EXHIBIT 10.30
SECURITIES PURCHASE AGREEMENT
Palatin Technologies, Inc.
4C Cedarbrook Drive
Cranbury, New Jersey 08512.
Ladies & Gentlemen:
The undersigned, (the "Investor"), hereby confirms its agreement with
you as follows:
1. This Securities Purchase Agreement (the "Agreement") is made effective as of
___________ __, 2003 between Palatin Technologies, Inc., a Delaware corporation
(the "Company"), and the Investor.
2. The Company has authorized, subject to adjustment by the Company's Board of
Directors, the issuance and sale of up to 14,000,000 shares of common stock of
the Company, $0.01 par value per share (the "Common Stock"), and warrants to
purchase 3,500,000 shares of Common Stock (the "Warrant"), with an exercise
price of 125% of the Price Per Share (as defined below), pursuant to the form of
Warrant attached hereto as Exhibit A, to certain investors in a private
placement (the "Offering"). For every four (4) shares of Common Stock purchased
by the Investor, such Investor shall be entitled to receive a warrant to
purchase one (1) share of Common Stock. The purchase price for the Common Stock
and Warrants will be (i) the average reported closing sales price ("Price Per
Share") for the Common Stock on the American Stock Exchange for the ten (10)
business days immediately prior to the date hereof for each share of Common
Stock purchased and (ii) $0.03125, which reflects the value assigned to the
warrants for each share of Common Stock purchased.
3. The Company and the Investor agree that the Investor will purchase from the
Company and the Company will issue and sell to the Investor _____ shares of
Common Stock and _____ Warrants, for a Price Per Share of $1.39 per share of
Common Stock and $0.03125 per quarter of a Warrant purchased, or an aggregate
purchase price of $1.42, pursuant to the Terms and Conditions for Purchase of
Common Stock and Warrants attached hereto as Annex I and incorporated herein by
reference as if fully set forth herein. Unless otherwise requested by the
Investor, certificates representing the Common Stock and Warrants purchased by
the Investor will be registered in the Investor's name and address as set forth
below.
4. The Investor represents that, except as set forth below, (a) it has had no
position, office or other material relationship within the past three years with
the Company or its affiliates, (b) neither it, nor any group of which it is a
member or to which it is related, beneficially owns (including the right to
acquire or vote) any securities of the Company and (c) it has no direct or
indirect affiliation or association with any NASD member. Exceptions:
(If no exceptions, write "none." If left blank, response will be deemed to be
"none.")
Please confirm that the foregoing correctly sets forth the agreement
between us by signing in the space provided below for that purpose.
"INVESTOR"
By:
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Print Name:
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Title:
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Address:
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Tax ID No.:
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Contact name:
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Telephone:
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Facsimile:
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Name in which shares should be registered
(if different):
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Number of shares of Common Stock: _________
Number of Warrants: __________
U.S. Dollar Amount Invested: $__________
Date: ________ __, 2003
If Purchaser is a Registered Representative with a NASD member firm,
have the following acknowledgment signed by the appropriate party:
The undersigned NASD member firm acknowledges receipt of the notice required by
Article 3, Sections 28(a) and (b) of the Rules of Fair Practice.
By:
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Name of NASD Member Firm:
By:
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Authorized Officer:
AGREED AND ACCEPTED:
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Palatin Technologies, Inc.
By: _________________________
Title: _________________________
Date: __________ __, 2003
[SIGNATURE PAGE TO STOCK PURCHASE AGREEMENT]
24
ANNEX I
TERMS AND CONDITIONS FOR PURCHASE OF COMMON STOCK AND WARRANTS
1. Authorization and Sale of the Common Stock and Warrants. Subject to
the terms and conditions of this Agreement, the Company has authorized the sale
of up to 14,000,000 shares of Common Stock and Warrants to purchase 3,500,000
shares of Common Stock. The Company reserves the right to increase or decrease
these numbers.
2. Agreement to Sell and Purchase the Common Stock and Warrants;
Subscription Date.
2.1 At the Closing (as defined in Section 3), the Company will
sell to the Investor, and the Investor will purchase from the Company, upon the
terms and conditions hereinafter set forth, the number of shares of Common Stock
and Warrants set forth on the signature page hereto at the purchase price set
forth on such signature page.
2.2 The Company is entering into this same form of Securities
Purchase Agreement with certain other investors (the "Other Investors")
effective as of the date hereof (the "Subscription Date") and expects to
complete sales of Common Stock and Warrants to them. (The Investor and the Other
Investors are hereinafter sometimes collectively referred to as the "Investors,"
and this Agreement and the Securities Purchase Agreements executed by the Other
Investors are hereinafter sometimes collectively referred to as the
"Agreements.")
3. Delivery of the Securities at Closing. The completion of the
purchase and sale of the Common Stock and Warrants (the "Closing") shall occur
(the "Closing Date") on the business day after the Subscription Date (or upon
such earlier date as the Company and the Investors shall agree), at the offices
of the Company's counsel, but in no event earlier than such date and time as the
escrow agent (as identified in Section 8) shall have received all of the
executed Agreements. At the Closing, upon written instruction of the Company,
the escrow agent shall release the Escrowed Property (as defined in Section 8)
to the Company and the Company shall deliver to the Investor one or more stock
certificates representing the number of shares of Common Stock and Warrants set
forth on the signature page hereto, each such certificate to be registered in
the name of the Investor or, if so indicated on the signature page hereto, in
the name of a nominee designated by the Investor. The Company's obligation to
issue the Common Stock and Warrants to the Investor shall be subject to the
following conditions, any one or more of which may be waived by the Company: (a)
receipt by the escrow agent of a certified or official bank check or wire
transfer of funds (in accordance with the wire transfer instructions attached
hereto as Exhibit B) in the full amount of the purchase price for the Common
Stock and Warrants being purchased hereunder as set forth on the signature page
hereto; (b) completion of the purchases and sales under the Agreements with the
Other Investors such that a minimum of $ 10,000,000 shares of Common Stock and
Warrants are sold pursuant to the Agreements; and (c) the accuracy of the
representations and warranties made by the Investors and the fulfillment of
those undertakings of the Investors to be fulfilled prior to the Closing. The
Investor's obligation to purchase the Common Stock and Warrants shall be subject
to the following conditions, any one or more of which may be waived by the
Investor: (a) receipt by the Investor or its authorized agent of one or more
certificates representing the number of shares of Common Stock and Warrants set
forth on the signature page hereto; (b) receipt by the Investor of an opinion
letter, dated as of the Closing Date, from Mintz, Levin, Cohn, Ferris, Glovsky
and Popeo, P.C., counsel to the Company in form reasonably satisfactory to the
Investor; (c) the accuracy of the representations and warranties when made by
the Company and as if made by the Company at the Closing and the fulfillment of
those undertakings of the Company to be fulfilled prior to the Closing; (d) on
the Closing Date, no legal action, suit or proceeding shall be pending or
threatened which seeks to restrain or prohibit the transactions contemplated by
the Agreements; (e) the Company shall have delivered to the Investors its
certificate, dated the Closing Date, duly executed by its Chief Executive
Officer to the effect set forth in clause (c) above; (f) the receipt by the
Investors of a certificate, dated the Closing Date, of the Secretary or
Assistant Secretary of the Company certifying as to (i) the accuracy of the
certificate of incorporation and bylaws of the Company as in effect on the
Closing Date (which shall be attached to such certificate as an exhibit), (ii)
the accuracy of all resolutions of the board of directors (and committees
thereof) of the Company relating to the Agreements and the transactions
contemplated thereby (which shall be attached to such certificate as an exhibit)
and (iii) the incumbency and signatures of all officers of the Company executing
the Agreements and any other agreement or document contemplated thereby.
Investor acknowledges that the final approval of the American Stock Exchange is
required in connection with the issuance of the Common Stock and Warrants, and,
accordingly, the shares of Common Stock and Warrants may be subject to return to
the Company in exchange for the return of the full purchase price of the Common
Stock and Warrants.
