,
understandings or arrangements by which the Company or any subsidiary is or may
become bound to issue additional shares of Common Stock or Common Stock
Equivalents, other than as a result of the purchase and sale of
the Shares and Warrants. The issuance and sale of the
Shares and Warrants, and the issuance of Warrant Shares upon exercise of the
Warrants, will not obligate the Company to issue shares of Common Stock or other
securities to any Person (other than the Purchaser) and will not result in a
right of any holder of Company securities to adjust the exercise, conversion,
exchange or reset price under any of such securities. All of the outstanding
shares of capital stock of the Company are validly issued, fully paid and
nonassessable. No further approval or authorization of any
stockholder, the Board of Directors or others is required for the issuance and
sale of the Securities. There are no stockholders agreements, voting
agreements or other similar agreements with respect to the Company’s capital
stock to which the Company is a party or, to the knowledge of the Company,
between or among any of the Company’s stockholders that are not described in the
SEC Reports.
(h) SEC Reports; Financial
Statements. The Company has filed all reports, schedules,
forms, statements and other documents required to be filed by the Company under
the Exchange Act, including pursuant to Section 13(a) or 15(d) thereof, for the
two years preceding the date hereof (or such shorter period as the Company was
required by law or regulation to file such material) (the foregoing materials,
including the exhibits thereto and documents incorporated by reference therein,
together with the Prospectus and any Prospectus Supplement, being collectively
referred to herein as the “SEC Reports”) on a
timely basis or has received a valid extension of such time of filing and has
filed any such SEC Reports prior to the expiration of any such
extension. As of their respective dates, the SEC Reports complied in
all material respects with the requirements of the Exchange Act, as applicable,
and none of the SEC Reports, when filed, contained any untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading; provided, however,
that this representation and warranty shall not apply to any statements or
omissions made in reliance upon information furnished to the Company by the
Purchaser. The financial statements of the Company included in the SEC Reports
comply in all material respects with applicable accounting requirements and the
rules and regulations of the Commission with respect thereto as in effect at the
time of filing. Such financial statements have been prepared in
accordance with United States generally accepted accounting principles applied
on a consistent basis during the periods involved (“GAAP”), except as may
be otherwise specified in such financial statements or the notes thereto and
except to the extent that unaudited financial statements may not contain all
footnotes required by GAAP, and such statements fairly present in all material
respects the financial position of the Company and its consolidated Subsidiaries
as of and for the dates thereof and the results of operations and cash flows for
the periods then ended, subject, in the case of unaudited statements, to normal,
immaterial, year-end audit adjustments.
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(i) Material Changes;
Undisclosed Events, Liabilities or Developments. Since the
date of the latest audited financial statements included within the SEC Reports,
except as specifically disclosed in a subsequent SEC Report filed prior to the
date hereof, (i) there has been no event, occurrence or development that has had
or that could reasonably be expected to result in a Material Adverse Effect,
(ii) the Company has not incurred any liabilities (contingent or otherwise)
other than (A) trade payables and accrued expenses incurred in the ordinary
course of business consistent with past practice and (B) liabilities not
required to be reflected in the Company’s financial statements pursuant to GAAP
or disclosed in filings made with the Commission, (iii) the Company has not
altered its method of accounting, (iv) the Company has not declared or made any
dividend or distribution of cash or other property to its stockholders or
purchased, redeemed or made any agreements to purchase or redeem any shares of
its capital stock and (v) the Company has not issued any equity securities to
any officer, director or Affiliate, except pursuant to existing Company stock
option plans. The Company does not have pending before the Commission
any request for confidential treatment of information. Except for the
issuance of the Shares and Warrants contemplated by this Agreement,
no event, liability, fact, circumstance, occurrence or development has occurred
or exists or is reasonably expected to occur or exist with respect to the
Company or its Subsidiaries or their respective business, prospects, properties,
operations, assets or financial condition that would be required to be disclosed
by the Company under applicable securities laws at the time this representation
is made or deemed made that has not been publicly disclosed at least 1 Trading
Day prior to the date that this representation is made.
(j) Litigation. There
is no action, suit, inquiry, notice of violation, proceeding or investigation
pending or, to the knowledge of the Company, threatened against or affecting the
Company, any subsidiary or any of their respective properties before or by any
court, arbitrator, governmental or administrative agency or regulatory authority
(federal, state, county, local or foreign) (collectively, an “Action”) which (i)
adversely affects or challenges the legality, validity or enforceability of any
of the Transaction Documents or the Securities or (ii) could, if there were an
unfavorable decision, have or reasonably be expected to result in a Material
Adverse Effect. Neither the Company nor any subsidiary, nor any
director or officer thereof, is or has been the subject of any Action involving
a claim of violation of or liability under federal or state securities laws or a
claim of breach of fiduciary duty. There has not been, and to the
knowledge of the Company, there is not pending or contemplated, any
investigation by the Commission involving the Company or any current or former
director or officer of the Company.
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(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 that could reasonably be expected to result in a Material Adverse
Effect. None of the Company’s or its Subsidiaries’ employees is a
member of a union that relates to such employee’s relationship with the Company
or such subsidiary, and neither the Company nor any of its Subsidiaries is a
party to a collective bargaining agreement, and the Company and its Subsidiaries
believe that their relationships with their employees are good. No
executive officer, to the knowledge of the Company, is, or is now expected to
be, in violation of any material term of any employment contract,
confidentiality, disclosure or proprietary information agreement or
non-competition agreement, or any other contract or agreement or any restrictive
covenant in favor of any third party, and the continued employment of each such
executive officer does not subject the Company or any of its Subsidiaries to any
liability with respect to any of the foregoing matters. The Company
and its Subsidiaries are in compliance with all U.S. federal, state, local and
foreign laws and regulations relating to employment and employment practices,
terms and conditions of employment and wages and hours, except where the failure
to be in compliance could not, individually or in the aggregate, reasonably be
expected to have 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 in
default under or that it is in violation of, any indenture, loan or credit
agreement or any other agreement or instrument to which it is a party or by
which it or any of its properties is bound (whether or not such default or
violation has been waived), (ii) is in violation of any judgment, decree or
order of any court, arbitrator or governmental body or (iii) is or has been in
violation of any statute, rule, ordinance or regulation of any governmental
authority, including without limitation all foreign, federal, state and local
laws applicable to its business and all such laws that affect the environment,
except in each case as could not reasonably be expected to result in a Material
Adverse Effect.
(m) Regulatory
Permits. The Company and the Subsidiaries possess all
certificates, authorizations and permits issued by the appropriate federal,
state, local or foreign regulatory authorities necessary to conduct their
respective businesses as described in the SEC Reports, except where the failure
to possess such permits could not reasonably be expected to result in a Material
Adverse Effect (“Material Permits”),
and neither the Company nor any subsidiary has received any notice of
proceedings relating to the revocation or modification of any Material
Permit.
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(n) Title to
Assets. The Company and the Subsidiaries have good and
marketable title in fee simple to all real property owned by them and good and
marketable title to all personal property owned by them that is material to the
business of the Company and the Subsidiaries, in each case free and clear of all
Liens, except for Liens as do not materially affect the value of such property
and do not materially interfere with the use made and proposed to be made of
such property by the Company and the Subsidiaries and Liens for the payment of
federal, state or other taxes, the payment of which is neither delinquent nor
subject to penalties. Any real property and facilities held under
lease by the Company and the Subsidiaries are held by them under valid,
subsisting and enforceable leases with which the Company and the Subsidiaries
are in compliance with such exceptions as are not material and do not materially
interfere with the use made and proposed to be made of such property and
facilities by the Company and its Subsidiaries.
(o) Patents and
Trademarks. Except as set forth on Schedule 3.1(o) hereto, the Company and the
Subsidiaries have, or have rights to use, all patents, patent applications,
trademarks, trademark applications, service marks, trade names, trade secrets,
inventions, copyrights, licenses and other intellectual property rights and
similar rights necessary or material for use in connection with their respective
businesses as described in the SEC Reports and which the failure to so have
could reasonably be expected to have a Material Adverse Effect (collectively,
the “Intellectual
Property Rights”). Neither the Company nor any subsidiary has
received a notice (written or otherwise) that any of the Intellectual Property
Rights used by the Company or any subsidiary violates or infringes upon the
rights of any Person. To the knowledge of the Company, all such
Intellectual Property Rights are enforceable and there is no existing
infringement by another Person of any of the Intellectual Property
Rights. The Company and its Subsidiaries have taken reasonable
security measures to protect the secrecy, confidentiality and value of all of
their intellectual properties, except where the failure to do so could not,
individually or in the aggregate, reasonably be expected to have 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 at least equal to the aggregate Subscription Amount. Neither
the Company nor any subsidiary has any reason to believe that it will not be
able to renew its existing insurance coverage as and when such coverage expires
or to obtain similar coverage from similar insurers as may be necessary to
continue its business without a significant increase in cost.
(q) Transactions With Affiliates
and Employees. Except as set forth 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, in each case in excess
of $120,000 other than for (i) payment of salary or consulting fees for services
rendered, (ii) reimbursement for expenses incurred on behalf of the Company and
(iii) other employee benefits, including stock option agreements under any stock
option plan of the Company.
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(r) Sarbanes-Oxley. The
Company is in material compliance with all provisions of the Sarbanes-Oxley Act
of 2002 that are applicable to it as of the Closing Date.
(s) Certain
Fees. Except as set forth in the Prospectus Supplement, 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 the Transaction Documents. The Purchaser shall have
no obligation with respect to any fees or with respect to any claims made by or
on behalf of other Persons for fees of a type contemplated in this Section that
may be due in connection with the transactions contemplated by the Transaction
Documents.
(t) Investment Company.
The Company is not, and is not an Affiliate of, and immediately after receipt of
payment for the Shares and Warrants, will not be or be an Affiliate of, an
“investment company” within the meaning of the Investment Company Act of 1940,
as amended.
(u) Registration
Rights. No Person has any right to cause the Company to effect
the registration under the Securities Act of any securities of the Company as a
result of the transactions contemplated by this Agreement.
(v) Listing and Maintenance
Requirements. The Common Stock is registered pursuant to
Section 12(b) or 12(g) of the Exchange Act, and the Company has taken no action
designed to, or that to its knowledge is likely to have the effect of,
terminating the registration of the Common Stock under the Exchange Act nor has
the Company received any notification that the Commission is contemplating
terminating such registration. 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 in compliance with all such listing and maintenance
requirements.
(w) Application of Takeover
Protections. The Company and the Board of Directors have taken
all necessary action, if any, in order to render inapplicable any control share
acquisition, business combination, poison pill (including any distribution under
a rights agreement) or other similar anti-takeover provision under the Company’s
certificate of incorporation (or similar charter documents) or the laws of its
state of incorporation that is or could become applicable to the Purchaser as a
result of the Purchaser and the Company fulfilling their obligations or
exercising their rights under the Transaction Documents, including without
limitation as a result of the Company’s issuance of the Shares and Warrants and
the Purchaser’s ownership of the Shares and Warrants.
