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Filing
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
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
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): June 29, 2009
ADVENTRX Pharmaceuticals, Inc.
(Exact name of registrant as specified in its charter)
Delaware | 001-32157 | 84-1318182 | ||
(State or other jurisdiction of incorporation) |
(Commission File Number) | (IRS Employer Identification No.) |
6725 Mesa Ridge Road, Suite 100
San Diego, CA 92121
(Address of principal executive offices and zip code)
San Diego, CA 92121
(Address of principal executive offices and zip code)
Not applicable
(Former name or former address if changed since last report)
(Former name or former address if changed since last report)
Registrants telephone number, including area code: (858) 552-0866
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:
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under
the Exchange Act (17 CFR 240.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under
the Exchange Act (17 CFR 240.13e-4(c))
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Item 1.01 Entry into a Material Definitive Agreement.
On June 26, 2009, ADVENTRX Pharmaceuticals, Inc. (the Company) entered into an engagement
letter agreement with Rodman & Renshaw, LLC (the Placement Agent), pursuant to which the
Placement Agent agreed to serve as exclusive placement agent for the Company on a best efforts
basis in connection with a proposed offering by the Company of its securities.
On June 29, 2009, the Company entered into a securities purchase agreement with an investor,
pursuant to which the Company agreed to sell an aggregate of 1,361 shares of its 5% Series B
Convertible Preferred Stock (convertible preferred stock). The purchase price per share of
convertible preferred stock is $1,000. An aggregate of 9,504,189 shares of the Companys common
stock are issuable upon conversion of the convertible preferred stock.
Subject to certain ownership limitations, the convertible preferred stock will be convertible
at the option of the holder at any time into shares of our common stock at a conversion price of
$0.1432 per share, which was the closing price of the Companys common stock on June 26, 2009, and
will accrue a 5% dividend until July 6, 2014. In the event the convertible preferred stock is
converted at any time prior to July 6, 2014, the Company will pay the holder of the converted
convertible preferred stock an amount equal to $250 per $1,000 principal amount of convertible
preferred stock converted less dividends paid with respect to such converted convertible preferred
stock before the relevant conversion date. The conversion price of the convertible preferred stock
will be subject to adjustment in the case of stock splits, stock dividends, combinations of shares
and similar recapitalization transactions. The convertible preferred stock will be subject to
automatic conversion into shares of common stock upon the occurrence of a change in control of the
Company and the Company may become obligated to redeem the convertible preferred stock upon the occurrence
of certain triggering events, including the material breach by the Company of certain contractual
obligations to the holders of the convertible preferred stock, the occurrence of a change in
control of the Company, the occurrence of certain insolvency events relating to the Company or the
failure of the Companys common stock to continue to be listed or quoted for trading on one or more specified
United States securities exchanges.
The securities purchase agreement and the certificate of designation authorizing the
convertible preferred stock include certain agreements and covenants for the benefit of the holders
of the convertible preferred stock, including restrictions on the Companys ability to amend its
certificate of incorporation and bylaws, pay cash dividends or distributions with respect to its
common stock or other junior securities, repurchase shares of its common stock or other junior
securities, issue additional equity securities for a period of 60 days after June 12, 2009 and
incur indebtedness, and a requirement to use its reasonable best efforts to maintain the listing of
its common stock on one or more specified United States securities exchanges.
The convertible preferred stock and the shares of common stock underlying the convertible
preferred stock are being offered and will be issued and sold pursuant to the Companys effective
shelf registration statement on Form S-3 (File No. 333-159376) and the related prospectus
supplement, dated June 29, 2009 and filed with the Securities and
Exchange Commission on June 30, 2009 pursuant to Rule
424(b) under the Securities Act of 1933, as amended. The net proceeds to the Company from the
offering, after deducting placement agent fees and its estimated offering expenses, are expected to
be approximately $1.2 million. The transaction is expected to close on July 6, 2009, subject to
satisfaction of customary closing conditions. At the closing, 25%, or approximately $340,250, of
the gross proceeds will be placed in an escrow account with Signature Bank, which amount will be
released to make dividend payments and any make-whole payments payable to the holders of the
convertible preferred stock.
A copy of the opinion of special counsel to the Company relating to the legality of the
issuance and sale of the shares of convertible preferred stock and shares of common stock issuable
upon conversion of the convertible preferred stock in the offering is attached as Exhibit 5.1
hereto.
Pursuant to the terms of the engagement letter agreement with the Placement Agent, assuming
the sale of all of the shares of convertible preferred stock in the offering, the Company will pay
the Placement Agent a fee equal to approximately $95,270 (7.0% of the gross proceeds from the sale
of the securities). In addition, the Company will issue to the Placement Agent warrants to purchase up to that
number of shares of common stock equal to 5.0% of the number of shares of common stock underlying
the convertible preferred stock sold in the offering. Assuming the sale of all of the shares of
convertible preferred stock in the offering, the compensation warrants to the placement agent will
be exercisable for up to 475,209 shares of the Companys common stock at an exercise price of
$0.179 per share. Subject to certain
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ownership limitations, the warrants will be exercisable at any time after the six-month
anniversary of their date of issuance and on or before the fifth anniversary of their
date of issuance. The exercise price of the warrants and, in some cases, the number of shares issuable
upon exercise are subject to adjustment in the case of stock splits, stock dividends, combinations
of shares and similar recapitalization transactions. The Placement Agents warrants will include
certain restrictions on transfer in accordance with FINRA regulations.
The foregoing description of the terms of the securities purchase agreement, the certificate
of designation of preferences, rights and limitations of the convertible preferred stock, the
Placement Agents warrants and the engagement letter agreement are subject to, and qualified in
their entirety by, such documents attached hereto as Exhibits 4.1, 3.1, 4.2 and 10.1, respectively,
and incorporated herein by reference. A copy of the press release announcing the registered direct
public offering is attached hereto as Exhibit 99.1 and is incorporated herein by reference.
Item 5.03 Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year.
On June 29, 2009, the Company filed a Certificate of Designation of Preferences, Rights and
Limitations of 5% Series B Convertible Preferred Stock with the Secretary of State of the State of
Delaware. The description of the certificate of designation and the convertible preferred stock
contained in Item 1.01 above are incorporated herein by reference and are subject to, and qualified
in their entirety by, the certificate of designation attached hereto as Exhibit 3.1 and
incorporated herein by reference.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
The list of exhibits called for by this Item is incorporated by reference to the Exhibit Index
filed with this report.
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SIGNATURE
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.
ADVENTRX Pharmaceuticals, Inc. |
||||
Dated: June 29, 2009 | By: | /s/ Patrick L. Keran | ||
Name: | Patrick L. Keran | |||
Title: | General Counsel and Vice President, Legal |
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Exhibit Index
Exhibit No. | Description | |
3.1
|
Certificate of Designation of Preferences, Rights and Limitations of 5% Series B Convertible Preferred Stock | |
4.1
|
Securities Purchase Agreement, dated June 29, 2009, by and between ADVENTRX Pharmaceuticals, Inc. and the purchasers listed on the signature pages thereto | |
4.2
|
Form of Common Stock Purchase Warrant to be issued by ADVENTRX Pharmaceuticals, Inc. to Rodman & Renshaw, LLC | |
5.1
|
Opinion of DLA Piper LLP (US) | |
10.1
|
Engagement Letter Agreement, dated June 26, 2009, by and between ADVENTRX Pharmaceuticals, Inc. and Rodman & Renshaw, LLC | |
23.1
|
Consent of DLA Piper LLP (US) (included in Exhibit 5.1) | |
99.1
|
Press Release, dated June 29, 2009 |
Exhibit 3.1
ADVENTRX PHARMACEUTICALS, INC.
CERTIFICATE OF DESIGNATION OF PREFERENCES,
RIGHTS AND LIMITATIONS
OF
5% SERIES B CONVERTIBLE PREFERRED STOCK
RIGHTS AND LIMITATIONS
OF
5% SERIES B CONVERTIBLE PREFERRED STOCK
PURSUANT TO SECTION 151 OF THE
DELAWARE GENERAL CORPORATION LAW
DELAWARE GENERAL CORPORATION LAW
The undersigned, Brian M. Culley and Patrick L. Keran, do hereby certify that:
1. They are the Chief Business Officer and Senior Vice President and Secretary, respectively,
of ADVENTRX Pharmaceuticals, Inc., a Delaware corporation (the Corporation).
2. The Corporation is authorized to issue 1,000,000 shares of preferred stock, of which 1,993
shares were previously designated as 0% Series A Convertible Preferred Stock, but all of which
have been converted by the Corporation as of the date hereof and, pursuant to Section 11(i) of the
Certificate of Designation of Preferences, Rights and Limitations of 0% Series A Convertible
Preferred Stock filed with the Secretary of State of the State of Delaware on June 8, 2009, all of
which have resumed the status of authorized but unissued and undesignated shares of preferred
stock; therefore, all of which are presently undesignated and may be issued with such rights and
powers as the board of directors of the Corporation (the Board of Directors) may
designate.
3. The following resolutions were duly adopted by the Board of Directors:
WHEREAS, the certificate of incorporation of the Corporation provides for a class of its
authorized stock known as preferred stock, consisting of 1,000,000 shares, $0.001 par value per
share, issuable from time to time in one or more series;
WHEREAS, the Board of Directors is authorized to fix the dividend rights, dividend rate,
voting rights, conversion rights, rights and terms of redemption and liquidation preferences of any
wholly unissued series of preferred stock and the number of shares constituting any series and the
designation thereof, of any of them; and
WHEREAS, it is the desire of the Board of Directors, pursuant to its authority as aforesaid,
to fix the rights, preferences, restrictions and other matters relating to a series of the
preferred stock, which shall consist of, except as otherwise set forth in the Purchase Agreement
(as hereinafter defined), up to 1,361 shares of the preferred stock which the Corporation has the
authority to issue, as follows:
NOW, THEREFORE, BE IT RESOLVED, that the Board of Directors does hereby provide for the
issuance of a series of preferred stock for cash or exchange of other securities, rights or
property and does hereby fix and determine the rights, preferences, restrictions and other matters
relating to such series of preferred stock as follows:
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TERMS OF PREFERRED STOCK
Section 1. Definitions. For the purposes hereof, the following terms shall
have the following meanings:
Affiliate means any Person that, directly or indirectly through one or more
intermediaries, controls or is controlled by or is under common control with a Person, as
such terms are used in and construed under Rule 405 of the Securities Act.
Alternate Consideration shall have the meaning set forth in Section 7(e).
Bankruptcy Event means any of the following events: (a) the Corporation or
any Significant Subsidiary (as such term is defined in Rule 1-02(w) of Regulation S-X)
thereof commences a case or other proceeding under any bankruptcy, reorganization,
arrangement, adjustment of debt, relief of debtors, dissolution, insolvency or liquidation
or similar law of any jurisdiction relating to the Corporation or any Significant Subsidiary
thereof, (b) there is commenced against the Corporation or any Significant Subsidiary
thereof any such case or proceeding that is not dismissed or stayed within 60 days after
commencement, (c) the Corporation or any Significant Subsidiary thereof is adjudicated
insolvent or bankrupt or any order of relief or other order approving any such case or
proceeding is entered, (d) the Corporation or any Significant Subsidiary thereof suffers any
appointment of any custodian or the like for it or any substantial part of its property that
is not discharged or stayed within 60 calendar days after such appointment, (e) the
Corporation or any Significant Subsidiary thereof makes a general assignment for the benefit
of creditors, (f) the Corporation or any Significant Subsidiary thereof calls a meeting of
its creditors with a view to arranging a composition, adjustment or restructuring of its
debts, or (g) the Corporation or any Significant Subsidiary thereof, by any act or failure
to act, expressly indicates its consent to, approval of or acquiescence in any of the
foregoing or takes any corporate or other action for the purpose of effecting any of the
foregoing.
Beneficial Ownership Limitation shall have the meaning set forth in Section
6(d).
Business Day means any day except any Saturday, any Sunday, any day which is
a federal legal holiday in the United States or any day on which banking institutions in the
State of New York are authorized or required by law or other governmental action to close.
Buy-In shall have the meaning set forth in Section 6(c)(iv).
Change of Control Transaction means the occurrence after the date hereof of
any of (a) an acquisition after the date hereof by an individual or legal entity or group
(as described in Rule 13d-5(b)(1) promulgated under the Exchange Act) of effective control
(whether through legal or beneficial ownership of capital stock of the Corporation, by
contract or otherwise) of in excess of 40% of the voting securities of the Corporation
(other than by means of conversion or exercise of Preferred Stock and the
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Securities issued together with the Preferred Stock), (b) the Corporation merges into
or consolidates with any other Person, or any Person merges into or consolidates with the
Corporation and, after giving effect to such transaction, the stockholders of the
Corporation immediately prior to such transaction own less than 60% of the aggregate voting
power of the Corporation or the successor entity of such transaction, (c) the Corporation
sells or transfers all or substantially all of its assets to another Person and the
stockholders of the Corporation immediately prior to such transaction own less than 60% of
the aggregate voting power of the acquiring entity immediately after the transaction, (d) a
replacement at one time or within a one year period of more than one-half of the members of
the Board of Directors which is not approved by a majority of those individuals who are
members of the Board of Directors on the Original Issue Date (or by those individuals who
are serving as members of the Board of Directors on any date whose nomination to the Board
of Directors was approved by a majority of the members of the Board of Directors who are
members on the Original Issue Date), or (e) the execution by the Corporation of an agreement
to which the Corporation is a party or by which it is bound, providing for any of the
events set forth in clauses (a) through (d) above.
Closing means the closing of the purchase and sale of the Securities pursuant
to Section 2.1 of the Purchase Agreement.
Closing Date means the Trading Day on which all of the Transaction Documents
have been executed and delivered by the applicable parties thereto and all conditions
precedent to (i) each Holders obligations to pay the Subscription Amount and (ii) the
Corporations obligations to deliver the Securities have been satisfied or waived.