4. Representations, Warranties and Covenants of the Company. Except as
otherwise described in the Company's SEC Documents (as defined in Section 4.4),
which qualifies the following representations, warranties and covenants in their
entirety, the Company hereby represents and warrants to, and covenants with, the
Investor, as follows:
4.1 Organization. Each of the Company and its Subsidiaries is
duly organized, validly existing and in good standing under the laws of the
jurisdiction of its organization. Each of the Company and its Subsidiaries (as
defined in Rule 405 under the Securities Act of 1933, as amended (the
"Securities Act")) has full power and authority to own, operate and occupy its
properties and to conduct its business as presently conducted and is registered
or qualified to do business and in good standing in each jurisdiction in which
it owns or leases property or transacts business and where the failure to be so
qualified would have a material adverse effect upon the financial condition or
business, operations or assets of the Company and its Subsidiaries, considered
as one enterprise, and no proceeding has been instituted in any such
jurisdiction, revoking, limiting or curtailing, or seeking to revoke, limit or
curtail, such power and authority or qualification.
4.2 Due Authorization. The Company has all requisite power and
authority to execute, deliver and perform its obligations under the Agreements,
and the Agreements have been duly authorized and validly executed and delivered
by the Company and constitute legal, valid and binding agreements of the Company
enforceable against the Company in accordance with their terms, except as rights
to indemnity and contribution may be limited by state or federal securities laws
or the public policy underlying such laws, except as enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting creditors' and contracting parties' rights generally and
except as enforceability may be subject to general principles of equity
(regardless of whether such enforceability is considered in a proceeding in
equity or at law).
4.3 Non-Contravention. The execution and delivery of the
Agreements, the issuance and sale of the Common Stock and Warrants to be sold by
the Company under the Agreements, the fulfillment of the terms of the Agreements
and the consummation of the transactions contemplated thereby will not (A)
conflict with or constitute a violation of, or default (with or without the
giving of notice or the passage of time or both) under, (i) any material bond,
debenture, note or other evidence of indebtedness, or under any material lease,
indenture, mortgage, deed of trust, loan agreement, joint venture or other
agreement or instrument to which the Company or any Subsidiary is a party or by
which it or any of its Subsidiaries or their respective properties are bound,
(ii) the charter, by-laws or other organizational documents of the Company or
any Subsidiary, or (iii) any law, administrative regulation, ordinance or order
of any court or governmental agency, arbitration panel or authority applicable
to the Company or any Subsidiary or their respective properties, except where
such conflict, violation or default would not have a material adverse effect on
the financial condition or results of operations of the Company and Subsidiaries
taken as one enterprise, (B) result in the creation or imposition of any lien,
encumbrance, claim, security interest or restriction whatsoever upon any of the
material properties or assets of the Company or any Subsidiary or an
acceleration of indebtedness pursuant to any obligation, agreement or condition
contained in any material bond, debenture, note or any other evidence of
indebtedness or any material indenture, mortgage, deed of trust or any other
agreement or instrument to which the Company or any Subsidiary is a party or by
which any of them is bound or to which any of the property or assets of the
Company or any Subsidiary is subject. No consent, approval, authorization or
other order of, or registration, qualification or filing with, any regulatory
body, administrative agency, self-regulatory organization, stock exchange or
market, or other governmental body in the United States is required for the
execution and delivery of the Agreements and the valid issuance and sale of the
Common Stock and Warrants to be sold pursuant to the Agreements, other than such
as have been made or obtained, and except for any securities filings required to
be made under federal or state securities laws. Notwithstanding the foregoing,
the final approval of the American Stock Exchange is required in connection with
the issuance of the Common Stock and Warrants.
4.4 Reporting Status. The Company has filed in a timely manner
all documents that the Company was required to file under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), during the 12 months
preceding the date of this Agreement. The following documents complied in all
material respects with the Securities and Exchange Commission's ("SEC")
requirements as of their respective filing dates, and the information contained
therein as of the date thereof did not contain an 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 in light of the circumstances under where they
were made not misleading, except to the extent that information contained in any
such document has been revised or superseded by a later filed SEC Document (as
defined below):
(i) The Company's Annual Report on Form 10-K for the year
ended June 30, 2002, including the exhibits thereto
(the "Form 10-K"); and
(ii) all other documents, including the exhibits thereto,
filed by the Company with the SEC since June 30, 2002
pursuant to the reporting requirements of the Exchange
Act (together with the Form 10-K, the "SEC Documents").
4.5 Capitalization. As of the date hereof, the authorized
capital stock of the Company consists of 75,000,000 shares of Common Stock and
10,000,000 shares of preferred stock, par value $0.01 per share, of the Company
(the "Preferred Stock"). As of March 18, 2003, there were approximately (i)
28,383,557 shares of Common Stock issued and outstanding, (ii) 24,867 shares of
Series A Convertible Preferred Stock issued and outstanding which are
convertible into 804,757 shares of Common Stock, (iii) 700,000 shares of Series
C Convertible Preferred Stock issued and outstanding which are convertible into
700,000 shares of Common Stock, (iv) 5,075,540 shares of Common Stock reserved
for issuance under the Company's stock option plans, including 3,818,371 shares
issuable upon exercise of outstanding stock options issued by the Company to
current or former employees, consultants and directors of the Company and its
Subsidiaries and (v) 7,727,318 shares issuable upon exercise of warrants to
acquire shares of Common Stock. All outstanding shares of Common Stock are duly
authorized, validly issued, fully paid and nonassessable, free from any liens or
any other encumbrances created by the Company with respect to the issuance and
delivery thereof and not subject to preemptive rights. Other than as disclosed
in the SEC Documents, there are no outstanding rights, options, warrants,
preemptive rights, rights of first refusal agreements, commitments or similar
rights for the purchase or acquisition from the Company of any securities of the
Company. The Common Stock and Warrants to be sold pursuant to the Agreements
have been duly authorized, and when issued and paid for in accordance with the
terms of the Agreements will be duly and validly issued, fully paid and
nonassessable, free and clear of all pledges, liens, encumbrances and other
restrictions (other than those arising under federal or state securities laws as
a result of the private placement of the Common Stock and Warrants to the
Investors). Other than with respect to the outstanding Series C convertible
preferred stock, no preemptive right, co-sale right, right of first refusal or
other similar right exists with respect to the Common Stock and Warrants or the
issuance and sale thereof. No further approval or authorization of any
stockholder, the Board of Directors of the Company or others is required for the
issuance and sale of the Common Stock and Warrants, other than the approval of
the American Stock Exchange. Except as set forth in the SEC Documents, no holder
of any of the securities of the Company has any rights ("demand," "piggyback" or
otherwise) to have such securities registered by reason of the intention to
file, filing or effectiveness of a Registration Statement (as defined in Section
7.1 hereof). The outstanding Series A Convertible Preferred Stock contains a
price protection provision such that the conversion price will be adjusted with
respect to future issuances of securities at less than $3.09, and upon issuance
of the maximum number of securities pursuant to this Agreement, the conversion
price of the Series A Convertible Preferred Stock will be lowered to $2.66,
resulting in the additional issuance of 130,091 shares of Common Stock upon
conversion of such Series A Convertible Preferred Stock. The number of shares of
common stock issuable on exercise of certain warrants with similar price
protection provisions will increase by 87,075.
4.6 Legal Proceedings. There is no material legal or
governmental proceeding pending or, to the knowledge of the Company, threatened
to which the Company or any Subsidiary or any officer or director of the Company
or any Subsidiary in their capacity as such officer or director is or may be a
party or of which the business or property of the Company or any Subsidiary is
subject that is not disclosed in the SEC Documents. There is no action, suit,
proceeding, inquiry or investigation before or by any court, public board or
body (including, without limitation, the SEC) pending or, to the knowledge of
the Company, threatened against or affecting the Company or any of its
Subsidiaries wherein an unfavorable decision, ruling or finding could adversely
affect the validity or enforceability of, or the authority or ability of the
Company to perform its obligations under the Agreements.
4.7 No Violations. Neither the Company nor any Subsidiary is
in violation of its charter, bylaws, or other organizational document, or in
violation of any law, administrative regulation, ordinance or order of any court
or governmental agency, arbitration panel or authority applicable to the Company
or any Subsidiary, including the rules, regulations and policies of the SEC and
the Food and Drug Administration of the U.S. Department of Health and Human
Services (the "FDA") and which violation, individually or in the aggregate,
would be reasonably likely to have a material adverse effect on the business,
operations, assets or financial condition of the Company and its Subsidiaries,
considered as one enterprise, or is in default (and there exists no condition
which, with or without the passage of time or giving of notice or both, would
constitute a default) in any material respect in the performance of any bond,
debenture, note or any other evidence of indebtedness in any indenture,
mortgage, deed of trust or any other material agreement or instrument to which
the Company or any Subsidiary is a party or by which the Company or any
Subsidiary is bound or by which the properties of the Company or any Subsidiary
are bound, which would be reasonably likely to have a material adverse effect
upon the business, operations, assets or financial condition of the Company and
it s Subsidiaries, considered as one enterprise.