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(x) Disclosure. Except
with respect to the material terms and conditions of the transactions
contemplated by the Transaction Documents, the Company confirms that neither it
nor any other Person acting on its behalf has provided the Purchaser or its
agents or counsel with any information that it believes constitutes or might
constitute material, non-public information which is not otherwise disclosed in
the Prospectus Supplement. The Company understands and confirms
that the Purchaser will rely on the foregoing representation in effecting
transactions in securities of the Company. The Company acknowledges and agrees
that the 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 Section 3.2 hereof.
(y) Tax
Status. Except for matters that would not, individually or in
the aggregate, have or reasonably be expected to result in a Material Adverse
Effect, the Company and each subsidiary has filed all necessary federal, state
and foreign income and franchise tax returns and has paid or accrued all taxes
shown as due thereon, and the Company has no knowledge of a tax deficiency which
has been asserted or threatened against the Company or any
subsidiary.
(z) Foreign Corrupt
Practices. Neither the Company, nor to the knowledge of the
Company, any agent or other person acting on behalf of the Company, has (i)
directly or indirectly, used any funds for unlawful contributions, gifts,
entertainment or other unlawful expenses related to foreign or domestic
political activity, (ii) made any unlawful payment to foreign or domestic
government officials or employees or to any foreign or domestic political
parties or campaigns from corporate funds, (iii) failed to disclose fully any
contribution made by the Company (or made by any person acting on its behalf of
which the Company is aware) which is in violation of law, or (iv) violated in
any material respect any provision of the Foreign Corrupt Practices Act of 1977,
as amended.
(aa) Accountants. The
Company’s independent registered public accounting firm is identified in the
Prospectus and such accounting firm is a registered public accounting firm as
required by the Exchange Act.
(bb)
Acknowledgment
Regarding Purchaser’s Purchase of Securities. The Company
acknowledges and agrees that the Purchaser is acting solely in the capacity of
an arm’s length purchaser with respect to the Transaction Documents and the
transactions contemplated thereby. The Company further acknowledges
that the Purchaser is not acting as a financial advisor or fiduciary of the
Company (or in any similar capacity) with respect to the Transaction Documents
and the transactions contemplated thereby and any advice given by the Purchaser
or any of its respective representatives or agents in connection with the
Transaction Documents and the transactions contemplated thereby is merely
incidental to the Purchaser’s purchase of the Securities. The Company
further represents to the Purchaser that the Company’s decision to enter into
this Agreement and the other Transaction Documents has been based solely on the
independent evaluation of the transactions contemplated hereby by the Company
and its representatives.
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(cc) Acknowledgement Regarding
Purchaser’s Trading Activity. Anything in this Agreement or elsewhere
herein to the contrary notwithstanding (except for Sections 3.2(e) and 4.12
hereof), it is understood and acknowledged by the Company that: (i) the
Purchaser has not been asked by the Company to agree, nor has the Purchaser
agreed, to desist from purchasing or selling, long and/or short, securities of
the Company, or “derivative” securities based on securities issued by the
Company or to hold the Securities for any
specified term; (ii) past or future open market or other transactions by the
Purchaser, specifically including, without limitation, Short Sales or
“derivative” transactions, before or after the closing of this or future private
placement transactions, may negatively impact the market price of the Company’s
publicly-traded securities; (iii) the Purchaser, and counter-parties in
“derivative” transactions to which the Purchaser is a party, directly or
indirectly, presently may have a “short” position in the Common Stock, and (iv)
the Purchaser shall not be deemed to have any affiliation with or control over
any arm’s length counter-party in any “derivative”
transaction. The Company further understands and acknowledges
that (y) the Purchaser may engage in hedging activities at various times during
the period that the Securities are outstanding, including, without limitation,
during the periods that the value of the Warrant Shares deliverable with respect
to Securities are being determined, and (z) such hedging activities (if any)
could reduce the value of the existing stockholders’ equity interests in the
Company at and after the time that the hedging activities are being
conducted. The Company acknowledges that such aforementioned hedging
activities do not constitute a breach of any of the Transaction
Documents.
(dd) Regulation M
Compliance. The Company has not, and to its knowledge no one acting
on its behalf has, (i) taken, directly or indirectly, any action designed to
cause or to result in the stabilization or manipulation of the price of any
security of the Company to facilitate the sale or resale of any of the
Securities, (ii) sold, bid for, purchased, or, paid any compensation for
soliciting purchases of, any of the Securities, or (iii) paid or agreed to pay
to any Person any compensation for soliciting another to purchase any other
securities of the Company, other than, in the case of clauses (ii) and (iii),
compensation paid to the Company’s placement agent in connection with the
placement of the Securities.
3.2 Representations and
Warranties of the Purchaser. The Purchaser hereby represents
and warrants as of the date hereof and as of the Closing Date to the Company as
follows (unless as of a specific date therein):
(a) Organization;
Authority. The Purchaser is either an individual or an entity
duly organized, validly existing and in good standing under the laws of the
jurisdiction of its organization with full right, corporate or partnership power
and authority to enter into and to consummate the transactions contemplated by
this Agreement and otherwise to carry out its obligations hereunder and
thereunder. The execution and delivery of this Agreement and performance by the
Purchaser of the transactions contemplated by this Agreement have been duly
authorized by all necessary corporate, partnership, limited liability company or
similar action, as applicable, on the part of the Purchaser. Each
Transaction Document to which it is a party has been duly executed by the
Purchaser, and when delivered by the Purchaser in accordance with the terms
hereof, will constitute the valid and legally binding obligation of the
Purchaser, enforceable against it in accordance with its terms, except:
(i) as limited by general equitable principles and applicable bankruptcy,
insolvency, reorganization, moratorium and other laws of general application
affecting enforcement of creditors’ rights generally, (ii) as limited by laws
relating to the availability of specific performance, injunctive relief or other
equitable remedies and (iii) insofar as indemnification and contribution
provisions may be limited by applicable law.
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(b) Certain Transactions and
Confidentiality. Other than consummating the transactions
contemplated hereunder, the Purchaser has not, nor has any Person acting on
behalf of or pursuant to any understanding with the Purchaser, directly or
indirectly executed any purchases or sales, including Short Sales, of the
securities of the Company during the period commencing as of the time that the
Purchaser first became aware of by (written or oral) communication the specific
transaction involving the offer and sale of such Securities and ending
immediately prior to the execution hereof. Notwithstanding the foregoing, in the
case the Purchaser is a multi-managed investment vehicle whereby separate
portfolio managers manage separate portions of the Purchaser’s assets and the
portfolio managers have no direct knowledge of the investment decisions made by
the portfolio managers managing other portions of the Purchaser’s assets, the
representation set forth above shall only apply with respect to the portion of
assets managed by the portfolio manager that made the investment decision to
purchase the Securities covered by this Agreement. Other than to
other Persons party to this Agreement, the Purchaser has maintained the
confidentiality of all disclosures made to it in connection with this
transaction (including the existence and terms of this
transaction). Notwithstanding the foregoing, for avoidance of doubt,
nothing contained herein shall constitute a representation or warranty, or
preclude any actions, with respect to the identification of the availability of,
or securing of, available shares to borrow in order to effect Short Sales or
similar transactions in the future.
The
Company acknowledges and agrees that the representations contained in Section
3.2 shall not modify, amend or affect the Purchaser’s right to rely on the
Company’s representations and warranties contained in this Agreement or any
representations and warranties contained in any other Transaction Document or
any other document or instrument executed and/or delivered in connection with
this Agreement or the consummation of the transaction contemplated
hereby.
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ARTICLE
IV.
OTHER
AGREEMENTS OF THE PARTIES
4.1 Warrant
Shares. If all or any portion of a Warrant is exercised at a
time when there is an effective registration statement to cover the issuance or
resale of the Warrant Shares or if the Warrant is exercised via cashless
exercise, the Warrant Shares issued pursuant to any such exercise shall be
issued free of all legends. If at any time following the date hereof
the Registration Statement (or any subsequent registration statement registering
the sale or resale of the Warrant Shares) is not effective or is not otherwise
available for the sale or resale of the Warrant Shares, the Company shall
immediately notify the holders of the Warrants in writing that such registration
statement is not then effective and thereafter shall promptly notify such
holders when the registration statement is effective again and available for the
sale or resale of the Warrant Shares (it being understood and agreed that the
foregoing shall not limit the ability of the Company to issue, or the Purchaser
to sell, any of the Warrant Shares in compliance with applicable federal and
state securities laws). The Company shall use its best efforts to keep a
registration statement (including the Registration Statement) registering the
issuance or resale of the Warrant Shares effective during the term of the
Warrants. Upon a cashless exercise of a Warrant, the holding period for purposes
of Rule 144 shall tack back to the original date of issuance of such Warrant, if
then permitted by Rule 144 or any successor rule, law, or policy.
4.2 Furnishing of
Information. Until the earliest of the time that (i) the
Purchaser no longer owns Securities, or (ii) the Warrants have expired, the
Company covenants to timely file (or obtain extensions in respect thereof and
file within the applicable grace period) all reports required to be filed by the
Company after the date hereof pursuant to the Exchange Act even if the Company
is not then subject to the reporting requirements of the Exchange
Act. As long as the Purchaser owns Securities, if the Company is not
required to file reports pursuant to the Exchange Act, it will prepare and
furnish to the Purchaser and make publicly available in accordance with Rule
144(c) such information as is required for the Purchaser to sell the Securities,
including without limitation, under Rule 144. The Company further covenants that
it will take such further action as any holder of Securities may reasonably
request, to the extent required from time to time to enable such Person to sell
such Securities without registration under the Securities Act, including without
limitation, within the requirements of the exemption 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 for
purposes of the rules and regulations of any Trading Market such that it would
require shareholder approval prior to the closing of such other transaction
unless shareholder approval is obtained before the closing of such subsequent
transaction.
4.4 Securities Laws Disclosure;
Publicity. The Company shall (i) 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 (ii) within the time prescribed under the Exchange Act file a current report
on Form 8-K disclosing the material terms of the transaction and including the
Transaction Documents as exhibits thereto. From and after the
issuance of such press release, the Company shall have publicly disclosed all
material, non-public information delivered to the Purchaser by the Company or
any of its subsidiaries, or any of their respective officers, directors,
employees or agents in connection with the transactions contemplated by the
Transaction Documents. The Company and the Purchaser shall consult
with each other in issuing any other press releases with respect to the
transactions contemplated hereby, and neither the Company nor the Purchaser
shall issue any such press release nor otherwise make any such public statement
without the prior consent of the Company, with respect to any press release of
the Purchaser, or without the prior consent of the Purchaser, with respect to
any press release of the Company, which consent shall not unreasonably be
withheld or delayed, except if such disclosure is required by law, in which case
the disclosing party shall promptly provide the other party with prior notice of
such public statement or communication. Notwithstanding the
foregoing, the Company shall not publicly disclose the name of the Purchaser, or
include the name of the Purchaser in any filing with the Commission or any
regulatory agency or Trading Market, without the prior written consent of the
Purchaser, except (a) as required by federal securities law in connection with
the filing of final Transaction Documents (including signature pages thereto)
with the Commission and (b) to the extent such disclosure is required by law or
Trading Market regulations, in which case the Company shall provide the
Purchaser with prior notice of such disclosure permitted under this clause
(b). On or prior to 8:30 am on the Business Day following the Closing
Date, the Company shall file the Prospectus Supplement with the Commission in
accordance with Rule 424 under the 1933 Act.
