UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 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 23, 2015
StemCells, Inc.
(Exact
name of registrant as specified in its charter)
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Delaware |
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000-19871 |
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94-3078125 |
(State or other jurisdiction
of incorporation) |
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(Commission
File Number) |
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(I.R.S. Employer
Identification No.) |
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7707 Gateway Blvd, Suite 140, Newark, CA |
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94560 |
(Address of principal executive offices) |
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(Zip Code) |
Registrants telephone number, including area code: 510.456.4000
Not Applicable
Former
name or former address, if changed since last report
Check the appropriate box below
if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
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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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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Item 8.01. Other Events.
On April 24, 2015 StemCells, Inc. (the Company) entered into an underwriting agreement (the Underwriting
Agreement) with Maxim Group LLC, as representative of the underwriters named in Schedule I to the Underwriting Agreement (the Underwriters), pursuant to which the Company agreed to sell to the Underwriters 35,715,000 shares of
common stock of the Company (the Shares) and warrants to purchase up to 26,786,250 shares of common stock (the Warrants). The Shares and Warrants will be sold at a public offering price of $0.70 for a fixed combination of one
Share and a Warrant to purchase three-quarters of a share of common stock at an exercise price of $0.85 per share of common stock in an underwritten public offering (the Offering). The Company has also granted the Underwriters a 30-day
option to purchase up to an additional 5,357,250 shares of common stock and warrants to purchase 4,017,938 to cover over-allotments, if any.
The Company expects that the gross proceeds of the Offering will be approximately $25.0 million. The Shares, the Warrants and the shares of
common stock underlying the Warrants are being issued pursuant to the effective registration statement on Form S-3 (File No. 333-193100).
The Offering is expected to close on or about April 29, 2015, subject to the satisfaction of customary closing conditions.
On April 23, 2015, the Company issued a press release announcing that it intended to make a public offering of securities. On
April 24, 2015, the Company issued a press release announcing the pricing and terms of the Offering. Copies of the two press releases are attached hereto as Exhibits 99.1 and 99.2, respectively, and are each incorporated herein by reference.
Ropes & Gray LLP, counsel to the Company, has issued an opinion to the Company, dated April 24, 2015, regarding the Shares and Warrants to be sold in the Offering. A copy of the opinion is filed as Exhibit 5.1 to this Current Report on
Form 8-K.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits
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Exhibit No. |
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Description |
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1.1 |
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Underwriting Agreement between StemCells, Inc. and Maxim Group LLC |
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4.1 |
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Form of Warrant |
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5.1 |
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Opinion of Ropes & Gray LLP |
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23.1 |
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Consent of Ropes & Gray LLP (contained in Exhibit 5.1 above) |
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99.1 |
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Press Release of StemCells, Inc. dated April 23, 2015 |
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99.2 |
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Press Release of StemCells, Inc. dated April 24, 2015 |
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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April 24, 2015 |
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StemCells, Inc. |
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/s/ Kenneth B. Stratton |
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Name: |
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Kenneth B. Stratton |
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Title: |
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General Counsel |
Exhibit Index
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Exhibit No. |
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Description |
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1.1 |
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Underwriting Agreement between StemCells, Inc. and Maxim Group LLC |
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4.1 |
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Form of Warrant |
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5.1 |
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Opinion of Ropes & Gray LLP |
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23.1 |
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Consent of Ropes & Gray LLP (contained in Exhibit 5.1 above) |
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99.1 |
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Press Release of StemCells, Inc. dated April 23, 2015 |
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99.2 |
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Press Release of StemCells, Inc. dated April 24, 2015 |
Exhibit 1.1
35,715,000 SHARES OF COMMON STOCK
AND
26,786,250
WARRANTS OF
STEMCELLS, INC.
UNDERWRITING AGREEMENT
April 24, 2015
Maxim Group LLC
As the Representative of the
Several underwriters, if any, named in Schedule I hereto
405 Lexington Avenue
New York, New York 10174
Ladies and Gentlemen:
The undersigned,
StemCells, Inc., a company incorporated under the laws of the State of Delaware (collectively with its subsidiaries and affiliates, including, without limitation, all entities disclosed or described in the Registration Statement as being
subsidiaries or affiliates of StemCells, Inc., the Company), hereby confirms its agreement (this Agreement) with the several underwriters (such underwriters, including the Representative (as defined below), the
Underwriters and each an Underwriter) named in Schedule I hereto for whom Maxim Group LLC is acting as representative to the several Underwriters (the Representative and if there are no
Underwriters other than the Representative, references to multiple Underwriters shall be disregarded and the term Representative as used herein shall have the same meaning as Underwriter) on the terms and conditions set forth herein.
It is understood that the several Underwriters are to make a public offering of the Public Securities as soon as the Representative deems it
advisable to do so. The Public Securities are to be initially offered to the public at the public offering price set forth in the Prospectus. The Representative may from time to time thereafter change the public offering price and other selling
terms.
It is further understood that you will act as the Representative for the Underwriters in the offering and sale of the Closing
Securities and, if any, the Option Securities in accordance with this Agreement.
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:
Affiliate means with respect to any Person, any other Person that, directly or indirectly through one or
more intermediaries, controls or is controlled by or is under common control with such 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 closed.
Closing
means the closing of the purchase and sale of the Closing Securities pursuant to Section 2.1.
Closing
Date means the hour and the date on the third (fourth, if the pricing occurs after 4:30 p.m. Eastern time on any given day) Trading Day following the Execution Date or at such other time not later than ten Trading Days following the
Execution Date as shall be agreed upon by the Representative and the Company.
Closing Purchase Price
shall have the meaning ascribed to such term in Section 2.1(b), which aggregate purchase price shall be net of underwriting discounts and commissions.
Closing Securities shall have the meaning ascribed to such term in Section 2.1(a)(ii).
Closing Shares shall have the meaning ascribed to such term in Section 2.1(a)(i).
Closing Warrants shall have the meaning ascribed to such term in Section 2.1(a)(ii).
Combined Purchase Price shall have the meaning ascribed to such term in Section 2.1(b).
Commission means the United States Securities and Exchange Commission.
Common Stock means the common stock of the Company, par value $.01 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
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Subsidiaries which would entitle the holder thereof to acquire at any time Common Stock, including, without limitation, any debt, preferred stock, right, option, warrant or other instrument that
is at any time convertible into or exercisable or exchangeable for, or otherwise entitles the holder thereof to receive, Common Stock.
Company Auditor means Grant Thornton LLP, with offices located at 2901 Douglas Boulevard, Suite 300,
Roseville, California 95661.
Company Counsel means Ropes & Gray LLP, with offices located at
Prudential Tower, 800 Boylston Street, Boston, MA 02199.
Company IP Counsel means Cooley LLP, with
offices located at 1114 Avenue of the Americas, New York, New York 10036.
Contributing Party shall have
the meaning ascribed to such term in Section 6.4(b).
Effective Date shall have the meaning
ascribed to such term in Section 3.1(f).
EGS means Ellenoff Grossman & Schole LLP, with
offices located at 1345 Avenue of the Americas, New York, New York 10105.
Exchange Act means the
Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.
Execution
Date shall mean the date on which the parties execute and enter into this Agreement.
Exempt
Issuance means the issuance of (a) shares of Common Stock or options to employees, officers or directors of the Company pursuant to any stock or option plan duly adopted for such purpose, by a majority of the non-employee members of
the Board of Directors or a majority of the members of a committee of non-employee directors established for such purpose, (b) securities upon the exercise or exchange of or conversion of any Securities issued hereunder and/or other securities
exercisable or exchangeable for or convertible into shares of Common Stock issued and outstanding on the date of this Agreement, provided that such securities have not been amended since the date of this Agreement to increase the number of such
securities or to decrease the exercise price, exchange price or conversion price of such securities, 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 equity holders of a Person) which is, itself or through its subsidiaries, an operating company or an owner of an asset in a business synergistic with the business of the
Company and shall provide to the Company additional benefits in addition to the investment of funds, but shall not include a transaction in which the Company is issuing securities primarily for the purpose of raising capital or to an entity whose
primary business is investing in securities.
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FINRA means the Financial Industry Regulatory Authority.
GAAP shall have the meaning ascribed to such term in Section 3.1(h).
Intellectual Property shall have the meaning ascribed to such term in Section 3.1(o).
Liens means a lien, charge, pledge, security interest, encumbrance, right of first refusal, preemptive right
or other restriction.
Lock-Up Agreements shall mean the lock-up agreements, in the form of Exhibit
E attached hereto, delivered on the date hereof by each of the Companys officers and directors holding Common Stock or Common Stock Equivalents.
Material Adverse Effect means (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 Companys ability to perform in any material respect on a timely basis its obligations under any Transaction Document, but shall not mean or include any condition, event or change which (1) is or results from events or
occurrences relating to the economy in general (including arising from terrorist attacks, acts of war or civil unrest) or the Companys industry in general and not specifically relating to the Company or having a disproportionate impact on the
Company, or (2) results from the announcement of this Agreement or the transactions contemplated hereby or by the other Transaction Documents.
Offering shall have the meaning ascribed to such term in Section 2.1(c).
Option Closing Date shall have the meaning ascribed to such term in Section 2.2(c).
Option Closing Purchase Price shall have the meaning ascribed to such term in Section 2.2(b), which
aggregate purchase price shall be net of underwriting discounts and commissions.
Option Securities
shall have the meaning ascribed to such term in Section 2.2(a)(ii).
Option Shares shall have the
meaning ascribed to such term in Section 2.2(a)(i).
Option Warrants shall have the meaning
ascribed to such term in Section 2.2(a).
Over-Allotment Option shall have the meaning ascribed to
such term in Section 2.2.
Permits shall have the meaning ascribed to such term in
Section 3.1(p).
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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.
Preliminary Prospectus means, if any, any preliminary prospectus relating to the Securities included in the
Registration Statement or filed with the Commission pursuant to Rule 424(b).
Proceeding means an
action, claim, suit, investigation or proceeding (including, without limitation, an investigation or partial proceeding, such as a deposition), whether commenced or threatened.
Prospectus means the final prospectus filed for the Registration Statement with respect to the Securities.
Prospectus Supplement means, if any, any supplement to the Prospectus complying with Rule 424(b) of the
Securities Act that is filed with the Commission.
Public Securities shall mean, collectively, the
Closing Securities and, if any, the Option Securities.
Registration Statement means the registration
statement of the Company on Form S-3 (File No. 333-193100) with respect to the Securities, as amended as of the date hereof, including the Prospectus and Prospectus Supplement, if any, the Preliminary Prospectus, if any, and all exhibits filed
with or incorporated by reference into such registration statement.
Required Approvals shall have the
meaning ascribed to such term in Section 3.1(e).
Road Show Materials shall have the meaning
ascribed to such term in Section 6.1.
Rule 424 means Rule 424 promulgated by the Commission
pursuant to the Securities Act, as such Rule may be amended or interpreted from time to time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same purpose and effect as such Rule.
SEC Reports shall have the meaning ascribed to such term in Section 3.1(h).
Securities means the Closing Securities, the Option Securities and the Warrant Shares.
Securities Act means the Securities Act of 1933, as amended, and the rules and regulations promulgated
thereunder.
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Share Purchase Price shall have the meaning ascribed to such
term in Section 2.1(b).
Shares means, collectively, the shares of Common Stock delivered to the
Underwriters in accordance with Section 2.1(a)(i) and Section 2.2(a).
Subsidiary shall have
the meaning ascribed to such term in Section 3.1(a).
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 MKT, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market, the New York Stock Exchange, OTCQX or OTCQB (or any
successors to any of the foregoing).
Transaction Documents means this Agreement, the Warrants, the
Lock-Up Agreements and any other documents or agreements executed in connection with the transactions contemplated hereunder.
Transfer Agent means the current transfer agent of the Company and any successor transfer agent of the
Company.
Underwriter Free Writing Prospectus shall have the meaning ascribe to such term in
Section 4.21(a).
Warrant Purchase Price shall have the meaning ascribed to such term in
Section 2.1(b).
Warrant Shares means the shares of Common Stock issuable upon exercise of the
Warrants.
Warrants means, collectively, the Common Stock purchase warrants delivered to the
Underwriters in accordance with Section 2.1(a)(ii) and Section 2.2, which Warrants shall be exercisable immediately and have a term of exercise equal to five (5) years.
ARTICLE II.
PURCHASE
AND SALE
2.1 Closing.
(a) Upon the terms and subject to the conditions set forth herein, the Company agrees to sell, in the aggregate, 35,715,000
shares of Common Stock and 26,786,250 Warrants, and each Underwriter agrees to purchase, severally and not jointly, at the Closing, the following securities of the Company:
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(i) the number of shares of Common Stock (the Closing Shares)
set forth opposite the name of such Underwriter on Schedule I hereof; and
(ii) Warrants to purchase up to the
number of shares of Common Stock set forth opposite the name of such Underwriter on Schedule I hereof (the Closing Warrants and, collectively with the Closing Shares, the Closing Securities), which
Warrants shall have an exercise price of $0.85 per share, subject to adjustment as provided therein, in the form of Exhibit D attached hereto.
(b) The aggregate purchase price for the Closing Securities shall equal the amount set forth opposite the name of such
Underwriter on Schedule I hereto (the Closing Purchase Price). The combined purchase price for one Share and a Warrant to purchase 0.75 Warrant Share shall be $0.658 (the Combined Purchase Price) which
shall be allocated as $0.657999906 per Share (the Share Purchase Price) and $0.000000094 per Warrant (the Warrant Purchase Price); and
(c) On the Closing Date, each Underwriter shall deliver or cause to be delivered to the Company, via wire transfer, immediately
available funds equal to such Underwriters Closing Purchase Price and the Company shall deliver to, or as directed by, such Underwriter its respective Closing Securities and the Company shall deliver the other items required pursuant to
Section 2.3 deliverable at the Closing. Upon satisfaction of the covenants and conditions set forth in Sections 2.3 and 2.4, the Closing shall occur at the offices of EGS or such other location as the Company and Representative shall mutually
agree. The Public Securities are to be offered initially to the public at the offering price set forth on the cover page of the Prospectus Supplement (the Offering).