4.8 Governmental Permits, Etc. With the exception of the
matters which are dealt with separately in Section 4.1, 4.4, 4.13 and 4.14, each
the Company and it Subsidiaries has all necessary franchises, licenses,
certificates and other authorizations from any foreign, federal, state or local
government or governmental agency, department, or body that are currently
necessary for the operation of the business of the Company and its Subsidiaries
as currently conducted, except where the failure to currently possess could not
reasonably be expected to have a material adverse effect upon the business,
operations, assets or financial condition of the Company and its Subsidiaries,
considered as one enterprise.
4.9 Intellectual Property. Each of the Company and its
Subsidiaries owns or possesses sufficient rights to use all patents, patent
rights, trademarks, copyrights, licenses, inventions, trade secrets, trade names
and know-how (collectively, "Intellectual Property") that are necessary for the
conduct of its business as now conducted, and as proposed to be conducted in the
SEC Documents, except where the failure to currently own or possess could not
reasonably be expected to have a material adverse effect on the financial
condition or business of the Company and its Subsidiaries considered as one
enterprise. Except as set forth in the SEC Documents, (i) neither the Company
nor any of its Subsidiaries has received any notice of, or has any knowledge of,
any infringement of asserted rights of a third party with respect to any
Intellectual Property that, individually or in the aggregate, would have a
material adverse effect on the financial condition or business, operations or
assets of the Company and its Subsidiaries considered as one enterprise and (ii)
neither the Company nor any of its Subsidiaries has received any notice of any
infringement rights by a third party with respect to any Intellectual Property
that, individually or in the aggregate, would have a material adverse effect
upon the business, operations, assets or financial condition of the Company and
its Subsidiaries, considered as one enterprise.
4.10 Environmental Matters. The Company and its Subsidiaries
(i) are in compliance in all material respects with any and all applicable
foreign, federal, state and local laws and regulations relating to the
protection of human health and safety, the environment or hazardous or toxic
substances or wastes, pollutants or contaminants ("Environmental Laws"), (ii)
have received all material permits, licenses or other approvals required of them
under applicable Environmental Laws to conduct their respective businesses and
(iii) are in compliance with all terms and conditions of any permit, license or
approval, except where such noncompliance with Environmental Laws, failure to
receive required permits, licenses or other approvals or failure to comply with
the terms and conditions of such permits, licenses or approvals would not,
singly or in the aggregate, have a material adverse effect on the Company and
its Subsidiaries taken as a whole.
4.11 Financial Statements. The financial statements of the
Company and the related notes thereto included in the SEC Documents present
fairly in all material respects, in accordance with generally accepted
accounting principles, the financial position of the Company and its
Subsidiaries as of the dates indicated, and the results of its operations and
cash flows for the periods therein specified. Such consolidated financial
statements (including the related notes) have been prepared in accordance with
generally accepted accounting principles applied on a consistent basis
throughout the periods therein specified, except as set forth in the SEC
Documents and subject in the case of unaudited financial statements, to normal
year-end audit adjustments.
4.12 No Material Adverse Change. Except as disclosed in the
SEC Documents, since June 30, 2002 there has not been (i) any material adverse
change in the financial condition or earnings of the Company and its
Subsidiaries considered as one enterprise nor has any material adverse event
occurred to the Company or its Subsidiaries, (ii) any material adverse event
affecting the Company or any of its Subsidiaries, (iii) any obligation, direct
or contingent, that is material to the Company and its Subsidiaries considered
as one enterprise, incurred by the Company, except obligations incurred in the
ordinary course of business, (iv) any dividend or distribution of any kind
declared, paid or made on the capital stock of the Company or any of its
Subsidiaries, or (v) any loss or damage (whether or not insured) to the physical
property of the Company which has been sustained which has a material adverse
effect on the condition (financial or otherwise), earnings, operations or
business of the Company and its Subsidiaries considered as one enterprise.
Except as disclosed in the SEC Documents, neither the Company nor any of its
Subsidiaries has (i) sold, assigned, transferred, abandoned, mortgaged, pledged
or subjected to lien any of its material properties, tangible or intangible, or
rights under any material contract, permit, license, franchise or other
agreement or (ii) waived or cancelled any material indebtedness or other
obligations owed to the Company or any such Subsidiary.
4.13 AMEX Listing. The Company's Common Stock is registered
pursuant to Section 12(b) of the Exchange Act and is listed on the American
Stock Exchange (the "AMEX"), and the Company has taken no action designed to, or
likely to have the effect of, terminating the registration of the Common Stock
under the Exchange Act or de-listing the Common Stock from AMEX, nor to the
Company's knowledge is the AMEX currently contemplating terminating such
listing. The Company and the Common Stock meet the criteria for continued
listing and trading on the AMEX.
4.14 Listing of the Common Stock. The Company shall comply
with all requirements of the AMEX with respect to the issuance of the Common
Stock and Warrants and the listing of the Common Stock and the Common Stock
underlying the Warrants on the AMEX. In furtherance thereof, the Company shall
use its best efforts to take such actions as may be necessary and as soon as
practicable and in no event later than 20 days after the Closing Date to seek
the approval of AMEX for the issuance of the Common Stock and Warrants and to
file with the AMEX an application or other document required by the AMEX and pay
all applicable fees for the listing of the Common Stock and the Common Stock
underlying the Warrants with the AMEX and shall provide evidence of such filing
to the Investors. The Company knows of no reason why the Common Stock and the
Common Stock underlying the Warrants will not be eligible for listing on the
AMEX.
4.15 No Manipulation of Stock. The Company has not taken and
will not, in violation of applicable law, take, any action designed to or that
might reasonably be expected to cause or result in stabilization or manipulation
of the price of the Common Stock to facilitate the sale or resale of the Common
Stock and the Common Stock issuable upon exercise of the Warrants.
4.16 S-3 Status. The Company meets the requirements for filing
Form S-3 for the registration of the resale of the Common Stock and the Common
Stock issuable upon exercise of the Warrants by the Investors and will use its
best efforts to maintain S-3 status with the SEC during the Registration Period
(as defined in Section 7.1(c)).
4.17 Insurance. The Company maintains and will continue to
maintain insurance against loss or damage by fire or other casualty and such
other insurance, including, but not limited to, product liability insurance, in
such amounts and covering such risks as is reasonably adequate consistent with
industry practice for the conduct of its business and the value of its
properties, all of which insurance is in full force and effect.
4.18 Tax Matters. The Company has filed all material federal,
state and local income and franchise and other tax returns required to be filed
and has paid or accrued all taxes due in accordance therewith, and no tax
deficiency has been determined adversely to the Company which has had (nor does
the Company have any knowledge of any tax deficiency which, if determined
adversely to the Company, might have) a material adverse effect on the condition
(financial or otherwise), earnings, operations or business of the Company and
its Subsidiaries considered as one enterprise.
4.19 Investment Company. The Company is not an "investment
company" within the meaning of such term under the Investment Company Act of
1940 and the rules and regulations of the SEC thereunder and will not become an
investment company upon the receipt and application of the net proceeds of this
offering.
4.20 No Registration. Assuming the accuracy of the
representations and warranties made by, and compliance with the covenants of,
the Investors in Section 5 hereof, no registration of the Common Stock and
Warrants under the Securities Act of 1933, as amended (the "Securities Act") is
required in connection with the offer and sale of the Common Stock and Warrants
by the Company to the Investors as contemplated by the Agreements.
4.21 Intentionally Omitted.
4.22 Form D. The Company agrees to file one or more Forms D
with respect to the Common Stock and Warrants on a timely basis as required
under Regulation D under the Securities Act to claim the exemption provided by
Rule 506 of Regulation D and to, upon request, provide a copy thereof to the
Investors and their counsel.
4.23 Certain Future Financings and Related Actions.
(a) The Company will not sell, offer to sell,
solicit offers to buy or otherwise
negotiate in respect of any "security" (as defined in the Securities Act) that
is or could be integrated with the sale of the Common Stock and Warrants in a
manner that would require the registration of the Common Stock and Warrants
under the Securities Act.