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4.5 Shareholder Rights
Plan. No claim will be made or enforced by the Company or,
with the consent of the Company, any other Person, that the Purchaser is an
“Acquiring Person” under any control share acquisition, business combination,
poison pill (including any distribution under a rights agreement) or similar
anti-takeover plan or arrangement in effect or hereafter adopted by the Company,
or that the Purchaser could be deemed to trigger the provisions of any such plan
or arrangement, by virtue of receiving Shares and Warrants under the
Transaction Documents or under any other agreement between the Company and the
Purchaser.
4.6 Non-Public
Information. Except with respect to the material terms and
conditions of the transactions contemplated by the Transaction Documents, the
Company covenants and agrees that neither it, nor any other Person acting on its
behalf will provide the Purchaser or its agents or counsel with any information
that the Company believes constitutes material non-public information, unless
prior thereto the Purchaser shall have executed a written agreement with the
Company regarding the confidentiality and use of such
information. The Company understands and confirms that the Purchaser
shall be relying on the foregoing covenant in effecting transactions in
securities of the Company.
4.7 Use of
Proceeds. The Company shall use the net proceeds from the sale
of the Securities as described in the Prospectus and Prospectus
Supplements.
4.8 Indemnification of
Purchaser. Subject to the provisions of this Section
4.8, the Company will indemnify and hold the Purchaser and its directors,
officers, shareholders, members, partners, employees and agents (and any other
Persons with a functionally equivalent role of a Person holding such titles
notwithstanding a lack of such title or any other title), each Person who
controls the Purchaser (within the meaning of Section 15 of the Securities Act
and Section 20 of the Exchange Act), and the directors, officers, shareholders,
agents, members, partners or employees (and any other Persons with a
functionally equivalent role of a Person holding such titles notwithstanding a
lack of such title or any other title) of such controlling persons (each, a
“Purchaser
Party”) harmless from any and all losses, liabilities, obligations,
claims, contingencies, damages, costs and expenses, including all judgments,
amounts paid in settlements, court costs and reasonable attorneys’ fees and
costs of investigation that any such Purchaser Party may suffer or incur as a
result of or relating to (a) any breach of any of the representations,
warranties, covenants or agreements made by the Company in this Agreement or in
the other Transaction Documents or (b) any action instituted against the
Purchaser in any capacity, or any of them or their respective Affiliates, by any
stockholder of the Company who is not an Affiliate of the Purchaser, with
respect to any of the transactions contemplated by the Transaction Documents
(unless such action is based upon a breach of the Purchaser’s representations,
warranties or covenants under the Transaction Documents or any agreements or
understandings the Purchaser may have with any such stockholder or any
violations by the Purchaser of state or federal securities laws or any conduct
by the Purchaser which constitutes fraud, gross negligence, willful misconduct
or malfeasance). If any action shall be brought against any Purchaser
Party in respect of which indemnity may be sought pursuant to this Agreement,
such Purchaser Party shall promptly notify the Company in writing, and the
Company shall have the right to assume the defense thereof with counsel of its
own choosing reasonably acceptable to the Purchaser Party. Any
Purchaser Party shall have the right to employ separate counsel in any such
action and participate in the defense thereof, but the fees and expenses of such
counsel shall be at the expense of such Purchaser Party except to the extent
that (i) the employment thereof has been specifically authorized by the Company
in writing, (ii) the Company has failed after a reasonable period of time to
assume such defense and to employ counsel or (iii) in such action there is, in
the reasonable opinion of counsel, a material conflict on any material issue
between the position of the Company and the position of such Purchaser Party, in
which case the Company shall be responsible for the reasonable fees and expenses
of no more than one such separate counsel. The Company will not be
liable to any Purchaser Party under this Agreement (y) for any settlement by a
Purchaser Party effected without the Company’s prior written consent, which
shall not be unreasonably withheld or delayed; or (z) to the extent, but only to
the extent that a loss, claim, damage or liability is attributable to any
Purchaser Party’s breach of any of the representations, warranties, covenants or
agreements made by such Purchaser Party in this Agreement or in the other
Transaction Documents.
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4.9 Reservation of Common
Stock. As of the date hereof, the Company has reserved and the Company
shall continue to reserve and keep available at all times, free of preemptive
rights, a sufficient number of shares of Common Stock for the purpose of
enabling the Company to issue Shares pursuant to this Agreement and Warrant
Shares pursuant to any exercise of the Warrants.
4.10 Listing of Common
Stock. The Company hereby agrees to use best efforts to maintain the
listing or quotation of the Common Stock on the Trading Market on which it is
currently listed, and concurrently with the Closing, the Company shall apply to
list or quote all of the Shares and the Warrant Shares on such Trading Market
and promptly secure the listing of all of the Shares and the Warrant Shares on
such Trading Market. The Company further agrees, if the Company applies to have
the Common Stock traded on any other Trading Market, it will then include in
such application all of the Shares and Warrant Shares, and will take such other
action as is necessary to cause all of the Shares and the Warrant Shares to be
listed or quoted on such other Trading Market as promptly as
possible. The Company will then take all action reasonably necessary
to continue the listing and trading of its Common Stock on a Trading Market and
will comply in all respects with the Company’s reporting, filing and other
obligations under the bylaws or rules of the Trading Market.
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4.11 Lock-Up; Subsequent Equity
Sales.
(a) From
the date hereof until 45 days after the Closing Date, neither the Company nor
any Subsidiary shall issue, enter into any agreement to issue or announce the
issuance or proposed issuance of any shares of Common Stock or Common Stock
Equivalents at an effective price per share less than $1.50.
(b) For
a period of one year from the date hereof (the “Participation
Period”), the Investor shall have the right to participate in any
subsequent offering (a “Subsequent
Financing”) of Common Stock or Common Stock Equivalents, other than an
Exempt Issuance, as provided herein. At least twelve hours prior to
the execution of definitive documentation for a Subsequent Financing, the
Company shall deliver to the Investor a written notice of its intention to
effect a Subsequent Financing (“Pre-Notice”), which
Pre-Notice shall ask the Investor if it wants to review the details of such
financing (such additional notice, a “Subsequent Financing
Notice”). Upon the written request of the Investor, and only
upon a request by the Investor, for a Subsequent Financing Notice, the Company
shall promptly, but no later two hours after the receipt of such request,
deliver a Subsequent Financing Notice to the Investor. Such request
shall be delivered to the Company by the Investor not more than four hours after
its receipt of the Pre-Notice. The Subsequent Financing Notice shall
describe in reasonable detail the proposed terms of such Subsequent Financing,
including a description of the material terms of any Common Stock Equivalents to
be offered, and the expected amount of gross proceeds of such Subsequent
Financing (the “Subsequent Financing Gross
Proceeds”). The Investor shall notify the Company in writing
within four hours after its receipt of the Subsequent Financing Notice of its
willingness to participate in the Subsequent Financing on the terms described in
the Subsequent Financing Notice, subject to completion of mutually acceptable
documentation. If the Investor fails to timely respond to a
Pre-Notice or Subsequent Financing Notice, the Investor shall have no right to
participate in the Subsequent Financing. In the event that the
Investor timely notifies the Company that it wishes to participate in the
Subsequent Financing, the Investor shall have the right to participate in the
Subsequent Financing in an amount not to exceed 20% of the Subsequent Financing
Gross Proceeds. The Company shall have the right to sell any amount
of the Subsequent Financing not purchased by the Investor to such investors as
it may determine in its sole discretion; provided, however, that any such sales
shall be on terms no more favorable to the investors than those described in the
Subsequent Financing Notice. Notwithstanding the delivery of any
Pre-Notice or Subsequent Financing Notice, the Company shall have the right to
terminate or delay the Subsequent Financing as it may determine in its sole
discretion. The Investor acknowledges and agrees that, upon its
receipt of a Subsequent Financing Notice, the Investor shall be deemed to be in
receipt of material non-public information regarding the Company and agrees to
hold such information in confidence and not to disclose such information to any
other person and not to effect any transactions in the Common Stock until the
earlier of (i) the public announcement of the Subsequent Financing or (ii) the
receipt of written notice from the Company that it has abandoned the Subsequent
Financing (which notice shall be given promptly following a determination by the
Company not to proceed with a Subsequent Financing).
- 20
- -
(c) From
the date hereof until three (3) years from the Closing Date, the Company shall
be prohibited from effecting or entering into an agreement to effect any
issuance by the Company or any of its Subsidiaries of Common Stock or Common
Stock Equivalents for cash consideration (or a combination of units hereof)
involving a Variable Rate Transaction. “Variable Rate
Transaction” means a transaction in which the Company (i) issues or sells
any debt or equity securities that are convertible into, exchangeable or
exercisable for, or include the right to receive additional shares of Common
Stock either (A) at a conversion price, exercise price or exchange rate or other
price that is based upon and/or varies with the trading prices of or quotations
for the shares of Common Stock at any time after the initial issuance of such
debt or equity securities, or (B) with a conversion, exercise or exchange price
that is subject to being reset at some future date after the initial issuance of
such debt or equity security or upon the occurrence of specified or contingent
events directly or indirectly related to the business of the Company or the
market for the Common Stock (but not including any routine anti-dilution
protections in any warrant or convertible security) 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. The
Purchaser shall be entitled to obtain injunctive relief against the Company to
preclude any such issuance, which remedy shall be in addition to any right to
collect damages.
(d) Notwithstanding
the foregoing, Section 4.11(a) shall not apply in respect of an Exempt Issuance
and no Variable Rate Transaction shall be an Exempt Issuance.
4.12 Certain Transactions and
Confidentiality. The Purchaser covenants that neither it nor any
Affiliate acting on its behalf or pursuant to any understanding with it will
execute any purchases or sales, including Short Sales of any of the Company’s
securities during the period commencing with the execution of this Agreement and
ending at such time that the transactions contemplated by this Agreement are
first publicly announced pursuant to the initial press release as described in
Section 4.3. The Purchaser covenants that until such time as the
transactions contemplated by this Agreement are publicly disclosed by the
Company pursuant to the initial press release as described in Section 4.3, the
Purchaser will maintain the confidentiality of the existence and terms of this
transaction and the information included in the Disclosure Schedules.