2.2 Over-Allotment Option.
(a) For the purposes of covering any over-allotments in connection with the distribution and sale of the Closing Securities,
the Representative is hereby granted an option (the Over-Allotment Option) to purchase, in the aggregate, up to 5,357,250 shares of Common Stock (the Option Shares) and Warrants to purchase up to 4,017,938
shares of Common Stock (the Option Warrants and, collectively with the Option Shares, the Option Securities) which may be purchased in any combination of Option Shares and/or Option Warrants at the Share
Purchase Price and/or Warrant Purchase Price, respectively.
(b) In connection with an exercise of the Over-Allotment
Option, (a) the purchase price to be paid for the Option Shares is equal to the product of the Share Purchase Price multiplied by the number of Option Shares to be purchased and (b) the purchase price to be paid for the Option Warrants is
equal to the product of the Warrant Purchase Price multiplied by the number of Option Warrants (the aggregate purchase price to be paid on an Option Closing Date, the Option Closing Purchase Price).
(c) The Over-Allotment Option granted pursuant to this Section 2.2 may be exercised by the Representative as to all (at
any time) or any part (from time to time) of
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the Option Securities within 30 days after the Execution Date. An Underwriter will not be under any obligation to purchase any Option Securities prior to the exercise of the Over-Allotment Option
by the Representative. The Over-Allotment Option granted hereby may be exercised by the giving of oral notice to the Company from the Representative, which must be confirmed in writing by overnight mail or facsimile or other electronic transmission
setting forth the number of Option Shares and/or Option Warrants to be purchased and the date and time for delivery of and payment for the Option Securities (each, an Option Closing Date), which will not be earlier than the
Closing Date nor earlier than the third Trading Day following the date of the notice (other than in connection with a notice delivered between the date hereof and the Closing Date for which the Closing Date may be the Option Closing Date) nor later
than five (5) full Business Days after the date of the notice or such other time as shall be agreed upon by the Company and the Representative, at the offices of EGS or at such other place (including remotely by facsimile or other electronic
transmission) as shall be agreed upon by the Company and the Representative. If such delivery and payment for the Option Securities does not occur on the Closing Date, each Option Closing Date will be as set forth in the notice. Upon exercise of the
Over-Allotment Option, the Company will become obligated to convey to the Underwriters, and, subject to the terms and conditions set forth herein, the Underwriters will become obligated to purchase, the number of Option Shares and/or Option Warrants
specified in such notice. The Representative may cancel the Over-Allotment Option at any time prior to the expiration of the Over-Allotment Option by written notice to the Company.
2.3 Deliveries. The Company shall deliver or cause to be delivered to each Underwriter (if applicable) the following:
(i) At the Closing Date, the Closing Shares and, as to each Option Closing Date, if any, the applicable Option Shares, which
shares shall be delivered via The Depository Trust Company Deposit or Withdrawal at Custodian system for the accounts of the several Underwriters;
(ii) At the Closing Date, the Closing Warrants and, as to each Option Closing Date, if any, the applicable Option Warrants in
certificated form registered in the name or names and in such authorized denominations as the applicable Underwriter may request in writing at least two full Business Days prior to the Closing Date and, if any, each Option Closing Date;
(iii) At the Closing Date, a legal opinion of Company Counsel addressed to the Underwriters, including, without limitation, a
negative assurance letter, and as to each Option Closing Date, if any, a bring-down opinion from Company Counsel, each in form and substance reasonably satisfactory to the Representative;
(iv) At the Closing Date, a legal opinion of Company IP Counsel addressed to the Underwriters, including, without limitation, a
negative assurance letter, and as to each Option Closing Date, if any, a bring-down opinion from Company IP Counsel, each in form and substance reasonably satisfactory to the Representative;
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(v) Contemporaneously herewith, a cold comfort letter, addressed to the
Underwriters and in form and substance satisfactory in all respects to the Representative from the Company Auditor dated, respectively, as of the date of this Agreement and a bring-down letter dated as of the Closing Date and each Option Closing
Date, if any;
(vi) At the Closing Date and on each Option Closing Date, the duly executed and delivered Officers
Certificate, substantially in the form required by Exhibit B attached hereto;
(vii) At the Closing Date and on each
Option Closing Date, the duly executed and delivered Secretarys Certificate, substantially in the form required by Exhibit C attached hereto; and
(viii) Contemporaneously herewith, the duly executed and delivered Lock-Up Agreements.
2.4 Closing Conditions. The respective obligations of each Underwriter hereunder in connection with the Closing and each Option Closing
Date, if any, are subject to the following conditions being met or waived by the Representative:
(i) the accuracy in all
material respects when made and on the date in question (other than representations and warranties of the Company already qualified by materiality, which shall be true and correct in all respects) of the representations and warranties of the Company
contained herein (unless as of a specific date therein);
(ii) all obligations, covenants and agreements of the Company
required to be performed at or prior to the date in question shall have been performed;
(iii) the delivery by the Company
of the items set forth in Section 2.3 of this Agreement;
(iv) the Registration Statement shall be effective on the
date of this Agreement and at each of the Closing Date and each Option Closing Date, if any, no stop order suspending the effectiveness of the Registration Statement shall have been issued and no proceedings for that purpose shall have been
instituted or to the Companys knowledge shall be pending or contemplated by the Commission and any request on the part of the Commission for additional information shall have been complied with to the reasonable satisfaction of the
Representative;
(v) by the Execution Date, if required by FINRA, the Underwriters shall have received clearance from FINRA
as to the amount of compensation allowable or payable to the Underwriters as described in the Registration Statement;
(vi)
the Closing Shares, the Option Shares and the Warrant Shares have been approved for listing on the Trading Market; and
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(vii) since the Effective Date and on each of the Closing Date and each Option
Closing Date, if any: (i) there shall have been no material adverse change or development involving a prospective material adverse change in the condition or prospects or the business activities, financial or otherwise, of the Company from the
latest dates as of which such condition is set forth in the Registration Statement and Prospectus; (ii) no action, suit or proceeding, at law or in equity, shall have been pending or threatened against the Company or any Affiliate of the
Company before or by any court or federal or state commission, board or other administrative agency wherein an unfavorable decision, ruling or finding may materially adversely affect the business, operations, prospects or financial condition or
income of the Company, except as set forth in the Registration Statement and Prospectus; (iii) no stop order shall have been issued under the Securities Act and no proceedings therefor shall have been initiated or threatened by the Commission;
and (iv) the Registration Statement and the Prospectus and any amendments or supplements thereto shall contain all material statements which are required to be stated therein in accordance with the Securities Act and the rules and regulations
thereunder and shall conform in all material respects to the requirements of the Securities Act and the rules and regulations thereunder, and neither the Registration Statement nor the Prospectus nor any amendment or supplement thereto shall contain
any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES
3.1 Representations and Warranties of the Company. Except as set forth in the Registration Statement, the Preliminary Prospectus or the
SEC Reports, the Company hereby makes the representations and warranties set forth below to the Underwriters as of the Execution Date, as of the Closing Date and as of each Option Closing Date, if any, as follows:
(a) Subsidiaries. All of the direct and indirect significant subsidiaries (as such term is defined in Rule 1-02(w) of
Regulation S-X) of the Company are listed in the Companys most recent Annual Report on Form 10-K as modified by any subsequent SEC Reports filed with the Commission (each a Subsidiary). The Company owns, directly or
indirectly, all of the capital stock or other equity interests of each Subsidiary free and clear of any Liens, and all 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.
(b) Organization and Qualification.
Each of the Company and the Subsidiaries is an entity duly incorporated or otherwise organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation or organization (as applicable), except where the failure
of a Subsidiary to be in good standing could not reasonably be expected to result in a Material Adverse Effect. Each of the Company and the Subsidiaries has 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
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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 reasonably be expected to result in a Material Adverse Effect and, to the knowledge of the Company, 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.
(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 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 its stockholders, and no further action is required by the Company or its stockholders in connection therewith other than in
connection with the Required Approvals (as defined 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, 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
of the Transaction Documents by the Company, the issuance and sale of the Securities at the Closing and the consummation by the Company of the other transactions contemplated thereby do not and will not (i) conflict with or violate any
provision of the Companys or any Subsidiarys certificate or articles of incorporation, bylaws or other organizational or charter documents, or (ii) conflict with, violate or constitute a default (or an event that with notice or
lapse of time or both would become a default) under, or result in the creation of any Lien upon any of the properties or assets of the Company or any Subsidiary pursuant to, or give to others any rights of termination, amendment, acceleration or
cancellation (with or without notice, lapse of time or both) of, any agreement (written or oral), credit facility, debt or other instrument (evidencing a Company or Subsidiary debt or otherwise) 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 (as defined below), 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 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, approval 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 having jurisdiction over the Company or its Subsidiaries,
its stockholders or the Trading Market in connection with the execution, delivery and performance by the Company of the Transaction Documents, including the issuance and listing or quotation (as applicable) of the Securities on the Trading Market,
other than: (i) the filing with the Commission of the Prospectus and (ii) any notice filings or SEC Reports as are required to be made in connection with the Closing Date under applicable federal and state securities laws or under
applicable rules and regulations of the Trading Market (collectively, the Required Approvals).
(f)
Issuance of the Securities. The Securities are duly authorized and, when issued and paid for in accordance with the applicable Transaction Documents, will be duly and validly issued, fully paid and nonassessable, free and clear of all Liens
imposed by the Company. The Warrant Shares, when issued in accordance with the terms of the Warrants, will be validly issued, fully paid and nonassessable, free and clear of all Liens imposed by the Company. The 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 holder of the Securities will not be subject to personal liability by reason of being such holders. The Securities are
not and will not be subject to the preemptive rights of any holders of any security of the Company or similar contractual rights granted by the Company. All corporate action required to be taken for the authorization, issuance and sale of the
Securities has been duly and validly taken. The Company has filed with the Commission the Registration Statement under the Securities Act, which became effective on January 8, 2014 (the Effective Date), for the registration
under the Securities Act of the Securities. At the time of such filing, the Company met the requirements of Form S-3 under the Securities Act. The Registration Statement meets the requirements set forth in Rule 415(a)(1)(x) under the Securities Act
and complies with said Rule and the Prospectus Supplement will meet the requirements set forth in Rule 424(b). The Company has advised the Representative of all further information (financial and other) with respect to the Company required to be set
forth therein in the Registration Statement and Prospectus Supplement. Any reference in this Agreement to the Registration Statement, the Prospectus or the Prospectus Supplement shall be deemed to refer to and include the documents incorporated by
reference therein pursuant to Item 12 of Form S-3 which were filed under the Exchange Act, on or before the date of this Agreement, or the issue date of the 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 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 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 which is contained, included, described, referenced, set forth or stated in the Registration Statement, the Prospectus or the Prospectus
Supplement (and all other references of like import) shall be deemed to mean and include all such financial
12
statements and schedules and other information which is or is deemed to be incorporated by reference in the Registration Statement, the 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 Prospectus or the Prospectus Supplement has been issued, and no proceeding for any such purpose is pending or has been initiated or, to the Companys
knowledge, is threatened by the Commission. For purposes of this Agreement, free writing prospectus has the meaning set forth in Rule 405 under the Securities Act. The Company will not, without the prior consent of the
Representative, prepare, use or refer to, any free writing prospectus. The Securities conform in all material respects to all statements with respect thereto contained in the Registration Statement.
(g) Capitalization. The capitalization of the Company is as set forth in the Registration Statement. 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. There are no outstanding options, warrants, rights to subscribe to, calls or
commitments of any character whatsoever relating to, or securities, rights or obligations convertible into or exchangeable for, or giving any Person any right to subscribe for or acquire, any shares of Common Stock, or contracts, commitments,
understandings or arrangements by which the Company or any Subsidiary is or may become bound to issue additional shares of Common Stock or Common Stock Equivalents. The issuance and sale of the Securities will not obligate the Company to issue
shares of Common Stock or other securities to any Person (other than the Underwriters) 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, have been issued in compliance with all federal and state securities laws and requirements of the Trading Market, and none of such outstanding
shares was issued in violation of any preemptive rights or similar rights to subscribe for or purchase securities. The authorized shares of the Company conform in all material respects to all statements relating thereto contained in the Registration
Statement and the Prospectus. The offers and sales of the Companys securities were, at the time effected, either registered under the Securities Act and the applicable state securities or Blue Sky laws or, to the Companys knowledge based
in part on the representations and warranties of the purchasers, exempt from such registration requirements. No further approval or authorization of any stockholder or the Board of Directors of the Company is required for the issuance and sale of
the Securities, other than the Required Approvals. There are no stockholders agreements, voting agreements or other similar agreements with respect to the Companys capital stock to which the Company is a party or, to the knowledge of the
Company, between or among any of the Companys stockholders.