(b) The Company shall not offer, sell, contract to
sell or issue (or engage any
person to assist the Company in taking any such action) any equity securities or
securities convertible into, exchangeable for or otherwise entitling the holder
to acquire, any Common Stock at a price below the market price of the Common
Stock during the period from the date of this Agreement to the effective date of
the Registration Statement; provided, however, that nothing in this Section
4.23(b) shall prohibit the Company from issuing securities (v) to employees,
directors, officers, advisors or consultants of the Company; (w) upon exercise
of conversion, exchange, purchase or similar rights issued, granted or given by
the Company and outstanding as of the date of this Agreement; (x) pursuant to a
public offering underwritten on a firm commitment basis registered under the
Securities Act; (y) for the purpose of funding the acquisition of securities or
assets of any entity in a single transaction or a series of related
transactions; or (z) pursuant to a strategic partnership or alliance agreement,
loan agreement, equipment lease or similar commercial agreement (including
licensing and similar arrangements).
4.24 Use of Proceeds. The Company will use the net proceeds
from the sale of the Common Stock and Warrants for continued research and
development of the Company's MIDAS technology, PT-141 and LeuTech programs, as
well as working capital and other general corporate purposes.
5. Representations, Warranties and Covenants of the Investor. The
Investor hereby represents and warrants to, and covenants with, the Company as
follows:
5.1 (i) The Investor is an "accredited investor" as defined in Regulation D
under the Securities Act and the Investor has the knowledge, sophistication and
experience necessary to make, and is qualified to make decisions with respect
to, investments in shares presenting an investment decision like that involved
in the purchase of the Common Stock and Warrants, including investments in
securities issued by the Company and investments in comparable companies, and
has requested, received, reviewed and considered all information it deemed
relevant in making an informed decision to purchase the Common Stock and
Warrants, including without limitation, the Confidential Private Placement
Memorandum dated _______ 2003, and all exhibits attached thereto and
incorporated by reference therein (the "Memorandum") and the Company's Annual
Report on Form 10-K for the fiscal year ended June 30, 2002 delivered to the
Investor; (ii) the Investor is acquiring the number of shares of Common Stock
and Warrants set forth on the signature page hereto for its own account for
investment only and with no present intention of distributing any of the shares
of Common Stock, Warrants and shares of Common Stock issuable upon exercise of
the Warrants, in violation of the Securities Act or any arrangement or
understanding with any other persons regarding the distribution of the shares of
Common Stock, Warrants and the shares of Common Stock issuable upon exercise of
the Warrants; (iii) the Investor will not, directly or indirectly, offer, sell,
pledge, transfer or otherwise dispose of (or solicit any offers to buy, purchase
or otherwise acquire or take a pledge of) any of the Common Stock, Warrants and
shares of Common Stock issuable upon exercise of the Warrants except in
compliance with the Securities Act, applicable state securities laws and the
respective rules and regulations promulgated thereunder; (iv) the Investor has
filled in all requested information on the signature page hereto for use in
preparation of the Registration Statement and the answers thereto are true and
correct as of the date hereof and will be true and correct as of the Closing
Date; (v) the Investor will notify the Company promptly of any change in any of
such information until such time as the Investor has sold all of its Common
Stock, Warrants and shares of Common Stock issued upon exercise of the Warrants
or until the Company is no longer required to keep the Registration Statement
effective; and (vi) the Investor has, in connection with its decision to
purchase the number of shares of Common Stock and Warrants set forth on the
signature page hereto, relied only upon the SEC Documents, other publicly
available information and the representations and warranties of the Company
contained herein. The Investor understands that its acquisition of the Common
Stock and Warrants has not been registered under the Securities Act or
registered or qualified under any state securities laws in reliance on specific
exemptions therefrom, which exemptions may depend upon, among other things, the
truth and accuracy of, and the Investor's compliance with, the representations,
warranties, agreements and covenants of the Investor set forth in this Agreement
and the bona fide nature of the Investor's investment intent as expressed
herein.
5.2 The Investor acknowledges that the Company has represented
that no action has been or will be taken in any jurisdiction outside the United
States by the Company that would permit an offering of the Common Stock and
Warrants, or possession or distribution of offering materials in connection with
the issuance of the Common Stock and Warrants, in any jurisdiction outside the
United States where action for that purpose is required. If the Investor is
located or domiciled outside the United States it agrees to comply with all
applicable laws and regulations in each foreign jurisdiction in which it
purchases, offers, sells or delivers the shares of Common Stock and Warrants or
has in its possession or distributes any offering material, in all cases at its
own expense.
5.3 The Investor hereby covenants with the Company not to make
any sale of the Common Stock and Warrants without complying with the provisions
of this Agreement, including Section 7.2 hereof, provided that the Company
complies with its obligations under Section 7.1, without effectively causing the
prospectus delivery requirement under the Securities Act to be satisfied, if
applicable, and the Investor acknowledges that the certificates evidencing the
Common Stock and Warrants will be imprinted with a legend that prohibits their
transfer except in accordance therewith. The Investor acknowledges that there
may occasionally be times when the Company, based on the advice of its counsel,
determines that, subject to the limitations of Section 7.2, it must suspend the
use of the Prospectus forming a part of the Registration Statement until such
time as an amendment to the Registration Statement has been filed by the Company
and declared effective by the SEC or until the Company has amended or
supplemented such Prospectus.
5.4 The Investor further represents and warrants to, and
covenants with, the Company that (i) the Investor has full right, power,
authority and capacity to enter into this Agreement and to consummate the
transactions contemplated hereby and has taken all necessary action to authorize
the execution, delivery and performance of this Agreement and (ii) this
Agreement constitutes a valid and binding obligation of the Investor enforceable
against the Investor in accordance with its terms, except as enforceability may
be limited by applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting creditors' and contracting parties' rights generally and
except as enforceability may be subject to general principles of equity
(regardless of whether such enforceability is considered in a proceeding in
equity or at law) and except as the indemnification and contribution agreements
of the Investors herein may be legally unenforceable.
5.5 Investor will not, prior to the effectiveness of the
Registration Statement, directly or indirectly, sell, offer to sell, solicit
offers to buy, dispose of, loan, pledge or grant any right with respect to
(collectively, a "Disposition"), the Common Stock of the Company in violation of
the Securities Act, nor will Investor engage in any hedging or other transaction
which is designed to or could reasonably be expected to lead to or result in a
Disposition of Common Stock of the Company by the Investor or any other person
or entity in violation of the Securities Act. Such prohibited hedging or other
transactions would include without limitation effecting any short sale or having
in effect any short position (whether or not such sale or position is against
the box and regardless of when such position was entered into) or any purchase,
sale or grant of any right (including without limitation any put or call option)
with respect to the Common Stock of the Company or with respect to any security
(other than a broad-based market basket or index) that includes, relates to or
derives any significant part of its value from the Common Stock of the Company.
The Investor acknowledges that the Common Stock, Warrants and shares of Common
Stock issuable upon exercise of the Warrants shall bear a restrictive legend to
the effect that the Common Stock, Warrants and Common Stock issuable upon
exercise of the Warrants have not been registered under the Securities Act of
1933, as amended and such securities may not be sold or transferred in the
absence of an effective registration statement or pursuant to an exemption from
registration.
5.6 The Investor understands that nothing in this Agreement or
any other materials presented to the Investor in connection with the purchase
and sale of the Common Stock and Warrants constitutes legal, tax or investment
advice. The Investor has consulted such legal, tax and investment advisors as
it, in its sole discretion, has deemed necessary or appropriate in connection
with its purchase of the Common Stock and Warrants.
5.7 The Investor shall hold in strict confidence all
information concerning this Agreement and the Offering of the Common Stock and
Warrants until the earlier of such time as the Company has made a public
announcement concerning this Agreement or the Offering of the Common Stock and
Warrants.