Closing Price means on any particular date (a) the last reported closing bid
price per share of Common Stock on such date on the Trading Market (as reported by Bloomberg
L.P. at 4:15 p.m. (New York City time)), (b) if there is no such price on such date, then
the closing bid price on the Trading Market on the date nearest preceding such date (as
reported by Bloomberg L.P. at 4:15 p.m. (New York City time)), (c) if the Common Stock is
not then listed or quoted on a Trading Market and if prices for the Common Stock are then
reported in the pink sheets published by Pink OTC Markets, Inc. (or a similar organization
or agency succeeding to its functions of reporting prices), the most recent bid price per
share of the Common Stock so reported, or (d) if the shares of Common Stock are not then
publicly traded the fair market value as of such date 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 shares then outstanding and reasonably acceptable to the Corporation, the
fees and expenses of which shall be paid by the Corporation.
Commission means the United States Securities and Exchange Commission.
Common Stock means the Corporations common stock, par value $0.001 per
share, and stock of any other class of securities into which such securities may hereafter
be reclassified or changed.
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Common Stock Equivalents means any securities of the Corporation or the
Subsidiaries which would entitle the holder thereof to acquire at any time Common Stock,
including, without limitation, any debt, preferred stock, rights, options, warrants or other
instrument that is at any time convertible into or exercisable or exchangeable for, or
otherwise entitles the holder thereof to receive, Common Stock.
Conversion Amount means the sum of the Stated Value at issue.
Conversion Date shall have the meaning set forth in Section 6(a).
Conversion Price shall have the meaning set forth in Section 6(b).
Conversion Shares means, collectively, the shares of Common Stock issuable
upon conversion of the shares of Preferred Stock in accordance with the terms hereof.
Dividend Payment Date shall have the meaning set forth in Section 3(a).
Exchange Act means the Securities Exchange Act of 1934, as amended, and the
rules and regulations promulgated thereunder.
Fundamental Transaction shall have the meaning set forth in Section 7(e).
GAAP means United States generally accepted accounting principles.
Holder shall have the meaning given such term in Section 2.
Indebtedness means (a) any liabilities for borrowed money or amounts owed in
excess of $50,000 (other than accrued liabilities or trade accounts payable incurred in the
ordinary course of business), (b) all guaranties, endorsements and other contingent
obligations in respect of indebtedness of others, whether or not the same are or should be
reflected in the Corporations balance sheet (or the notes thereto), except guaranties by
endorsement of negotiable instruments for deposit or collection or similar transactions in
the ordinary course of business, and (c) the present value of any lease payments in excess
of $50,000 due under leases required to be capitalized in accordance with GAAP.
Junior Securities means the Common Stock and all other Common Stock
Equivalents of the Corporation other than those securities which are explicitly senior or
pari passu to the Preferred Stock in dividend rights or liquidation
preference.
Liens means a lien, charge, security interest, encumbrance, right of first
refusal, preemptive right or other restriction.
Liquidation shall have the meaning set forth in Section 5.
Make-Whole Payment shall have the meaning set forth in Section 3(a).
New York Courts shall have the meaning set forth in Section 11(d).
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Notice of Conversion shall have the meaning set forth in Section 6(a).
Original Issue Date means the date of the first issuance of any shares of the
Preferred Stock regardless of the number of transfers of any particular shares of Preferred
Stock and regardless of the number of certificates which may be issued to evidence such
Preferred Stock.
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.
Preferred Stock shall have the meaning set forth in Section 2.
Purchase Agreement means the Securities Purchase Agreement, dated as of June
29, 2009, among the Corporation and the original Holders, as amended, modified or
supplemented from time to time in accordance with its terms.
Securities means the Preferred Stock and the Underlying Shares.
Securities Act means the Securities Act of 1933, as amended, and the rules
and regulations promulgated thereunder.
Share Delivery Date shall have the meaning set forth in Section 6(c).
Stated Value shall have the meaning set forth in Section 2, as the same may
be increased pursuant to Section 3 and as adjusted for reverse and forward stock splits and
the like after the Original Issue Date.
Subscription Amount shall mean, as to each Holder, the aggregate amount to be
paid for the Preferred Stock purchased pursuant to the Purchase Agreement as specified below
such Holders name on the signature page of the Purchase Agreement and next to the heading
Subscription Amount, in United States dollars and in immediately available funds.
Subsidiary means any subsidiary of the Corporation as set forth on
Schedule 3.1(a) of the Purchase Agreement and shall, where applicable, also include
any direct or indirect subsidiary of the Corporation formed or acquired after the date of
the Purchase Agreement.
Successor Entity shall have the meaning set forth in Section 7(e).
Trading Day means a day on which the principal Trading Market is open for
business.
Trading Market means any of the following markets or exchanges on which the
Common Stock is listed or quoted for trading on the date in question: the NYSE Amex, the
Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market
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or the New York Stock Exchange or the OTC Bulletin Board (or any successors to any of
the foregoing).
Transaction Documents means this Certificate of Designation, the Purchase
Agreement, all exhibits and schedules thereto and hereto and any other documents or
agreements executed in connection with the transactions contemplated pursuant to the
Purchase Agreement.
Transfer Agent means American Stock Transfer & Trust Company LLC, the current
transfer agent of the Company, with a mailing address of 6201 15th Avenue, 2nd Floor,
Brooklyn, NY 11219 and a facsimile number of (718) 921-8310, and any successor transfer
agent of the Corporation.
Triggering Event shall have the meaning set forth in Section 10(a).
Triggering Redemption Amount means, for each share of Preferred Stock, the
sum of (a) the greater of (i) 130% of the Stated Value (105% of the Stated Value in the case
of a Triggering Event resulting solely from a Change in Control Transaction) and (ii) the
product of (y) the VWAP on the Trading Day immediately preceding the date of the Triggering
Event and (z) the Stated Value divided by the then Conversion Price and (b) the Make-Whole
Payment and all liquidated damages and other costs, expenses or amounts due in respect of
the Preferred Stock.
Triggering Redemption Payment Date shall have the meaning set forth in
Section 10(b).
Underlying Shares means the shares of Common Stock issued and issuable upon
conversion or redemption of the Preferred Stock.
Variable Rate Transaction shall have the meaning ascribed to such term in
Section 4.12(b) of the Purchase Agreement.
VWAP means, for any date, the price determined by the first of the following
clauses that applies: (a) if the Common Stock is then listed or quoted on a Trading Market,
the daily volume weighted average price of the Common Stock for such date (or the nearest
preceding date) on the Trading Market on which the Common Stock is then listed or quoted as
reported by Bloomberg L.P. (based on a Trading Day from 9:30 a.m. (New York City time) to
4:02 p.m. (New York City time)), (b) if the OTC Bulletin Board is not a Trading Market, the
volume weighted average price of the Common Stock for such date (or the nearest preceding
date) on the OTC Bulletin Board, (c) if the Common Stock is not then listed or quoted for
trading on the OTC Bulletin Board and if prices for the Common Stock are then reported in
the Pink Sheets published by Pink OTC Markets, Inc. (or a similar organization or agency
succeeding to its functions of reporting prices), the most recent bid price per share of the
Common Stock so reported, or (d) in all other cases, the fair market value of a share of
Common Stock as determined by an independent appraiser selected in good faith by the Holders
of a majority in interest of the Securities then outstanding and reasonably acceptable to
the Corporation, the fees and expenses of which shall be paid by the Corporation.
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Section 2. Designation, Amount and Par Value. The series of preferred
stock shall be designated as its 5% Series B Convertible Preferred Stock (the Preferred
Stock) and the number of shares so designated shall be up to 1,361 (which shall not be
subject to increase without the written consent of all of the holders of the Preferred Stock
(each, a Holder and collectively, the Holders)). Each share of Preferred
Stock shall have a par value of $0.001 per share and a stated value equal to $1,000, subject
to increase set forth in Section 3 below (the Stated Value).
Section 3. Dividends.
a) Dividends in Cash; Make-Whole. Subject to the Make-Whole Payment provision
set forth below in this Section 3(a), Holders shall be entitled to receive, and the
Corporation shall pay, cumulative dividends at the rate per share (as a percentage of the
Stated Value per share) of 5% per annum until July 6, 2014 and 0% per annum thereafter,
payable quarterly on January 1, April 1, July 1 and October 1, beginning on October 1, 2009
and each Conversion Date (with respect only to Preferred Stock being converted) (each such
date, a Dividend Payment Date) (if any Dividend Payment Date is not a Trading Day,
the applicable payment shall be due on the next succeeding Trading Day) in cash;
provided, however, upon the conversion of Preferred Stock prior to July 6,
2014, the Corporation shall pay to the Holders of the Preferred Stock so converted cash with
respect to the Preferred Stock so converted in an amount equal to U.S. $250 per $1,000
principal amount of the Securities, less the amount of any dividend paid on such Preferred
Stock before the relevant Conversion Date (the Make-Whole Payment).
b) Dividend Calculations. Dividends on the Preferred Stock shall be calculated
on the basis of a 360-day year, consisting of twelve 30 calendar day periods, and shall
accrue daily commencing on the Original Issue Date, and shall be deemed to accrue from such
date whether or not earned or declared and whether or not there are profits, surplus or
other funds of the Corporation legally available for the payment of dividends.
c) Late Fees. Any dividends that are not paid within three Trading Days
following a Dividend Payment Date shall continue to accrue and shall entail a late fee,
which must be paid in cash, at the rate of 18% per annum or the lesser rate permitted by
applicable law which shall accrue daily from the Dividend Payment Date through and including
the date of actual payment in full.
d) So long as any Preferred Stock shall remain outstanding, neither the Corporation nor
any Subsidiary thereof shall redeem, purchase or otherwise acquire directly or indirectly
any Junior Securities except as expressly permitted by Section 10(a)(vi). So long as any
Preferred Stock shall remain outstanding, neither the Corporation nor any Subsidiary thereof
shall directly or indirectly pay or declare any dividend or make any distribution upon
(other than a dividend or distribution described in Section 6 or dividends due and paid in
the ordinary course on preferred stock of the Corporation at such times when the Corporation
is in compliance with its payment and other obligations hereunder), nor shall any
distribution be made in respect of, any Junior Securities, nor shall any monies be set aside
for or applied to the purchase or redemption
7
(through a sinking fund or otherwise) of any Junior Securities or shares pari
passu with the Preferred Stock.
e) The Corporation acknowledges and agrees that the capital of the Corporation (as such
term is used in Section 154 of the Delaware General Corporation Law) in respect of the
Preferred Stock and any future issuances of the Corporations capital stock shall be equal
to the aggregate par value of such Preferred Stock or capital stock, as the case may be, and
that, on or after the date of the Purchase Agreement, it shall not increase the capital of
the Corporation with respect to any shares of the Corporations capital stock issued and
outstanding on such date. The Corporation also acknowledges and agrees that it shall not
create any special reserves under Section 171 of the Delaware General Corporation Law
without the prior written consent of each Holder.
Section 4. Voting Rights. Except as otherwise provided herein or as otherwise
required by law, the Preferred Stock shall have no voting rights. However, as long as any shares of
Preferred Stock are outstanding, the Corporation shall not, without the affirmative vote of the
Holders of a majority of the then outstanding shares of the Preferred Stock, (a) alter or change
adversely the powers, preferences or rights given to the Preferred Stock or alter or amend this
Certificate of Designation, (b) authorize or create any class of stock ranking as to dividends,
redemption or distribution of assets upon a Liquidation (as defined in Section 5) senior to, or
otherwise pari passu with, the Preferred Stock, (c) amend its certificate of
incorporation or other charter documents in any manner that adversely affects any rights of the
Holders, (d) increase the number of authorized shares of Preferred Stock, or (e) enter into any
agreement with respect to any of the foregoing. Notwithstanding anything to the contrary set forth
in this Section 4, the holders of Preferred Stock shall not have a separate class vote with respect
to any action taken in connection with a Change of Control which results in a mandatory conversion
of the Preferred Stock pursuant to Section 6(a)(2).
Section 5. Liquidation. Upon any liquidation, dissolution or winding-up of the
Corporation, whether voluntary or involuntary (a Liquidation), the Holders shall be
entitled to receive out of the assets, whether capital or surplus, of the Corporation available to
stockholders an amount equal to the Stated Value, plus the Make-Whole Payment plus any fees or
liquidated damages then due and owing thereon under this Certificate of Designation, for each share
of Preferred Stock before any distribution or payment shall be made to the holders of any Junior
Securities, and if the assets of the Corporation shall be insufficient to pay in full such amounts,
then the entire assets to be distributed to the Holders shall be ratably distributed among the
Holders in accordance with the respective amounts that would be payable on such shares if all
amounts payable thereon were paid in full. A Fundamental Transaction or Change of Control
Transaction shall not be deemed a Liquidation. The Corporation shall mail written notice of any
such Liquidation, not less than 45 days prior to the payment date stated therein, to each Holder.
Section 6. Conversion.
a) Conversions at Option of Holder and Mandatory Conversion.