Notwithstanding the foregoing, and notwithstanding anything contained in this
Agreement to the contrary, the Company expressly acknowledges and agrees that
(i) the Purchaser makes no representation, warranty or covenant hereby that it
will not engage in effecting transactions in any securities of the Company after
the time that the transactions contemplated by this Agreement are first publicly
announced pursuant to the initial press release as described in Section 4.3,
(ii) the Purchaser shall not be restricted or prohibited from effecting any
transactions in any securities of the Company in accordance with applicable
securities laws from and after the time that the transactions contemplated by
this Agreement are first publicly announced pursuant to the initial press
release as described in Section 4.3 and (iii) the Purchaser shall have no duty
of confidentiality to the Company or its Subsidiaries after the issuance of the
initial press release as described in Section 4.3. Notwithstanding the
foregoing, in the case the Purchaser is a multi-managed investment vehicle
whereby separate portfolio managers manage separate portions of the Purchaser’s
assets and the portfolio managers have no direct knowledge of the investment
decisions made by the portfolio managers managing other portions of the
Purchaser’s assets, the covenant set forth above shall only apply with respect
to the portion of assets managed by the portfolio manager that made the
investment decision to purchase the Securities covered by this
Agreement.
- 21
- -
ARTICLE
V.
MISCELLANEOUS
5.1 Termination.
This Agreement may be terminated by the Purchaser, as to the Purchaser’s
obligations hereunder, by written notice to the other parties, if the Closing
has not been consummated on or before April 16, 2010; provided, however, that no such
termination will affect the right of any party to sue for any breach by the
other party (or parties).
5.2 Fees and
Expenses. Except as expressly set forth in the Transaction
Documents to the contrary, each party shall pay the fees and expenses of its
advisers, counsel, accountants and other experts, if any, and all other expenses
incurred by such party incident to the negotiation, preparation, execution,
delivery and performance of this Agreement. The Company shall pay all
Transfer Agent fees, stamp taxes and other taxes and duties levied in connection
with the delivery of any Securities to the Purchaser.
5.3 Entire
Agreement. The Transaction Documents, together with the
exhibits and schedules thereto, the Prospectus and the Prospectus Supplement,
contain the entire understanding of the parties with respect to the subject
matter hereof and supersede all prior agreements and understandings, oral or
written, with respect to such matters, which the parties acknowledge have been
merged into such documents, exhibits and schedules.
5.4 Notices. Any
and all notices or other communications or deliveries required or permitted to
be provided hereunder shall be in writing and shall be deemed given and
effective on the earliest of: (a) the date of transmission, if such notice or
communication is delivered via facsimile at the facsimile number set forth on
the signature pages attached hereto prior to 5:30 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 set
forth on the signature pages attached hereto on a day that is not a Trading Day
or later than 5:30 p.m. (New York City time) on any Trading Day, (c) the second
(2nd)Trading
Day following the date of mailing, if sent by U.S. nationally recognized
overnight courier service or (d) upon actual receipt by the party to whom such
notice is required to be given. The address for such notices and
communications shall be as set forth on the signature pages attached
hereto.
5.5 Amendments;
Waivers. No provision of this Agreement may be waived,
modified, supplemented or amended except in a written instrument signed, in the
case of an amendment, by the Company and the Purchaser or, in the case of a
waiver, by the party against whom enforcement of any such waived provision is
sought. No waiver of any default with respect to any provision,
condition or requirement of this Agreement shall be deemed to be a continuing
waiver in the future or a waiver of any subsequent default or a waiver of any
other provision, condition or requirement hereof, nor shall any delay or
omission of any party to exercise any right hereunder in any manner impair the
exercise of any such right.
- 22
- -
5.6 Headings. The
headings herein are for convenience only, do not constitute a part of this
Agreement and shall not be deemed to limit or affect any of the provisions
hereof.
5.7 Successors and
Assigns. This Agreement shall be binding upon and inure to the
benefit of the parties and their successors and permitted
assigns. The Company may not assign this Agreement or any rights or
obligations hereunder without the prior written consent of the Purchaser (other
than by merger). The Purchaser may assign any or all of its rights
under this Agreement to any Person to whom the Purchaser assigns or transfers
any Securities, in which event such assignee shall be deemed to be the Purchaser
hereunder with respect to such assigned rights.
5.8 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 Section 4.7.
5.9 Governing
Law. All questions concerning the construction, validity,
enforcement and interpretation of the Transaction Documents shall be governed by
and construed and enforced in accordance with the internal laws of the State of
New York, without regard to the principles of conflicts of law
thereof. Each party agrees that all legal proceedings concerning the
interpretations, enforcement and defense of the transactions contemplated by
this Agreement and any other Transaction Documents (whether brought against a
party hereto or its respective affiliates, directors, officers, shareholders,
employees or agents) shall be commenced exclusively in the state and federal
courts sitting in the City of New York. Each party hereby irrevocably submits to
the exclusive jurisdiction of the state and federal courts sitting in the City
of New York, borough of Manhattan for the adjudication of any dispute hereunder
or in connection herewith or with any transaction contemplated hereby or
discussed herein (including with respect to the enforcement of any of the
Transaction Documents), and hereby irrevocably waives, and agrees not to assert
in any suit, action or proceeding, any claim that it is not personally subject
to the jurisdiction of any such court, that such suit, action or proceeding is
improper or is an inconvenient venue for such proceeding. Each party
hereby irrevocably waives personal service of process and consents to process
being served in any such suit, action or proceeding by mailing a copy thereof
via registered or certified mail or overnight delivery (with evidence of
delivery) to such party at the address in effect for notices to it under this
Agreement and agrees that such service shall constitute good and sufficient
service of process and notice thereof. Nothing contained herein shall
be deemed to limit in any way any right to serve process in any other manner
permitted by law. If either party shall commence an action or
proceeding to enforce any provisions of the Transaction Documents, then, in
addition to the obligations of the Company under Section 4.7, the prevailing
party in such action or proceeding shall be reimbursed by the other party for
its reasonable attorneys’ fees and other costs and expenses incurred with the
investigation, preparation and prosecution of such action or
proceeding.
5.10 Survival. The
representations and warranties contained herein shall survive the Closing and
the delivery of the Shares and Warrants.
- 23
- -
5.11 Execution. This
Agreement may be executed in two or more counterparts, all of which when taken
together shall be considered one and the same agreement and shall become
effective when counterparts have been signed by each party and delivered to 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 or by e-mail delivery of a “.pdf” format data file, such
signature shall create a valid and binding obligation of the party executing (or
on whose behalf such signature is executed) with the same force and effect as if
such facsimile or “.pdf” signature page were an original thereof.
5.12 Severability. If
any term, provision, covenant or restriction of this Agreement is held by a
court of competent jurisdiction to be invalid, illegal, void or unenforceable,
the remainder of the terms, provisions, covenants and restrictions set forth
herein shall remain in full force and effect and shall in no way be affected,
impaired or invalidated, and the parties hereto shall use their commercially
reasonable efforts to find and employ an alternative means to achieve the same
or substantially the same result as that contemplated by such term, provision,
covenant or restriction. It is hereby stipulated and declared to be the
intention of the parties that they would have executed the remaining terms,
provisions, covenants and restrictions without including any of such that may be
hereafter declared invalid, illegal, void or unenforceable.
5.13 Rescission and Withdrawal
Right. Notwithstanding anything to the contrary contained in
(and without limiting any similar provisions of) any of the other Transaction
Documents, whenever the Purchaser exercises a right, election, demand or option
under a Transaction Document and the Company does not timely perform its related
obligations within the periods therein provided, then the Purchaser may rescind
or withdraw, in its sole discretion from time to time upon written notice to the
Company, any relevant notice, demand or election in whole or in part without
prejudice to its future actions and rights.
5.14 Replacement of
Securities. If any certificate or instrument evidencing any
Securities is mutilated, lost, stolen or destroyed, the Company shall issue or
cause to be issued in exchange and substitution for and upon cancellation
thereof (in the case of mutilation), or in lieu of and substitution therefor, a
new certificate or instrument, but only upon receipt of evidence reasonably
satisfactory to the Company of such loss, theft or destruction. The
applicant for a new certificate or instrument under such circumstances shall
also pay any reasonable third-party costs (including customary indemnity)
associated with the issuance of such replacement Securities.
5.15 Remedies. In
addition to being entitled to exercise all rights provided herein or granted by
law, including recovery of damages, each of the Purchaser and the Company will
be entitled to specific performance under the Transaction
Documents. The parties agree that monetary damages may not be
adequate compensation for any loss incurred by reason of any breach of
obligations contained in the Transaction Documents and hereby agree to waive and
not to assert in any action for specific performance of any such obligation the
defense that a remedy at law would be adequate.
5.16 Payment Set
Aside. To the extent that the Company makes a payment or
payments to the Purchaser pursuant to any Transaction Document or the Purchaser
enforces or exercises its rights thereunder, and such payment or payments or the
proceeds of such enforcement or exercise or any part thereof are subsequently
invalidated, declared to be fraudulent or preferential, set aside, recovered
from, disgorged by or are required to be refunded, repaid or otherwise restored
to the Company, a trustee, receiver or any other person under any law
(including, without limitation, any bankruptcy law, state or federal law, common
law or equitable cause of action), then to the extent of any such restoration
the obligation or part thereof originally intended to be satisfied shall be
revived and continued in full force and effect as if such payment had not been
made or such enforcement or setoff had not occurred.
- 24
- -
5.17 Liquidated
Damages. The Company’s obligations to pay any partial
liquidated damages or other amounts owing under the Transaction Documents is a
continuing obligation of the Company and shall not terminate until all unpaid
partial liquidated damages and other amounts have been paid notwithstanding the
fact that the instrument or security pursuant to which such partial liquidated
damages or other amounts are due and payable shall have been
canceled.
5.18 Saturdays, Sundays,
Holidays,
etc. If
the last or appointed day for the taking of any action or the expiration of any
right required or granted herein shall not be a Business Day, then such action
may be taken or such right may be exercised on the next succeeding Business
Day.
5.19 Construction. The
parties agree that each of them and/or their respective counsel has reviewed and
had an opportunity to revise the Transaction Documents and, therefore, the
normal rule of construction to the effect that any ambiguities are to be
resolved against the drafting party shall not be employed in the interpretation
of the Transaction Documents or any amendments hereto. In addition, each and
every reference to share prices and shares of Common Stock in any Transaction
Document shall be subject to adjustment for reverse and forward stock splits,
stock dividends, stock combinations and other similar transactions of the Common
Stock that occur after the date of this Agreement.
5.20 WAIVER OF
JURY TRIAL. IN ANY
ACTION, SUIT, OR PROCEEDING IN ANY JURISDICTION BROUGHT BY ANY PARTY AGAINST ANY
OTHER PARTY, THE PARTIES EACH KNOWINGLY AND INTENTIONALLY, TO THE GREATEST
EXTENT PERMITTED BY APPLICABLE LAW, HEREBY ABSOLUTELY, UNCONDITIONALLY,
IRREVOCABLY AND EXPRESSLY WAIVES FOREVER TRIAL BY JURY.