5.8 If the Investor is an individual, the Investor certifies
that he or she is not nor to his or her knowledge has been designated, a
"suspected terrorist" as defined in Executive Order 13224. If the Investor is a
corporation, trust, partnership, limited liability company or other
organization, the Investor certifies that, to the best of its knowledge, the
Investor has not been designated, and is not owned or controlled by, a
"suspected terrorist" as defined in Executive Order 13224. The Investor hereby
acknowledges that the Company seeks to comply with all applicable laws covering
money laundering and related activities. In furtherance of those efforts, the
Investor hereby represents, warrants and agrees that: (a) none of the cash or
property that the Investor will pay or will contribute to the Company ahs been
or shall be derived from, or related to, any activity that is deemed criminal
under United States law; and (b) no contribution or payment by the Investor to
the Company, to the extent that they are within the Investor's control, shall
cause the Company to be in violation of the Untied States Bank Secrecy Act, the
United States Money Laundering Control Act of 1986 or the Untied States
International Money Laundering Abatement and Anti-Terrorist Financing Act of
2001. The Investor shall promptly notify the Company if any of these
representations ceases to be true and accurate regarding the Investor. The
Investor agrees to provide the Company any additional information regarding the
Investor that the Company deems necessary or convenient to ensure compliance
with all applicable laws concerning money laundering and similar activities. The
Investor understands and agrees that if at any time it is discovered that any of
the foregoing representations are incorrect, or if otherwise required by
applicable law or regulation related to money laundering similar activities, the
Company may undertake appropriate actions to ensure compliance with applicable
law or regulation, including but not limited to segregation and/or redemption of
the Investor's investment in the Company. The Investor further understands that
the Company may release confidential information about the Investor and, if
applicable, any underlying beneficial owners, to proper authorities if the
Company, in its sole discretion, determines that it is in the best interest of
the Company in light of relevant rules and regulations under the laws set forth
in subsection (b) above.
6. Survival of Representations, Warranties and Agreements.
Notwithstanding any investigation made by any party to this Agreement, all
covenants, agreements, representations and warranties made by the Company and
the Investor herein shall survive the execution of this Agreement, the delivery
to the Investor of the Common Stock and Warrants being purchased and the payment
therefor for a period of one (1) year from the Closing Date.
7. Registration; Compliance with the Securities Act.
7.1 Registration Procedures and Expenses. The Company shall:
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(a) subject to receipt of necessary information from
the Investors, use its best
efforts to prepare and file with the SEC, within 30 days after the Closing Date,
a registration statement (the "Registration Statement") on Form S-3 to enable
the resale of the Registrable Shares (as defined below) by the Investors on a
delayed or continuous basis under Rule 415 of the Securities Act. The
Registration Statement may include shares of common stock other than those held
by the Investor and the Other Investors, provided that the inclusion of those
shares would not affect the plan of distribution included in the Registration
Statement. "Registrable Shares" means (a) all shares of Common Stock purchased
in the Offering, (b) all shares of Common Stock underlying the Warrants, (c)
Penalty Shares (as defined below), if any, and (d) any shares of capital stock
issued or issuable, from time to time, upon any reclassification, share
combination, share subdivision, stock split, share dividend, merger,
consolidation or similar transaction or event or otherwise as a distribution on,
in exchange for or with respect to any of the foregoing, in each case held at
the relevant time by an Investor;
(b) use its best efforts, subject to receipt of
necessary information from the
Investors, to cause the Registration Statement to become effective within 90
days after the Closing Date;
(c) use its best efforts to prepare and file with
the SEC such amendments and
supplements to the Registration Statement and the Prospectus used in connection
therewith and take all such other actions as may be necessary to keep the
Registration Statement current and effective for a period (the "Registration
Period") not exceeding, with respect to each Investor's Registrable Shares, the
earlier of (i) the second anniversary of the Closing Date, (ii) the date on
which the Investor may sell all the shares of Common Stock, Warrants and shares
of Common Stock issuable upon exercise of the Warrants then held by the Investor
without restriction by the volume limitations of Rule 144(e) of the Securities
Act, and (iii) such time as all Registrable Shares held by such Investor have
been sold (A) pursuant to a registration statement, (B) to or through a broker
or dealer or underwriter in a public distribution or a public securities
transaction, and/or (C) in a transaction exempt from the registration and
prospectus delivery requirements of the Securities Act under Section 4(1)
thereof so that all transfer restrictions and restrictive legends with respect
thereto, if any, are removed upon the consummation of such sale;
(d) promptly furnish to the Investor with respect to
the Registrable Shares
registered under the Registration Statement such number of copies of the
Registration Statement, Prospectuses and Preliminary Prospectuses in conformity
with the requirements of the Securities Act and such other documents as the
Investor may reasonably request, in order to facilitate the public sale or other
disposition of all or any of the Registrable Shares by the Investor;
(e) promptly take such action as may be necessary to
qualify, or obtain, an
exemption for the Registrable Shares under such of the state securities laws of
United States jurisdictions as shall be necessary to qualify, or obtain an
exemption for, the sale of the Registrable Shares in states specified in writing
by the Investor; provided, however, that the Company shall not be required to
qualify to do business or consent to service of process in any jurisdiction in
which it is not now so qualified or has not so consented;
(f) bear all expenses in connection with the
procedures in paragraph (a) through
(c) of this Section 7.1 and the registration of the Registrable Shares pursuant
to the Registration Statement, regardless of whether a Registration Statement
becomes effective, including without limitation: (i) all registration and filing
fees and expenses (including filings made with the AMEX); (ii) fees and expenses
of compliance with federal securities and state "blue sky" or securities laws;
(iii) expenses of printing (including printing certificates for the Registrable
Shares and Prospectuses), messenger and delivery services and telephone; (iv)
all application and filing fees in connection with listing the Registrable
Shares on a national securities exchange or automated quotation system pursuant
to the requirements hereof; and (v) all fees and disbursements of counsel of the
Company and independent certified public accountants of the Company; provided,
however, that each Investor shall be responsible for paying the underwriting
commissions or brokerage fees, and taxes of any kind (including, without
limitation, transfer taxes) applicable to any disposition, sale or transfer of
such Investor's Registrable Shares and any fees and expenses of counsel or other
advisors to the Investor or Other Investors. The Company shall, in any event,
bear its internal expenses (including, without limitation, all salaries and
expenses of its officers and employees performing legal or accounting duties),
the expense of any annual audit, rating agency fees and the fees and expenses of
any person, including special experts, retained by the Company;
(g) advise the Investors, within two business days
by e-mail, fax or other type of
communication, and, if requested by such person, confirm such advice in writing:
(i) after it shall receive notice or obtain knowledge of the issuance of any
stop order by the SEC delaying or suspending the effectiveness of the
Registration Statement or of the initiation or threat of any proceeding for that
purpose, or any other order issued by any state securities commission or other
regulatory authority suspending the qualification or exemption from
qualification of such Registrable Shares under state securities or "blue sky"
laws; and it will promptly use its best efforts to prevent the issuance of any
stop order or other order or to obtain its withdrawal at the earliest possible
moment if such stop order or other order should be issued; (ii) when the
Prospectus or any Prospectus Supplement or post-effective amendment has been
filed, and, with respect to the Registration Statement or any post-effective
amendment thereto, when the same has become effective; and (iii) after the
Company shall receive notice or obtain knowledge of the existence of any fact or
the happening of any event that makes any statement of a material fact made in
the Registration Statement, the Prospectus, any amendment or supplement thereto,
or any document incorporated by reference therein untrue, or that requires the
making of any additions to or changes in the Registration Statement or the
Prospectus in order to make the statements therein not misleading;
(h) otherwise use its best efforts to comply with
all applicable rules and regulations of the SEC which could affect the sale of
the Registrable Shares;
(i) use its best efforts to cause all Registrable
Shares to be listed on each securities exchange or market, if any, on which
equity securities issued by the Company are then listed;
(j) use its best efforts to take all other steps
necessary to effect the registration of the Registrable Shares contemplated
hereby and to enable the Investors to sell the Registrable Shares under Rule
144; and
(k) The Company further agrees that, in the event
that the Registration Statement
has not (i) been filed with the SEC within 30 days after the Closing Date or
(ii) been declared effective by the SEC within 90 days after the Closing Date
(each such event referred to in clauses (i) and (ii), a "Registration Default"),
for all or part of each 30-day period (a "Penalty Period") during which the
Registration Default remains uncured, the Company shall issue or pay, as
applicable, to each Investor 1% for each Penalty Period of the aggregate
purchase price paid by the Investor for its Common Stock and Warrants, payable
in validly issued, fully paid and nonassessable shares of Common Stock (valued
at the average of the closing price of the Common Stock for the three trading
days ending on the last trading day of such Penalty Period) (the "Penalty
Shares") or cash, or a combination thereof, at the option of the Company;
provided, however, that the maximum aggregate payment of cash, or issuance of
Penalty Shares to each Investor, as the case may be, in respect of a
Registration Default shall not exceed 5% of the aggregate purchase price paid by
such Investor for its Common Stock and Warrants and provided further, that if
the issuance of Penalty Shares by the Company would result in the Company being
required under AMEX rules or other applicable rules to obtain the approval of
the Company's stockholders, then the Company shall pay cash rather than issue
such Penalty Shares to the extent needed to avoid such stockholder approval. The
Company shall deliver said shares or cash payment to the Investor by the fifth
business day after the end of each such Penalty Period. Notwithstanding anything
to the contrary in Section 7.3 or any other provision of this Agreement, the
issuance of the Penalty Shares or cash as provided in this Section 7.1(k) shall
be the Investor's sole and exclusive remedy in the event of any Registration
Default; provided, however, that if the foregoing remedy is deemed unenforceable
by a court of competent jurisdiction then the Investor shall have all other
remedies available at law or in equity.