1) Conversion at the Option of the Holder. Each share of Preferred Stock shall
be convertible, at any time and from time to time from and after the Original Issue Date at
the option of the Holder thereof, into that number of shares of Common Stock (subject to
8
the limitations set forth in Section 6(d)) determined by dividing the Stated Value of such
share of Preferred Stock by the Conversion Price. Holders shall effect conversions by
providing the Corporation with the form of conversion notice attached hereto as Annex
A (a Notice of Conversion). Each Notice of Conversion shall specify the number
of shares of Preferred Stock to be converted, the number of shares of Preferred Stock owned
prior to the conversion at issue, the number of shares of Preferred Stock owned subsequent
to the conversion at issue and the date on which such conversion is to be effected, which
date may not be prior to the date the applicable Holder delivers by facsimile such Notice of
Conversion to the Corporation (such date, the Conversion Date). If no Conversion
Date is specified in a Notice of Conversion, the Conversion Date shall be the date that such
Notice of Conversion to the Corporation is deemed delivered hereunder. The calculations and
entries set forth in the Notice of Conversion shall control in the absence of manifest or
mathematical error. To effect conversions of shares of Preferred Stock, a Holder shall not
be required to surrender the certificate(s) representing the shares of Preferred Stock to
the Corporation unless all of the shares of Preferred Stock represented thereby are so
converted, in which case such Holder shall deliver the certificate representing such shares
of Preferred Stock promptly following the Conversion Date at issue. Shares of Preferred
Stock converted into Common Stock or redeemed in accordance with the terms hereof shall be
canceled and shall not be reissued. The Company shall maintain records showing the number
of shares of Preferred Stock converted for each Holder and the applicable Conversion Date.
Each Holder and any assignee, by acceptance of a certificate for the Preferred Stock,
acknowledges and agrees that, by reason of the provisions of this paragraph, the number of
shares of Preferred Stock represented by such certificate may at any given time be less than
the amount stated on the face thereof.
2) Mandatory Conversion. Upon the consummation of a Change of Control, other
than a Change of Control described in clauses (d) or (e) of the definition of Change of
Control, each share of Preferred Stock will be automatically converted, without cost and on
the terms of this Section 6, into the number of whole shares of Common Stock into which the
share of Preferred Stock would be convertible under Section 6(a)(1) above. Any dividends or
distributions accrued or declared but unpaid at the time of conversion with respect to the
Preferred Stock converted, including the Make-Whole Payment, will be paid to the holder of
Common Stock issued on conversion of the Preferred Stock. A conversion on the consummation
of a Change of Control will be conditioned on, and will be deemed to have occurred
immediately before, the consummation of the Change of Control.
b) Conversion Price. The conversion price for the Preferred Stock shall equal
$0.1432, subject to adjustment herein (the Conversion Price).
c) Mechanics of Conversion
i. Delivery of Certificate Upon Conversion. Not later than three (3)
Trading Days after each Conversion Date (the Share Delivery Date), the
Corporation shall deliver, or cause to be delivered, to the converting Holder (A) a
certificate or certificates representing the Conversion Shares which shall be free
of restrictive legends and trading restrictions representing the number of
9
Conversion Shares being acquired upon the conversion of the Preferred Stock.
The Corporation shall use its best efforts to deliver any certificate or
certificates required to be delivered by the Corporation under this Section 6
electronically through the Depository Trust Company or another established clearing
corporation performing similar functions.
ii. Failure to Deliver Certificates. If, in the case of any Notice of
Conversion, such certificate or certificates are not delivered to or as directed by
the applicable Holder by the Share Delivery Date, the Holder shall be entitled to
elect by written notice to the Corporation at any time on or before its receipt of
such certificate or certificates, to rescind such Conversion, in which event the
Corporation shall promptly return to the Holder any original Preferred Stock
certificate delivered to the Corporation and the Holder shall promptly return to the
Corporation the Common Stock certificates issued to such Holder pursuant to the
rescinded Conversion Notice.
iii. Obligation Absolute. The Corporations obligation to issue and
deliver the Conversion Shares upon conversion of Preferred Stock in accordance with
the terms hereof are absolute and unconditional, irrespective of any action or
inaction by a Holder to enforce the same, any waiver or consent with respect to any
provision hereof, the recovery of any judgment against any Person or any action to
enforce the same, or any setoff, counterclaim, recoupment, limitation or
termination, or any breach or alleged breach by such Holder or any other Person of
any obligation to the Corporation or any violation or alleged violation of law by
such Holder or any other person, and irrespective of any other circumstance which
might otherwise limit such obligation of the Corporation to such Holder in
connection with the issuance of such Conversion Shares; provided,
however, that such delivery shall not operate as a waiver by the Corporation
of any such action that the Corporation may have against such Holder. In the event
a Holder shall elect to convert any or all of the Stated Value of its Preferred
Stock, the Corporation may not refuse conversion based on any claim that such Holder
or any one associated or affiliated with such Holder has been engaged in any
violation of law, agreement or for any other reason, unless an injunction from a
court, on notice to Holder, restraining and/or enjoining conversion of all or part
of the Preferred Stock of such Holder shall have been sought and obtained, and the
Corporation posts a surety bond for the benefit of such Holder in the amount of 150%
of the Stated Value of Preferred Stock which is subject to the injunction, which
bond shall remain in effect until the completion of arbitration/litigation of the
underlying dispute and the proceeds of which shall be payable to such Holder to the
extent it obtains judgment. In the absence of such injunction, the Corporation
shall issue Conversion Shares and, if applicable, cash, upon a properly noticed
conversion. Nothing herein shall limit a Holders right to pursue actual damages or
declare a Triggering Event pursuant to Section 10 hereof for the Corporations
failure to deliver Conversion Shares within the period specified herein and such
Holder shall have the right to pursue all remedies available to it hereunder, at law
or in equity including, without limitation, a decree of specific performance and/or
injunctive relief. The exercise of any such rights shall not
10
prohibit a Holder from seeking to enforce damages pursuant to any other Section
hereof or under applicable law.
iv. Compensation for Buy-In on Failure to Timely Deliver Certificates Upon
Conversion. In addition to any other rights available to the Holder, if the
Corporation fails for any reason to deliver to a Holder the applicable certificate
or certificates by the Share Delivery Date pursuant to Section 6(c)(i), and if after
such Share Delivery Date such Holder is required by its brokerage firm 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
such Holder of the Conversion Shares which such Holder was entitled to receive upon
the conversion relating to such Share Delivery Date (a Buy-In), then the
Corporation shall (A) pay in cash to such Holder (in addition to any other remedies
available to or elected by such Holder) the amount, if any, by which (x) such
Holders total purchase price (including any brokerage commissions) for the Common
Stock so purchased exceeds (y) the product of (1) the aggregate number of shares of
Common Stock that such Holder was entitled to receive from the conversion at issue
multiplied by (2) the actual sale price at which the sell order giving rise to such
purchase obligation was executed (including any brokerage commissions) and (B) at
the option of such Holder, either reissue (if surrendered) the shares of Preferred
Stock equal to the number of shares of Preferred Stock submitted for conversion (in
which case, such conversion shall be deemed rescinded) or deliver to such Holder the
number of shares of Common Stock that would have been issued if the Corporation had
timely complied with its delivery requirements under Section 6(c)(i). For example,
if a Holder purchases shares of Common Stock having a total purchase price of
$11,000 to cover a Buy-In with respect to an attempted conversion of shares of
Preferred Stock with respect to which the actual sale price of the Conversion Shares
(including any brokerage commissions) giving rise to such purchase obligation was a
total of $10,000 under clause (A) of the immediately preceding sentence, the
Corporation shall be required to pay such Holder $1,000. The Holder shall provide
the Corporation written notice indicating the amounts payable to such Holder in
respect of the Buy-In and, upon request of the Corporation, 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 Corporations failure to timely deliver certificates representing shares of
Common Stock upon conversion of the shares of Preferred Stock as required pursuant
to the terms hereof.
v. Reservation of Shares Issuable Upon Conversion. The Corporation
covenants that it will at all times reserve and keep available out of its authorized
and unissued shares of Common Stock for the sole purpose of issuance upon conversion
of the Preferred Stock, as herein provided, free from preemptive rights or any other
actual contingent purchase rights of Persons other than the Holder (and the other
holders of the Preferred Stock), not less than such aggregate number of shares of
the Common Stock as shall (subject to the terms and conditions set forth in the
Purchase Agreement) be issuable (taking into account
11
the adjustments and restrictions of Section 7) upon the conversion of the then
outstanding shares of Preferred Stock. The Corporation covenants that all shares of
Common Stock that shall be so issuable shall, upon issue, be duly authorized,
validly issued, fully paid and nonassessable.
vi. Fractional Shares. No fractional shares or scrip representing
fractional shares shall be issued upon the conversion of the Preferred Stock. As
to any fraction of a share which the Holder would otherwise be entitled to purchase
upon such conversion, the Corporation shall at its election, either pay a cash
adjustment in respect of such final fraction in an amount equal to such fraction
multiplied by the Conversion Price or round up to the next whole share.
vii. Transfer Taxes. The issuance of certificates for shares of the
Common Stock on conversion of this Preferred Stock shall be made without charge to
any Holder for any documentary stamp or similar taxes that may be payable in respect
of the issue or delivery of such certificates, provided that the Corporation shall
not be required to pay any tax that may be payable in respect of any transfer
involved in the issuance and delivery of any such certificate upon conversion in a
name other than that of the Holders of such shares of Preferred Stock and the
Corporation shall not be required to issue or deliver such certificates unless or
until the Person or Persons requesting the issuance thereof shall have paid to the
Corporation the amount of such tax or shall have established to the satisfaction of
the Corporation that such tax has been paid.
d) Beneficial Ownership Limitation. The Corporation shall not effect any
conversion of the Preferred Stock, and a Holder shall not have the right to convert any
portion of the Preferred Stock, to the extent that, after giving effect to the conversion
set forth on the applicable Notice of Conversion, such Holder (together with such Holders
Affiliates, and any Persons acting as a group together with such Holder or any of such
Holders Affiliates) would beneficially own in excess of the Beneficial Ownership Limitation
(as defined below). For purposes of the foregoing sentence, the number of shares of Common
Stock beneficially owned by such Holder and its Affiliates shall include the number of
shares of Common Stock issuable upon conversion of the Preferred Stock with respect to which
such determination is being made, but shall exclude the number of shares of Common Stock
which are issuable upon (i) conversion of the remaining, unconverted Stated Value of
Preferred Stock beneficially owned by such Holder or any of its Affiliates and (ii) exercise
or conversion of the unexercised or unconverted portion of any other securities of the
Corporation subject to a limitation on conversion or exercise analogous to the limitation
contained herein (including, without limitation, the Preferred Stock) beneficially owned by
such Holder or any of its Affiliates. Except as set forth in the preceding sentence, for
purposes of this Section 6(d), beneficial ownership shall be calculated in accordance with
Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder. To
the extent that the limitation contained in this Section 6(d) applies, the determination of
whether the Preferred Stock is convertible (in relation to other securities owned by such
Holder together with any Affiliates) and of how many shares of Preferred Stock are
convertible shall be in the sole discretion of such Holder, and the submission of a Notice
of Conversion shall be deemed to be such Holders determination of whether the shares of
12
Preferred Stock may be converted (in relation to other securities owned by such Holder
together with any Affiliates) and how many shares of the Preferred Stock are convertible, in
each case subject to the Beneficial Ownership Limitation. To ensure compliance with this
restriction, each Holder will be deemed to represent to the Corporation each time it
delivers a Notice of Conversion that such Notice of Conversion has not violated the
restrictions set forth in this paragraph and the Corporation shall have no obligation to
verify or confirm the accuracy of such determination. In addition, a determination as to
any group status as contemplated above shall be determined in accordance with Section 13(d)
of the Exchange Act and the rules and regulations promulgated thereunder. For purposes of
this Section 6(d), in determining the number of outstanding shares of Common Stock, a Holder
may rely on the number of outstanding shares of Common Stock as stated in the most recent of
the following: (i) the Corporations most recent periodic or annual report filed with the
Commission, as the case may be, (ii) a more recent public announcement by the Corporation or
(iii) a more recent written notice by the Corporation or the Transfer Agent setting forth
the number of shares of Common Stock outstanding. Upon the written or oral request of a
Holder, the Corporation 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 Corporation, including the Preferred Stock, by such Holder
or its Affiliates since the date as of which such number of outstanding shares of Common
Stock was reported. The Beneficial Ownership Limitation shall be 4.99% of the
number of shares of the Common Stock outstanding immediately after giving effect to the
issuance of shares of Common Stock issuable upon conversion of Preferred Stock held by the
applicable Holder. A Holder, upon not less than 61 days prior notice to the Corporation,
may increase or decrease the Beneficial Ownership Limitation provisions of this Section 6(d)
applicable to its Preferred Stock provided that the Beneficial Ownership Limitation in no
event exceeds 9.99% of the number of shares of the Common Stock outstanding immediately
after giving effect to the issuance of shares of Common Stock upon conversion of this
Preferred Stock held by the Holder and the provisions of this Section 6(d) shall continue to
apply. Any such increase or decrease will not be effective until the 61st day
after such notice is delivered to the Corporation and shall only apply to such Holder and no
other Holder. The provisions of this paragraph shall be construed and implemented in a
manner otherwise than in strict conformity with the terms of this Section 6(d) to correct
this paragraph (or any portion hereof) which may be defective or inconsistent with the
intended Beneficial Ownership Limitation contained herein or to make changes or supplements
necessary or desirable to properly give effect to such limitation. The limitations contained
in this paragraph shall apply to a successor holder of Preferred Stock.