(Signature
Pages Follow)
- 25
- -
IN WITNESS WHEREOF, the parties hereto
have caused this Securities Purchase Agreement to be duly executed by their
respective authorized signatories as of the date first indicated
above.
|
PHARMATHENE,
INC.
|
Address for Notice:
|
||
| By: |
/s/
Eric I. Richman
|
||
|
Name:
Eric I. Richman
Title:
President
With
a copy to (which shall not constitute notice):
|
One
Park Place
Suite
450
Annapolis,
MD 21401
Fax
(410) 269-2601
Attention:
General Counsel
|
||
|
Sonnenschein
Nath & Rosenthal LLP
1221
Avenue of the Americas
New
York, New York 10020
Attention:
Jeffrey A. Baumel
|
|||
[REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK
SIGNATURE
PAGE FOR PURCHASER FOLLOWS]
- 26
- -
[PURCHASER
SIGNATURE PAGES TO PIP SECURITIES PURCHASE AGREEMENT]
IN
WITNESS WHEREOF, the undersigned have caused this Securities Purchase Agreement
to be duly executed by their respective authorized signatories as of the date
first indicated above.
|
Name
of Purchaser:
|
|
|
Signature of Authorized
Signatory of Purchaser:
|
|
|
Name
of Authorized Signatory:
|
|
|
Title
of Authorized Signatory:
|
|
|
Email
Address of Authorized Signatory:
|
|
|
Facsimile
Number of Authorized Signatory:
|
|
|
Address
for Notice of Purchaser:
|
Address
for Delivery of Securities for Purchaser (if not same as address for
notice):
Subscription
Amount: $2,500,002
Shares:
1,666,668
Warrants:
500,000
EIN
Number: [PROVIDE
THIS UNDER SEPARATE COVER]
[SIGNATURE
PAGES CONTINUE]
- 27
- -
EXHIBIT A
COMMON
STOCK PURCHASE WARRANT
PHARMATHENE,
INC.
|
Warrant
Shares: [_______]
|
Initial
Exercise Date: April [____], 2010
|
|
Issue
Date: April [____], 2010
|
THIS
COMMON STOCK PURCHASE WARRANT (the “Warrant”) certifies
that, for value received, _____________ (the “Holder”) is entitled,
upon the terms and subject to the limitations on exercise and the conditions
hereinafter set forth, at any time on or after the six-month anniversary of the
Issue Date (the “Initial Exercise
Date”) and on or prior to the close of business on the five-year
anniversary of the Initial Exercise Date (the “Termination Date”)
but not thereafter, to subscribe for and purchase from PharmAthene, Inc., a
Delaware corporation (the “Company”), up to
______ shares (the “Warrant Shares”) of
Common Stock. The purchase price of one share of Common Stock under this Warrant
shall be equal to the Exercise Price, as defined in Section 2(b).
Section 1. Definitions. Capitalized
terms used and not otherwise defined herein shall have the meanings set forth in
that certain Securities Purchase Agreement (the “Purchase Agreement”),
dated April 7, 2010 (the “Subscription Date”),
among the Company and the purchasers signatory thereto.
Section 2. Exercise.
a) Exercise of
Warrant. Exercise of the purchase rights represented by this
Warrant may be made, in whole or in part, at any time or times on or after the
Initial Exercise Date and on or before the Termination Date by delivery to the
Company (or such other office or agency of the Company as it may designate by
notice in writing to the registered Holder at the address of the Holder
appearing on the books of the Company) of a duly executed facsimile copy of the
Notice of Exercise Form annexed hereto; and, within three (3) Trading Days of
the date said Notice of Exercise is delivered to the Company, the Company shall
have received payment of the aggregate Exercise Price of the shares thereby
purchased by wire transfer or cashier’s check drawn on a United States bank or,
if available, pursuant to the cashless exercise procedure specified in Section
2(c) below. Notwithstanding anything herein to the contrary, the
Holder shall not be required to physically surrender this Warrant to the Company
until the Holder has purchased all of the Warrant Shares available hereunder and
the Warrant has been exercised in full, in which case, the Holder shall
surrender this Warrant to the Company for cancellation within three (3) Trading
Days of the date the final Notice of Exercise is delivered to the
Company. Partial exercises of this Warrant resulting in purchases of
a portion of the total number of Warrant Shares available hereunder shall have
the effect of lowering the outstanding number of Warrant Shares purchasable
hereunder in an amount equal to the applicable number of Warrant Shares
purchased. The Holder and the Company shall maintain records showing
the number of Warrant Shares purchased and the date of such
purchases. The Company shall deliver any objection to any Notice of
Exercise Form within 1 Business Day of receipt of such notice. The Holder and any assignee, by
acceptance of this Warrant, acknowledge and agree that, by reason of the
provisions of this paragraph, following the purchase of a portion of the Warrant
Shares hereunder, the number of Warrant Shares available for purchase hereunder
at any given time may be less than the amount stated on the face
hereof.
b) Exercise
Price. The exercise price per share of the Common Stock under
this Warrant shall be $1.89, subject to adjustment hereunder (the “Exercise
Price”).
c) Cashless
Exercise. If at the time of exercise hereof there is no
effective registration statement registering, or the prospectus contained
therein is not available for the issuance of the Warrant Shares to the Holder
and all of the Warrant Shares are not then registered for resale by Holder into
the market at market prices from time to time on an effective registration
statement for use on a continuous basis (or the prospectus contained therein is
not available for use), then this Warrant may also be exercised, in whole or in
part, at such time by means of a “cashless exercise” in which the Holder shall
be entitled to receive a certificate for the number of Warrant Shares equal to
the quotient obtained by dividing [(A-B) (X)] by (A), where:
|
(A)
=
|
the
VWAP on the Trading Day immediately preceding the date on which Holder
elects to exercise this Warrant by means of a “cashless exercise,” as set
forth in the applicable Notice of
Exercise;
|
|
(B)
=
|
the
Exercise Price of this Warrant, as adjusted hereunder;
and
|
|
| (X) = | the number of Warrant Shares that would be issuable upon exercise of this Warrant in accordance with the terms of this Warrant if such exercise were by means of a cash exercise rather than a cashless exercise. |
“VWAP” means, for any
date, the price determined by the first of the following clauses that applies:
(a) if the Common Stock is then listed or quoted on a Trading Market, the daily
volume weighted average price of the Common Stock for such date (or the nearest
preceding date) on the Trading Market on which the Common Stock is then listed
or quoted as reported by Bloomberg L.P. (based on a Trading Day from 9:30 a.m.
(New York City time) to 4:02 p.m. (New York City time), (b) if the OTC
Bulletin Board is not a Trading Market, the volume weighted average price of the
Common Stock for such date (or the nearest preceding date) on the OTC Bulletin
Board, (c) if the Common Stock is not then listed or quoted for trading on the
OTC Bulletin Board and if prices for the Common Stock are then reported in the
“Pink Sheets” published by Pink OTC Markets, Inc. (or a similar organization or
agency succeeding to its functions of reporting prices), the most recent bid
price per share of the Common Stock so reported, or (d) in all other cases,
the fair market value of a share of Common Stock as determined by an independent
appraiser selected in good faith by the Holders of a majority in interest of the
Securities then outstanding and reasonably acceptable to the Company, the fees
and expenses of which shall be paid by the Company.
- 2 -
d) Mechanics of
Exercise.
i. Delivery of Certificates
Upon Exercise. Certificates for shares purchased hereunder
shall be transmitted by the Transfer Agent to the Holder by crediting the
account of the Holder’s prime broker with the Depository Trust Company through
its Deposit Withdrawal Agent Commission (“DWAC”) system if the
Company is then a participant in such system and either (A) there is an
effective Registration Statement permitting the issuance of the Warrant Shares
to or resale of the Warrant Shares by Holder or (B) this Warrant is being
exercised via cashless exercise, and otherwise by physical delivery to the
address specified by the Holder in the Notice of Exercise by the date that is
three (3) Trading Days after the latest of (A) the delivery to the Company of
the Notice of Exercise Form, (B) surrender of this Warrant (if required) and (C)
payment of the aggregate Exercise Price as set forth above (including by
cashless exercise, if permitted) (such date, the “Warrant Share Delivery
Date”). This Warrant shall be deemed to have been exercised on
the first date on which all of the foregoing have been delivered to the
Company. The Warrant Shares shall be deemed to have been issued, and
Holder or any other person so designated to be named therein shall be deemed to
have become a holder of record of such shares for all purposes, as of the date
the Warrant has been exercised, with payment to the Company of the Exercise
Price (or by cashless exercise, if permitted) and all taxes required to be paid
by the Holder, if any, pursuant to Section 2(d)(vi) prior to the issuance of
such shares, having been paid. If the Company fails for any reason to deliver to
the Holder certificates evidencing the Warrant Shares subject to a Notice of
Exercise by the Warrant Share Delivery Date, the Company shall pay to the
Holder, in cash, as liquidated damages and not as a penalty, for each $1,000 of
Warrant Shares subject to such exercise (based on the VWAP of the Common Stock
on the date of the applicable Notice of Exercise), $10 per Trading Day
(increasing to $20 per Trading Day on the fifth Trading Day after such
liquidated damages begin to accrue) for each Trading Day after such Warrant
Share Delivery Date until such certificates are delivered or Holder rescinds
such exercise.
ii. Delivery of New Warrants
Upon Exercise. If this Warrant shall have been exercised in
part, the Company shall, at the request of a Holder and upon surrender of this
Warrant certificate, at the time of delivery of the certificate or certificates
representing Warrant Shares, deliver to Holder a new Warrant evidencing the
rights of Holder to purchase the unpurchased Warrant Shares called for by this
Warrant, which new Warrant shall in all other respects be identical with this
Warrant.
iii. Rescission
Rights. If the Company fails to cause the Transfer Agent to
transmit to the Holder a certificate or the certificates representing the
Warrant Shares pursuant to Section 2(d)(i) by the Warrant Share Delivery Date,
then, the Holder will have the right to rescind such exercise.