7.2 Transfer; Suspension.
(a) The Investor agrees that it will not effect any
Disposition of the Common
Stock or shares of Common Stock issuable upon exercise of the Warrants or its
right to purchase the Common Stock or shares of Common Stock issuable upon
exercise of the Warrants that would constitute a sale within the meaning of the
Securities Act except as contemplated in the Registration Statement referred to
in Section 7.1 and as described below or otherwise in accordance with the
Securities Act, and that it will promptly notify the Company of any changes in
the information set forth in the Registration Statement regarding the Investor
or its plan of distribution.
(b) Except in the event that paragraph (c) below
applies, the Company shall, at
all times during the Registration Period, promptly (i) prepare and file from
time to time with the SEC a post-effective amendment to the Registration
Statement or a supplement to the related Prospectus or a supplement or amendment
to any document incorporated therein by reference or file any other required
document so that such Registration Statement will not contain an 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, and
so that, as thereafter delivered to purchasers of the Registrable Shares being
sold thereunder, such Prospectus will not contain an 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, in light of the circumstances under
which they were made, not misleading; (ii) provide the Investor copies of any
documents filed pursuant to Section 7.2(b)(i); and (iii) inform each Investor
that the Company has complied with its obligations in Section 7.2(b)(i) (or
that, if the Company has filed a post-effective amendment to the Registration
Statement which has not yet been declared effective, the Company will notify the
Investor to that effect, will use its best efforts to secure the effectiveness
of such post-effective amendment as promptly as possible and will promptly
notify the Investor pursuant to Section 7.2(b)(i) hereof when the amendment has
become effective).
(c) Subject to paragraph (d) below, in the event (i)
of any request by the SEC or
any other federal or state governmental authority during the period of
effectiveness of the Registration Statement for amendments or supplements to a
Registration Statement or related Prospectus or for additional information; (ii)
of the issuance by the SEC or any other federal or state governmental authority
of any stop order suspending the effectiveness of a Registration Statement or
the initiation of any proceedings for that purpose; (iii) of the receipt by the
Company of any notification with respect to the suspension of the qualification
or exemption from qualification of any of the Registrable Shares for sale in any
jurisdiction or the initiation or threatening of any proceeding for such
purpose; or (iv) of any event or circumstance which necessitates the making of
any changes in the Registration Statement or Prospectus, or any document
incorporated or deemed to be incorporated therein by reference, so that, in the
case of the Registration Statement, it will not contain any untrue statement of
a material fact or any omission to state a material fact required to be stated
therein or necessary to make the statements therein not misleading, and that in
the case of the Prospectus, it will not contain any untrue statement of a
material fact or any omission to state 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; then the Company shall
deliver a certificate in writing to the Investor (the "Suspension Notice") to
the effect of the foregoing and, upon receipt of such Suspension Notice, the
Investor will refrain from selling any Registrable Shares pursuant to the
Registration Statement (a "Suspension") until the Investor's receipt of copies
of a supplemented or amended Prospectus prepared and filed by the Company, or
until it is advised in writing by the Company that the current Prospectus may be
used, and has received copies of any additional or supplemental filings that are
incorporated or deemed incorporated by reference in any such Prospectus. In the
event of any Suspension, the Company will use its best efforts to cause the use
of the Prospectus so suspended to be resumed as soon as reasonably practicable
after the delivery of a Suspension Notice to the Investor. In addition to and
without limiting any other remedies (including, without limitation, at law or at
equity) available to the Investor, the Investor shall be entitled to specific
performance in the event that the Company fails to comply with the provisions of
this Section 7.2(c).
(d) Notwithstanding the foregoing paragraphs of this
Section 7.2, the Investor
shall not be prohibited from selling Registrable Shares under the Registration
Statement as a result of Suspensions on more than two occasions (for two
separate suspension events) of not more than 30 days each in any twelve month
period.
(e) Provided that a Suspension is not then in
effect, the Investor may sell
Registrable Shares under the Registration Statement, provided that it arranges
for delivery of a current Prospectus to the transferee of such Registrable
Shares. Upon receipt of a request therefor, the Company has agreed to provide,
at its own expense, an adequate number of current Prospectuses (including
documents incorporated by reference therein) to the Investor and to supply
copies to any other parties requiring such Prospectuses.
(f) In the event of a sale of Registrable Shares by
the Investor under the
Registration Statement, the Investor must also deliver to the Company's transfer
agent, with a copy to the Company, a Certificate of Subsequent Sale
substantially in the form attached hereto as Exhibit C, so that the Registrable
Shares may be properly transferred.
7.3 Indemnification. For the purpose of this Section 7.3:
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(i) the term "Selling Stockholder" shall include the Investor
and any affiliate of such Investor;
(ii) the term "Registration Statement" shall include any final
Prospectus, exhibit, supplement or amendment included in or relating to the
Registration Statement referred to in Section 7.1; and
(iii) the term "untrue statement" shall include any untrue
statement or alleged untrue statement, or any omission or alleged omission to
state in the Registration Statement or Prospectus 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.
(a) The Company agrees to indemnify and hold
harmless each Selling Stockholder
from and against any losses, claims, damages, liabilities or expenses to which
such Selling Stockholder may become subject (under the Securities Act or
otherwise) insofar as such losses, claims, damages, liabilities or expenses (or
actions or proceedings in respect thereof) arise out of, or are based upon (i)
any untrue statement of a material fact contained in the Registration Statement
or Prospectus, (ii) any failure by the Company to fulfill any undertaking
included in the Registration Statement, or (iii) any breach of any
representation, warranty or covenant made by the Company in this Agreement, and
the Company will promptly reimburse such Selling Stockholder for any reasonable
legal or other expenses incurred in investigating, defending or preparing to
defend, settling, compromising or paying any such action, proceeding or claim,
provided, however, that the Company shall not be liable in any such case to the
extent that such loss, claim, damage, liability or expense arises solely out of,
or is based solely upon, an untrue statement made in such Registration Statement
in reliance upon and in conformity with written information furnished to the
Company by such Selling Stockholder specifically for use in preparation of the
Registration Statement or the failure of such Selling Stockholder to comply with
its covenants and agreements contained in Sections 5.3 or 7.2 hereof respecting
sale of the Common Stock and Warrants or any statement or omission in any
Prospectus that is corrected in any subsequent Prospectus that was delivered to
the Investor at least three business days prior to the pertinent sale or sales
by the Investor. Notwithstanding the foregoing, the Company shall not be liable
to any Selling Stockholder for any consequential damages, including lost
profits, solely with respect to losses, claims, damages, liabilities or expenses
to which such Selling Stockholder may become subject arising out of, or based
upon, any breach of any representation, warranty or covenant made by the Company
in this Agreement.
(b) The Investor agrees (severally and not jointly
with any other Investor) to
indemnify and hold harmless the Company (and each person, if any, who controls
the Company within the meaning of Section 15 of the Securities Act, each officer
of the Company who signs the Registration Statement and each director of the
Company) from and against any losses, claims, damages, liabilities or expenses
to which the Company (or any such officer, director or controlling person) may
become subject (under the Securities Act or otherwise), insofar as such losses,
claims, damages, liabilities or expenses (or actions or proceedings in respect
thereof) arise solely out of, or are based solely upon, (i) any failure to
comply with, or breach of, the representations, covenants and agreements
contained in Section 5 or 7.2 hereof respecting sale of the Common Stock and
Warrants, or (ii) any untrue statement of a material fact contained in the
Registration Statement if such untrue statement was made in reliance upon and in
conformity with written information furnished by the Investor specifically for
use in preparation of the Registration Statement (provided, however, that no
Investor shall be liable in any such case for any untrue statement in any
Registration Statement or Prospectus if such statement has been corrected in
writing by such Investor and delivered to the Company at least three business
days prior to the pertinent sale or sales by the Investor), and the Investor
will reimburse the Company (or such officer, director or controlling person), as
the case may be, for any legal or other expenses reasonably incurred in
investigating, defending or preparing to defend, settling, compromising or
paying any such action, proceeding or claim. Notwithstanding the foregoing, (x)
the Investor's aggregate liability pursuant to this subsection (b) and
subsection (d) shall be limited to the net amount received by the Investor from
the sale of the Registrable Shares and (y) the Investor shall not be liable to
the Company for any consequential damages, including lost profits, solely with
respect to losses, claims, damages, liabilities or expenses to which the Company
(or any officer, director or controlling person as set forth above) may become
subject (under the Securities Act or otherwise), arising out of, or based upon,
any failure to comply with the covenants and agreements contained in Section 5.3
or 7.2 hereof respecting sale of the Registrable Shares.