(h) SEC Reports; Financial Statements. The
Company has filed or furnished all reports, schedules, forms, statements and other documents required to be filed or furnished by it under the Securities Act and the Exchange Act (including all required exhibits thereto), including pursuant to
Section 13(a) or 15(d) thereof, (the foregoing materials, as the same may be amended, and including the exhibits thereto and documents incorporated by reference therein, being collectively referred to herein as the SEC
13
Reports) for the 12 months preceding the date hereof (or such shorter period as the Company was required by law to file such material) and any notices, reports or other filings
pursuant to applicable requirements of the Trading Market on a timely basis or has received a valid extension of such time of filing, and has filed any such SEC Reports and notices, reports or other filings pursuant to applicable requirements of the
Trading Market prior to the expiration of any such extension. As of their respective dates, the SEC Reports complied in all material respects with the applicable requirements of the Securities Act and 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 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 (i) have been prepared in accordance with United States generally accepted accounting principles applied on a consistent basis
during the periods involved (GAAP), except as may be otherwise specified in such financial statements or the notes thereto and except that unaudited financial statements may not contain all footnotes required by GAAP, and
(ii) 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, year-end audit adjustments. The agreements and documents described in the Registration Statement, the Prospectus, the Prospectus Supplement and the SEC Reports conform to the descriptions thereof contained therein
and there are no agreements or other documents required by the Securities Act and the rules and regulations thereunder to be described in the Registration Statement, the Prospectus, the Prospectus Supplement or the SEC Reports or to be filed with
the Commission as exhibits to the Registration Statement, that have not been so described or filed. Each agreement or other instrument (however characterized or described) to which the Company is a party or by which it is or may be bound or affected
and (i) that is referred to in the Registration Statement, the Prospectus, the Prospectus Supplement or the SEC Reports, or (ii) is material to the Companys business, has been duly authorized and validly executed by the Company, is
in full force and effect in all material respects and is enforceable against the Company and, to the Companys knowledge, the other parties thereto, in accordance with its terms, except (x) as such enforceability may be limited by
bankruptcy, insolvency, reorganization or similar laws affecting creditors rights generally, (y) as enforceability of any indemnification or contribution provision may be limited under the federal and state securities laws, and
(z) that the remedy of specific performance and injunctive and other forms of equitable relief may be subject to the equitable defenses and to the discretion of the court before which any proceeding therefore may be brought. None of such
agreements or instruments has been assigned by the Company, and neither the Company nor, to the best of the Companys knowledge, any other party is in default thereunder and, to the best of the Companys knowledge, no event has occurred
that, with the lapse of time or the giving of notice, or both, would constitute a default thereunder. To the best of the Companys knowledge, performance by the Company of the material provisions of such agreements or
14
instruments will not result in a violation of any existing applicable law, rule, regulation,
judgment, order or decree of any governmental agency or court, domestic or foreign, having jurisdiction over the Company or any of its assets or businesses, including, without limitation, those relating to environmental laws and regulations.
(i) Material Changes. Since the date of the latest audited financial statements included within the SEC Reports, except
as specifically disclosed in the SEC Reports, (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, except as has been reasonably cured by the Company,
(ii) the Company has not incurred any liabilities (contingent or otherwise) that are material to the Company or its Subsidiaries other than (A) trade payables, accrued expenses and other liabilities incurred in the ordinary course of
business consistent with past practice and (B) liabilities not required to be reflected in the Companys 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 in any material respect except as otherwise required pursuant to GAAP, (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 (other than in connection with repurchases of unvested stock issued to employees of the Company) and (v) the Company has not issued any equity securities to any
officer, director or Affiliate, except pursuant to existing Company stock option and incentive plans or awards. The Company does not have pending before the Commission any request for confidential treatment of information. To the Companys
knowledge, except for the transactions 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 businesses, prospects, properties, operations, assets or financial condition that would be required to be disclosed by the Company under applicable securities laws at the time this representation is made or deemed
made that has not been publicly disclosed at least 1 Trading Day prior to the date that this representation is made, except as would not be reasonably likely to result in an Material Adverse Effect.
(j) Litigation. Except as disclosed in the SEC Reports, there is no Proceeding pending or, to the knowledge of the
Company, threatened against or affecting the Company, any Subsidiary, or any of their respective properties, officers, or directors (in any such officers or directors capacity as such) before or by any court, arbitrator, governmental or
administrative agency or regulatory authority (federal, state, county, local or foreign) which (i) adversely affects or challenges the legality, validity or enforceability of any of the Transaction Documents or the Securities, (ii) could,
if there were an unfavorable decision, ruling or finding, have or reasonably be expected to result in a Material Adverse Effect, or (iii) involves a claim or violation of, or liability under, any federal or state securities laws or which
involves a claim of breach of fiduciary duty. There has not been and, to the knowledge of the Company, there is not currently pending or contemplated, any investigation by the Commission involving the Company or any Subsidiary or any current or
former director or officer of the Company or any Subsidiary (in his or her capacity as such). The Commission has not issued any stop order or other
15
order suspending the effectiveness of any registration statement filed by the Company or any Subsidiary under the Exchange Act or the Securities Act and, to the Companys knowledge, no
proceeding for such purpose is pending before or threatened by the Commission.
(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, could reasonably be expected to 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 in violation of any statute, rule or regulation of any
governmental authority or the Trading Market, including without limitation all foreign, federal, state and local laws applicable to its business, except in each case as would not have a Material Adverse Effect.
(l) Listing and Maintenance Requirements. The Common Stock is registered pursuant to Section 12(b) of the Exchange
Act, and the Company has taken no action designed to, or which to its knowledge is likely to have the effect of, terminating the registration of the Common Stock under the Exchange Act, nor has the Company received any notification that the
Commission is contemplating terminating such registration. The Company has not, in the 12 months preceding the date hereof or the Closing Date, received notice from any Trading Market on which the Common Stock is or has been listed or quoted (as
applicable) to the effect that the Company is not in compliance with the listing or quotation (as applicable) and maintenance requirements of such Trading Market. The Company is, and immediately after the consummation of the transactions
contemplated hereby will be, in compliance with all such listing or quotation (as applicable) and maintenance requirements.
(m) Application of Takeover Protections. The Company and its Board of Directors have taken all necessary action, if any,
in order to render inapplicable any control share acquisition, business combination, poison pill (including any distribution under a rights agreement) or other similar anti-takeover provision under the
Companys certificate of incorporation (or similar charter documents) and the laws of its state of incorporation that is or could become applicable to the Underwriters as a result of the Underwriters and the Company fulfilling their obligations
or exercising their rights under the Transaction Documents, including, without limitation, the Companys issuance of the Securities and the Underwriters ownership of the Securities.
(n) Effective Registration Statement. The Registration Statement has been declared effective by the Commission and
remains effective as of the date hereof and the Company knows of no reason why the Registration Statement will not continue to remain effective for the foreseeable future. The Company is eligible to use Form S-3 registration statements for the
issuance of securities.
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(o) Intellectual Property. The Company possesses such right, title and
interest in and to, or possesses adequate rights to use, all patents, patent rights, trade secrets, inventions, know-how, trademarks, trade names, copyrights, service marks and other proprietary rights (Intellectual Property)
material to the conduct of the Companys business except Intellectual Property the failure of which to possess would not have a Material Adverse Effect. Except as disclosed in the SEC Reports, the Company has not received any notice of
infringement, misappropriation or conflict from any third party as to Intellectual Property owned by or exclusively licensed to the Company that has not been resolved or disposed of, which infringement, misappropriation or conflict would, if the
subject of an unfavorable decision, ruling or finding, have a Material Adverse Effect. To the Companys knowledge, it has not infringed, misappropriated, or otherwise conflicted with the Intellectual Property of any third parties, which
infringement, misappropriation or conflict would, if the subject of an unfavorable decision, ruling or finding, have a Material Adverse Effect. The Company and its Subsidiaries have taken reasonable security measures to protect the secrecy,
confidentiality and value of all of their intellectual properties, except where failure to do so could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.
(p) Permits. The Company has made all filings, applications and submissions required by, and possesses all approvals,
licenses, certificates, certifications, clearances, consents, exemptions, marks, notifications, orders, permits and other authorizations issued by, the appropriate federal, state or foreign regulatory authorities necessary to own or lease its
properties and to conduct its businesses (collectively, Permits), except for such Permits the failure of which to possess or obtain would not reasonably be expected to have a Material Adverse Effect. The Company has not received
any written notice of proceedings relating to the limitation, revocation, cancellation, suspension, modification or non-renewal of any such Permit which, singly or in the aggregate, if the subject of an unfavorable decision, ruling or finding, would
have a Material Adverse Effect, and has no reason to believe that any such Permit will not be renewed in the ordinary course.
(q) Insurance. The Company and the Subsidiaries are insured by insurers of recognized financial responsibility against
such losses and risks and in such amounts as are prudent and customary in the businesses in which the Company and the Subsidiaries are engaged, including, but not limited to, directors and officers insurance coverage. 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.
(r) Disclosure. The Company confirms that, as of the date hereof and as of the Closing Date, neither the Company nor any
officer, director or employee of the Company acting on its behalf (as such term is used in Regulation FD) has provided or will provide the Underwriters or their agents or counsel with any information that the Company believes may constitute
material, non-public information except insofar as the existence and terms of the proposed transactions hereunder may constitute such information. The Company understands and confirms that the Underwriters will rely on the foregoing representations
and covenants in effecting transactions in securities of the Company.
17
None of the representations and warranties of the Company contained herein, nor any statement made by the Company in any disclosure, schedule, exhibit, certificate or other document furnished or
to be furnished to the Underwriters in connection herewith, contains or will contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements made therein, in light of the circumstances
under which they were made, not misleading.
(s) Sarbanes-Oxley. The Company and the Subsidiaries are in material
compliance with any and all applicable requirements of the Sarbanes-Oxley Act of 2002 that are effective as of the date hereof, and any and all applicable rules and regulations promulgated by the Commission thereunder that are effective as of the
date hereof and as of the Closing Date.
(t) Certain Fees. Except as set forth in the Preliminary Prospectus or the
Prospectus Supplement, no brokerage or finders fees or commissions are or will be payable by the Company or any Subsidiary or Affiliate of 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 Underwriters shall have no obligation or liability 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. To the Companys knowledge, there are no other arrangements, agreements or understandings of the Company
or any of its stockholders that may affect the Underwriters compensation, as determined by FINRA. The Company has not made any direct or indirect payments (in cash, securities or otherwise) to: (i) any person, as a finders fee,
consulting fee or otherwise, in consideration of such person raising capital for the Company or introducing to the Company persons who raised or provided capital to the Company; (ii) any FINRA member; or (iii) any person or entity that has
any direct or indirect affiliation or association with any FINRA member, within the twelve months prior to the Execution Date. None of the net proceeds of the Offering will be paid by the Company to any participating FINRA member or its affiliates,
except as specifically authorized herein.
(u) 10b-5. The Registration Statement (and any further documents to be
filed with the Commission) contains all exhibits and schedules as required by the Securities Act. Each of the Registration Statement and any post-effective amendment thereto, if any, at the time it became effective, complied in all material respects
with the Securities Act and the Exchange Act and the applicable rules and regulations under the Securities Act and did not and, as amended or supplemented, if applicable, will not, 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. The Prospectus and the Prospectus Supplement, each as of its respective date, comply in all material respects with the Securities Act and the
Exchange Act and the applicable rules and regulations. Each of the Prospectus 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
18
circumstances under which they were made, not misleading. The SEC Reports, 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 they were 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 the SEC Reports incorporated by reference in the 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 Prospectus 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. No post-effective amendment to the Registration Statement reflecting any
facts or events arising after the date thereof which 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 transaction contemplated hereby 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 Prospectus or Prospectus Supplement, or to be filed as exhibits or schedules to the Registration Statement, which have not been described or filed as required. The press releases disseminated by the Company
during the twelve months preceding the date of this Agreement taken as a whole do not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made and when made, not misleading.
(v) Foreign Corrupt
Practices. Neither the Company nor any Subsidiary, nor to the knowledge of the Company or any Subsidiary, any agent or other person acting on behalf of the Company or any Subsidiary, has (i) directly or indirectly, used any funds for
unlawful contributions, gifts, entertainment or other unlawful expenses related to foreign or domestic political activity, (ii) made any unlawful payment to foreign or domestic government officials or employees or to any foreign or domestic
political parties or campaigns from corporate funds, (iii) failed to disclose fully any contribution made by the Company or any Subsidiary (or made by any person acting on its behalf of which the Company is aware) which is in violation of law,
or (iv) violated in any material respect any provision of FCPA. The Company has taken reasonable steps to ensure that its accounting controls and procedures are sufficient to cause the Company to comply in all material respects with the FCPA.
(w) FDA. As to each product subject to the jurisdiction of the U.S. Food and Drug Administration
(FDA) under the Federal Food, Drug and Cosmetic Act, as amended, and the regulations thereunder (FDCA) that is manufactured, packaged, labeled, tested, distributed, sold, and/or marketed by the Company or any of
its Subsidiaries (each such product, a Pharmaceutical Product), such Pharmaceutical Product is being manufactured, packaged, labeled, tested, distributed, sold and/or
19
marketed by the Company in compliance with all applicable requirements under FDCA and similar laws, rules and regulations relating to registration, investigational use, premarket clearance,
licensure, or application approval, good manufacturing practices, good laboratory practices, good clinical practices, product listing, quotas, labeling, advertising, record keeping and filing of reports, except where the failure to be in compliance
would not have a Material Adverse Effect. There is no pending, completed or, to the Companys knowledge, threatened, action (including any lawsuit, arbitration, or legal or administrative or regulatory proceeding, charge, complaint, or
investigation) against the Company or any of its Subsidiaries, and none of the Company or any of its Subsidiaries has received any notice, warning letter or other communication from the FDA or any other governmental entity, which (i) contests
the premarket clearance, licensure, registration, or approval of, the uses of, the distribution of, the manufacturing or packaging of, the testing of, the sale of, or the labeling and promotion of any Pharmaceutical Product, (ii) withdraws its
approval of, requests the recall, suspension, or seizure of, or withdraws or orders the withdrawal of advertising or sales promotional materials relating to, any Pharmaceutical Product, (iii) imposes a clinical hold on any clinical
investigation by the Company or any of its Subsidiaries, (iv) enjoins production at any facility of the Company or any of its Subsidiaries, (v) enters or proposes to enter into a consent decree of permanent injunction with the Company or
any of its Subsidiaries, or (vi) otherwise alleges any violation of any laws, rules or regulations by the Company or any of its Subsidiaries, and which, either individually or in the aggregate, would have a Material Adverse Effect. The
properties, business and operations of the Company have been and are being conducted in all material respects in accordance with all applicable laws, rules and regulations of the FDA. The Company has not been informed by the FDA that the FDA
will prohibit the marketing, sale, license or use in the United States of any product proposed to be developed, produced or marketed by the Company nor has the FDA expressed any concern as to approving or clearing for marketing any product being
developed or proposed to be developed by the Company. Statements in the Prospectus, including materials incorporated by reference into the Registration Statement and Prospectus, concerning the Companys applications, filings, submissions and
proceedings with the FDA under the FDCA fairly summarize in all material respects such matters.