- 3 -
iv. Compensation for Buy-In on
Failure to Timely Deliver Certificates Upon Exercise. In
addition to any other rights available to the Holder, if the Company fails to
cause the Transfer Agent to transmit to the Holder a certificate or the
certificates representing the Warrant Shares pursuant to an exercise on or
before the Warrant Share Delivery Date, and if after such date the Holder is
required by its broker to purchase (in an open market transaction or otherwise)
or the Holder’s brokerage firm otherwise purchases, shares of Common Stock to
deliver in satisfaction of a sale by the Holder of the Warrant Shares which the
Holder anticipated receiving upon such exercise (a “Buy-In”), then the
Company shall, within three (3) Trading Days after the Holder’s request and in
the Holder’s discretion, either (i) pay cash to the Holder in an amount equal to
the Holder’s total purchase price (including brokerage commissions, if any) for
the shares of Common Stock so purchased (the “Buy-In Price”), at
which point the Company’s obligation to deliver such certificate (and to issue
such Warrant Shares or credit such Holder’s balance account with DTC) shall
terminate, or (ii) promptly honor its obligation to deliver to the Holder a
certificate or certificates representing such Warrant Shares or credit such
Holder’s balance account with DTC and pay cash to the Holder in an amount equal
to the excess (if any) of the Buy-In Price over the product of (A) such number
of shares of Common Stock, times (B) the VWAP on the date of
exercise.
v. No Fractional Shares or
Scrip. No fractional shares or scrip representing fractional
shares shall be issued upon the exercise of this Warrant. As to any
fraction of a share which the Holder would otherwise be entitled to purchase
upon such exercise, the Company shall, at its election, either pay a cash
adjustment in respect of such final fraction in an amount equal to such fraction
multiplied by the Exercise Price or round up to the next whole
share.
vi. Charges, Taxes and
Expenses. Issuance of certificates for Warrant Shares shall be
made without charge to the Holder for any issue or transfer tax or other
incidental expense in respect of the issuance of such certificate, all of which
taxes and expenses shall be paid by the Company, and such certificates shall be
issued in the name of the Holder or in such name or names as may be directed by
the Holder; provided, however, that in the
event certificates for Warrant Shares are to be issued in a name other than the
name of the Holder, this Warrant when surrendered for exercise shall be
accompanied by the Assignment Form attached hereto duly executed by the Holder
and the Company may require, as a condition thereto, the payment of a sum
sufficient to reimburse it for any transfer tax incidental thereto.
- 4 -
vii. Closing of
Books. The Company will not close its stockholder books or
records in any manner which prevents the timely exercise of this Warrant,
pursuant to the terms hereof.
e) Holder’s Exercise
Limitations. The Company shall not effect any exercise of this
Warrant, and a Holder shall not have the right to exercise any portion of this
Warrant, pursuant to Section 2 or otherwise, to the extent that after giving
effect to such issuance after exercise as set forth on the applicable Notice of
Exercise, the Holder (together with the Holder’s Affiliates, and any other
Persons acting as a group together with the Holder or any of the Holder’s
Affiliates), would beneficially own in excess of the Beneficial Ownership
Limitation (as defined below). For purposes of the foregoing sentence, the
number of shares of Common Stock beneficially owned by the Holder and its
Affiliates shall include the number of shares of Common Stock issuable upon
exercise of this Warrant with respect to which such determination is being made,
but shall exclude the number of shares of Common Stock which would be issuable
upon (i) exercise of the remaining, nonexercised portion of this Warrant
beneficially owned by the Holder or any of its Affiliates and (ii) exercise or
conversion of the unexercised or nonconverted portion of any other securities of
the Company (including, without limitation, any other Common Stock
Equivalents) subject to a limitation on conversion or exercise analogous to the
limitation contained herein beneficially owned by the Holder or any of its
Affiliates. Except as set forth in the preceding sentence, for purposes of
this Section 2(e), beneficial ownership shall be calculated in accordance with
Section 13(d) of the Exchange Act and the rules and regulations promulgated
thereunder, it being acknowledged by the Holder that the Company is not
representing to the Holder that such calculation is in compliance with Section
13(d) of the Exchange Act and the Holder is solely responsible for any schedules
required to be filed in accordance therewith. To the extent
that the limitation contained in this Section 2(e) applies, the determination of
whether this Warrant is exercisable (in relation to other securities owned by
the Holder together with any Affiliates) and of which portion of this Warrant is
exercisable shall be in the sole discretion of the Holder, and the submission of
a Notice of Exercise shall be deemed to be the Holder’s determination of whether
this Warrant is exercisable (in relation to other securities owned by the Holder
together with any Affiliates) and of which portion of this Warrant is
exercisable, in each case subject to the Beneficial Ownership Limitation, and
the Company shall have no obligation to verify or confirm the accuracy of such
determination. In addition, a determination as to any group
status as contemplated above shall be determined in accordance with Section
13(d) of the Exchange Act and the rules and regulations promulgated
thereunder. For purposes of this Section 2(e), in determining the
number of outstanding shares of Common Stock, a Holder may rely on the number of
outstanding shares of Common Stock as reflected in (A) the Company’s most recent
periodic or annual report filed with the Commission, as the case may be, (B) a
more recent public announcement by the Company or (C) a more recent written
notice by the Company or the Transfer Agent setting forth the number of shares
of Common Stock outstanding. Upon the written or oral request of a Holder,
the Company shall within two Trading Days confirm orally and in writing to the
Holder the number of shares of Common Stock then outstanding. In any case,
the number of outstanding shares of Common Stock shall be determined after
giving effect to the conversion or exercise of securities of the Company,
including this Warrant, by the Holder or its Affiliates since the date as of
which such number of outstanding shares of Common Stock was
reported. The “Beneficial Ownership
Limitation” shall be 4.99% of the number of shares of the Common Stock
outstanding immediately after giving effect to the issuance of shares of Common
Stock issuable upon exercise of this Warrant. The Holder, upon not
less than 61 days’ prior notice to the Company, may increase or decrease the
Beneficial Ownership Limitation provisions of this Section 2(e), provided that
the Beneficial Ownership Limitation in no event exceeds 9.99% of the number of
shares of the Common Stock outstanding immediately after giving effect to the
issuance of shares of Common Stock upon exercise of this Warrant held by the
Holder and the provisions of this Section 2(e) shall continue to
apply. Any such increase or decrease will not be effective until the
61st
day after such notice is delivered to the Company. The provisions of
this paragraph shall be construed and implemented in a manner otherwise than in
strict conformity with the terms of this Section 2(e) to correct this paragraph
(or any portion hereof) which may be defective or inconsistent with the intended
Beneficial Ownership Limitation herein contained or to make changes or
supplements necessary or desirable to properly give effect to such limitation.
The limitations contained in this paragraph shall apply to a successor holder of
this Warrant.
- 5 -
Section 3. Certain
Adjustments.
a) Stock Dividends and
Splits. If the Company, at any time while this Warrant is outstanding:
(i) pays a stock dividend or otherwise makes a distribution or distributions on
shares of its Common Stock or any other equity or equity equivalent securities
payable in shares of Common Stock (which, for avoidance of doubt, shall not
include any shares of Common Stock issued by the Company upon exercise of this
Warrant), (ii) subdivides outstanding shares of Common Stock into a larger
number of shares, (iii) combines (including by way of reverse stock split)
outstanding shares of Common Stock into a smaller number of shares, or (iv)
issues by reclassification of shares of the Common Stock any shares of capital
stock of the Company, then in each case the Exercise Price shall be multiplied
by a fraction of which the numerator shall be the number of shares of Common
Stock (excluding treasury shares, if any) outstanding immediately before such
event and of which the denominator shall be the number of shares of Common Stock
outstanding immediately after such event, and the number of shares issuable upon
exercise of this Warrant shall be proportionately adjusted such that the
aggregate Exercise Price of this Warrant shall remain unchanged. Any
adjustment made pursuant to this Section 3(a) shall become effective immediately
after the record date for the determination of stockholders entitled to receive
such dividend or distribution and shall become effective immediately after the
effective date in the case of a subdivision, combination or
re-classification.
b) Intentionally
Omitted.
.
c) Subsequent Rights
Offerings. If the Company, at any time while the Warrant is
outstanding, shall issue rights, options or warrants to all holders of Common
Stock (and not to the Holders) entitling them to subscribe for or purchase
shares of Common Stock at a price per share less than the VWAP on the record
date mentioned below, then, the Exercise Price shall be multiplied by a
fraction, of which the denominator shall be the number of shares of the Common
Stock outstanding on the date of issuance of such rights, options or warrants
plus the number of additional shares of Common Stock offered for subscription or
purchase, and of which the numerator shall be the number of shares of the Common
Stock outstanding on the date of issuance of such rights, options or warrants
plus the number of shares which the aggregate offering price of the total number
of shares so offered (assuming receipt by the Company in full of all
consideration payable upon exercise of such rights, options or warrants) would
purchase at such VWAP. Such adjustment shall be made whenever such
rights, options or warrants are issued, and shall become effective immediately
after the record date for the determination of stockholders entitled to receive
such rights, options or warrants.
- 6 -
d) Pro Rata
Distributions. If the Company, at any time while this Warrant
is outstanding, shall distribute to all holders of Common Stock (and not to the
Holders) evidences of its indebtedness or assets (including cash and cash
dividends) or rights or warrants to subscribe for or purchase any security other
than the Common Stock (which shall be subject to Section 3(b)), then in each
such case the Exercise Price shall be adjusted by multiplying the Exercise Price
in effect immediately prior to the record date fixed for determination of
stockholders entitled to receive such distribution by a fraction of which the
denominator shall be the VWAP determined as of the record date mentioned above,
and of which the numerator shall be such VWAP on such record date less the then
per share fair market value at such record date of the portion of such assets or
evidence of indebtedness so distributed applicable to one outstanding share of
the Common Stock as determined by the Board of Directors in good
faith. In either case the adjustments shall be described in a
statement provided to the Holder of the portion of assets or evidences of
indebtedness so distributed or such subscription rights applicable to one share
of Common Stock. Such adjustment shall be made whenever any such
distribution is made and shall become effective immediately after the record
date mentioned above.