(c) Promptly after receipt by any indemnified person
of a notice of a claim or the
beginning of any action in respect of which indemnity is to be sought against an
indemnifying person pursuant to this Section 7.3, such indemnified person shall
notify the indemnifying person in writing of such claim or of the commencement
of such action, but the omission to so notify the indemnifying party will not
relieve it from any liability which it may have to any indemnified party under
this Section 7.3 (except to the extent that such omission materially and
adversely affects the indemnifying party's ability to defend such action) or
from any liability otherwise than under this Section 7.3. Subject to the
provisions hereinafter stated, in case any such action shall be brought against
an indemnified person, the indemnifying person shall be entitled to participate
therein, and, to the extent that it shall elect by written notice delivered to
the indemnified party promptly after receiving the aforesaid notice from such
indemnified party, shall be entitled to assume the defense thereof, with counsel
reasonably satisfactory to such indemnified person. After notice from the
indemnifying person to such indemnified person of its election to assume the
defense thereof, such indemnifying person shall not be liable to such
indemnified person for any legal expenses subsequently incurred by such
indemnified person in connection with the defense thereof, provided further,
however, that if there exists or shall exist a conflict of interest that would
make it inappropriate, in the opinion of counsel to the indemnified person, for
the same counsel to represent both the indemnified person and such indemnifying
person or any affiliate or associate thereof, the indemnified person shall be
entitled to retain its own counsel at the expense of such indemnifying person;
provided, however, that no indemnifying person shall be responsible for the fees
and expenses of more than one separate counsel (together with appropriate local
counsel) for all indemnified parties. In no event shall any indemnifying person
be liable in respect of any amounts paid in settlement of any action unless the
indemnifying person shall have approved the terms of such settlement; provided
that such consent shall not be unreasonably withheld. No indemnifying person
shall, without the prior written consent of the indemnified person, effect any
settlement of any pending or threatened proceeding in respect of which any
indemnified person is or could have been a party and indemnification could have
been sought hereunder by such indemnified person, unless such settlement
includes an unconditional release of such indemnified person from all liability
on claims that are the subject matter of such proceeding.
(d) If the indemnification provided for in this
Section 7.3 is unavailable to or
insufficient to hold harmless an indemnified party under subsection (a) or (b)
above in respect of any losses, claims, damages, liabilities or expenses (or
actions or proceedings in respect thereof) referred to therein, then each
indemnifying party shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages, liabilities or
expenses (or actions in respect thereof) in such proportion as is appropriate to
reflect the relative fault of the Company on the one hand and the Investor on
the other in connection with the statements or omissions or other matters which
resulted in such losses, claims, damages, liabilities or expenses (or actions in
respect thereof), as well as any other relevant equitable considerations. The
relative fault shall be determined by reference to, among other things, in the
case of an untrue statement, whether the untrue statement relates to information
supplied by the Company on the one hand or an Investor on the other and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such untrue statement. The Company and the Investor each
agree that it would not be just and equitable if contribution pursuant to this
subsection (d) were determined by pro rata allocation (even if the Investor and
its affiliates were treated as one entity for such purpose) or by any other
method of allocation which does not take into account the equitable
considerations referred to above in this subsection (d). The amount paid or
payable by an indemnified party as a result of the losses, claims, damages or
liabilities (or actions in respect thereof) referred to above in this subsection
(d) shall be deemed to include any legal or other expenses reasonably incurred
by such indemnified party in connection with investigating or defending any such
action or claim. Notwithstanding the provisions of this subsection (d), the
Investor shall not be required to contribute any amount in excess of the net
amount received by the Investor from the sale of the Registrable Shares. No
person guilty of 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. The Investor's
obligations in this subsection to contribute are several in proportion to their
sales of Registrable Shares to which such loss relates and not joint.
(e) The parties to this Agreement hereby acknowledge
that they are sophisticated
business persons who were represented by counsel during the negotiations
regarding the provisions hereof including, without limitation, the provisions of
this Section 7.3, and are fully informed regarding said provisions.
7.4 Rule 144. For a period of two years following the date
hereof, the Company agrees with each holder of Registrable Shares to:
(a) comply with the requirements of Rule 144(c) under the Securities Act with
respect to current public information about the Company;
(b) use its best efforts to file with the SEC in a timely manner all reports and
other documents required of the Company under the Securities Act and the
Exchange Act (at any time it is subject to such reporting requirements); and
(c) furnish to any holder of Registrable Shares upon
request (i) a written
statement by the Company as to its compliance with the requirements of said Rule
144(c) and the reporting requirements of the Securities Act and the Exchange Act
(at any time it is subject to such reporting requirements), (ii) a copy of the
most recent annual or quarterly report of the Company, and (iii) such other
publicly-filed reports and documents of the Company as such holder may
reasonably request to avail itself of any similar rule or regulation of the SEC
allowing it to sell any such securities without registration.
7.5 Termination of Conditions and Obligations. The conditions
precedent imposed by Section 5 or this Section 7 upon Dispositions of the
Registrable Shares by the Investor shall cease and terminate as to any
particular number of the Registrable Shares and the restrictive legend shall be
removed when such Registrable Shares shall have been effectively registered
under the Securities Act and sold or otherwise disposed of in accordance with
the intended method of disposition set forth in the Registration Statement
covering such Registrable Shares or at such time as an opinion of counsel
reasonably satisfactory to the Company shall have been rendered to the effect
that such conditions are not necessary in order to comply with the Securities
Act (provided that such opinion shall not be required if the Company shall be
furnished with written documentation reasonably satisfactory to it that such
Registrable Shares are being transferred in a customary transaction exempt from
registration under Rule 144 under the Securities Act).
8. Escrow Agent. To induce Mintz Levin Cohn Ferris Glovsky and Popeo,
P.C. to serve as the escrow agent and to act in such capacity hereunder, it is
agreed by the parties hereto that:
8.1 The escrow agent shall not be under any duty to give the property held by it
hereunder (the "Escrowed Property") any greater degree of care than it gives its
own similar property.
8.2 This Section 8 of this Agreement expressly sets forth all the duties of the
escrow agent with respect to any and all matters pertinent hereto. No implied
duties or obligations shall be read into this Agreement against the escrow
agent. The escrow agent shall not be bound by the provisions of any agreement
among the other parties hereto except this Section 8 of this Agreement.
8.3 The escrow agent shall not be liable, except for its own gross negligence or
willful misconduct and, except with respect to claims based upon such gross
negligence or willful misconduct that are successfully asserted against the
escrow agent, the other parties hereto shall jointly and severally indemnify
and hold harmless the escrow agent from and against any and all losses,
liabilities, claims, actions, damages and expenses, including, without
limitation, reasonable attorneys' fees and disbursements, arising out of or in
connection with this Agreement.
8.4 The escrow agent shall be entitled to rely upon any order, judgment,
certification, demand, notice, instrument or other writing delivered to it
hereunder without being required to determine the authenticity or the
correctness of any fact stated therein or the propriety or validity of the
service thereof. The escrow agent may act in reliance upon any instrument or
signature believed by it to be genuine and may assume that any person
purporting to give receipt or advice or make any statement or execute any
document in connection with the provisions hereof has been duly authorized to
do so.
8.5 The escrow agent may act pursuant to the advice of counsel with respect to
any matter relating to this Agreement and shall not be liable for any action
taken or omitted in accordance with such advice.
8.6 The escrow agent does not have any interest in the Escrowed Property
deposited hereunder but is serving as escrow holder only and having only
possession thereof. The other parties shall, on a joint and several basis, pay
or reimburse the escrow agent upon request for any and all expenses, if any,
incurred by the escrow agent in connection with this Agreement and transfer
taxes or other taxes relating to the Escrowed Property incurred in connection
herewith and shall indemnify and hold harmless the escrow agent from any
amounts that it is obligated to pay in the way of such expenses and taxes. The
escrow agent shall first seek such payment or reimbursement from the Company,
and in the event is unable to do so, shall seek such payment and reimbursement
from the Investors. This Section 8.6 and Section 8.3 shall survive
notwithstanding any termination of this Agreement or the resignation of the
escrow agent.