(x) FINRA
Affiliation. No officer, director or any beneficial owner of 5% or more of the Companys unregistered securities has any direct or indirect affiliation or association with any FINRA member (as determined in accordance with the rules and
regulations of FINRA).
(y) Officers Certificate. Any certificate signed by any duly authorized officer of the
Company and delivered to you or to EGS shall be deemed a representation and warranty by the Company to the Underwriters as to the matters covered thereby.
(z) 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
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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
Companys placement agent in connection with the placement of the Securities.
ARTICLE IV.
OTHER AGREEMENTS OF THE PARTIES
4.1 Amendments to Registration Statement. The Company has delivered, or will as promptly as practicable deliver, to the Underwriters
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 Prospectus and any Prospectus
Supplement, as amended or supplemented, in such quantities and at such places as an Underwriter 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 Securities other than the Prospectus, the Preliminary Prospectus, the Registration Statement, and copies of the documents incorporated by reference therein.
4.2 Federal Securities Laws.
(a) Compliance. During the time when a Prospectus is required to be delivered under the Securities Act, the Company will
use commercially reasonable efforts to comply with all requirements imposed upon it by the Securities Act and the rules and regulations thereunder and the Exchange Act and the rules and regulations thereunder, as from time to time in force, so far
as necessary to permit the continuance of sales of or dealings in the Securities in accordance with the provisions hereof and the Prospectus. If at any time when a Prospectus relating to the Securities is required to be delivered under the
Securities Act, any event shall have occurred as a result of which, in the opinion of counsel for the Company or counsel for the Underwriters, the Prospectus, as then amended or supplemented, includes an untrue statement of a material fact or omits
to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading, or if it is necessary at any time to amend the Prospectus to comply with
the Securities Act, the Company will notify the Underwriters promptly and prepare and file with the Commission, subject to Section 4.1 hereof, an appropriate amendment or supplement in accordance with Section 10 of the Securities Act.
(b) Filing of Final Prospectus. The Company will file the Prospectus (in form and substance satisfactory to the
Representative) with the Commission pursuant to the requirements of Rule 424.
(c) Free Writing Prospectuses. The
Company represents and agrees that it has not made and will not make any offer relating to the Securities that would constitute an issuer free writing prospectus, as defined in Rule 433 of the rules and regulations under the Securities Act, without
the prior consent of the Representative. Any such free writing
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prospectus consented to by the Representative is hereinafter referred to as a Permitted Free Writing Prospectus. The Company represents that it will treat each Permitted
Free Writing Prospectus as an issuer free writing prospectus as defined in rule and regulations under the Securities Act, and has complied and will comply with the applicable requirements of Rule 433 of the Securities Act, including
timely Commission filing where required, legending and record keeping.
4.3 Delivery to the Underwriters of Prospectuses. The
Company will deliver to the Underwriters, without charge, from time to time during the period when the Prospectus is required to be delivered under the Securities Act or the Exchange Act such number of copies of each Prospectus as the Underwriters
may reasonably request.
4.4 Effectiveness and Events Requiring Notice to the Underwriters. During the period when the Prospectus
is required to be delivered under the Securities Act, the Company will use commercially reasonable efforts to cause the Registration Statement to remain effective with a current prospectus, and will notify the Underwriters immediately and confirm
the notice in writing: (i) of the issuance by the Commission of any stop order or of the initiation, or the threatening, of any proceeding for that purpose; (ii) of the issuance by any state securities commission of any proceedings for the
suspension of the qualification of the Securities for offering or sale in any jurisdiction or of the initiation, or the threatening, of any proceeding for that purpose; (iii) of the mailing and delivery to the Commission for filing of any
amendment or supplement to the Registration Statement or Prospectus under the Securities Act in respect of the Securities; (iv) of the receipt of any comments or request for any additional information from the Commission; and (v) of the
happening of any event during the period described in this Section 4.4 that, in the judgment of the Company, makes any statement of a material fact made in the Registration Statement, the Prospectus or any Prospectus Supplement untrue or that
requires the making of any changes in the Registration Statement, the Prospectus or any Prospectus Supplement in order to make the statements therein, in light of the circumstances under which they were made, not misleading. If the Commission or any
state securities commission shall enter a stop order or suspend such qualification at any time, the Company will make commercially reasonable efforts to obtain promptly the lifting of such order.
4.5 Reports to the Underwriters; Expenses.
(a) Periodic Reports, etc. For a period of three years from the Execution Date, the Company will furnish to the
Underwriters copies of such financial statements and other periodic and special reports as the Company from time to time furnishes generally to holders of any class of its securities and also promptly furnish to the Underwriters: (i) a copy of
each periodic report the Company has filed with the Commission; (ii) a copy of each Form 8-K prepared and filed by the Company; and (iii) a copy of each registration statement filed by the Company under the Securities Act; provided,
that documents filed with the Commission pursuant to its EDGAR system shall be deemed to have been delivered to the Underwriters pursuant to this Section.
(b) General Expenses Related to the Offering. The Company hereby agrees to pay on each of the Closing Date and each
Option Closing Date, if any, to the extent not
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paid prior to the Closing Date, all expenses incident to the performance of the obligations of the Company under this Agreement, including, but not limited to: (a) all filing fees and
communication expenses relating to the registration of the Securities to be sold in the Offering (including the Option Securities) with the Commission; (b) all FINRA Public Offering Filing System fees associated with the review of the Offering
by FINRA; (c) all fees and expenses relating to the listing of such Closing Shares, Option Shares and Warrant Shares on the Trading Market and such other stock exchanges as the Company and the Representative together determine; (d) the
costs of all mailing and printing of the Registration Statements, Preliminary Prospectuses, Prospectuses and all amendments, supplements and exhibits thereto as the Representative may reasonably deem necessary; (e) the costs of preparing,
printing and delivering the Securities; (f) fees and expenses of the Transfer Agent for the Securities; (g) stock transfer and/or stamp taxes, if any, payable upon the transfer of Securities from the Company to the Underwriters;
(h) the fees and expenses of the Companys accountants; and (i) the fees and expenses of the Companys legal counsel and other agents and representatives. The Underwriters may also deduct from the net proceeds of the Offering
payable to the Company on the Closing Date, or each Option Closing Date, if any, the expenses set forth herein to be paid by the Company to the Underwriters.
(c) Other Expenses. The Company further agrees that, in addition to the expenses payable pursuant to
Section 4.5(b), on the Closing Date, the Company will reimburse the Representative for its reasonable out-of-pocket expenses, including, without limitation, the reasonable fees and expenses of counsel to the Representative, up to $150,000 by
deduction from the proceeds of the Offering contemplated herein.
4.6 Application of Net Proceeds. The Company will apply the net
proceeds from the Offering received by it in a manner consistent with the application described under the caption Use Of Proceeds in the Prospectus.
4.7 Delivery of Earnings Statements to Security Holders. The Company will make generally available to its security holders as soon as
practicable, but not later than the first day of the fifteenth full calendar month following the Execution Date, an earnings statement (which need not be certified by independent public or independent certified public accountants unless required by
the Securities Act or the Rules and Regulations under the Securities Act, but which shall satisfy the provisions of Rule 158(a) under Section 11(a) of the Securities Act) covering a period of at least twelve consecutive months beginning after
the Execution Date. Such earning statement filed with the Commission pursuant to its EDGAR system shall be deemed to have been made available to the security holders pursuant to this Section.
4.8 Stabilization. Neither the Company, nor, to its knowledge, any of its employees, directors or shareholders (without the consent of
the Representative) has taken or will take, directly or indirectly, any action designed to or that has constituted or that might reasonably be expected to cause or result in, under the Exchange Act, or otherwise, stabilization or manipulation of the
price of any security of the Company to facilitate the sale or resale of the Securities.
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4.9 Internal Controls. The Company will maintain a system of internal accounting controls
sufficient to provide reasonable assurances that: (i) transactions are executed in accordance with managements general or specific authorization; (ii) transactions are recorded as necessary in order to permit preparation of financial
statements in accordance with GAAP and to maintain accountability for assets; (iii) access to assets is permitted only in accordance with managements general or specific authorization; and (iv) the recorded accountability for assets
is compared with existing assets at reasonable intervals and appropriate action is taken with respect to any differences.
4.10
Accountants. For a period of three (3) years from the Execution Date, the Company shall continue to retain a nationally recognized independent certified public accounting firm. The Underwriters acknowledge that the Company Auditor is
acceptable to the Underwriters.
4.11 FINRA. The Company shall advise the Underwriters (who shall make an appropriate filing with
FINRA) if it is aware that any officer, director or 5% or greater shareholder of the Company is or becomes an affiliate or associated person of a FINRA member firm prior to the earlier of the termination of this Agreement or the conclusion of the
distribution of the Offering.
4.12 No Fiduciary Duties. The Company acknowledges and agrees that the Underwriters
responsibility to the Company is solely contractual and commercial in nature, based on arms-length negotiations and that neither the Underwriters nor their affiliates or any Selected Dealer shall be deemed to be acting in a fiduciary capacity, or
otherwise owes any fiduciary duty to the Company or any of its affiliates in connection with the Offering and the other transactions contemplated by this Agreement. Notwithstanding anything in this Agreement to the contrary, the Company acknowledges
that the Underwriters may have financial interests in the success of the Offering that are not limited to the difference between the price to the public and the purchase price paid to the Company by the Underwriters for the shares and the
Underwriters have no obligation to disclose, or account to the Company for, any of such additional financial interests. The Company hereby waives and releases, to the fullest extent permitted by law, any claims that the Company may have against the
Underwriters with respect to any breach or alleged breach of fiduciary duty.
4.13 Warrant Shares. Provided that the holder of the
Warrant is not an affiliate of the Company under Rule 144 promulgated under the Securities Act, if all or any portion of a Warrant is exercised at a time when there is an effective registration statement to cover the issuance of the Warrant Shares
or if the Warrant is exercised via cashless exercise at a time when such Warrant Shares would be eligible for resale under Rule 144 by a non-affiliate of the Company, the Warrant Shares issued pursuant to any such exercise shall be issued free of
all restrictive 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
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 of the Warrant Shares (it being understood and agreed that the foregoing shall not limit the ability of the Company to issue, or any holder thereof to sell, any of the Warrant Shares in compliance with applicable
federal and state securities laws).
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4.14 Securities Laws Disclosure; Publicity. At the request of the Representative, by 9:00
AM (New York City time) on the date hereof, the Company shall issue a press release disclosing the material terms of the Offering. The Company and the Representative shall consult with each other in issuing any other press releases with respect to
the Offering, and neither the Company nor any Underwriter 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 such Underwriter, or without the
prior consent of such Underwriter, 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.
4.15 Shareholder Rights Plan. No claim will be made
or enforced by the Company or, with the consent of the Company, any other Person, that any Underwriter of the Securities 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 any Underwriter of Securities could be deemed to trigger the provisions of any such plan or arrangement, by
virtue of receiving Securities.
4.16 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 the Closing Shares, the Option Shares pursuant to the Over-Allotment
Option and Warrant Shares pursuant to any exercise of the Warrants.
4.17 Listing of Common Stock. For a period of three
(3) years from the Execution Date, the Company hereby agrees to use commercially reasonable efforts to maintain the listing or quotation of the Common Stock on the Trading Market on which it is then-currently listed, and concurrently with the
Closing, the Company shall apply to list or quote all of the Closing Shares, Option Shares and Warrant Shares on the Nasdaq Capital Market and promptly secure the listing of all of the Closing Shares, Option Shares and Warrant Shares on the Nasdaq
Capital 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 Closing Shares, Option Shares and Warrant Shares, and will take such
other action as is necessary to cause all of the Closing Shares, Option Shares and Warrant Shares to be listed or quoted on such other Trading Market as promptly as possible.
4.18 Subsequent Equity Sales.
(a) Without the prior written consent of the Representative, from the date hereof through the earlier of (i) the 90th day from the date hereof and (ii) the trading day immediately following the date after which the closing price of the Common Stock is equal to or in excess of $0.875 (as may be adjusted for
stock splits, dividends, and other
25
similar transactions) for three consecutive Trading Days, 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; provided, however, that in no event shall the prohibition set forth in this Section 4.18 terminate prior to the 30th day from the date
hereof.
(b) Notwithstanding the foregoing, this Section 4.18 shall not apply in respect of an Exempt Issuance.
4.19 Capital Changes. Until one year from the Closing Date, and other than to maintain compliance with the listing requirements of the
Trading Market, the Company shall not undertake a reverse or forward stock split or reclassification of the Common Stock without the prior written consent of the Representative.
4.20 Research Independence. In addition, the Company acknowledges that each Underwriters research analysts and research
departments, if any, are required to be independent from their respective investment banking divisions and are subject to certain regulations and internal policies, and that such Underwriters research analysts may hold and make statements or
investment recommendations and/or publish research reports with respect to the Company and/or the offering that differ from the views of its investment bankers. The Company acknowledges that the Representative is a full service securities firm and
as such from time to time, subject to applicable securities laws, the Representative may effect transactions for its own account or the account of its customers and hold long or short position in debt or equity securities of the Company.