e) Fundamental
Transaction. If, at any time while this Warrant is outstanding, (i) the
Company, directly or indirectly, in one or more related transactions effects any
merger or consolidation of the Company with or into another Person, (ii) the
Company, directly or indirectly, effects any sale, lease, license, assignment,
transfer, conveyance or other disposition of all or substantially all of its
assets in one or a series of related transactions, (iii) any, direct or
indirect, purchase offer, tender offer or exchange offer (whether by the Company
or another Person) is completed pursuant to which holders of Common Stock are
permitted to sell, tender or exchange their shares for other securities, cash or
property and has been accepted by the holders of 50% or more of the outstanding
Common Stock, (iv) the Company, directly or indirectly, in one or more related
transactions effects any reclassification, reorganization or recapitalization of
the Common Stock or any compulsory share exchange pursuant to which the Common
Stock is effectively converted into or exchanged for other securities, cash or
property, (v) the Company, directly or indirectly, in one or more related
transactions consummates a stock or share purchase agreement or other business
combination (including, without limitation, a reorganization, recapitalization,
spin-off or scheme of arrangement) with another Person whereby such other Person
acquires more than 50% of the outstanding shares of Common Stock (not including
any shares of Common Stock held by the other Person or other Persons making or
party to, or associated or affiliated with the other Persons making or party to,
such stock or share purchase agreement or other business combination) (each a
“Fundamental
Transaction”), then, upon any subsequent exercise of this Warrant, the
Holder shall have the right to receive, for each Warrant Share that would have
been issuable upon such exercise immediately prior to the occurrence of such
Fundamental Transaction, at the option of the Holder (without regard to any
limitation in Section 2(e) on the exercise of this Warrant), the number of
shares of Common Stock of the successor or acquiring corporation or of the
Company, if it is the surviving corporation, and any additional consideration
(the “Alternate
Consideration”) receivable as a result of such Fundamental Transaction by
a holder of the number of shares of Common Stock for which this Warrant is
exercisable immediately prior to such Fundamental Transaction (without regard to
any limitation in Section 2(e) on the exercise of this Warrant). For
purposes of any such exercise, the determination of the Exercise Price shall be
appropriately adjusted to apply to such Alternate Consideration based on the
amount of Alternate Consideration issuable in respect of one share of Common
Stock in such Fundamental Transaction, and the Company shall apportion the
Exercise Price among the Alternate Consideration in a reasonable manner
reflecting the relative value of any different components of the Alternate
Consideration. If holders of Common Stock are given any choice as to
the securities, cash or property to be received in a Fundamental Transaction,
then the Holder shall be given the same choice as to the Alternate Consideration
it receives upon any exercise of this Warrant following such Fundamental
Transaction. Notwithstanding anything to the contrary, in the event
of a Fundamental Transaction other than one in which a Successor Entity (as
defined below) that is a publicly traded corporation whose stock is quoted or
listed for trading on an Eligible Market assumes this Warrant such that the
Warrant shall be exercisable for the publicly traded Common Stock of such
Successor Entity, the Company or any Successor Entity shall, at the
Holder’s option, exercisable at any time concurrently with, or within 30 days
after, the consummation of the Fundamental Transaction, purchase this Warrant
from the Holder by paying to the Holder an amount of cash equal to the Black
Scholes Value of the remaining unexercised portion of this Warrant on the date
of the consummation of such Fundamental Transaction. As used herein
(w) “Black Scholes
Value” means the value of this Warrant based on the Black and Scholes
Option Pricing Model obtained from the “OV” function on Bloomberg, L.P. (“Bloomberg”)
determined as of the day of consummation of the applicable Fundamental
Transaction for pricing purposes and reflecting (A) a risk-free interest rate
corresponding to the U.S. Treasury rate for a period equal to the time between
the date of the public announcement of the applicable Fundamental Transaction
and the Termination Date, (B) an expected volatility equal to the greater of
100% and the 100 day volatility obtained from the HVT function on Bloomberg as
of the Trading Day immediately following the public announcement of the
applicable Fundamental Transaction, (C) the underlying price per share used in
such calculation shall be the sum of the price per share being offered in cash,
if any, plus the value of any non-cash consideration, if any, being offered in
such Fundamental Transaction and (D) a remaining option time equal to the time
between the date of the public announcement of the applicable Fundamental
Transaction and the Termination Date, (x)
“Successor
Entity” means the Person (as defined in the Purchase Agreement) (or,
if so elected by the Holder, the Parent Entity (as defined below)) formed by, resulting from or surviving any
Fundamental Transaction or the Person (or, if so elected by the Holder, the
Parent Entity) with which such Fundamental Transaction shall have been entered
into, (y) “Eligible Market” means the NYSE Amex, The NASDAQ Capital Market,
The NASDAQ Global Market, The NASDAQ Global Select Market, the New York Stock
Exchange or the OTC Bulletin Board (or any successors to any of the
foregoing) and (z) “Parent Entity” of a Person means an entity that, directly or indirectly, controls the applicable Person and whose
common stock or equivalent equity security
is quoted or listed on an Eligible Market,
or, if there is more than one such Person or Parent Entity, the Person or Parent
Entity with the largest public market capitalization as of the date of consummation of the
Fundamental Transaction. The terms of any agreement pursuant
to which a Fundamental Transaction is effected shall include terms requiring any
such successor or surviving entity to comply with the provisions of this Section
3(e) and insuring that this Warrant (or any such replacement security) will be
similarly adjusted upon any subsequent transaction analogous to a Fundamental
Transaction.
- 7 -
f) Calculations. All
calculations under this Section 3 shall be made to the nearest cent or the
nearest 1/100th of a share, as the case may be. For purposes of this Section 3,
the number of shares of Common Stock deemed to be issued and outstanding as of a
given date shall be the sum of the number of shares of Common Stock (excluding
treasury shares, if any) issued and outstanding.
g) Notice to
Holder.
i. Adjustment to Exercise
Price. Whenever the Exercise Price is adjusted pursuant to any provision
of this Section 3, the Company shall promptly mail to the Holder a notice
setting forth the Exercise Price after such adjustment and setting forth a brief
statement of the facts requiring such adjustment.
ii. Notice to Allow Exercise by
Holder. After the Initial Exercise Date, if (A) the Company shall declare
a dividend (or any other distribution in whatever form) on the Common Stock, (B)
the Company shall declare a special nonrecurring cash dividend on or a
redemption of the Common Stock, (C) the Company shall authorize the granting to
all holders of the Common Stock rights or warrants to subscribe for or purchase
any shares of capital stock of any class or of any rights, (D) the approval of
any stockholders of the Company shall be required in connection with any
reclassification of the Common Stock, any consolidation or merger to which the
Company is a party, any sale or transfer of all or substantially all of the
assets of the Company, or any compulsory share exchange whereby the Common Stock
is converted into other securities, cash or property, or (E) the Company shall
authorize the voluntary or involuntary dissolution, liquidation or winding up of
the affairs of the Company, then, in each case, the Company shall cause to be
mailed to the Holder at its last address as it shall appear upon the Warrant
Register of the Company, at least 20 calendar days prior to the applicable
record or effective date hereinafter specified, a notice stating (x) the date on
which a record is to be taken for the purpose of such dividend, distribution,
redemption, rights or warrants, or if a record is not to be taken, the date as
of which the holders of the Common Stock of record to be entitled to such
dividend, distributions, redemption, rights or warrants are to be determined or
(y) the date on which such reclassification, consolidation, merger, sale,
transfer or share exchange is expected to become effective or close, and the
date as of which it is expected that holders of the Common Stock of record shall
be entitled to exchange their shares of the Common Stock for securities, cash or
other property deliverable upon such reclassification, consolidation, merger,
sale, transfer or share exchange; provided that the failure to mail such notice
or any defect therein or in the mailing thereof shall not affect the validity of
the corporate action required to be specified in such notice. To the
extent that any notice provided hereunder constitutes, or contains, material,
non-public information regarding the Company or any of the Subsidiaries, the
Company shall simultaneously file such notice with the Commission pursuant to a
Current Report on Form 8-K. The Holder shall remain entitled to
exercise this Warrant during the period commencing on the date of such notice to
the effective date of the event triggering such notice except as may otherwise
be expressly set forth herein.
- 8 -
Section 4. Transfer of
Warrant.
a) Transferability. Subject
to compliance with any applicable securities laws, this Warrant and all rights
hereunder (including, without limitation, any registration rights) are
transferable, in whole or in part, upon surrender of this Warrant at the
principal office of the Company or its designated agent, together with a written
assignment of this Warrant substantially in the form attached hereto duly
executed by the Holder or its agent or attorney and funds sufficient to pay any
transfer taxes payable upon the making of such transfer. Upon such
surrender and, if required, such payment, the Company shall execute and deliver
a new Warrant or Warrants in the name of the assignee or assignees, as
applicable, and in the denomination or denominations specified in such
instrument of assignment, and shall issue to the assignor a new Warrant
evidencing the portion of this Warrant not so assigned, and this Warrant shall
promptly be cancelled. The Warrant, if properly assigned in
accordance herewith, may be exercised by a new holder for the purchase of
Warrant Shares without having a new Warrant issued.
b) New Warrants. This
Warrant may be divided or combined with other Warrants upon presentation hereof
at the aforesaid office of the Company, together with a written notice
specifying the names and denominations in which new Warrants are to be issued,
signed by the Holder or its agent or attorney. Subject to compliance
with Section 4(a), as to any transfer which may be involved in such division or
combination, the Company shall execute and deliver a new Warrant or Warrants in
exchange for the Warrant or Warrants to be divided or combined in accordance
with such notice. All Warrants issued on transfers or exchanges shall be dated
the initial issuance date set forth on the first page of this Warrant and shall
be identical with this Warrant except as to the number of Warrant Shares
issuable pursuant thereto.
- 9 -
c) Warrant Register. The
Company shall register this Warrant, upon records to be maintained by the
Company for that purpose (the “Warrant Register”),
in the name of the record Holder hereof from time to time. The
Company may deem and treat the registered Holder of this Warrant as the absolute
owner hereof for the purpose of any exercise hereof or any distribution to the
Holder, and for all other purposes, absent actual notice to the
contrary.
d) Representation by the
Holder. The Holder, by the acceptance hereof, represents and
warrants that it is acquiring this Warrant and, upon any exercise hereof, will
acquire the Warrant Shares issuable upon such exercise, for its own account and
not with a view to or for distributing or reselling such Warrant Shares or any
part thereof in violation of the Securities Act or any applicable state
securities law, except pursuant to sales registered or exempted under the
Securities Act.
Section 5. Miscellaneous.
a) No Rights as Stockholder
Until Exercise. This Warrant does not entitle the Holder to
any voting rights, dividends or other rights as a stockholder of the Company
prior to the exercise hereof as set forth in Section 2(d)(i).
b) Loss, Theft, Destruction or
Mutilation of Warrant. The Company covenants that upon receipt by the
Company of evidence reasonably satisfactory to it of the loss, theft,
destruction or mutilation of this Warrant or any stock certificate relating to
the Warrant Shares, and in case of loss, theft or destruction, of indemnity or
security reasonably satisfactory to it (which, in the case of the Warrant, shall
not include the posting of any bond), and upon surrender and cancellation of
such Warrant or stock certificate, if mutilated, the Company will make and
deliver a new Warrant or stock certificate of like tenor and dated as of such
cancellation, in lieu of such Warrant or stock certificate.
c) Saturdays, Sundays,
Holidays, etc. If the last or appointed day for the taking of
any action or the expiration of any right required or granted herein shall not
be a Business Day, then, such action may be taken or such right may be exercised
on the next succeeding Business Day.
d) Authorized
Shares.
The
Company covenants that, during the period the Warrant is outstanding, it will
reserve from its authorized and unissued Common Stock a sufficient number of
shares to provide for the issuance of the Warrant Shares upon the exercise of
any purchase rights under this Warrant. The Company further covenants
that its issuance of this Warrant shall constitute full authority to its
officers who are charged with the duty of executing stock certificates to
execute and issue the necessary certificates for the Warrant Shares upon the
exercise of the purchase rights under this Warrant. The Company will
take all such reasonable action as may be necessary to assure that such Warrant
Shares may be issued as provided herein without violation of any applicable law
or regulation, or of any requirements of the Trading Market upon which the
Common Stock may be listed. The Company covenants that all Warrant
Shares which may be issued upon the exercise of the purchase rights represented
by this Warrant will, upon exercise of the purchase rights represented by this
Warrant and payment for such Warrant Shares in accordance herewith, be duly
authorized, validly issued, fully paid and nonassessable and free from all
taxes, liens and charges created by the Company in respect of the issue thereof
(other than taxes in respect of any transfer occurring contemporaneously with
such issue).