Section 7. Certain Adjustments.
a) Stock Dividends and Stock Splits. If the Corporation, at any time while
this Preferred Stock is outstanding: (i) pays a stock dividend or otherwise makes a
distribution or distributions payable in shares of Common Stock on shares of Common Stock or
any other Common Stock Equivalents (which, for avoidance of doubt, shall not include any
shares of Common Stock issued by the Corporation upon conversion of, or payment of a
dividend on, this Preferred Stock), (ii) subdivides outstanding shares of
13
Common Stock into a larger number of shares, (iii) combines (including by way of a
reverse stock split) outstanding shares of Common Stock into a smaller number of shares, or
(iv) issues, in the event of a reclassification of shares of the Common Stock, any shares of
capital stock of the Corporation, then the Conversion Price shall be multiplied by a
fraction of which the numerator shall be the number of shares of Common Stock (excluding any
treasury shares of the Corporation) 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 this Section 7(a) shall become effective
immediately after the record date for the determination of stockholders entitled to receive
such dividend or distribution and shall become effective immediately after the effective
date in the case of a subdivision, combination or re-classification.
b) RESERVED.
c) Subsequent Rights Offerings. If the Corporation, at any time while this
Preferred Stock is outstanding, shall issue rights, options or warrants to all holders of
Common Stock (and not to the Holders) entitling them to subscribe for or purchase shares of
Common Stock at a price per share that is lower than the VWAP on the record date referenced
below, then the Conversion Price shall be multiplied by a fraction of which the denominator
shall be the number of shares of the Common Stock outstanding on the date of issuance of
such rights, options or warrants plus the number of additional shares of Common Stock
offered for subscription or purchase, and of which the numerator shall be the number of
shares of the Common Stock outstanding on the date of issuance of such rights, options or
warrants plus the number of shares which the aggregate offering price of the total number of
shares so offered (assuming delivery to the Corporation in full of all consideration payable
upon exercise of such rights, options or warrants) would purchase at such VWAP. Such
adjustment shall be made whenever such rights, options or warrants are issued, and shall
become effective immediately after the record date for the determination of stockholders
entitled to receive such rights, options or warrants.
d) Pro Rata Distributions. If the Corporation, at any time while this Preferred
Stock is outstanding, distributes to all holders of Common Stock (and not to the Holders)
evidences of its indebtedness or assets (including cash and cash dividends) or rights or
warrants to subscribe for or purchase any security, then in each such case the Conversion
Price shall be adjusted by multiplying such Conversion Price in effect immediately prior to
the record date fixed for determination of stockholders entitled to receive such
distribution by a fraction of which the denominator shall be the VWAP determined as of the
record date mentioned above, and of which the numerator shall be such VWAP on such record
date less the then fair market value at such record date of the portion of such assets or
evidence of indebtedness or rights or warrants so distributed applicable to one outstanding
share of the Common Stock as determined by the Board of Directors of the Corporation in good
faith. In either case the adjustments shall be described in a statement delivered to the
Holders describing the portion of assets or evidences of indebtedness so distributed or such
subscription rights applicable to one share of Common Stock. Such adjustment shall be made
whenever any such distribution is made and shall become effective immediately after the
record date mentioned above.
14
e) Fundamental Transaction. If, at any time while this Preferred Stock is
outstanding, (i) the Corporation, directly or indirectly, in one or more related
transactions effects any merger or consolidation of the Corporation with or into another
Person, (ii) the Corporation, directly or indirectly, effects any sale, lease, license,
assignment, transfer, conveyance or other disposition of all or substantially all of its
assets in one or a series of related transactions, (iii) any, direct or indirect, purchase
offer, tender offer or exchange offer (whether by the Corporation or another Person) is
completed pursuant to which holders of Common Stock are permitted to sell, tender or
exchange their shares for other securities, cash or property and has been accepted by the
holders of 50% or more of the outstanding Common Stock, (iv) the Corporation, directly or
indirectly, in one or more related transactions effects any reclassification, reorganization
or recapitalization of the Common Stock or any compulsory share exchange pursuant to which
the Common Stock is effectively converted into or exchanged for other securities, cash or
property, (v) the Corporation, directly or indirectly, in one or more related transactions
consummates a stock or share purchase agreement or other business combination (including,
without limitation, a reorganization, recapitalization, spin-off or scheme of arrangement)
with another Person whereby such other Person acquires more than 50% of the outstanding
shares of Common Stock (not including any shares of Common Stock held by the other Person or
other Persons making or party to, or associated or affiliated with the other Persons making
or party to, such stock or share purchase agreement or other business combination) (each a
Fundamental Transaction), then, upon any subsequent conversion of this Preferred
Stock, the Holder shall have the right to receive, for each Conversion Share that would have
been issuable upon such conversion immediately prior to the occurrence of such Fundamental
Transaction (without regard to any limitation in Section 6(d) on the conversion of this
Preferred Stock), the number of shares of Common Stock of the successor or acquiring
corporation or of the Corporation, if it is the surviving corporation, and any additional
consideration (the Alternate Consideration) receivable as a result of such
Fundamental Transaction by a holder of the number of shares of Common Stock for which this
Preferred Stock is convertible immediately prior to such Fundamental Transaction (without
regard to any limitation in Section 6(d) on the conversion of this Preferred Stock). For
purposes of any such conversion, the determination of the Conversion Price shall be
appropriately adjusted to apply to such Alternate Consideration based on the amount of
Alternate Consideration issuable in respect of one share of Common Stock in such Fundamental
Transaction, and the Corporation shall apportion the Conversion Price among the Alternate
Consideration in a reasonable manner reflecting the relative value of any different
components of the Alternate Consideration. If holders of Common Stock are given any choice
as to the securities, cash or property to be received in a Fundamental Transaction, then the
Holder shall be given the same choice as to the Alternate Consideration it receives upon any
conversion of this Preferred Stock following such Fundamental Transaction. To the extent
necessary to effectuate the foregoing provisions, any successor to the Corporation or
surviving entity in such Fundamental Transaction shall file a new Certificate of Designation
with the same terms and conditions and issue to the Holders new preferred stock consistent
with the foregoing provisions and evidencing the Holders right to convert such preferred
stock into Alternate Consideration. The Corporation shall cause any successor entity in a
Fundamental Transaction in which the Corporation is not the survivor (the Successor
Entity) to assume in writing all of the obligations of the Corporation under this
Certificate of Designation and the other Transaction Documents
15
(as defined in the Purchase Agreement) in accordance with the provisions of this
Section 7(e) pursuant to written agreements and shall, at the option of the holder of this
Preferred Stock, deliver to the Holder in exchange for this Preferred Stock a security of
the Successor Entity evidenced by a written instrument substantially similar in form and
substance to this Preferred Stock which is convertible for a corresponding number of shares
of capital stock of such Successor Entity (or its parent entity) equivalent to the shares of
Common Stock acquirable and receivable upon conversion of this Preferred Stock (without
regard to any limitations on the conversion of this Preferred Stock) prior to such
Fundamental Transaction, and with a conversion price which applies the conversion price
hereunder to such shares of capital stock (but taking into account the relative value of the
shares of Common Stock pursuant to such Fundamental Transaction and the value of such shares
of capital stock, such number of shares of capital stock and such conversion price being for
the purpose of protecting the economic value of this Preferred Stock immediately prior to
the consummation of such Fundamental Transaction), and which is reasonably satisfactory in
form and substance to the Holder. Upon the occurrence of any such Fundamental Transaction,
the Successor Entity shall succeed to, and be substituted for (so that from and after the
date of such Fundamental Transaction, the provisions of this Certificate of Designation and
the other Transaction Documents referring to the Corporation shall refer instead to the
Successor Entity), and may exercise every right and power of the Corporation and shall
assume all of the obligations of the Corporation under this Certificate of Designation and
the other Transaction Documents with the same effect as if such Successor Entity had been
named as the Corporation herein.
f) Calculations. All calculations under this Section 7 shall be made to the
nearest cent or the nearest 1/100th of a share, as the case may be. For purposes of this
Section 7, the number of shares of Common Stock deemed to be issued and outstanding as of a
given date shall be the sum of the number of shares of Common Stock (excluding any treasury
shares of the Corporation) issued and outstanding.
g) Notice to the Holders.
i. Adjustment to Conversion Price. Whenever the Conversion Price is
adjusted pursuant to any provision of this Section 7, the Corporation shall promptly
deliver to each Holder a notice setting forth the Conversion Price after such
adjustment and setting forth a brief statement of the facts requiring such
adjustment.
ii. Notice to Allow Conversion by Holder. If (A) the Corporation shall
declare a dividend (or any other distribution in whatever form) on the Common Stock,
(B) the Corporation shall declare a special nonrecurring cash dividend on or a
redemption of the Common Stock, (C) the Corporation shall authorize the granting to
all holders of the Common Stock of rights or warrants to subscribe for or purchase
any shares of capital stock of any class or of any rights, (D) the approval of any
stockholders of the Corporation shall be required in connection with any
reclassification of the Common Stock, any consolidation or merger to which the
Corporation is a party, any sale or transfer of all or substantially all of the
assets of the Corporation, or any compulsory share
16
exchange whereby the Common Stock is converted into other securities, cash or
property or (E) the Corporation shall authorize the voluntary or involuntary
dissolution, liquidation or winding up of the affairs of the Corporation, then, in
each case, the Corporation shall cause to be filed at each office or agency
maintained for the purpose of conversion of this Preferred Stock, and shall cause to
be delivered to each Holder at its last address as it shall appear upon the stock
books of the Corporation, at least twenty (20) calendar days prior to the applicable
record or effective date hereinafter specified, a notice stating (x) the date on
which a record is to be taken for the purpose of such dividend, distribution,
redemption, rights or warrants, or if a record is not to be taken, the date as of
which the holders of the Common Stock of record to be entitled to such dividend,
distributions, redemption, rights or warrants are to be determined or (y) the date
on which such reclassification, consolidation, merger, sale, transfer or share
exchange is expected to become effective or close, and the date as of which it is
expected that holders of the Common Stock of record shall be entitled to exchange
their shares of the Common Stock for securities, cash or other property deliverable
upon such reclassification, consolidation, merger, sale, transfer or share exchange,
provided that the failure to deliver such notice or any defect therein or in the
delivery thereof shall not affect the validity of the corporate action required to
be specified in such notice. To the extent that any notice provided hereunder
constitutes, or contains, material, non-public information regarding the Corporation
or any of the Subsidiaries, the Corporation shall simultaneously file such notice
with the Commission pursuant to a Current Report on Form 8-K. The Holder shall
remain entitled to convert the Conversion Amount of this Preferred Stock (or any
part hereof) during the 20-day period commencing on the date of such notice through
the effective date of the event triggering such notice except as may otherwise be
expressly set forth herein.
Section 8. [INTENTIONALLY DELETED]
Section 9. Negative Covenants. As long as any shares of Preferred Stock are
outstanding, unless the holders of at least 80% in Stated Value of the then outstanding shares of
Preferred Stock shall have otherwise given prior written consent, the Corporation shall not, and
shall not permit any of the Subsidiaries to, directly or indirectly:
a) amend its charter documents, including, without limitation, its certificate of
incorporation and bylaws, in any manner that materially and adversely affects any rights of
the Holder; provided, however, that this covenant shall in no event apply to amendments to
increase the Corporations authorized number of shares of Common Stock;
b) repay, repurchase or offer to repay, repurchase or otherwise acquire more than a
de minimis number of shares of its Common Stock, Common Stock Equivalents or
Junior Securities, other than as to (i) the Conversion Shares as permitted or required under
the Transaction Documents and (ii) repurchases of Common Stock or Common Stock Equivalents
of departing officers and directors of the Corporation, provided that such repurchases shall
not exceed an aggregate of $100,000 in any fiscal year for all officers and directors;
17
c) pay cash dividends or distributions on Junior Securities of the Corporation;
d) enter into any transaction with any Affiliate of the Corporation which would be
required to be disclosed in any public filing with the Commission, unless such transaction
is made on an arms-length basis and expressly approved by a majority of the disinterested
directors of the Corporation (even if less than a quorum otherwise required for board
approval); or
e) enter into any agreement with respect to any of the foregoing.
Section 10. Redemption Upon Triggering Events.
a) Triggering Event means, wherever used herein any of the following events
(whatever the reason for such event and whether such event shall be voluntary or involuntary
or effected by operation of law or pursuant to any judgment, decree or order of any court,
or any order, rule or regulation of any administrative or governmental body):
i. if the Corporation fails to provide at all times the Registration Statement
or usable prospectus that permits the Corporation to issue the Conversion Shares or
which allows the Holder to sell the Conversion Shares pursuant thereto, subject to a
grace period of 30 calendar days in the aggregate in any 365-day period;
ii. the Corporation shall fail to deliver certificates representing Conversion
Shares issuable upon a conversion hereunder that comply with the provisions hereof
prior to the fifth Trading Day after such shares are required to be delivered
hereunder, or the Corporation shall provide written notice to any Holder, including
by way of public announcement, at any time, of its intention not to comply with
requests for conversion of any shares of Preferred Stock in accordance with the
terms hereof;
iii. the Corporation shall fail for any reason to pay in full the amount of
cash due pursuant to a Buy-In within five Trading Days after notice therefor is
delivered hereunder;
iv. the Corporation shall fail to have available a sufficient number of
authorized and unreserved shares of Common Stock to issue to such Holder upon a
conversion hereunder;
v. unless specifically addressed elsewhere in this Certificate of Designation
as a Triggering Event, the Corporation shall fail to observe or perform in all
material respects any other covenant, agreement or warranty contained in, or
otherwise commit any material breach of the Transaction Documents, and such material
failure or breach shall not, if subject to the possibility of a cure by the
Corporation, have been cured in all material respects
18
within 30 calendar days after the date on which written notice of such failure
or breach shall have been delivered to the Corporation; provided, however, that this
paragraph shall be effective only as to those Holders that were a party to the
Purchase Agreement;
vi. the Corporation shall redeem more than a de minimis number
of Junior Securities other than as to repurchases of Common Stock or Common Stock
Equivalents from departing directors, officers, employees or consultants and
provided that, while any of the Preferred Stock remains outstanding, such
repurchases shall not exceed an aggregate of $100,000 in any fiscal year from all
directors, officers, employees and consultants;
vii. the Corporation shall be party to a Change of Control Transaction;
viii. there shall have occurred a Bankruptcy Event;
ix. the Common Stock shall fail to be listed or quoted for trading on a Trading
Market for more than five Trading Days, which need not be consecutive Trading Days;
provided, however, that this paragraph shall be effective only as to those Holders
that were a party to the Purchase Agreement; or
x. any monetary judgment, writ or similar final process shall be entered or
filed against the Corporation, any subsidiary or any of their respective property or
other assets for more than $150,000, and such judgment, writ or similar final
process shall remain unvacated, unbonded or unstayed for a period of 60 calendar
days (unless the Company shall provide the Holders with reasonable written evidence
that such judgment, writ or process is covered by an insurance policy issued by a
reputable insurer of recognized standing).
b) Upon the occurrence of a Triggering Event, each Holder shall (in addition to all
other rights it may have hereunder or under applicable law) have the right, exercisable at
the sole option of such Holder, to require the Corporation to redeem all of the Preferred
Stock then held by such Holder for a redemption price, in cash, equal to the Triggering
Redemption Amount. The Triggering Redemption Amount, in cash or in shares, shall be due and
payable or issuable, as the case may be, within five Trading Days of the date on which the
notice for the payment therefor is provided by a Holder (the Triggering Redemption
Payment Date). If the Corporation fails to pay in full the Triggering Redemption
Amount hereunder on the date such amount is due in accordance with this Section (whether in
cash or shares of Common Stock), the Corporation will pay interest thereon at a rate equal
to the lesser of 18% per annum or the maximum rate permitted by applicable law, accruing
daily from such date until the Triggering Redemption Amount, plus all such interest thereon,
is paid in full. For purposes of this Section, a share of Preferred Stock is outstanding
until such date as the applicable Holder shall have received Conversion Shares upon a
conversion (or attempted conversion) thereof that meets the requirements hereof or has been
paid the Triggering Redemption Amount in cash.