4.21 Certain Agreements of the Underwriters. The Underwriters hereby represent and agree that:
(a) They have not used, authorized use of, referred to or participated in the planning for use of, and will not use, authorize
use of, refer to or participate in the planning for use of, any free writing prospectus other than (i) a free writing prospectus that contains no issuer information (as defined in Rule 433(h)(2) under the Securities Act) that was
not included (including through incorporation by reference) in the Preliminary Prospectus or a previously filed issuer free writing prospectus, as defined in Rule 433 of the rules and regulations under the Securities Act, or (ii) any Permitted
Free Writing Prospectus prepared pursuant to Section 4.2(c) above (including any electronic road show), or (iii) any free writing prospectus prepared by an Underwriter and approved by the Company in advance in writing (each such free
writing prospectus referred to in clauses (i) or (iii), an Underwriter Free Writing Prospectus);
(b) They have not and will not, without the prior written consent of the Company, use any free writing prospectus that contains
the final terms of the Securities unless such terms have previously been included in a free writing prospectus filed with the Commission; provided that the Underwriters may use a term sheet substantially in the form of Annex A hereto without
the consent of the Company; provided further that the Underwriters using such term sheet shall notify the Company, and provide a copy of such term sheet to the Company, prior to, or substantially concurrently with, the first use of such term
sheet.
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(c) They are not subject to any pending proceeding under Section 8A of the
Securities Act with respect to the Offering (and will promptly notify the Company if any such proceeding against it is initiated during the period when the Prospectus is required to be delivered under the Securities Act or the Exchange Act).
ARTICLE V.
DEFAULT BY
UNDERWRITERS
If on the Closing Date or any Option Closing Date, if any, any Underwriter shall fail to purchase and pay for the
portion of the Closing Securities or Option Securities, as the case may be, which such Underwriter has agreed to purchase and pay for on such date (otherwise than by reason of any default on the part of the Company), the Representative, or if the
Representative is the defaulting Underwriter, the non-defaulting Underwriters, shall use commercially reasonable efforts to procure within 36 hours thereafter one or more of the other Underwriters, or any others, to purchase from the Company such
amounts as may be agreed upon and upon the terms set forth herein, the Closing Securities or Option Securities , as the case may be, which the defaulting Underwriter or Underwriters failed to purchase. If during such 36 hours the Representative
shall not have procured such other Underwriters, or any others, to purchase the Closing Securities or Option Securities, as the case may be, agreed to be purchased by the defaulting Underwriter or Underwriters, then (a) if the aggregate number
of Closing Securities or Option Securities, as the case may be, with respect to which such default shall occur does not exceed 10% of the Closing Securities or Option Securities, as the case may be, covered hereby, the other Underwriters shall be
obligated, severally, in proportion to the respective numbers of Closing Securities or Option Securities, as the case may be, which they are obligated to purchase hereunder, to purchase the Closing Securities or Option Securities, as the case may
be, which such defaulting Underwriter or Underwriters failed to purchase, or (b) if the aggregate number of Closing Securities or Option Securities, as the case may be, with respect to which such default shall occur exceeds 10% of the Closing
Securities or Option Securities, as the case may be, covered hereby, the Company or the Representative will have the right to terminate this Agreement without liability on the part of the non-defaulting Underwriters or of the Company except to the
extent provided in Article VI hereof. In the event of a default by any Underwriter or Underwriters, as set forth in this Article V, the applicable Closing Date may be postponed for such period, not exceeding seven days, as the Representative, or if
the Representative is the defaulting Underwriter, the non-defaulting Underwriters, may determine in order that the required changes in the Prospectus or in any other documents or arrangements may be effected. The term Underwriter
includes any Person substituted for a defaulting Underwriter. Any action taken under this Section shall not relieve any defaulting Underwriter from liability in respect of any default of such Underwriter under this Agreement.
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ARTICLE VI.
INDEMNIFICATION
6.1
Indemnification of the Underwriters. Subject to the conditions set forth below, the Company agrees to indemnify and hold harmless the Underwriters, and each dealer selected by each Underwriter that participates in the offer and sale of the
Securities (each a Selected Dealer) and each of their respective directors, officers and employees and each Person, if any, who controls such Underwriter or any Selected Dealer (Controlling Person) within the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act, against any and all loss, liability, claim, damage and expense whatsoever (including but not limited to any and all legal or other expenses reasonably incurred
in investigating, preparing or defending against any litigation, commenced or threatened, or any claim whatsoever, whether arising out of any action between such Underwriter and the Company or between such Underwriter and any third party or
otherwise) to which they or any of them may become subject under the Securities Act, the Exchange Act or any other statute or at common law or otherwise or under the laws of foreign countries, arising out of or based upon any untrue statement or
alleged untrue statement of a material fact contained in (i) any Preliminary Prospectus, if any, the Registration Statement or the Prospectus (as from time to time each may be amended and supplemented); or (ii) any materials or information
provided to investors by, or with the approval of, the Company in connection with the marketing of the Offering of the Securities, including any road show or investor presentations made to investors by the Company (whether in person or
electronically); (collectively, the Road Show Materials); or the omission or alleged omission therefrom of a material fact required to be stated therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading, unless such statement or omission was made in reliance upon and in conformity with written information furnished to the Company by or on behalf of any Underwriter expressly for use in any
Preliminary Prospectus, if any, the Registration Statement or Prospectus, or any amendment or supplement thereof, or in any Road Show Materials, as the case may be. With respect to any untrue statement or omission or alleged untrue statement or
omission made in the Preliminary Prospectus, if any, the indemnity agreement contained in this Section 6.1 shall not inure to the benefit of an Underwriter to the extent that any loss, liability, claim, damage or expense of such Underwriter
results from the fact that a copy of the Prospectus was not given or sent to the Person asserting any such loss, liability, claim or damage at or prior to the written confirmation of sale of the Securities to such Person as required by the
Securities Act and the rules and regulations thereunder, and if the untrue statement or omission has been corrected in the Prospectus, unless such failure to deliver the Prospectus was a result of non-compliance by the Company with its obligations
under this Agreement. The Company agrees promptly to notify each Underwriter of the commencement of any litigation or proceedings against the Company or any of its officers, directors or Controlling Persons in connection with the issue and sale of
the Public Securities or in connection with the Prospectus.
6.2 Procedure. If any action is brought against an Underwriter, a
Selected Dealer or a Controlling Person in respect of which indemnity may be sought against the Company pursuant to Section 6.1, such Underwriter, such Selected Dealer or Controlling Person, as the case may be, shall promptly notify the Company
in writing of the institution of such action and the Company shall assume the defense of such action, including the employment and fees of counsel (subject to the reasonable approval of such Underwriter or such Selected Dealer, as the case may be)
and payment of actual expenses. Such Underwriter, such Selected Dealer or Controlling Person shall have the right to employ its or their own counsel in any such case, but the fees and expenses of
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such counsel shall be at the expense of such Underwriter, such Selected Dealer or Controlling Person unless (i) the employment of such counsel at the expense of the Company shall have been
authorized in writing by the Company in connection with the defense of such action, or (ii) the Company shall not have employed counsel to have charge of the defense of such action, or (iii) such indemnified party or parties shall have
reasonably concluded that there may be defenses available to it or them which are different from or additional to those available to the Company (in which case the Company shall not have the right to direct the defense of such action on behalf of
the indemnified party or parties), in any of which events the reasonable fees and expenses of not more than one additional firm of attorneys selected by such Underwriter (in addition to local counsel), Selected Dealer and/or Controlling Person,
taken together as a group, shall be borne by the Company. In no event shall the Company be liable for fees and expenses of more than one firm of attorneys (in addition to any local counsel) separate from its own counsel for all indemnified parties
in connection with any one action or separate but similar or related actions in the same jurisdiction arising out of the same general allegations or circumstances. Notwithstanding anything to the contrary contained herein, if any Underwriter,
Selected Dealer or Controlling Person shall assume the defense of such action as provided above, the Company shall have the right to approve the terms of any settlement of such action which approval shall not be unreasonably withheld.
6.3 Indemnification of the Company. Each Underwriter severally and not jointly agrees to indemnify and hold harmless the Company, its
directors, officers and employees and agents who control the Company within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act against any and all loss, liability, claim, damage and expense described in the
foregoing indemnity from the Company to such Underwriter, as incurred, but only with respect to untrue statements or omissions, or alleged untrue statements or omissions made in any Preliminary Prospectus, if any, the Registration Statement or
Prospectus or any amendment or supplement thereto or in any Road Show Materials, in reliance upon, and in conformity with, written information furnished to the Company with respect to such Underwriter by or on behalf of such Underwriter expressly
for use in such Preliminary Prospectus, if any, the Registration Statement or Prospectus or any amendment or supplement thereto or in any such Road Show Materials. In case any action shall be brought against the Company or any other Person so
indemnified based on any Preliminary Prospectus, if any, the Registration Statement or Prospectus or any amendment or supplement thereto or any Road Show Materials, and in respect of which indemnity may be sought against such Underwriter, such
Underwriter shall have the rights and duties given to the Company, and the Company and each other Person so indemnified shall have the rights and duties given to such Underwriter by the provisions of this Article VI. Notwithstanding the provisions
of this Section 6.3, no Underwriter shall be required to indemnify the Company for any amount in excess of the underwriting discounts and commissions applicable to the Securities purchased by such Underwriter. The Underwriters obligations
in this Section 6.3 to indemnify the Company are several in proportion to their respective underwriting obligations and not joint.
6.4 Contribution.
(a) Contribution Rights. In order to provide for just and equitable contribution under the Securities Act in any case in
which (i) any Person entitled to indemnification
29
under this Article VI makes a claim for indemnification pursuant hereto but it is judicially determined (by the entry of a final judgment or decree by a court of competent jurisdiction and the
expiration of time to appeal or the denial of the last right of appeal) that such indemnification may not be enforced in such case notwithstanding the fact that this Article VI provides for indemnification in such case, or (ii) contribution
under the Securities Act, the Exchange Act or otherwise may be required on the part of any such Person in circumstances for which indemnification is provided under this Article VI, then, and in each such case, the Company and each Underwriter,
severally and not jointly, shall contribute to the aggregate losses, liabilities, claims, damages and expenses of the nature contemplated by said indemnity agreement incurred by the Company and such Underwriter, as incurred, in such proportions as
is appropriate to reflect the relative benefits received by the Company, on the one hand, and the Underwriters, on the other hand, from the offering of the Securities pursuant to this Agreement; provided, that, no Person guilty of a fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any Person who was not guilty of such fraudulent misrepresentation. For purposes of this Section, each director, officer and
employee of such Underwriter or the Company, as applicable, and each Person, if any, who controls such Underwriter or the Company, as applicable, within the meaning of Section 15 of the Securities Act shall have the same rights to contribution
as such Underwriter or the Company, as applicable. Notwithstanding the provisions of this Section 6.4, no Underwriter shall be required to contribute any amount in excess of the underwriting discounts and commissions applicable to the
Securities purchased by such Underwriter. The Underwriters obligations in this Section 6.4 to contribute are several in proportion to their respective underwriting obligations and not joint.
(b) Contribution Procedure. Within fifteen days after receipt by any party to this Agreement (or its representative) of
notice of the commencement of any action, suit or Proceeding, such party will, if a claim for contribution in respect thereof is to be made against another party (Contributing Party), notify the Contributing Party of the
commencement thereof, but the failure to so notify the Contributing Party will not relieve it from any liability which it may have to any other party other than for contribution hereunder. In case any such action, suit or Proceeding is brought
against any party, and such party notifies a Contributing Party or its representative of the commencement thereof within the aforesaid fifteen days, the Contributing Party will be entitled to participate therein with the notifying party and any
other Contributing Party similarly notified. Any such Contributing Party shall not be liable to any party seeking contribution on account of any settlement of any claim, action or Proceeding affected by such party seeking contribution without the
written consent of such Contributing Party. The contribution provisions contained in this Section 6.4 are intended to supersede, to the extent permitted by law, any right to contribution under the Securities Act, the Exchange Act or otherwise
available.
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ARTICLE VII.
MISCELLANEOUS
7.1
Termination.
(a) Termination Right. The Representative shall have the right to terminate this Agreement at
any time prior to any Closing Date, (i) if any domestic or international event or act or occurrence has materially disrupted, or in its opinion will in the immediate future materially disrupt, general securities markets in the United States; or
(ii) if trading on any Trading Market shall have been suspended or materially limited, or minimum or maximum prices for trading shall have been fixed, or maximum ranges for prices for securities shall have been required by FINRA or by order of
the Commission or any other government authority having jurisdiction, or (iii) if the United States shall have become involved in a new war or an increase in major hostilities, or (iv) if a banking moratorium has been declared by a New
York State or federal authority, or (v) if a moratorium on foreign exchange trading has been declared which materially adversely impacts the United States securities markets, or (vi) if the Company shall have sustained a material loss by
fire, flood, accident, hurricane, earthquake, theft, sabotage or other calamity or malicious act, or (vii) if the Company is in material breach of any of its representations, warranties or covenants hereunder, or (viii) if the
Representative shall have become aware after the date hereof of such a material adverse change in the conditions or prospects of the Company, in each case of (i) through (viii) herein, the effect of which, in the Representatives
judgment, would make it impracticable to proceed with the offering, sale and/or delivery of the Securities or to enforce contracts made by the Underwriters for the sale of the Securities.
(b) Expenses. In the event this Agreement shall be terminated pursuant to Section 7.1(a), within the time specified
herein or any extensions thereof pursuant to the terms herein, the Company shall be obligated to pay to the Representative its reasonable, documented, out-of-pocket expenses related to the transactions contemplated herein then due and payable,
including the fees and disbursements of EGS, up to an aggregate of $25,000 (provided, however, that such expense cap in no way limits or impairs the indemnification and contribution provisions of this Agreement).
(c) Indemnification. Notwithstanding any contrary provision contained in this Agreement, any election hereunder or any
termination of this Agreement, and whether or not this Agreement is otherwise carried out, the provisions of Article VI shall not be in any way effected by such election or termination or failure to carry out the terms of this Agreement or any part
hereof.