- 10 -
Except
and to the extent as waived or consented to by the Holder, the Company shall not
by any action, including, without limitation, amending its certificate of
incorporation or through any reorganization, transfer of assets, consolidation,
merger, dissolution, issue or sale of securities or any other voluntary action,
avoid or seek to avoid the observance or performance of any of the terms of this
Warrant, but will at all times in good faith assist in the carrying out of all
such terms and in the taking of all such actions as may be necessary or
appropriate to protect the rights of Holder as set forth in this Warrant against
impairment. Without limiting the generality of the foregoing, the
Company will (i) not increase the par value of any Warrant Shares above the
amount payable therefor upon such exercise immediately prior to such increase in
par value, (ii) take all such action as may be necessary or appropriate in order
that the Company may validly and legally issue fully paid and nonassessable
Warrant Shares upon the exercise of this Warrant and (iii) use commercially
reasonable efforts to obtain all such authorizations, exemptions or consents
from any public regulatory body having jurisdiction thereof, as may be,
necessary to enable the Company to perform its obligations under this
Warrant.
Before
taking any action which would result in an adjustment in the number of Warrant
Shares for which this Warrant is exercisable or in the Exercise Price, the
Company shall obtain all such authorizations or exemptions thereof, or consents
thereto, as may be necessary from any public regulatory body or bodies having
jurisdiction thereof.
e) Jurisdiction. All
questions concerning the construction, validity, enforcement and interpretation
of this Warrant shall be determined in accordance with the provisions of the
Purchase Agreement.
f) Restrictions. The
Holder acknowledges that the Warrant Shares acquired upon the exercise of this
Warrant, if not registered, and the Holder does not utilize cashless exercise,
will have restrictions upon resale imposed by state and federal securities
laws.
g) Nonwaiver and
Expenses. No course of dealing or any delay or failure to
exercise any right hereunder on the part of Holder shall operate as a waiver of
such right or otherwise prejudice Holder’s rights, powers or
remedies. Without limiting any other provision of this Warrant or the
Purchase Agreement, if the Company willfully and knowingly fails to comply with
any provision of this Warrant, which results in any material damages to the
Holder, the Company shall pay to Holder such amounts as shall be sufficient to
cover any costs and expenses including, but not limited to, reasonable
attorneys’ fees, including those of appellate proceedings, incurred by Holder in
collecting any amounts due pursuant hereto or in otherwise enforcing any of its
rights, powers or remedies hereunder.
- 11 -
h) Notices. Any
notice, request or other document required or permitted to be given or delivered
to the Holder by the Company shall be delivered in accordance with the notice
provisions of the Purchase Agreement.
i) Limitation of
Liability. No provision hereof, in the absence of any
affirmative action by Holder to exercise this Warrant to purchase Warrant
Shares, and no enumeration herein of the rights or privileges of Holder, shall
give rise to any liability of Holder for the purchase price of any Common Stock
or as a stockholder of the Company, whether such liability is asserted by the
Company or by creditors of the Company.
j) Remedies. The
Holder, in addition to being entitled to exercise all rights granted by law,
including recovery of damages, will be entitled to specific performance of its
rights under this Warrant. The Company agrees that monetary damages
would not be adequate compensation for any loss incurred by reason of a breach
by it of the provisions of this Warrant and hereby agrees to waive and not to
assert the defense in any action for specific performance that a remedy at law
would be adequate.
k) Successors and
Assigns. Subject to applicable securities laws, this Warrant
and the rights and obligations evidenced hereby shall inure to the benefit of
and be binding upon the successors and permitted assigns of the Company and the
successors and permitted assigns of Holder. The provisions of this
Warrant are intended to be for the benefit of any Holder from time to time of
this Warrant and shall be enforceable by the Holder or holder of Warrant
Shares.
l) Amendment. This
Warrant may be modified or amended or the provisions hereof waived with the
written consent of the Company and the Holder.
m) Severability. Wherever
possible, each provision of this Warrant shall be interpreted in such manner as
to be effective and valid under applicable law, but if any provision of this
Warrant shall be prohibited by or invalid under applicable law, such provision
shall be ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provisions or the remaining provisions of
this Warrant.
n) Headings. The
headings used in this Warrant are for the convenience of reference only and
shall not, for any purpose, be deemed a part of this Warrant.
********************
(Signature
Pages Follow)
- 12 -
IN
WITNESS WHEREOF, the Company has caused this Warrant to be executed by its
officer thereunto duly authorized as of the date first above
indicated.
|
PHARMATHENE,
INC.
|
|||
|
|
By:
|
||
|
Name:
Eric I. Richman
|
|||
| Title: President | |||
- 13 -
NOTICE
OF EXERCISE
TO: PHARMATHENE,
INC.
(1) The
undersigned hereby elects to purchase ________ Warrant Shares of the Company
pursuant to the terms of the attached Warrant (only if exercised in full), and
tenders herewith payment of the exercise price in full, together with all
applicable transfer taxes, if any.
(2) Payment
shall take the form of (check applicable box):
[ ]
in lawful money of the United States; or
[ ] [if
permitted] the cancellation of such number of Warrant Shares as is necessary, in
accordance with the formula set forth in subsection 2(c), to exercise this
Warrant with respect to the maximum number of Warrant Shares purchasable
pursuant to the cashless exercise procedure set forth in subsection
2(c).
(3) Please
issue a certificate or certificates representing said Warrant Shares in the name
of the undersigned or in such other name as is specified below:
_______________________________
The
Warrant Shares shall be delivered to the following DWAC Account Number or by
physical delivery of a certificate to:
_______________________________
_______________________________
_______________________________
[SIGNATURE
OF HOLDER]
|
Name
of Investing Entity:
|
|
|
Signature of Authorized
Signatory of Investing Entity:
|
|
|
Name
of Authorized Signatory:
|
|
|
Title
of Authorized Signatory:
|
|
|
Date:
|
ASSIGNMENT
FORM
(To
assign the foregoing warrant, execute
this form
and supply required information.
Do not
use this form to exercise the warrant.)
FOR VALUE
RECEIVED, [____] all of or [_______] shares of the foregoing Warrant and all
rights evidenced thereby are hereby assigned to
_______________________________________________
whose address is
_______________________________________________________________.
_______________________________________________________________
Dated: ______________,
_______
| Holder’s Signature: | _____________________________ | |
| Holder’s Address: | _____________________________ | |
| _____________________________ | ||
Signature
Guaranteed: ___________________________________________
NOTE: The
signature to this Assignment Form must correspond with the name as it appears on
the face of the Warrant, without alteration or enlargement or any change
whatsoever, and must be guaranteed by a bank or trust
company. Officers of corporations and those acting in a fiduciary or
other representative capacity should file proper evidence of authority to assign
the foregoing Warrant.
Contact:
Stacey
Jurchison
PharmAthene,
Inc.
Phone:
410-269-2610
Stacey.Jurchison@PharmAthene.com
PHARMATHENE
TO RAISE $2.5 MILLION FROM A SINGLE EXISTING INVESTOR
IN
A REGISTERED DIRECT FINANCING
ANNAPOLIS, MD – April 8, 2010
– PharmAthene, Inc. (NYSE Amex: PIP), a biodefense company developing medical
countermeasures against biological and chemical threats, announced today that a
single existing institutional investor has agreed to purchase approximately $2.5
million of its common stock and warrants in a registered public
offering.
Under the
terms of the purchase agreement, PharmAthene will sell an aggregate of 1,666,668
newly issued shares of its common stock at $1.50 per share and warrants to
purchase an aggregate of 500,000 shares of its common stock at an exercise price
of $1.89 per share. The warrants will be exercisable beginning on the
six month anniversary of the closing date of the transaction and will expire
five years from the date they become exercisable.
The
financing is expected to close on or about April 13, 2010 subject to the
satisfaction of customary closing conditions. The Company intends to use the net
proceeds from the transaction for general corporate purposes.
Roth
Capital Partners, LLC, served as sole placement agent for this
transaction.
The
securities described above are being offered by PharmAthene pursuant to a
registration statement previously filed and declared effective by the Securities
and Exchange Commission. This press release shall not constitute an
offer to sell or the solicitation of an offer to buy, nor shall there be any
sale of these securities in any state or jurisdiction in which such offer,
solicitation or sale would be unlawful prior to registration or qualification
under the securities laws of any such state or jurisdiction. The
securities may be offered only by means of a prospectus, including a prospectus
supplement, forming a part of the effective registration
statement. Copies of the final prospectus supplement may be obtained,
when available, at the Securities and Exchange Commission’s website at http://www.sec.gov.
About
PharmAthene, Inc.
PharmAthene
was formed to meet the critical needs of the United States and its allies by
developing and commercializing medical countermeasures against biological and
chemical weapons. PharmAthene's lead product development programs
include:
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SparVax™ -
a second generation recombinant protective antigen (rPA) anthrax
vaccine
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Third
generation rPA anthrax vaccine
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Valortim® -
a fully human monoclonal antibody for the prevention and treatment of
anthrax infection
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Protexia® -
a novel bioscavenger for the prevention and treatment of morbidity and
mortality associated with exposure to chemical nerve
agents
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Statement
on Cautionary Factors
Except
for the historical information presented herein, matters discussed may
constitute forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995 that are subject to certain risks and
uncertainties that could cause actual results to differ materially from any
future results, performance or achievements expressed or implied by
such statements. Statements that are not historical facts, including
statements preceded by, followed by, or that include the words "potential";
"believe"; "anticipate"; "intend"; "plan"; "expect"; "estimate"; "could"; "may";
"should"; “will”; “project”; “potential”; or similar statements are
forward-looking statements. PharmAthene disclaims any intent or obligation to
update these forward-looking statements other than as required by
law. Risks and uncertainties include risk associated with the
reliability of the results of the studies relating to human safety and possible
adverse effects resulting from the administration of the Company's product
candidates, unexpected funding delays and/or reductions or elimination of U.S.
government funding for one or more of the Company's development programs,
the award of government contracts to our competitors, unforeseen safety issues,
challenges related to the development, scale-up, technology transfer, and/or
process validation of manufacturing processes for our product candidates,
unexpected determinations that these product candidates prove not to be
effective and/or capable of being marketed as products, as well as risks
detailed from time to time in PharmAthene's Forms 10-K and 10-Q under the
caption "Risk Factors" and in its other reports filed with the U.S. Securities
and Exchange Commission (the "SEC"). In particular, while the Company
believes that the protest to the recent modification to the Company’s existing
contract with BARDA for the research and development of SparVax™ is
unlikely to be sustained, if the GAO were to rule in favor of the protestor,
such a ruling could have a material adverse effect on the financial position and
operations of the Company.
Copies of
PharmAthene's public disclosure filings are available from its investor
relations department and our website under the investor relations tab at www.PharmAthene.com.
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