Section 11. Miscellaneous.
19
a) Notices. Any and all notices or other communications or deliveries to be
provided by the Holders hereunder including, without limitation, any Notice of Conversion,
shall be in writing and delivered personally, by facsimile, or sent by a nationally
recognized overnight courier service, addressed to the Corporation, at 6725 Mesa Ridge Rd.,
Suite 100, San Diego, California 92121, Attention: Corporate Secretary, facsimile number
(858) 552-0876, or such other facsimile number or address as the Corporation may specify for
such purposes by notice to the Holders delivered in accordance with this Section 11, with a
copy sent by facsimile or overnight courier service to: DLA Piper LLP (US), 4365 Executive
Drive, Suite 1100, San Diego, California 92121, Attention: Michael S. Kagnoff. Any and all
notices or other communications or deliveries to be provided by the Corporation hereunder
shall be in writing and delivered personally, by facsimile, or sent by a nationally
recognized overnight courier service addressed to each Holder at the facsimile number or
address of such Holder appearing on the books of the Corporation, or if no such facsimile
number or address appears on the books of the Corporation, at the principal place of
business of such Holder, as set forth in the Purchase Agreement. Any notice or other
communication or deliveries hereunder shall be deemed given and effective on the earliest of
(i) the date of transmission, if such notice or communication is delivered via facsimile at
the facsimile number set forth in this Section prior to 5:30 p.m. (New York City time) on
any date, (ii) the next Trading Day after the date of transmission, if such notice or
communication is delivered via facsimile at the facsimile number set forth in this Section
on a day that is not a Trading Day or later than 5:30 p.m. (New York City time) on any
Trading Day, (iii) the second Trading Day following the date of mailing, if sent by U.S.
nationally recognized overnight courier service, or (iv) upon actual receipt by the party to
whom such notice is required to be given.
b) Absolute Obligation. Except as expressly provided herein, no provision of
this Certificate of Designation shall alter or impair the obligation of the Corporation,
which is absolute and unconditional, to pay liquidated damages and accrued interest, as
applicable, on the shares of Preferred Stock at the time, place, and rate, and in the coin
or currency, herein prescribed.
c) Lost or Mutilated Preferred Stock Certificate. If a Holders Preferred
Stock certificate shall be mutilated, lost, stolen or destroyed, the Corporation shall
execute and deliver, in exchange and substitution for and upon cancellation of a mutilated
certificate, or in lieu of or in substitution for a lost, stolen or destroyed certificate, a
new certificate for the shares of Preferred Stock so lost, stolen or destroyed, but only
upon receipt of evidence of such loss, theft or destruction of such certificate, and of the
ownership hereof reasonably satisfactory to the Corporation (including indemnity or security
reasonably satisfactory to the Corporation).
d) Governing Law. All questions concerning the construction, validity,
enforcement and interpretation of this Certificate of Designation shall be governed by and
construed and enforced in accordance with the internal laws of the State of Delaware,
without regard to the principles of conflict of laws thereof. Each party agrees that all
legal proceedings concerning the interpretation, enforcement and defense of the transactions
contemplated by any of the Transaction Documents (whether brought against
20
a party hereto or its respective Affiliates, directors, officers, shareholders,
employees or agents) shall be commenced in the state and federal courts sitting in the City
of New York, Borough of Manhattan (the New York Courts). Each party hereto hereby
irrevocably submits to the exclusive jurisdiction of the New York Courts for the
adjudication of any dispute hereunder or in connection herewith or with any transaction
contemplated hereby or discussed herein (including with respect to the enforcement of any of
the Transaction Documents), and hereby irrevocably waives, and agrees not to assert in any
suit, action or proceeding, any claim that it is not personally subject to the jurisdiction
of such New York Courts, or such New York Courts are improper or 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 Certificate of Designation 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 applicable law. Each party hereto hereby
irrevocably waives, to the fullest extent permitted by applicable law, any and all right to
trial by jury in any legal proceeding arising out of or relating to this Certificate of
Designation or the transactions contemplated hereby. If any party shall commence an action
or proceeding to enforce any provisions of this Certificate of Designation, then the
prevailing party in such action or proceeding shall be reimbursed by the other party for its
attorneys fees and other costs and expenses incurred in the investigation, preparation and
prosecution of such action or proceeding.
e) Waiver. Any waiver by the Corporation or a Holder of a breach of any
provision of this Certificate of Designation shall not operate as or be construed to be a
waiver of any other breach of such provision or of any breach of any other provision of this
Certificate of Designation or a waiver by any other Holders. The failure of the Corporation
or a Holder to insist upon strict adherence to any term of this Certificate of Designation
on one or more occasions shall not be considered a waiver or deprive that party (or any
other Holder) of the right thereafter to insist upon strict adherence to that term or any
other term of this Certificate of Designation on any other occasion. Any waiver by the
Corporation or a Holder must be in writing.
f) Severability. If any provision of this Certificate of Designation is
invalid, illegal or unenforceable, the balance of this Certificate of Designation shall
remain in effect, and if any provision is inapplicable to any Person or circumstance, it
shall nevertheless remain applicable to all other Persons and circumstances. If it shall be
found that any interest or other amount deemed interest due hereunder violates the
applicable law governing usury, the applicable rate of interest due hereunder shall
automatically be lowered to equal the maximum rate of interest permitted under applicable
law.
g) Next Business Day. Whenever any payment or other obligation hereunder shall
be due on a day other than a Business Day, such payment shall be made on the next succeeding
Business Day.
21
h) Headings. The headings contained herein are for convenience only, do not
constitute a part of this Certificate of Designation and shall not be deemed to limit or
affect any of the provisions hereof.
i) Status of Converted or Redeemed Preferred Stock. Shares of Preferred Stock
may only be issued pursuant to the Purchase Agreement. If any shares of Preferred Stock
shall be converted, redeemed or reacquired by the Corporation, such shares shall resume the
status of authorized but unissued shares of preferred stock and shall no longer be
designated as 5% Series B Convertible Preferred Stock.
*********************
22
RESOLVED, FURTHER, that the Chairman, the president or any vice-president, and the secretary or any
assistant secretary, of the Corporation be and they hereby are authorized and directed to prepare
and file this Certificate of Designation of Preferences, Rights and Limitations in accordance with
the foregoing resolution and the provisions of Delaware law.
IN WITNESS WHEREOF, the undersigned have executed this Certificate this 29th day of June 2009.
/s/ Brian M. Culley | /s/ Patrick L. Keran | |||||||||
Name:
|
Brian M. Culley | Name: | Patrick L. Keran | |||||||
Title:
|
Chief Business Officer and Senior Vice President | Title: | General Counsel, Secretary and Vice President, Legal |
ANNEX A
NOTICE OF CONVERSION
(TO BE
EXECUTED BY THE REGISTERED HOLDER IN ORDER TO CONVERT SHARES OF
PREFERRED STOCK)
PREFERRED STOCK)
The undersigned hereby elects to convert the number of shares of 5% Series B Convertible Preferred
Stock indicated below into shares of common stock, par value $0.001 per share (the Common
Stock), of ADVENTRX Pharmaceuticals, Inc., a Delaware corporation (the Corporation),
according to the conditions hereof, as of the date written below. If shares of Common Stock are to
be issued in the name of a Person other than the undersigned, the undersigned will pay all transfer
taxes payable with respect thereto and is delivering herewith such certificates and opinions as may
be required by the Corporation in accordance with the Purchase Agreement. No fee will be charged to
the Holders for any conversion, except for any such transfer taxes.
Conversion calculations:
Date to Effect Conversion:
Number of shares of Preferred Stock owned prior to Conversion:
Number of shares of Preferred Stock to be Converted:
Stated Value of shares of Preferred Stock to be Converted:
Number of shares of Common Stock to be Issued:
Applicable Conversion Price:
Number of shares of Preferred Stock subsequent to Conversion:
Address for Delivery:
or
DWAC Instructions*:
Name of DTC Participant (Holders prime broker-dealer):
DTC Participant
Number:
Name of Account at DTC Participant to be credited with the
shares:
Account Number at DTS Participant to be credited with the
shares:
Name of DTC Participant (Holders prime broker-dealer):
* | You must contact your broker-dealer and ask them to initiate the DWAC or you will not receive the shares. |
|
||||
(Print Name of Holder) |
||||
By: | ||||
Name: | ||||
Title: | ||||
Exhibit 4.1
SECURITIES PURCHASE AGREEMENT
This Securities Purchase Agreement (this Agreement) is dated as of June 29, 2009,
between ADVENTRX Pharmaceuticals, Inc., a Delaware corporation (the Company), and each
purchaser identified on the signature pages hereto (each, including its successors and assigns, a
Purchaser and collectively, the Purchasers).
WHEREAS, subject to the terms and conditions set forth in this Agreement and pursuant to an
effective registration statement under the Securities Act of 1933, as amended (the Securities
Act), the Company desires to issue and sell to each Purchaser, and each Purchaser, severally
and not jointly, desires to purchase from the Company, securities of the Company as more fully
described in this Agreement.
NOW, THEREFORE, IN CONSIDERATION of the mutual covenants contained in this Agreement, and for
other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged,
the Company and each Purchaser agree as follows:
ARTICLE I.
DEFINITIONS
DEFINITIONS
1.1 Definitions. In addition to the terms defined elsewhere in this Agreement: (a)
capitalized terms that are not otherwise defined herein have the meanings given to such terms in
the Certificate of Designation (as defined herein), and (b) the following terms have the meanings
set forth in this Section 1.1:
Acquiring Person shall have the meaning ascribed to such term in Section 4.7.
Action shall have the meaning ascribed to such term in Section 3.1(j).
Affiliate means any Person that, directly or indirectly through one or more
intermediaries, controls or is controlled by or is under common control with a Person, as
such terms are used in and construed under Rule 405 under the Securities Act.
Board of Directors means the board of directors of the Company.
Business Day means any day except any Saturday, any Sunday, any day which is
a federal legal holiday in the United States or any day on which banking institutions in the
State of New York are authorized or required by law or other governmental action to close.
Certificate of Designation means the Certificate of Designation to be filed
prior to the Closing by the Company with the Secretary of State of Delaware, in the form of
Exhibit A attached hereto.
Closing means the closing of the purchase and sale of the Securities pursuant
to Section 2.1.
Closing Date means the Trading Day on which all of the Transaction Documents
have been executed and delivered by the applicable parties thereto, and all conditions
precedent to (i) the Purchasers obligations to pay the Subscription Amount
and (ii) the Companys obligations to deliver the Securities, in each case, have been
satisfied or waived.
Commission means the United States Securities and Exchange Commission.
Common Stock means the common stock of the Company, par value $0.001 per
share, and any other class of securities into which such securities may hereafter be
reclassified or changed.
Common Stock Equivalents means any securities of the Company or the
Subsidiaries which would entitle the holder thereof to acquire at any time Common Stock,
including, without limitation, any debt, preferred stock, rights, options, warrants or other
instrument that is at any time convertible into or exercisable or exchangeable for, or
otherwise entitles the holder thereof to receive, Common Stock.
Company Counsel means DLA Piper LLP (US), with offices located at 4365
Executive Drive, Suite 1100, San Diego, CA 92121.
Disclosure Schedules means the Disclosure Schedules of the Company delivered
concurrently herewith.
Evaluation Date shall have the meaning ascribed to such term in Section
3.1(r).
Exchange Act means the Securities Exchange Act of 1934, as amended, and the
rules and regulations promulgated thereunder.
Exempt Issuance means the issuance of (a) a Common Stock purchase warrant to
Rodman & Renshaw LLC, as compensation for its services as the Companys placement agent, and
shares of Common Stock issuable upon exercise thereof, (b) shares of Common Stock, options
or other equity awards to employees, officers, directors or consultants of the Company
pursuant to any equity incentive 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, (c) 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 (d)
securities issued pursuant to acquisitions or strategic transactions approved by a majority
of the disinterested directors of the Company, provided that any such issuance shall only be
to a Person (or to the equityholders of a Person) which is, itself or through its
subsidiaries, an operating company or an asset in a business synergistic with the business
of the Company and shall provide to the Company additional benefits in addition to the
investment of funds, but shall not include a transaction in which the Company is issuing
securities primarily for the purpose of raising capital or to an entity whose primary
business is investing in securities.
FDA shall have the meaning ascribed to such term in Section 3.1(gg).
FDCA shall have the meaning ascribed to such term in Section 3.1(gg).