7.2 Entire Agreement. The Transaction Documents, together with the exhibits and schedules thereto, the Preliminary
Prospectus and the Prospectus, contain the entire understanding of the parties with respect to the subject matter hereof and thereof and supersede all prior agreements and understandings, oral or written, with respect to such matters, which the
parties acknowledge have been merged into such documents, exhibits and schedules.
7.3 Notices. Any and all notices or other
communications or deliveries required or permitted to be provided hereunder shall be in writing and shall be deemed given and effective on the earliest of: (a) the date of transmission, if such notice or communication is delivered via facsimile
at the facsimile number set forth on the signature pages attached hereto at or prior to 5:30 p.m. (New York City time) on a Trading Day, (b) the next Trading Day after the date of
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transmission, if such notice or communication is delivered via facsimile at the facsimile number as set forth on the signature pages attached hereto on a day that is not a Trading Day or later
than 5:30 p.m. (New York City time) on any Trading Day, (c) the second (2nd) Trading Day following the date of mailing, if sent by U.S. nationally recognized overnight courier service or
(d) upon actual receipt by the party to whom such notice is required to be given. The address for such notices and communications shall be as set forth on the signature pages attached hereto.
7.4 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 Representative. 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.
7.5 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.
7.6 Successors and Assigns. This Agreement shall be binding upon and inure to the benefit
of the parties and their successors and permitted assigns.
7.7 Governing Law. All questions concerning the construction, validity,
enforcement and interpretation of the Transaction Documents shall be governed by and construed and enforced in accordance with the internal laws of the State of New York, without regard to the principles of conflicts of law thereof. Each party
agrees that all legal proceedings concerning the interpretations, enforcement and defense of the transactions contemplated by this Agreement and any other Transaction Documents (whether brought against a party hereto or its respective affiliates,
directors, officers, shareholders, partners, members, employees or agents) shall be commenced exclusively in the state and federal courts sitting in the City of New York. Each party hereby irrevocably submits to the exclusive jurisdiction of the
state and federal courts sitting in the City of New York, Borough of Manhattan for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein (including with respect to the
enforcement of any of the Transaction Documents), and hereby irrevocably waives, and agrees not to assert in any action, suit 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 Article VI, the prevailing party in such action, suit 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.
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7.8 Survival. The representations and warranties contained herein shall survive the
Closing and the Option Closing, if any, and the delivery of the Securities.
7.9 Execution. This Agreement may be executed in two
or more counterparts, all of which when taken together shall be considered one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to each other party, it being understood that the parties
need not sign the same counterpart. In the event that any signature is delivered by 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.
7.10 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 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.
7.11 Remedies. In addition to being entitled to exercise all rights provided herein or granted by law, including recovery of damages,
the Underwriters 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.
7.12 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.
7.13 Construction. The parties agree that each of them and/or their respective counsel have reviewed and had an opportunity to revise
the Transaction Documents and, therefore, the normal rule of construction to the effect that any ambiguities are to be resolved against the drafting party shall not be employed in the interpretation of the Transaction Documents or any amendments
thereto. In addition, each and every reference to share prices and shares of Common Stock in any Transaction Document shall be subject to adjustment for reverse and forward stock splits, stock dividends, stock combinations and other similar
transactions of the Common Stock that occur after the date of this Agreement.
7.14 WAIVER OF JURY TRIAL. IN ANY ACTION,
SUIT, OR PROCEEDING IN ANY JURISDICTION BROUGHT BY ANY PARTY AGAINST ANY OTHER PARTY
33
ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY, THE PARTIES EACH KNOWINGLY AND INTENTIONALLY, TO THE GREATEST EXTENT PERMITTED BY APPLICABLE LAW, HEREBY
ABSOLUTELY, UNCONDITIONALLY, IRREVOCABLY AND EXPRESSLY WAIVE FOREVER ANY RIGHT TO TRIAL BY JURY.
(Signature Pages Follow)
34
If the foregoing correctly sets forth the understanding between the Underwriters and the Company,
please so indicate in the space provided below for that purpose, whereupon this letter shall constitute a binding agreement among the Company and the several Underwriters in accordance with its terms.
|
|
|
Very truly yours, |
|
STEMCELLS, INC. |
|
|
By: |
|
/s/ Kenneth B. Stratton |
|
|
Name: Kenneth B. Stratton |
|
|
Title: Secretary & General Counsel |
Address for Notice:
7707
Gateway Boulevard, Suite 140
Newark, California 94560
Facsimile: (510) 456-4001
Attention: Martin McGlynn
Copy to:
Marko Zatylny
Ropes & Gray LLP
Prudential Tower
800 Boylston Street
Boston, Massachusetts 02199-3600
Facsimile: (617) 235-0751
Accepted on the date first above
written.
MAXIM GROUP LLC
As the Representative of
the several
Underwriters listed on Schedule I
By: Maxim
Group LLC
|
|
|
By: |
|
/s/ Clifford Teller |
|
|
Name: Clifford Teller |
|
|
Title: Executive Managing Director |
35
Address for Notice:
405 Lexington Avenue
New York, New York 10174
Facsimile: (212) 895-3783
Attention: Clifford A. Teller
Copy to:
Ellenoff Grossman & Schole LLP
1345 Avenue of the Americas
New York, New York 10105
Facsimile: (212) 401-4741
Attention: Robert F. Charron
36
SCHEDULE I
SCHEDULE OF UNDERWRITERS
|
|
|
|
|
|
|
|
|
|
|
|
|
Underwriters |
|
Closing Shares |
|
|
Closing Warrants |
|
|
Closing Purchase Price |
|
Maxim Group LLC |
|
|
29,464,875 |
|
|
|
22,098,656 |
|
|
$ |
19,387,887.75 |
|
Chardan Capital Markets, LLC |
|
|
6,250,125 |
|
|
|
4,687,594 |
|
|
|
4,112,582.25 |
|
Total: |
|
|
35,715,000 |
|
|
|
26,786,250 |
|
|
$ |
23,500,470.00 |
|
37
Exhibit 4.1
Form of Warrant
STEMCELLS, INC.
WARRANT TO PURCHASE COMMON STOCK
Date of Issuance: April , 2015
VOID AFTER April [], 2020
THIS WARRANT TO PURCHASE COMMON STOCK (the Warrant) certifies that, for value
received, , or permitted registered assigns (the Holder), is entitled, upon the terms and subject to the
limitations on exercise and the conditions hereinafter set forth, at any time on or after the Date of Issuance and on or prior to the close of business on the five (5) year anniversary of the Date of Issuance (the Termination
Date) but not thereafter, to subscribe for and purchase at the Exercise Price (defined below) from StemCells, Inc., a Delaware corporation (the Company), up to
shares of the common stock of the Company, par value $0.01 per share (the Common Stock). This warrant is one of a series of warrants issued by the Company as
of the date hereof (individually a Warrant; collectively, Company Warrants).
1. DEFINITIONS. As used herein, the following terms shall have the following meanings:
(a) Exercise Period shall mean the period commencing with the date hereof and ending five (5) years from the date
hereof, unless sooner terminated as provided below.
(b) Exercise Price shall mean $0.85 per share, subject to
adjustment pursuant to Section 4 below.
(c) Exercise Shares shall mean the shares of Common Stock
issuable upon exercise of this Warrant.
(d) Trading Day shall mean (i) any day on which the Common Stock is
listed or quoted and traded on its primary Trading Market, (ii) if the Common Stock is not then listed or quoted and traded on any Trading Market (meaning any of the NYSE, NYSE MKT or NASDAQ), then a day on which trading occurs on the OTCQX or
OTCQB (or any successor thereto), or (iii) if trading does not occur on the OTCQX or OTCQB (or any successor thereto), any business day.
2. EXERCISE OF WARRANT.
2.1 STANDARD EXERCISE OF WARRANT. The rights represented by this Warrant
may be exercised in whole or in part at any time during the Exercise Period, by delivery of the following to the Company at its address set forth on the signature page hereto (or at such other
office or agent of the Company as it may designate by notice in writing to the Holder):
(a) An executed Notice of Exercise in the
form attached hereto; and
(b) Payment of the Exercise Price either (i) in cash or by check (subject to the limitations in
Section 2.4 below), or (ii) pursuant to net exercise terms outlined under Section 2.2 below.
No ink-original
Notice of Exercise shall be required, nor shall any medallion guarantee (or other type of guarantee or notarization) of any Notice of Exercise be required. The Holder shall not be required to physically surrender this Warrant to the Company until
the Holder has purchased all of the Exercise 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 Exercise Shares available hereunder shall have the effect of lowering the outstanding number of
Exercise Shares purchasable hereunder in an amount equal to the applicable number of Exercise Shares purchased. The Holder and the Company shall maintain records showing the number of Exercise Shares purchased and the date of such purchases. 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 Exercise Shares hereunder, the number of Exercise Shares available for
purchase hereunder at any given time may be less than the amount stated on the face hereof.
Exercise Shares purchased hereunder shall
be transmitted by the transfer agent of the Company to the Holder by crediting the account of the Holders prime broker with the Depository Trust Company through its Deposits and Withdrawal at Custodian (DWAC) system if the Company is a
participant in such system, 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 delivery to the Company of the Notice of Exercise (such date,
the Exercise Share Delivery Date), provided that the Company shall not be obligated to deliver Exercise Shares hereunder unless the Company has received the aggregate Exercise Price on or before the Exercise Share Delivery Date.
This Warrant shall be deemed to have been exercised on the date the Exercise Price is received by the Company. The Exercise 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 this Warrant has been exercised by payment to the Company of the Exercise Price.
Notwithstanding the foregoing, the Company shall not be required to make the payments set forth herein in the case of uncertificated Exercise
Shares if the Holder fails to timely file a request with the depository trust company to receive such uncertificated Exercise Shares.
The
person in whose name any certificate or certificates for Exercise Shares are to be issued upon exercise of this Warrant shall be deemed to have become the holder of record of such shares on the date on which this Warrant was surrendered and payment
of the Exercise Price was
2
made, irrespective of the date of delivery of such certificate or certificates, except that, if the date of such surrender and payment is a date when the stock transfer books of the Company are
closed, such person shall be deemed to have become the holder of such shares at the close of business on the next succeeding date on which the stock transfer books are open.
Notwithstanding the foregoing, if the Company fails to cause the transfer agent to transmit to the Holder a certificate or the certificates
representing the Exercise Shares pursuant to an exercise on or before the Exercise Share Delivery Date, then the Holder will have the right to rescind such Notice of Exercise. Nothing herein shall limit a Holders right to pursue any other
remedies available to it hereunder, at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief with respect to the Companys failure to timely deliver a certificate pursuant to the terms hereof.
In addition, if the Company fails for any reason to deliver to the Holder the Exercise Shares subject to a Notice of Exercise by the
close of business on the 2nd Trading Day following the Exercise 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
Exercise 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 for each Trading Day after such Exercise Share Delivery Date until such Exercise Shares are
delivered or the Holder rescinds such exercise. For purposes herein, 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 Common Stock is not then listed or quoted on a Trading Market, the volume weighted average price of the Common Stock for such date (or the nearest preceding
date) on OTCQB or OTCQX as applicable, (c) if the Common Stock is not then listed or quoted for trading on OTCQB or OTCQX and if prices for the Common Stock are then reported in the Pink Sheets published by 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 Warrants then outstanding and reasonably acceptable to the Company, the fees and expenses of which shall be paid by the Company.
In addition to any other rights available to the Holder, if the Company fails to cause the transfer agent of the Company to transmit to the
Holder the Exercise Shares in accordance with the provisions of Section 2.1 above pursuant to an exercise on or before the Exercise 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 Holders brokerage firm otherwise purchases, shares of Common Stock to deliver in satisfaction of a sale by the Holder of the Exercise Shares which the Holder anticipated receiving upon such exercise (a
Buy-In), then the Company shall (A) pay in cash to the Holder the amount, if any, by which (x) the Holders total purchase price (including brokerage commissions, if any) for the shares of Common Stock so purchased
exceeds (y) the amount obtained by multiplying (1) the number of Exercise Shares that the
3
Company was required to deliver to the Holder in connection with the exercise at issue times (2) the price at which the sell order giving rise to such purchase obligation was executed, and
(B) at the option of the Holder, either reinstate the portion of the Warrant and equivalent number of Exercise Shares for which such exercise was not honored (in which case such exercise shall be deemed rescinded) or deliver to the Holder the
number of shares of Common Stock that would have been issued had the Company timely complied with its exercise and delivery obligations hereunder. For example, if the Holder purchases Common Stock having a total purchase price of $11,000 to cover a
Buy-In with respect to an attempted exercise of shares of Common Stock with an aggregate sale price giving rise to such purchase obligation of $10,000, under clause (A) of the immediately preceding sentence the Company shall be required to pay
the Holder $1,000. The Holder shall provide the Company written notice indicating the amounts payable to the Holder in respect of the Buy-In and, upon request of the Company, evidence of the amount of such loss. Nothing herein shall limit a
Holders right to pursue any other remedies available to it hereunder, at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief with respect to the Companys failure to timely deliver
shares of Common Stock upon exercise of the Warrant as required pursuant to the terms hereof.