8.7 The escrow agent makes no representation as to the validity, value,
genuineness or the collectability of any security or other document or
instrument held by or delivered to it.
8.8 The escrow agent may at any time resign as such by delivering the Escrowed
Property to any successor escrow agent jointly designated by the other parties
hereto in writing, or to any court of competent jurisdiction, whereupon the
escrow agent shall be discharged of and from any and all further obligations
arising in connection with this Agreement. The resignation of the escrow agent
will take effect on the earlier of (a) the appointment of a successor
(including a court of competent jurisdiction) or (b) the day which is 30 days
after the date of delivery of its written notice of resignation to the other
parties hereto. If at that time the escrow agent has not received a
designation of a successor escrow agent, the escrow agent's sole
responsibility after that time shall be to safekeep the Escrowed Property
until receipt of a designation of successor escrow agent or a joint written
disposition instruction by the other parties hereto or a final order of a
court of competent jurisdiction.
8.9 In the event of any disagreement between the other parties hereto resulting
in adverse claims or demands being made in connection with the Escrowed
Property, or in the event that the escrow agent in good faith is in doubt as
to what action it should take hereunder, the escrow agent shall be entitled to
retain the Escrowed Property until the escrow agent shall have received (i) a
final non-appealable order of a court of competent jurisdiction directing
delivery of the Escrowed Property or (ii) a written agreement executed by the
other parties hereto directing delivery of the Escrowed Property, in which
event the escrow agent shall disburse the Escrowed Property in accordance with
such order or agreement. Any court order shall be accompanied by a legal
opinion by counsel for the presenting party satisfactory to the escrow agent
to the effect that said opinion is final and non-appealable.
8.10 Notwithstanding anything to the contrary contained herein, the escrow
agent's duties and obligations hereunder shall terminate upon the release and
distribution of the Escrowed Property in accordance with the terms of this
Agreement.
Each of the Company and the Investor understands and agrees that,
notwithstanding its duties as escrow agent hereunder, the escrow agent is the
attorney for the Company, and, accordingly, neither any services as escrow agent
hereunder nor any provisions hereof, either express or implied, shall restrict
or inhibit the escrow agent in any way from representing the Company or its
affiliates in any action, dispute, controversy, arbitration, suit or negotiation
arising under this Agreement or under any other agreement or in any manner or
context whatsoever, whether or not directly or indirectly involving the Company
or its affiliates. Notwithstanding anything to the contrary contained herein, if
at any time a law firm representing either Company or Investor serves or is
serving as escrow agent, then with respect to such law firm's capacity as escrow
agent, such counsel shall not for these purposes serve as the agent for either
of the parties, but shall be a fiduciary of both parties.
9. Notices. All notices, requests, consents and other communications
hereunder shall be in writing, shall be mailed (A) if within domestic United
States by first-class registered or certified airmail, or nationally recognized
overnight express courier, postage prepaid, or by facsimile, or (B) if delivered
from outside the United States, by International Federal Express or facsimile,
and shall be deemed given (i) if delivered by first-class registered or
certified mail domestic, three business days after so mailed, (ii) if delivered
by nationally recognized overnight carrier, one business day after so mailed,
(iii) if delivered by International Federal Express, two business days after so
mailed, and (iv) if delivered by facsimile, upon electric confirmation of
receipt and shall be delivered as addressed as follows:
(a) if to the Company, to:
Palatin Technologies, Inc.
4C Cedarbrook Drive
Cranbury, New Jersey 08512
Phone: (609) 495-2200
Fax: (609) 495-2203
Attention: Stephen T. Wills, Chief
Financial Officer
with a copy to:
Faith L. Charles, Esq.
Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C.
666 Third Avenue
New York, NY 10017
Phone: (212) 935-3000
Fax: (212) 935-3115
(b) if to the Investor, at its address on the signature page
hereto, or at such other address or addresses as may have been furnished to the
Company in writing.
10. Changes. This Agreement may not be modified or amended except
pursuant to an instrument in writing signed by the Company and the Investor.
11. Headings. The headings of the various sections of this Agreement
have been inserted for convenience of reference only and shall not be deemed to
be part of this Agreement.
12. Severability. In case any provision contained in this Agreement
should be invalid, illegal or unenforceable in any respect, the validity,
legality and enforceability of the remaining provisions contained herein shall
not in any way be affected or impaired thereby.
13. Governing Law. This Agreement shall be governed by, and construed
in accordance with, the internal laws of the State of New York, without giving
effect to the principles of conflicts of law.
14. Entire Agreement. This Agreement constitutes the entire agreement
between the parties hereto pertaining to the subject matter hereof, and any and
all other written or oral agreements relating to such subject matter are
expressly cancelled.
15. Finders Fees. Except for commissions payable to Legg Mason Wood
Walker, Incorporated by the Company, neither the Company nor the Investor nor
any affiliate thereof has incurred any obligation which will result in the
obligation of the other party to pay any finder's fee or commission in
connection with this transaction.
16. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall constitute an original, but all of which, when
taken together, shall constitute but one instrument, and shall become effective
when one or more counterparts have been signed by each party hereto and
delivered to the other parties.
17. Successors and Assigns. This Agreement shall inure to the benefit
of and be binding upon the successors and permitted assigns of the Company and
the Investors, including without limitation and without the need for an express
assignment, affiliates of the Investors. With respect to transfers that are not
made pursuant to the Registration Statement, the rights and obligations of an
Investor under this Agreement shall be automatically assigned by such Investor
to any transferee of all or any portion of such Investor's Registrable Shares
who is a Permitted Transferee (as defined below); provided, however, that within
two business days prior to the transfer, (i) the Company is provided notice of
the transfer including the name and address of the transferee and the number of
Registrable Shares transferred; and (ii) that such transferee agrees in writing
to be bound by the terms of this Agreement. (For purposes of this "Agreement, a
"Permitted Transferee" shall mean any Person who is an "accredited investor," as
that term is defined in Rule 501(a) of Regulation D under the Securities Act.
Upon any transfer permitted by this Section 16, the Company shall be obligated
to such transferee to perform all of its covenants under this Agreement as if
such transferee were an Investor.
18. Expenses. Each of the Company and the Investors shall bear its own
expenses in connection with the preparation and negotiation of the Agreement.
EXHIBIT A
FORM OF WARRANT
SEE EXHIBIT J IN PRIVATE PLACEMENT MEMORANDUM
EXHIBIT B
WIRE TRANSFER INSTRUCTIONS
Wire transfers should be made to Mintz Levin Cohn Ferris Glovsky and Popeo PC,
as Escrow Agent, Fleet Bank of Massachusetts, N.A., Malden MA 02148,
ABA#011000390, Account Name: Mintz Levin Cohn Ferris Glovsky and Popeo PC IOLTA
Account, Account Number 534-66888, Reference: Palatin Technologies.
EXHIBIT C
CERTIFICATE OF SUBSEQUENT SALE
American Stock Transfer & Trust Company
59 Maiden Lane, Ground Floor
New York, NY 10038
RE: Sale of Shares of Common Stock and Warrants of Palatin Technologies, Inc.
(the "Company") pursuant to the Company's Registration Statement on Form
S-3 dated _____________ (the "Registration Statement")
Ladies and Gentlemen:
The undersigned hereby certifies, in connection with the sale of shares
of Common Stock of the Company included in the table of Selling Stockholders in
the Registration Statement, that the undersigned has sold the shares pursuant to
the Registration Statement and in a manner described under the caption "Plan of
Distribution" in the Registration Statement and that such sale complies with all
applicable securities laws, including, without limitation, the Registration
Statement delivery requirements of the Securities Act of 1933, as amended.
Selling Stockholder (the beneficial owner):
Record Holder (e.g., if held in name of nominee):
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Restricted Stock Certificate No.(s):
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Number of Shares Sold:
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Date of Sale:
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In the event that you receive a stock certificate(s) representing more
shares of Common Stock than have been sold by the undersigned, then you should
return to the undersigned a newly issued certificate for such excess shares in
the name of the Record Holder and BEARING A RESTRICTIVE LEGEND. Further, you
should place a stop transfer on your records with regard to such certificate.
Very truly yours,
Dated: By:
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Print Name:
---------------------------------
Title:
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