2
GAAP shall have the meaning ascribed to such term in Section 3.1(h).
Indebtedness shall have the meaning ascribed to such term in Section 3.1(z).
Intellectual Property Rights shall have the meaning ascribed to such term in
Section 3.1(o).
Liens means a lien, charge, security interest, encumbrance, right of first
refusal, preemptive right or other restriction other than restrictions imposed by securities
laws.
Make-Whole Payment shall have the meaning ascribed to such term in the
Certificate of Designation.
Material Adverse Effect shall have the meaning assigned to such term in
Section 3.1(b).
Material Permits shall have the meaning ascribed to such term in Section
3.1(m).
Maximum Rate shall have the meaning ascribed to such term in Section 5.17.
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.
Pharmaceutical Product shall have the meaning ascribed to such term in
Section 3.1(gg).
Preferred Stock means the up to 1,361 shares of the Companys 5% Series B
Convertible Preferred Stock issued hereunder having the rights, preferences, privileges and
limitations set forth in the Certificate of Designation, in the form of Exhibit A
hereto.
Previous Prospectus Supplement means prospectus supplement no. 1 to the
Prospectus, dated June 8, 2009.
Proceeding means an action, claim, suit, investigation or proceeding
(including, without limitation, an informal investigation or partial proceeding, such as a
deposition), whether commenced or threatened.
Prospectus means the final prospectus filed for the Registration Statement.
Prospectus Supplement means the supplement to the Prospectus complying with
Rule 424(b) of the Securities Act that is filed with the Commission and delivered by the
Company to each Purchaser before or at the Closing.
Purchaser Party shall have the meaning ascribed to such term in Section 4.10.
Registration Statement means the effective registration statement with the
Commission file No. 333-159376 which registers the sale of the Preferred Stock and
Underlying Shares to the Purchasers.
3
Required Approvals shall have the meaning ascribed to such term in Section
3.1(e).
Required Minimum means, as of any date, the maximum aggregate number of
shares of Common Stock then issued or potentially issuable in the future pursuant to the
Transaction Documents, including any Underlying Shares issuable upon conversion in full of
all shares of Preferred Stock, ignoring any conversion or exercise limits set forth therein.
Rule 144 means Rule 144 promulgated by the Commission pursuant to the
Securities Act, as such Rule may be amended from time to time, or any similar rule or
regulation hereafter adopted by the Commission having substantially the same effect as such
Rule.
Rule 424 means Rule 424 promulgated by the Commission pursuant to the
Securities Act, as such Rule may be amended or interpreted from time to time, or any similar
rule or regulation hereafter adopted by the Commission having substantially the same purpose
and effect as such Rule.
SEC Reports shall have the meaning ascribed to such term in Section 3.1(h).
Securities means the Preferred Stock and the Underlying Shares.
Securities Act means the Securities Act of 1933, as amended, and the rules
and regulations promulgated thereunder.
Short Sales means all short sales as defined in Rule 200 of Regulation SHO
under the Exchange Act (but shall not be deemed to include the location and/or reservation
of borrowable shares of Common Stock).
Stated Value means $1,000 per share of Preferred Stock.
Subscription Amount means, as to each Purchaser, the aggregate amount to be
paid for the shares of Preferred Stock purchased hereunder as specified below such
Purchasers name on the signature page of this Agreement and next to the heading
Subscription Amount, in United States dollars and in immediately available funds.
Subsidiary means any subsidiary of the Company as set forth on Schedule
3.1(a) and shall, where applicable, also include any direct or indirect subsidiary of
the Company formed or acquired after the date hereof.
Trading Day means a day on which the principal Trading Market for the Common
Stock is open for trading.
Trading Market means any of the following markets or exchanges on which the
Common Stock is listed or quoted for trading on the date in question: the NYSE AMEX, the
Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market, the New
York Stock Exchange or the OTC Bulletin Board (or any successors to any of the foregoing).
4
Transaction Documents means this Agreement, the Certificate of Designation,
all exhibits and schedules thereto and hereto and any other documents or agreements executed
in connection with the transactions contemplated hereunder.
Transfer Agent means American Stock Transfer & Trust Company LLC, the current
transfer agent of the Company, with a mailing address of 6201 15th Avenue, 2nd Floor,
Brooklyn, NY 11219 and a facsimile number of (718) 921-8310, and any successor transfer
agent of the Company.
Underlying Shares means the shares of Common Stock issued and issuable upon
conversion or redemption of the Preferred Stock and issued and issuable in lieu of the cash
payment of dividends on the Preferred Stock in accordance with the terms of the Certificate
of Designation.
Variable Rate Transaction shall have the meaning ascribed to such term in
Section 4.13(b).
WS means Weinstein Smith LLP with offices located at 420 Lexington Avenue,
Suite 2620, New York, New York 10170-0002.
ARTICLE II.
PURCHASE AND SALE
PURCHASE AND SALE
2.1 Closing. On the Closing Date, upon the terms and subject to the conditions set
forth herein, substantially concurrent with the execution and delivery of this Agreement by the
parties hereto, the Company agrees to sell, and the Purchasers, severally and not jointly, agree to
purchase, up to an aggregate of $1,361,000 of shares of Preferred Stock with an aggregate Stated
Value for each Purchaser equal to such Purchasers Subscription Amount as set forth on the
signature page hereto executed by such Purchaser. The aggregate number of shares of Preferred
Stock sold hereunder shall be up to 1,361. At the Closing, each Purchaser shall deliver to the
Company via wire transfer or a certified check of immediately available funds equal to its
Subscription Amount, and the Company shall deliver to each Purchaser its respective shares of
Preferred Stock, and the Company and each Purchaser shall deliver the other items set forth in
Section 2.2 deliverable at the Closing. Upon satisfaction of the covenants and conditions set
forth in Sections 2.2 and 2.3, the Closing shall occur at the offices of WS or such other location
as the parties shall mutually agree.
2.2 Deliveries.
(a) On or prior to the Closing Date, the Company shall deliver or cause to be delivered
to each Purchaser the following:
(i) this Agreement duly executed by the Company;
(ii) a legal opinion of Company Counsel, substantially in the form to be
mutually agreed upon by the parties hereto;
(iii) a certificate evidencing a number of shares of Preferred Stock equal to
such Purchasers Subscription Amount divided by the Stated Value, registered in the
name of such Purchaser and evidence of the filing and
5
acceptance of the Certificate of Designation from the Secretary of State of
Delaware;
(iv) an escrow agreement in form and substance reasonably satisfactory to the
Company and the Purchasers pursuant to which the Make-Whole Payment shall be
deposited; and
(v) the Prospectus and Prospectus Supplement (which may be delivered in
accordance with Rule 172 under the Securities Act).
(b) On or prior to the Closing Date, each Purchaser shall deliver or cause to be
delivered to the Company the following:
(i) this Agreement duly executed by such Purchaser;
(ii) an escrow agreement in form and substance reasonably satisfactory to the
Company and the Purchasers pursuant to which the Make-Whole Payment (as defined in
the Certificate of Designation) shall be deposited; and
(iii) such Purchasers Subscription Amount by wire transfer to the account as
specified in writing by the Company, of which the Make-Whole Payment shall be
deposited directly in the above-referenced escrow account.
2.3 Closing Conditions.
(a) The obligations of the Company hereunder in connection with the Closing are subject
to the following conditions being met:
(i) the accuracy in all material respects when made and on the Closing Date of
the representations and warranties each Purchaser contained herein (unless as of a
specific date therein);
(ii) all obligations, covenants and agreements of each Purchaser required to be
performed at or prior to the Closing Date shall have been performed; and
(iii) the delivery by each Purchaser of the items set forth in Section 2.2(b)
of this Agreement.
(b) The respective obligations of the Purchasers hereunder in connection with the
Closing are subject to the following conditions being met:
(i) the accuracy in all material respects when made and on the Closing Date 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 Closing Date shall have been performed;
(iii) the delivery by the Company of the items set forth in Section 2.2(a) of
this Agreement;
6
(iv) there shall have been no Material Adverse Effect with respect to the
Company since the date hereof; and
(v) from the date hereof to the Closing Date, trading in the Common Stock shall
not have been suspended by the Commission or the Companys principal Trading Market
(except for any suspension of trading of limited duration agreed to by the Company,
which suspension shall be terminated prior to the Closing), and, at any time prior
to the Closing Date, trading in securities generally as reported by Bloomberg L.P.
shall not have been suspended or limited, or minimum prices shall not have been
established on securities whose trades are reported by such service, or on any
Trading Market, nor shall a banking moratorium have been declared either by the
United States or New York State authorities nor shall there have occurred any
material outbreak or escalation of hostilities or other national or international
calamity of such magnitude in its effect on, or any material adverse change in, any
financial market which, in each case, in the reasonable judgment of each Purchaser,
makes it impracticable or inadvisable to purchase the Securities at the Closing.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES
REPRESENTATIONS AND WARRANTIES
3.1 Representations and Warranties of the Company. Except as set forth or
incorporated by reference into the Registration Statement, the Prospectus, the Prospectus
Supplement or the Disclosure Schedules, which disclosures in such filings with the Commission and
in the Disclosure Schedules shall be deemed a part hereof and shall qualify any representation or
otherwise made herein to the extent of the disclosure contained in such filings with the Commission
or in the Disclosure Schedule corresponding to this Section 3.1, the Company hereby makes the
following representations and warranties to each Purchaser:
(a) Subsidiaries. All of the direct and indirect subsidiaries of the Company
are set forth on Schedule 3.1(a). The Company owns, directly or indirectly, all of
the capital stock or other equity interests of each Subsidiary free and clear of any Liens,
and all of 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. If the Company has no subsidiaries, all other
references to the Subsidiaries or any of them in the Transaction Documents shall be
disregarded.
(b) Organization and Qualification. The Company and each of 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, with the requisite
power and authority to own and use its properties and assets and to carry on its business as
currently conducted. Neither the Company nor any Subsidiary is in violation nor default of
any of the provisions of its respective certificate or articles of incorporation, bylaws or
other organizational or charter documents. Each of the Company and the Subsidiaries is duly
qualified to conduct business and is in good standing as a foreign corporation or other
entity in each jurisdiction in which the nature of the business conducted or property owned
by it makes such qualification necessary, except where the failure to be so qualified or in
good standing, as the case may be, could not reasonably be expected to result in: (i) a
material adverse effect on the legality,
7
validity or enforceability of any Transaction Document, (ii) a material adverse change
in the results of operations, assets, business, prospects or condition (financial or
otherwise) of the Company and the Subsidiaries, taken as a whole, from that set forth or
incorporated by reference in the Prospectus and Prospectus Supplement, 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 (any of (i), (ii) or (iii), a Material
Adverse Effect) and no Proceeding has been instituted or, to the knowledge of the
Company, threatened 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 hereunder and thereunder.
The execution and delivery of each of the Transaction Documents by the Company and the
consummation by it of the transactions contemplated hereby and thereby have been duly
authorized by all necessary action on the part of the Company and no further action is
required by the Company, the Board of Directors or the Companys stockholders in connection
therewith other than in connection with the Required Approvals. Each Transaction Document
to which it is a party has been (or upon delivery will have been) duly executed by the
Company and, when delivered in accordance with the terms hereof and thereof, will constitute
the valid and binding obligation of the Company enforceable against the Company in
accordance with its terms, except: (i) as limited by general equitable principles and
applicable bankruptcy, insolvency, reorganization, moratorium and other laws of general
application affecting enforcement of creditors rights generally, (ii) as limited by laws
relating to the availability of specific performance, injunctive relief or other equitable
remedies and (iii) insofar as indemnification and contribution provisions may be limited by
applicable law.
(d) No Conflicts. The execution, delivery and performance by the Company of
the Transaction Documents, the issuance and sale of the Securities and the consummation by
it of the transactions contemplated hereby and thereby to which it is a party do not and
will not: (i) conflict with or violate any provision of the Companys or any Subsidiarys
certificate or articles of incorporation, bylaws or other organizational or charter
documents, (ii) conflict with, or constitute a default (or an event that with notice or
lapse of time or both would become a default) under, result in the creation of any Lien upon
any of the properties or assets of the Company or any Subsidiary, or give to others any
rights of termination, amendment, acceleration or cancellation (with or without notice,
lapse of time or both) of, any agreement, credit facility, debt or other instrument
(evidencing a Company or Subsidiary debt or otherwise) or other understanding to which the
Company or any Subsidiary is a party or by which any property or asset of the Company or any
Subsidiary is bound or affected, or (iii) subject to the Required Approvals, conflict with
or result in a violation of any law, rule, regulation, order, judgment, injunction, decree
or other restriction of any court or governmental authority to which the Company or a
Subsidiary is subject (including federal and state securities laws and regulations), or by
which any property or asset of the Company or a Subsidiary is bound or affected; except in
the case of each of clauses (ii) and (iii), such as could not reasonably be expected to
result in a Material Adverse Effect.
(e) Filings, Consents and Approvals. The Company is not required to obtain any
consent, waiver, authorization or order of, give any notice to, or make any filing or
8
registration with, any court or other federal, state, local or other governmental
authority or other Person in connection with the execution, delivery and performance by the
Company of the Transaction Documents, other than: (i) the filings required pursuant to
Section 4.6 of this Agreement, (ii) the filing with the Commission of the Prospectus
Supplement, (iii) the filing of application(s) with and approval by the NYSE Amex LLC for
the issuance and sale of the Securities and the listing of the Underlying Shares for trading
thereon in the time and manner required thereby, (iv) the filing with the Secretary of State
of the State of Delaware of the Certificate of Designation, (v) an approval or waiver under
that certain Rights Agreement, dated July 27, 2005, as amended (the Rights
Agreement), and (vi) such filings as are required to be made under applicable state
securities laws and the rules and regulations of the Financial Industry Regulatory Authority
(FINRA) (collectively, the Required Approvals).