2.2 NET EXERCISE. If
during the Exercise Period, the issuance of the Exercise Shares to the Holder is not covered by the registration statement on Form S-3 (File No. 333-193100) or any other effective registration statement under the Securities Act of 1933, as
amended, and the fair market value of one share of the Common Stock is greater than the Exercise Price (at the date of calculation as set forth below), the Company shall be permitted to satisfy its obligation to issue the shares to be issued on
exercise of this Warrant by issuing to the Holder, and the Holder shall be permitted to exercise all or part of this Warrant by electing to receive, shares equal to the value (as determined below) of this Warrant (or the portion thereof being
canceled), in lieu of paying the Exercise Price in immediately available funds. Upon delivery of a properly endorsed Notice of Exercise, the Company shall issue to the Holder a number of shares of Common Stock computed using the following formula:
X = Y (A-B)
A
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Where |
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X = |
|
the number of shares of Common Stock to be issued to the Holder |
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Y = |
|
the number of shares of Common Stock for which the Warrant is then being exercised |
|
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A = |
|
the fair market value of one share of the Companys Common Stock (at the date of such calculation) |
|
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B = |
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Exercise Price in effect at the time of exercise |
For purposes of the above calculation, the fair market value of one share of Common Stock shall
mean (i) the average of the closing sales prices for the shares of Common Stock on
4
the NASDAQ Capital Market or other Trading Market where such security is listed or traded as reported by Bloomberg Financial Markets (or a comparable reporting service of national reputation
selected by the Company and reasonably acceptable to the Holder if Bloomberg Financial Markets is not then reporting sales prices of such security) (collectively, Bloomberg) for the ten (10) consecutive trading days
immediately preceding such date, or (ii) if the NASDAQ Capital Market is not the principal Trading Market for the shares of Common Stock, the average of the reported sales prices reported by Bloomberg on the principal Trading Market for the
Common Stock during the same period, or, if there is no sales price for such period, the last sales price reported by Bloomberg for such period, or (iii) if neither of the foregoing applies, the last sales price of such security in the
over-the-counter market on the pink sheets or bulletin board for such security as reported by Bloomberg, or if no sales price is so reported for such security, the last bid price of such security as reported by Bloomberg or (iv) if fair market
value cannot be calculated as of such date on any of the foregoing bases, the fair market value shall be as determined by the Board of Directors of the Company in the exercise of its good faith judgment.
2.3 ISSUANCE OF NEW WARRANTS. Upon any partial exercise of this Warrant, the Company, at its expense, will, upon the written
request of the Holder and upon surrender of this Warrant, forthwith and, in any event within five Trading Days after the surrender of this Warrant, issue and deliver to the Holder a new warrant or warrants of like tenor, registered in the name of
the Holder, exercisable, in the aggregate, for the balance of the number of shares of Common Stock remaining available for purchase under this Warrant.
2.4 EXERCISE LIMITATIONS; HOLDERS RESTRICTIONS. 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, such Holder (together with such Holders affiliates) would beneficially own in excess of 4.99% of the number of
shares of the Common Stock outstanding immediately after giving effect to such issuance. For purposes of the foregoing sentence, the number of shares of Common Stock beneficially owned by such Holder and its affiliates shall include the number of
shares of Common Stock issuable upon exercise of this Warrant with respect to which the determination of such sentence is being made, but shall exclude the number of shares of Common Stock which would be issuable upon (A) exercise of the
remaining, nonexercised portion of this Warrant beneficially owned by such Holder or any of its affiliates and (B) exercise or conversion of the unexercised or nonconverted portion of any other securities of the Company (including, without
limitation, any other shares of Common Stock or Warrants) subject to a limitation on conversion or exercise analogous to the limitation contained herein beneficially owned by such Holder or any of its affiliates. Except as set forth in the preceding
sentence, for purposes of this Section 2.4, beneficial ownership shall be calculated in accordance with Section 13(d) of the Exchange Act, it being acknowledged by a Holder that the Company is not representing to such Holder that
such calculation is in compliance with Section 13(d) of the Exchange Act and such Holder is solely responsible for any schedules or other filings required to be filed under the Exchange Act. To the extent that the limitation contained in this
Section 2.4 applies, the determination of whether this Warrant is exercisable (in relation to other securities owned by such Holder) and of which a portion of this Warrant is exercisable shall be in the sole discretion of a Holder, and
the submission of a Notice of Exercise shall be deemed to be each Holders determination of whether this Warrant is exercisable (in relation to other securities owned by such Holder) and of which portion of this Warrant is
5
exercisable, in each case subject to such aggregate percentage limitation, and the Company shall be entitled to rely on the Holders determination and shall have no obligation to verify or
confirm the accuracy of such determination. For purposes of this Section 2.4, 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
(x) the Companys most recent Form 10-Q or Form 10-K, as the case may be, (y) a more recent public announcement by the Company or (z) any other notice by the Company or the Companys Transfer Agent setting forth the number
of shares of Common Stock outstanding. Upon the written or oral request of a Holder, the Company shall within two Trading Days confirm orally and in writing to such Holder the number of shares of Common Stock then outstanding. In any case, the
number of outstanding shares of Common Stock shall be determined after giving effect to the conversion or exercise of securities of the Company, including this Warrant, by such Holder or its affiliates since the date as of which such number of
outstanding shares of Common Stock was reported. The provisions of this Section 2.4 may be waived by such Holder, at the election of such Holder, upon not less than sixty-one (61) days prior notice to the Company, and the
provisions of this Section 2.4 shall continue to apply until such 61st day (or such later date, as determined by such Holder, as may be specified in such notice of waiver).
3. COVENANTS OF THE COMPANY.
3.1 COVENANTS AS TO EXERCISE SHARES. The Company covenants and agrees that all Exercise Shares that may be issued upon the
exercise of the rights represented by this Warrant will, upon issuance, be validly issued and outstanding, fully paid and nonassessable, and free from all taxes, liens and charges with respect to the issuance thereof.
The Company further covenants and agrees that the Company will at all times during the Exercise Period, have authorized and reserved, free
from preemptive rights, a sufficient number of shares of Common Stock to provide for the exercise of the rights represented by this Warrant. If at any time during the Exercise Period the number of authorized but unissued shares of Common Stock shall
not be sufficient to permit exercise of this Warrant, the Company will take such corporate action as may, in the opinion of its counsel, be necessary to increase its authorized but unissued shares of Common Stock to such number of shares as shall be
sufficient for such purposes.
3.2 NO IMPAIRMENT. The Company will not, by amendment of 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 to be observed or performed
hereunder by the Company, and will at all times in good faith assist in the carrying out of all the provisions of this Warrant and in the taking of all such action as may be necessary or appropriate in order to protect the exercise rights of the
Holder against impairment.
3.3 NOTICES OF RECORD DATE AND CERTAIN OTHER EVENTS. In the event of any taking by the Company of
a record of the holders of any class of securities for the purpose of determining the holders thereof who are entitled to receive any dividend or other distribution, the Company shall provide to the Holder, at least ten (10) days prior to the
date on which any such record is to be taken for the purpose of such dividend or distribution, a notice specifying such
6
date. In the event of any voluntary dissolution, liquidation or winding up of the Company, the Company shall provide to the Holder, at least ten (10) days prior to the date of the occurrence
of any such event, a notice specifying such date. In the event the Company authorizes or approves, enters into any agreement contemplating, or solicits stockholder approval for any Fundamental Transaction, as defined in Section 6 herein,
the Company shall provide to the Holder, at least ten (10) days prior to the date of the occurrence of such Fundamental Transaction, a notice specifying such date. Notwithstanding the foregoing, the failure to deliver such notice or any defect
therein shall not affect the validity of the corporate action required to be described in such notice.
4. ADJUSTMENT OF EXERCISE
PRICE AND EXERCISE SHARES.
(a) If the Company, at any time while this Warrant is outstanding, (i) pays a stock dividend on
its Common Stock or otherwise makes a distribution on any class of capital stock that is payable in shares of Common Stock, (ii) subdivides outstanding shares of Common Stock into a larger number of shares, or (iii) combines outstanding
shares of Common Stock into a smaller number of shares, then in each such case the Exercise Price shall be multiplied by a fraction of which the numerator shall be the number of shares of Common Stock outstanding immediately before such event and of
which the denominator shall be the number of shares of Common Stock outstanding immediately after such event. Any adjustment made pursuant to clause (i) of this paragraph shall become effective immediately after the record date for the
determination of stockholders entitled to receive such dividend or distribution, and any adjustment pursuant to clause (ii) or (iii) of this paragraph shall become effective immediately after the effective date of such subdivision or
combination. The form of this Warrant need not be changed because of any adjustment in the number of Exercise Shares subject to this Warrant.
(b) If the Company, at any time while this Warrant is outstanding, distributes to holders of Common Stock, (i) Common Stock or any
shares of stock or other securities which are at any time directly or indirectly convertible into or exchangeable for Common Stock, or any rights or options to subscribe for, purchase or otherwise acquire any of the foregoing by way of dividend or
other distribution (other than a dividend or distribution covered in Section 4(a) above); (ii) any cash paid or payable otherwise than as a cash dividend; or (iii) any other asset, then and in each such case, the Holder hereof
will, upon the exercise of this Warrant, be entitled to receive, in addition to the number of shares of Common Stock receivable thereupon, and without payment of any additional consideration therefor, the amount of stock and other securities and
property (including cash in the cases referred to in clauses (ii) and (iii) above) which such Holder would hold on the date of such exercise had such Holder been the holder of record of such Common Stock as of the date on which holders of
Common Stock received or became entitled to receive such shares or all other additional stock and other securities and property.
(c) Upon the occurrence of each adjustment pursuant to this Section 4, the Company at its expense will, at the written
request of the Holder, promptly compute such adjustment in accordance with the terms of this Warrant and prepare a certificate setting forth such adjustment, including a statement of the adjusted Exercise Price and adjusted number or type of
Exercise Shares or other securities issuable upon exercise of this Warrant (as applicable), describing the transactions giving rise to such adjustments and showing in detail the facts upon which such adjustment is based. Upon written request, the
Company will promptly deliver a copy of each such certificate to the Holder and to the Companys transfer agent.
7
5. FRACTIONAL SHARES. No fractional shares shall be issued upon the exercise of
this Warrant as a consequence of any adjustment pursuant hereto. All Exercise Shares (including fractions) issuable upon exercise of this Warrant may be aggregated for purposes of determining whether the exercise would result in the issuance of any
fractional share. If, after aggregation, the exercise would result in the issuance of a fractional share, the Company shall, in lieu of issuance of any fractional share, pay the Holder otherwise entitled to such fraction a sum in cash equal to the
product resulting from multiplying the then current fair market value of an Exercise Share by such fraction.
6. FUNDAMENTAL
TRANSACTIONS. If, at any time while this Warrant is outstanding, (i) the Company effects any merger or consolidation of the Company with or into another entity, in which the shareholders of the Company as of immediately prior to the
transaction own less than a majority of the outstanding stock of the surviving entity, (ii) any tender offer or exchange offer (whether by the Company or another person or entity) is completed pursuant to which the holders of more than the 50%
of the outstanding shares of Common Stock (not including any shares of Common Stock held by the person or persons making or party to, or associated or affiliated with the Persons making or party to, such purchase, tender or exchange offer) are
permitted to tender or exchange their shares for other securities, cash or property, or (iii) the Company effects any sale of all or substantially all of its assets in one or a series of related transactions, or (iv) the Company effects
any reclassification 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 (other than as a result of a subdivision or combination of
shares of Common Stock covered by Section 4 above), (v) the Company consummates a stock 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 the 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 purchase agreement or other business combination), or (vi) any person or group (as these terms are used for purposes of Sections 13(d) and 14(d) of the
Securities Exchange Act of 1934, as amended) becomes the beneficial owner (as defined in Rule 13d-3 under the Securities Exchange Act of 1934, as amended), directly or indirectly, of 50% of the aggregate ordinary voting power represented
by issued and outstanding Common Stock (each, a Fundamental Transaction), the Holder shall have the right thereafter to receive, upon exercise of this Warrant, the same amount and kind of securities, cash or property as it would
have been entitled to receive upon the occurrence of such Fundamental Transaction if it had been, immediately prior to such Fundamental Transaction, the holder of the number of Exercise Shares then issuable upon exercise in full of this Warrant (the
Alternate Consideration). To the extent necessary to effectuate the foregoing provisions, any successor to the Company or surviving entity in such Fundamental Transaction shall issue to the Holder a new warrant consistent with the
foregoing provisions and evidencing the Holders right to exercise such warrant into Alternate Consideration. The terms of any agreement pursuant to which a Fundamental Transaction is effected shall include terms requiring any such successor or
8
surviving entity to comply with the provisions of this Section 6 and ensuring that this Warrant (or any such replacement security) will be similarly adjusted upon any subsequent
transaction analogous to a Fundamental Transaction.
7. NO STOCKHOLDER RIGHTS. Other than as provided in
Section 3.3 or otherwise herein, the Holder, solely in such Holders capacity as a holder of this Warrant, shall not be entitled to vote or receive dividends or be deemed the holder of share capital of the Company for any purpose,
nor shall anything contained in this Warrant be construed to confer upon the Holder, solely in such Holders capacity as the Holder of this Warrant, any of the rights of a stockholder of the Company or any right to vote, give or withhold
consent to any corporate action (whether any reorganization, issue of stock, reclassification of stock, consolidation, merger, conveyance or otherwise), receive notice of meetings, receive dividends or subscription rights, or otherwise, prior to the
issuance to the Holder of the Exercise Shares which such Holder is then entitled to receive upon the due exercise of this Warrant. In addition, nothing contained in this Warrant shall be construed as imposing any liabilities on the Holder to
purchase any securities (upon exercise of this Warrant or otherwise) or as a stockholder of the Company, whether such liabilities are asserted by the Company or by creditors of the Company.
8. TRANSFER OF WARRANT. Subject to compliance with any applicable laws, this Warrant and all rights hereunder are
transferable, by the Holder in person or by duly authorized attorney, upon delivery of this Warrant and the form of assignment attached hereto to any transferee designated by Holder. If this Warrant is to be transferred, the Holder shall surrender
this Warrant to the Company or its designated agent, whereupon the Company or its agent, as applicable, will forthwith issue and deliver upon the order of the Holder a new Warrant (in accordance with Section 2.3), registered as the
Holder may request, representing the right to purchase the number of Exercise Shares being transferred by the Holder and, if less then the total number of Exercise Shares then underlying this Warrant is being transferred, a new Warrant (in
accordance with Section 2.3) to the Holder representing the right to purchase the number of Exercise Shares not being transferred.