(f) Issuance of the Securities; Registration. The Securities are duly
authorized and, the Preferred Stock, 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 Underlying Shares,
when issued in accordance with the terms of the applicable Transaction Documents, 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 a number of shares
of Common Stock for issuance of the Underlying Shares at least equal to the Required Minimum
on the date hereof. The Company has prepared and filed the Registration Statement in
conformity with the requirements of the Securities Act, which became effective on June 4,
2009 (the Effective Date), including the Prospectus, and such amendments and
supplements thereto as may have been required to the date of this Agreement. The
Registration Statement is effective under the Securities Act and no stop order preventing or
suspending the effectiveness of the Registration Statement or suspending or preventing the
use of the Prospectus has been issued by the Commission and no proceedings for that purpose
have been instituted or, to the knowledge of the Company, are threatened by the Commission.
The Company, if required by the rules and regulations of the Commission, proposes to file
the Prospectus, with the Commission pursuant to Rule 424(b). At the time the Registration
Statement and any amendments thereto became effective, at the date of this Agreement and at
the Closing Date, the Registration Statement and any amendments thereto conformed and will
conform in all material respects to the requirements of the Securities Act and did not and
will not contain any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements therein not misleading;
and the Prospectus and any amendments or supplements thereto, at time the Prospectus or any
amendment or supplement thereto was issued and at the Closing Date, conformed and will
conform in all material respects to the requirements of the Securities Act and did not and
will not contain an untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in light of the circumstances under which
they were made, not misleading.
(g) Capitalization. The capitalization of the Company is as set forth in the
Prospectus and the Prospectus Supplement. The Company has not issued any capital stock since
its most recently filed periodic report under the Exchange Act, other than pursuant to the
offering described in the Previous Prospectus Supplement, the exercise of employee stock
options under the Companys equity incentive plans, the issuance of shares of Common Stock
to employees pursuant to the Companys employee stock
9
purchase plans and pursuant to the conversion and/or exercise of Common Stock
Equivalents outstanding as of the date of the most recently filed periodic report under the
Exchange Act. Except as set forth in the Rights Agreement, no Person has any right of first
refusal, preemptive right, right of participation, or any similar right to participate in
the transactions contemplated by the Transaction Documents. Except (i) as a result of the
purchase and sale of the Securities, (ii) pursuant to the Registration Statement in the
offering described in the Previous Prospectus Supplement, (iii) the warrant issued to Rodman
& Renshaw LLC as compensation for its services as placement agent to the Company in the
offering described in the Previous Prospectus Supplement, (iv) pursuant to the Companys
equity incentive plans, and (v) pursuant to agreements or instruments, including the Rights
Agreement, filed as exhibits to SEC Reports incorporated by reference into the Prospectus
Supplement, and (vi) pursuant to the warrant to be issued to Rodman & Renshaw LLC as
compensation for its services as placement agent to the Company in connection with the
purchase and sale of the Securities, there are no outstanding options, warrants, scrip
rights to subscribe to, calls or commitments of any character whatsoever relating to, or
securities, rights or obligations convertible into or exercisable or exchangeable for, or
giving any Person any right to subscribe for or acquire any shares of Common Stock, or
contracts, commitments, understandings or arrangements by which the Company or any
Subsidiary is or may become bound to issue additional shares of Common Stock or Common Stock
Equivalents. 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 Purchasers and the
Companys placement agent) and will not result in a right of any holder of Company
securities to adjust the exercise, conversion, exchange or reset price under any of such
securities. All of the outstanding shares of capital stock of the Company are validly
issued, fully paid and nonassessable, have been issued in compliance with all federal and
state securities laws, and none of such outstanding shares was issued in violation of any
preemptive rights or similar rights to subscribe for or purchase securities. Except for the
Required Approvals, no further approval or authorization of any stockholder, the Board of
Directors or others is required for the issuance and sale of the Securities. There are no
stockholders agreements, voting agreements or other similar agreements with respect to the
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 all reports,
schedules, forms, statements and other documents required to be filed by the Company under
the Securities Act and the Exchange Act, including pursuant to Section 13(a) or 15(d)
thereof, for the two years preceding the date hereof (or such shorter period as the Company
was required by law or regulation to file such material) (the foregoing materials, including
the exhibits thereto and documents incorporated by reference therein, together with the
Registration Statement, the Prospectus, the Previous Prospectus Supplement, and the
Prospectus Supplement, being collectively referred to herein as the SEC Reports)
on a timely basis or has received a valid extension of such time of filing and has filed any
such SEC Reports prior to the expiration of any such extension. As of their respective
dates, the SEC Reports complied in all material respects with the requirements of the
Securities Act and the Exchange Act, as applicable, and none of the SEC Reports, when filed,
contained any untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading. The Company has
never been an issuer subject to Rule 144(i) under the
10
Securities Act. 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 or as
amended or corrected in a subsequent SEC Report. Such financial statements have been
prepared in accordance with United States generally accepted accounting principles applied
on a consistent basis during the periods involved (GAAP), except as may be
otherwise specified in such financial statements or the notes thereto and except that
unaudited financial statements may not contain all footnotes required by GAAP, and fairly
present in all material respects the financial position of the Company and its consolidated
Subsidiaries as of and for the dates thereof and the results of operations and cash flows
for the periods then ended, subject, in the case of unaudited statements, to normal,
immaterial, year-end audit adjustments.
(i) Material Changes; Undisclosed Events, Liabilities or Developments. Since
the date of the latest audited financial statements included within the SEC Reports, except
as specifically disclosed in a subsequent SEC Report filed prior to the date hereof: (i)
there has been no event, occurrence or development that has had or that could reasonably be
expected to result in a Material Adverse Effect, (ii) the Company has not incurred any
liabilities (contingent or otherwise) other than (A) trade payables and accrued expenses
incurred in the ordinary course of business consistent with past practice and (B)
liabilities not required to be reflected in the Companys financial statements pursuant to
GAAP or disclosed in filings made with the Commission, (iii) the Company has not altered its
method of accounting, (iv) the Company has not declared or made any dividend or distribution
of cash or other property to its stockholders or purchased, redeemed or made any agreements
to purchase or redeem any shares of its capital stock and (v) the Company has not issued any
equity securities to any officer, director or Affiliate, except pursuant to existing Company
equity incentive plans. The Company does not have pending before the Commission any request
for confidential treatment of information. Except for the issuance of the Securities
contemplated by this Agreement, the issuance of a warrant to Rodman & Renshaw, LLC as
compensation for its services as placement agent, and as set forth on Schedule
3.1(i), no event, liability, fact, circumstance, occurrence or development has occurred
or exists or is reasonably expected to occur or exist with respect to the Company or its
Subsidiaries or their respective business, properties, operations, assets or financial
condition, that would be required to be disclosed by the Company under applicable securities
laws at the time this representation is made or deemed made that has not been publicly
disclosed at least 1 Trading Day prior to the date that this representation is made.
(j) Litigation. There is no action, suit, inquiry, notice of violation,
proceeding or investigation pending or, to the knowledge of the Company, threatened against
or affecting the Company, any Subsidiary or any of their respective properties before or by
any court, arbitrator, governmental or administrative agency or regulatory authority
(federal, state, county, local or foreign) (collectively, an Action) which (i)
adversely affects or challenges the legality, validity or enforceability of any of the
Transaction Documents or the Securities or (ii) could, if there were an unfavorable
decision, reasonably be expected to result in a Material Adverse Effect. Neither the
Company nor any Subsidiary, nor any director or officer thereof, is or has been the subject
of any Action involving a claim of violation of or liability under federal or state
securities laws or a claim of breach of fiduciary duty. There has not been, and to the
knowledge of the Company, there is not pending or contemplated, any investigation by the
Commission
11
involving the Company or any current or former director or officer of the Company. The
Commission has not issued any stop order or other order suspending the effectiveness of any
registration statement filed by the Company or any Subsidiary under the Exchange Act or the
Securities Act.
(k) Labor Relations. No material labor dispute exists or, to the knowledge of
the Company, is imminent with respect to any of the employees of the Company, which could
reasonably be expected to result in a Material Adverse Effect. None of the Companys or its
Subsidiaries employees is a member of a union that relates to such employees relationship
with the Company or such Subsidiary, and neither the Company nor any of its Subsidiaries is
a party to a collective bargaining agreement, and the Company and its Subsidiaries believe
that their relationships with their employees are good. No executive officer, to the
knowledge of the Company, is, or is now expected to be, in violation of any material term of
any employment contract, confidentiality, disclosure or proprietary information agreement or
non-competition agreement, or any other contract or agreement or any restrictive covenant in
favor of any third party, and the continued employment of each such executive officer does
not subject the Company or any of its Subsidiaries to any liability with respect to any of
the foregoing matters. The Company and its Subsidiaries are in compliance with all U.S.
federal, state, local and foreign laws and regulations relating to employment and employment
practices, terms and conditions of employment and wages and hours, except where the failure
to be in compliance could not, individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect.
(l) Compliance. Neither the Company nor any Subsidiary: (i) is in default
under or in violation of (and no event has occurred that has not been waived that, with
notice or lapse of time or both, would result in a default by the Company or any Subsidiary
under), nor has the Company or any Subsidiary received notice of a claim that it is in
default under or that it is in violation of, any indenture, loan or credit agreement or any
other agreement or instrument to which it is a party or by which it or any of its properties
is bound (whether or not such default or violation has been waived), (ii) is in violation of
any judgment, decree or order of any court, arbitrator or governmental body or (iii) is or
has been in violation of any statute, rule, ordinance or regulation of any governmental
authority, including without limitation all foreign, federal, state and local laws
applicable to its business and all such laws that affect the environment, except in each
case as could not reasonably be expected to result in a Material Adverse Effect.
(m) Regulatory Permits. The Company and the Subsidiaries possess all
certificates, authorizations and permits issued by the appropriate federal, state, local or
foreign regulatory authorities necessary to conduct their respective businesses as described
in the SEC Reports, except where the failure to possess such permits could not reasonably be
expected to result in a Material Adverse Effect (Material Permits), and neither
the Company nor any Subsidiary has received any notice of proceedings relating to the
revocation or modification of any Material Permit. For clarity, the Company has not received
the approval of any regulatory agency to market or sell any of its product candidates.
(n) Title to Assets. The Company and the Subsidiaries have good and marketable
title in fee simple to all real property owned by them and good and marketable title in all
personal property owned by them that is material to the business of
12
the Company and the Subsidiaries, in each case free and clear of all Liens, except for
Liens as do not materially affect the value of such property and do not materially interfere
with the use made and proposed to be made of such property by the Company and the
Subsidiaries and Liens for the payment of federal, state or other taxes, the payment of
which is neither delinquent nor subject to penalties. Any real property and facilities held
under lease by the Company and the Subsidiaries are held by them under valid, subsisting and
enforceable leases with which the Company and the Subsidiaries are in compliance, except
where such non-compliance would not reasonably be expected to have a Material Adverse
Effect.
(o) Patents and Trademarks. The Company and the Subsidiaries have, or have
rights to use, all patents, patent applications, trademarks, trademark applications, service
marks, trade names, trade secrets, inventions, copyrights, licenses and other intellectual
property rights and similar rights as described in the SEC Reports as necessary or material
for use in connection with their respective businesses and which the failure to could
reasonably be expected to have a Material Adverse Effect (collectively, the
Intellectual Property Rights). In the last 12 months, neither the Company nor any
Subsidiary has received a notice (written or otherwise) that any of the Intellectual
Property Rights used by the Company or any Subsidiary violates or infringes upon the rights
of any Person. To the knowledge of the Company, all such Intellectual Property Rights are
enforceable and there is no existing infringement by another Person of any of the
Intellectual Property Rights. The Company and its Subsidiaries have taken reasonable
security measures to protect the secrecy, confidentiality and value of all of their
intellectual properties, except where failure to do so could not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect.
(p) Insurance. The Company and the Subsidiaries are insured by insurers of
recognized financial responsibility against such losses and risks and in such amounts as are
prudent and customary for companies of similar size as the Company in the businesses in
which the Company and the Subsidiaries are engaged, including, but not limited to, directors
and officers insurance coverage at least equal to the aggregate Subscription Amount.
Neither the Company nor any Subsidiary has any reason to believe that it will not be able to
renew its existing insurance coverage as and when such coverage expires or to obtain similar
coverage from similar insurers as may be necessary to continue its business without a
significant increase in cost.
(q) Transactions With Affiliates and Employees. Except as set forth in the SEC
Reports, none of the officers or directors of the Company and, to the knowledge of the
Company, none of the employees of the Company is presently a party to any transaction with
the Company or any Subsidiary (other than for services as employees, officers and
directors), including any contract, agreement or other arrangement providing for the
furnishing of services to or by, providing for rental of real or personal property to or
from, or otherwise requiring payments to or from any officer, director or such employee or,
to the knowledge of the Company, any entity in which any officer, director, or any such
employee has a substantial interest or is an officer, director, trustee or partner, in each
case in excess of $120,000 other than for: (i) payment of salary or consulting fees for
services rendered, (ii) reimbursement for expenses incurred on behalf of the Company and
(iii) other employee benefits, including stock option or other equity award agreements under
any equity incentive plan of the Company.