9. LOST, STOLEN, MUTILATED OR DESTROYED WARRANT. If this Warrant is lost, stolen, mutilated or destroyed, the Company may, on
such terms as to reasonable bond and indemnity or otherwise as it may reasonably impose (which shall, in the case of a mutilated Warrant, include the surrender thereof), issue a new Warrant of like denomination and tenor as this Warrant so lost,
stolen, mutilated or destroyed.
10. DISPUTE. In the case of a dispute as to the determination of the Exercise Price or the
arithmetic calculation of the Exercise Shares, the Company shall promptly issue to the Holder the number of Exercise Shares that are not disputed and resolve such dispute in accordance with this Section 10. In the case of a dispute as to
the determination of the Exercise Price or the arithmetic calculation of the Exercise Shares, the Company shall provide notice to the Holder of the disputed determinations or arithmetic calculations within two Trading Days of receipt of the Notice
of Exercise giving rise to such dispute, as the case may be. If the Holder and the Company are unable to agree upon such determination or calculation of the Exercise Price or the Exercise Shares within three Trading Days of such disputed
determination or arithmetic calculation being submitted to the Holder, then the Company shall, within two Trading Days,
9
submit (a) the disputed determination of the Exercise Price to an independent, reputable investment bank selected by the Company and approved by the Holder or (b) the disputed
arithmetic calculation of the Exercise Shares to the Companys independent, outside accountant. The Company shall cause at its expense the investment bank or the accountant, as the case may be, to perform the determinations or calculations and
notify the Company and the Holder of the results no later than ten Trading Days from the time it receives the disputed determinations or calculations. Such investment banks or accountants determination or calculation, as the case may be,
shall be binding upon all parties absent demonstrable error.
11. NOTICES, ETC. All notices required or permitted
hereunder shall be in writing and shall be deemed effectively given: (a) upon personal delivery to the party to be notified, (b) when sent by confirmed telex or facsimile if sent during normal business hours of the recipient, if not, then
on the next Trading Day, (c) five days after having been sent by registered or certified mail, return receipt requested, postage prepaid, or (d) one day after deposit with a nationally recognized overnight courier, specifying next day
delivery, with written verification of receipt. All communications shall be sent to the Company at the address listed on the signature page hereto and to Holder at the address appearing on the books of the Company or at such other address as the
Company or Holder may designate by ten (10) days advance written notice to the other parties hereto.
12. ACCEPTANCE. Receipt of this Warrant by the Holder shall constitute acceptance of and agreement to all of the terms and
conditions contained herein.
13. GOVERNING LAW; WAIVER OF JURY TRIAL. This Warrant shall be governed by, and construed
in accordance with, the laws of the State of New York. The Holder and the Company hereby submit to the non-exclusive jurisdiction of the Federal and state courts in the Borough of Manhattan in The City of New York in any suit or proceeding arising
out of or relating to this Agreement or the transactions contemplated thereby. The Holder and the Company irrevocably and unconditionally waive any objection to the laying of venue of any suit or proceeding arising out of or relating to this Warrant
in Federal and state courts in the Borough of Manhattan in The City of New York and irrevocably and unconditionally waives and agrees not to plead or claim in any such court that any such suit or proceeding in any such court has been brought in an
inconvenient forum. EACH OF THE COMPANY AND THE HOLDER HEREBY WAIVES ALL RIGHTS TO A TRIAL BY JURY.
14. AMENDMENT OR
WAIVER. Any term of this Warrant may be amended or waived (either generally or in a particular instance and either retroactively or prospectively) with the written consent of the Company and the Holder. The Company shall give prompt written
notice to the Holder of any amendment hereof or waiver hereunder that was effected without the Holders written consent. No waivers of any term, condition or provision of this Warrant, in any one or more instances, shall be deemed to be, or
construed as, a further or continuing waiver of any such term, condition or provision.
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IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by its duly authorized
officer as of the date first indicated above.
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STEMCELLS, INC. |
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Title: |
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7707 Gateway Blvd Newark, CA
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NOTICE OF EXERCISE
TO: STEMCELLS, 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. By
executing this notice, the undersigned Holder represents that it has complied with the Holders Exercise Limitations set forth in Section 2.4 of this Warrant.
(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 2.2, to exercise this Warrant with respect to the maximum number of Warrant Shares purchasable pursuant to the cashless exercise procedure set forth in subsection 2.2.
(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]
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Signature of Authorized Signatory of
Investing Entity: |
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Exhibit 5.1
April 24, 2015
StemCells, Inc.
7707 Gateway Blvd
Newark, California 94560
Re: Registration Statement on Form S-3 (File No. 333-193100)
Ladies and Gentlemen:
We have acted as counsel
to StemCells, Inc., a Delaware corporation (the Company) in connection with the issuance and sale of up to 41,072,250 shares of the Companys common stock, $0.01 par value per share (the Common Shares) and
warrants (the Warrants) to purchase up to 30,804,188 shares of common stock (such shares underlying the Warrants are referred to herein as the Warrant Shares and together with the Warrants and the Common Shares,
the Securities), pursuant to the above-referenced registration statement (as amended through the date hereof, the Registration Statement), filed by the Company with the Securities and Exchange Commission (the
Commission) under the Securities Act of 1933 (the Securities Act), the base prospectus dated January 8, 2014 (the Base Prospectus) , the preliminary prospectus supplement dated
April 23, 2015 to the Base Prospectus filed with the Commission pursuant to Rule 424(b) under the Act (the Preliminary Prospectus Supplement) and the prospectus supplement dated April 24, 2015 to the Base Prospectus
filed with the Commission pursuant to Rule 424(b) under the Act (the Final Prospectus Supplement) (the Base Prospectus, the Preliminary Prospectus Supplement and the Final Prospectus Supplement are hereinafter referred to as the
Prospectus). The Securities are being sold pursuant to an underwriting agreement, dated the date hereof (the Underwriting Agreement), among the Company and the underwriters named therein.
In connection with this opinion letter, we have examined such certificates, documents and records and have made such investigation of fact and
such examination of law as we have deemed appropriate in order to enable us to render the opinions set forth herein. In conducting such investigation, we have relied, without independent verification, upon certificates of officers of the Company,
public officials and other appropriate persons.
The opinions expressed below are limited to the laws of the State of New York and
Delaware General Corporation Law.
Based upon and subject to the foregoing, we are of the opinion that (i) the Common Shares have
been duly authorized and, when issued and delivered pursuant to the Underwriting
Agreement against payment of the consideration set forth therein, will be validly issued, fully paid and non-assessable, (ii) the Warrant Shares, when issued and delivered against payment
therefor upon the exercise of the Warrants in accordance with the terms therein, will be duly authorized, validly issued, fully paid and non-assessable, and (iii) provided that the Warrants have been duly executed and delivered by the Company
and duly delivered to the purchasers thereof against payment therefor, then the Warrants, when issued and sold pursuant to the Underwriting Agreement, will be valid and legally binding obligations of the Company, enforceable against the Company in
accordance with their terms, except as enforcement thereof may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws relating to or affecting creditors rights generally and by general equitable principles
(regardless of whether such enforceability is considered in a proceeding at law or in equity) and implied covenants of good faith and fair dealing.
We hereby consent to your filing this opinion as an exhibit to a Current Report on Form 8-K to be incorporated by reference in the
Registration Statement and to the use of our name under the caption Legal Matters in the Prospectus contained therein. In giving such consent, we do not thereby admit that we are in the category of persons whose consent is required under
Sections 7 and 11 of the Securities Act or the rules and regulations of the Commission thereunder.
Very truly
yours,
/s/ Ropes & Gray LLP
Ropes & Gray LLP
Exhibit 99.1
STEMCELLS, INC. ANNOUNCES PROPOSED PUBLIC OFFERING OF COMMON STOCK AND WARRANTS
NEWARK, Calif., (April 23, 2015) StemCells, Inc. (NASDAQ: STEM) today announced that it intends to offer and sell common stock and warrants,
subject to market and other conditions, in an underwritten public offering. The shares and warrants are being offered under the Companys effective shelf registration statement previously filed with the Securities and Exchange Commission (SEC).
StemCells intends to use the net proceeds of the offering for general corporate purposes, including working capital, capital expenditures and research and development.
Maxim Group LLC is acting as sole book-running manager for the offering.
The securities will be offered by means of a prospectus supplement and accompanying prospectus, forming a part of the effective registration statement, a copy
of which may be obtained, when available, at the website of the SEC at http://www.sec.gov. Electronic copies of the preliminary prospectus also may be obtained from Maxim Group LLC, 405 Lexington Avenue,
2nd Floor, New York, NY 10174, at 212-895-3500.
This press release shall not constitute an offer to
sell or the solicitation of an offer to buy these securities, nor shall there be any sale of these securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to the registration or qualification under the
securities laws of any such jurisdiction.
About StemCells, Inc.
StemCells, Inc. is currently engaged clinical development of its platform technology, HuCNS-SC®
(purified human neural stem cells) as a potential treatment for disorders of the central nervous system (CNS). Interim data from the Companys Phase I/II clinical trial in thoracic spinal cord injury (SCI) shows measurable gains involving
multiple sensory modalities and segments, including the conversion of 2 of 7 patients enrolled in the study with complete injuries (AIS A) converting to incomplete injuries (AIS B), post-transplant. Enrollment has recently commenced in the
Companys Phase II clinical trial in cervical SCI. StemCells, Inc. has also completed enrollment and treatment in its Phase I/II clinical trial in geographic atrophy of age-related macular degeneration (GA-AMD), the most severe form of dry AMD,
which is the leading cause of blindness in the elderly. Based upon interim results for subjects with twelve months data, the Company reported a 70 percent reduction in the rate of disease progression as compared to the control
(untreated) eye and a 65 percent reduction in the rate of disease progression as compared to the expected natural history of the disease. In a Phase I clinical trial in Pelizaeus-Merzbacher disease (PMD), a fatal myelination disorder
in children, the Company showed preliminary evidence of progressive and durable donor-derived myelination in all four patients transplanted with HuCNS-SC cells.
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CONTACT: |
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Greg Schiffman |
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StemCells, Inc. |
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Chief Financial Officer |
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(510) 456-4128 |
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Lena Evans |
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Russo Partners |
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(212) 845-4262 |
#####
Exhibit 99.2
STEMCELLS, INC. ANNOUNCES PRICING OF PUBLIC OFFERING TO RAISE $25 MILLION
NEWARK, Calif., (April 24, 2015) StemCells, Inc. (NASDAQ: STEM) today announced the pricing of an underwritten public offering of common stock
and warrants with a public offering price of $0.70 for a fixed combination of one share of common stock and a warrant to purchase three-quarters of a share of common stock. The warrants have an exercise price of $0.85 per share, are exercisable
immediately, and will expire five years from the date of issuance. The Company expects to receive gross proceeds of approximately $25.0 million, before deducting underwriting discounts and commissions and other estimated offering expenses. The
Company has also granted the underwriters a 30 day option to purchase up to an additional 5,357,250 shares of common stock and/or warrants to purchase up to an additional 4,017,938 shares of common stock to cover over-allotments, if any.
The offering is expected to close on or about April 29, 2015, subject to customary closing conditions.
Maxim Group LLC is acting as sole book-running manager for the offering and Chardan Capital Markets is acting as co-manager for the offering.
StemCells intends to use the net proceeds of the offering for general corporate purposes, including working capital, capital expenditures and research and
development.
The securities are being offered by means of a prospectus supplement and accompanying prospectus, forming a part of the effective
registration statement, a copy of which may be obtained, when available, at the website of the SEC at http://www.sec.gov. Electronic copies of the preliminary prospectus may be obtained from Maxim Group LLC, 405 Lexington Avenue, 2nd Floor, New York, NY 10174, at 212-895-3745. A final prospectus supplement related to the offering will be filed with the SEC.
This press release shall not constitute an offer to sell or the solicitation of an offer to buy these securities, nor shall there be any sale of these
securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to the registration or qualification under the securities laws of any such jurisdiction.
About StemCells, Inc.
StemCells, Inc. is currently
engaged in clinical development of its platform technology, HuCNS-SC® (purified human neural stem cells) as a potential treatment for disorders of the central nervous system (CNS). Interim
data from the Companys Phase I/II clinical trial in thoracic spinal cord injury (SCI) shows measurable gains involving multiple sensory modalities and segments, including the conversion of 2 of 7 patients enrolled in the study with complete
injuries (AIS A) converting to incomplete injuries (AIS B), post-transplant. Enrollment has recently commenced in the Companys Phase II clinical trial in cervical SCI. StemCells, Inc. has also completed enrollment and treatment in its Phase
I/II clinical trial in geographic atrophy of age-related macular degeneration (GA-AMD), the most severe form of dry AMD, which is the leading cause of blindness in the elderly. Based upon interim results for subjects with twelve months data, the
Company reported a 70 percent reduction in the rate of disease progression as compared to the control (untreated) eye and a 65 percent reduction in the rate of disease progression as compared to the expected natural history of the disease. In a
Phase I clinical trial in Pelizaeus-Merzbacher disease (PMD), a fatal myelination disorder in children, the Company showed preliminary evidence of progressive and durable donor-derived myelination in all four patients transplanted with HuCNS-SC
cells.
Certain statements contained herein, including the Companys intention to complete the offering and the expected use of net proceeds, are
not based on historical fact and are forward-looking statements within the meaning of the applicable securities laws and regulations. Owing to the uncertainties inherent in forward-looking statements, actual events or results could
differ materially from those stated here. These forward-looking statements reflect managements expectations as of the date of this press release and are subject to certain risks and uncertainties, including the expected gross proceeds of the
offering, the expected closing date and other factors. The Company does not undertake to revise these statements to reflect subsequent developments.
CONTACT:
Greg Schiffman
StemCells, Inc.
Executive Vice President and Chief Financial
Officer
(510) 456-4128
Lena Evans
Russo Partners
(212) 845-4262
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