13
(r) Sarbanes-Oxley; Internal Accounting Controls. The Company is in material
compliance with all provisions of the Sarbanes-Oxley Act of 2002 which are applicable to it
as of the Closing Date. The Company and the Subsidiaries maintain a system of internal
accounting controls sufficient to provide reasonable assurance that: (i) transactions are
executed in accordance with managements general or specific authorizations, (ii)
transactions are recorded as necessary to permit preparation of financial statements in
conformity with GAAP and to maintain asset accountability, (iii) access to assets is
permitted only in accordance with managements general or specific authorization, and (iv)
the recorded accountability for assets is compared with the existing assets at reasonable
intervals and appropriate action is taken with respect to any differences. The Company has
established disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e)
and 15d-15(e)) for the Company designed to ensure that information required to be disclosed
by the Company in the reports it files or submits under the Exchange Act is recorded,
processed, summarized and reported, within the time periods specified in the Commissions
rules and forms. The Companys certifying officers have evaluated the effectiveness of the
Companys disclosure controls and procedures as of the end of the period covered by the
Companys most recently filed periodic report under the Exchange Act (such date, the
Evaluation Date). The Company presented in its most recently filed periodic
report under the Exchange Act the conclusions of the certifying officers about the
effectiveness of the disclosure controls and procedures based on their evaluations as of the
Evaluation Date. Since the Evaluation Date, there have been no changes in the Companys
internal control over financial reporting (as such term is defined in the Exchange Act) that
has materially affected, or is reasonably likely to materially affect, the Companys
internal control over financial reporting.
(s) Certain Fees. Except as set forth in the Prospectus Supplement, no
brokerage or finders fees or commissions are or will be payable by the Company to any
broker, financial advisor or consultant, finder, placement agent, investment banker, bank or
other Person with respect to the transactions contemplated by the Transaction Documents.
The Purchasers shall have no obligation with respect to any fees or with respect to any
claims made by or on behalf of other Persons for fees of a type contemplated in this Section
that may be due in connection with the transactions contemplated by the Transaction
Documents.
(t) Investment Company. The Company is not, and is not an Affiliate of, and
immediately after receipt of payment for the Securities, will not be or be an Affiliate of,
an investment company within the meaning of the Investment Company Act of 1940, as
amended. The Company currently intends to conduct its business in a manner so that it will
not become an investment company subject to registration under the Investment Company Act
of 1940, as amended.
(u) Registration Rights. No Person has any right to cause the Company to
effect the registration under the Securities Act of any securities of the Company.
(v) Listing and Maintenance Requirements. The Common Stock is registered
pursuant to Section 12(b) or 12(g) of the Exchange Act, and the Company has taken no action
designed to, or 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
14
registration. The Company has not, in the 12 months preceding the date hereof,
received notice from any Trading Market on which the Common Stock is or has been listed or
quoted to the effect that the Company is not in compliance with the listing or maintenance
requirements of such Trading Market.
(w) Application of Takeover Protections. The Company and the Board of
Directors have taken all necessary action, if any, in order to render inapplicable any
control share acquisition, business combination, poison pill (including any distribution
under a rights agreement) or other similar anti-takeover provision under the Companys
certificate of incorporation (or similar charter documents) or the laws of its state of
incorporation that is or could become applicable to the Purchasers as a result of the
Purchasers and the Company fulfilling their obligations or exercising their rights under the
Transaction Documents, including without limitation as a result of the Companys issuance of
the Securities and the Purchasers ownership of the Securities.
(x) Disclosure. Except with respect to the material terms and conditions of
the transactions contemplated by the Transaction Documents, the Company confirms that
neither it nor any other Person acting on its behalf has provided any of the Purchasers or
their agents or counsel with any information that it believes constitutes or might
constitute material, non-public information which is not otherwise disclosed in the
Prospectus Supplement. The Company understands and confirms that the Purchasers will rely
on the foregoing representation in effecting transactions in securities of the Company. All
of the disclosure furnished by or on behalf of the Company to the Purchasers regarding the
Company, its business and the transactions contemplated hereby, including the Disclosure
Schedules to this Agreement, is true and correct in all material respects and does not
contain any untrue statement of a material fact or omit to state any material fact necessary
in order to make the statements made therein, in light of the circumstances under which they
were made, not misleading. 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. The Company acknowledges and
agrees that no Purchaser makes or has made any representations or warranties with respect to
the transactions contemplated hereby other than those specifically set forth in Section 3.2
hereof.
(y) No Integrated Offering. Assuming the accuracy of the Purchasers
representations and warranties set forth in Section 3.2, neither the Company, nor any of its
Affiliates, nor any Person acting on its or their behalf has, directly or indirectly, made
any offers or sales of any security or solicited any offers to buy any security, under
circumstances that would cause this offering of the Securities to be integrated with prior
offerings by the Company for purposes of any applicable shareholder approval provisions of
any Trading Market on which any of the securities of the Company are listed or
designated.
(z) Solvency. Based on the consolidated financial condition of the Company as
of the Closing Date, after giving effect to the receipt by the Company of the proceeds from
the sale of the Securities hereunder: (i) the fair saleable value of the Companys assets
exceeds the amount that will be required to be paid on or in respect of the Companys
existing debts and other liabilities (including known contingent liabilities) as
15
they mature, and (ii) the current cash flow of the Company, together with the proceeds
the Company would receive, were it to liquidate all of its assets, after taking into account
all anticipated uses of the cash, would be sufficient to pay all amounts on or in respect of
its liabilities when such amounts are required to be paid. The Company does not intend to
incur debts beyond its ability to pay such debts as they mature (taking into account the
timing and amounts of cash to be payable on or in respect of its debt). The Company has no
knowledge of any facts or circumstances which lead it to believe that it will file for
reorganization or liquidation under the bankruptcy or reorganization laws of any
jurisdiction within one year from the Closing Date. Schedule 3.1(z) sets forth as
of the date hereof all outstanding secured and unsecured Indebtedness of the Company or any
Subsidiary, or for which the Company or any Subsidiary has commitments. For the purposes of
this Agreement, Indebtedness means (x) any liabilities for borrowed money or
amounts owed in excess of $50,000 (other than accrued liabilities and trade accounts payable
incurred in the ordinary course of business), (y) all guaranties, endorsements and other
contingent obligations in respect of indebtedness of others, whether or not the same are or
should be reflected in the Companys balance sheet (or the notes thereto), except guaranties
by endorsement of negotiable instruments for deposit or collection or similar transactions
in the ordinary course of business; and (z) the present value of any lease payments in
excess of $50,000 due under leases required to be capitalized in accordance with GAAP.
Neither the Company nor any Subsidiary is in default with respect to any Indebtedness.
(aa) Tax Status. Except for matters that would not, individually or in the
aggregate, reasonably be expected to result in a Material Adverse Effect, the Company and
each Subsidiary has filed all necessary federal, state and foreign income and franchise tax
returns and has paid or accrued all taxes shown as due thereon, and the Company has no
knowledge of a tax deficiency which has been asserted or threatened against the Company or
any Subsidiary.
(bb) Foreign Corrupt Practices. Neither the Company, nor to the knowledge of
the Company, any agent or other person acting on behalf of the Company, has: (i) directly or
indirectly, used any funds for unlawful contributions, gifts, entertainment or other
unlawful expenses related to foreign or domestic political activity, (ii) made any unlawful
payment to foreign or domestic government officials or employees or to any foreign or
domestic political parties or campaigns from corporate funds, (iii) failed to disclose fully
any contribution made by the Company (or made by any person acting on its behalf of which
the Company is aware) which is in violation of law or (iv) violated in any material respect
any provision of the Foreign Corrupt Practices Act of 1977, as amended.
(cc) Accountants. The Companys accounting firm is J.H. Cohn LLP. To the
knowledge and belief of the Company, such accounting firm: (i) is a registered public
accounting firm as required by the Exchange Act and (ii) shall express its opinion with
respect to the financial statements to be included in the Companys Annual Report on Form
10-K for the year ending December 31, 2009.
(dd) Acknowledgment Regarding Purchasers Purchase of Securities. The Company
acknowledges and agrees that each of the Purchasers is acting solely in the capacity of an
arms length purchaser with respect to the Transaction Documents and the transactions
contemplated thereby. The Company further acknowledges that no
16
Purchaser is acting as a financial advisor or fiduciary of the Company (or in any
similar capacity) with respect to the Transaction Documents and the transactions
contemplated thereby and any advice given by any Purchaser or any of their respective
representatives or agents in connection with the Transaction Documents and the transactions
contemplated thereby is merely incidental to the Purchasers purchase of the Securities.
The Company further represents to each Purchaser that the Companys decision to enter into
this Agreement and the other Transaction Documents has been based solely on the independent
evaluation of the transactions contemplated hereby by the Company and its representatives.
(ee) Acknowledgment Regarding Purchasers Trading Activity. Anything in this
Agreement or elsewhere herein to the contrary notwithstanding (except for Sections 3.2(f)
and 4.14 hereof), it is understood and acknowledged by the Company that: (i) none of the
Purchasers have been asked by the Company to agree, nor has any Purchaser agreed, to desist
from purchasing or selling, long and/or short, securities of the Company, or derivative
securities based on securities issued by the Company or to hold the Securities for any
specified term, (ii) past or future open market or other transactions by any Purchaser,
specifically including, without limitation, Short Sales or derivative transactions, before
or after the closing of this or future private placement transactions, may negatively impact
the market price of the Companys publicly-traded securities, (iii) any Purchaser, and
counter-parties in derivative transactions to which any such Purchaser is a party,
directly or indirectly, may presently have a short position in the Common Stock and (iv)
each Purchaser shall not be deemed to have any affiliation with or control over any arms
length counter-party in any derivative transaction. The Company further understands and
acknowledges that (y) one or more Purchasers may engage in hedging activities at various
times during the period that the Securities are outstanding, including, without limitation,
during the periods that the value of the Underlying Shares deliverable with respect to
Securities are being determined, and (z) such hedging activities (if any) could reduce the
value of the existing stockholders equity interests in the Company at and after the time
that the hedging activities are being conducted. The Company acknowledges that such
aforementioned hedging activities do not constitute a breach of any of the Transaction
Documents.
(ff) Regulation M Compliance. The Company has not, and to its knowledge no one
acting on its behalf has, (i) taken, directly or indirectly, any action designed to cause or
to result in the stabilization or manipulation of the price of any security of the Company
to facilitate the sale or resale of any of the Securities, (ii) sold, bid for, purchased, or
paid any compensation for soliciting purchases of, any of the Securities, or (iii) paid or
agreed to pay to any Person any compensation for soliciting another to purchase any other
securities of the Company, other than, in the case of clauses (ii) and (iii), compensation
paid to the Companys placement agent in connection with the placement of the Securities.
(gg) 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 marketed
by the Company in compliance with all applicable requirements under FDCA
17
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.
(hh) Stock Option Plans. To the knowledge of the Company, each stock option
granted by the Company under the Companys equity incentive plan was granted (i) in
accordance with the terms of the Companys stock option plan and (ii) with an exercise price
at least equal to the fair market value of the Common Stock on the date such stock option
would be considered granted under GAAP and applicable law. To the knowledge of the Company,
no stock option granted under the Companys stock option plan has been backdated. The
Company has not knowingly granted, and there is no and has been no Company policy or
practice to knowingly grant, stock options prior to, or otherwise knowingly coordinate the
grant of stock options with, the release or other public announcement of material
information regarding the Company or its Subsidiaries or their financial results or
prospects.
3.2 Representations and Warranties of the Purchasers. Each Purchaser, for itself and
for no other Purchaser, hereby represents and warrants as of the date hereof and as of the Closing
Date to the Company as follows (unless as of a specific date therein):
(a) Organization; Authority. Such Purchaser is either an individual or an
entity duly organized, validly existing and in good standing under the laws of the
jurisdiction of its organization with full right, corporate or partnership power and
authority to enter into and to consummate the transactions contemplated by the Transaction
Documents and otherwise to carry out its obligations hereunder and thereunder. The execution
and delivery of the Transaction Documents and performance
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by such Purchaser of the transactions contemplated by the Transaction Documents have
been duly authorized by all necessary corporate, partnership, limited liability company or
similar action, as applicable, on the part of such Purchaser. Each Transaction Document to
which it is a party has been duly executed by such Purchaser, and when delivered by such
Purchaser in accordance with the terms hereof, will constitute the valid and legally binding
obligation of such Purchaser, enforceable against it in accordance with its terms, 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.
(b) No Conflicts. The execution, delivery and performance by such Purchaser of
this Agreement and the consummation by the Purchaser of the transactions contemplated hereby
do not and will not (i) conflict with or violate any provision of the Purchasers
certificate or articles of incorporation, bylaws, or other organizational or charter
documents, or (ii) 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 Purchaser is subject (including federal and state securities laws and
regulations), or by which any property or asset of the Purchaser is bound or affected.
(c) Own Account. Such Purchaser is acquiring the Securities as principal for
its own account and not with a view to or for distributing or reselling such Securities or
any part thereof in violation of the Securities Act or any applicable state securities law,
has no present intention of distributing any of such Securities in violation of the
Securities Act or any applicable state securities law and has no direct or indirect
arrangement or understandings with any other Persons to distribute or regarding the
distribution of such Securities in violation of the Securities Act or any applicable state
securities law (this representation and warranty not limiting such Purchasers right to sell
the Securities pursuant to the Registration Statement or otherwise in compliance with
applicable federal and state securities laws). Such Purchaser is acquiring the Securities
hereunder in the ordinary course of its business.
(d) Purchaser Status. At the time such Purchaser was offered the Securities,
it was, and as of the date hereof it is, and on each date on which it converts any shares of
Preferred Stock it will be either: (i) an accredited investor as defined in Rule
501(a)(1), (a)(2), (a)(3), (a)(7) or (a)(8) under the Securities Act or (ii) a qualified
institutional buyer as defined in Rule 144A(a) under the Securities Act. Such Purchaser is
not required to be registered as a broker-dealer under Section 15 of the Exchange Act.
(e) Experience of Such Purchaser. Such Purchaser acknowledges and understands
that (i) its investment in the Securities involves a high degree of risk and (ii) nothing in
the Transaction Documents or SEC Reports constitutes legal, tax or investment advice. Such
Purchaser, either alone or together with its representatives, has such knowledge,
sophistication and experience in business and financial matters so as to be capable of
evaluating the merits and risks of the prospective investment in the Securities, and has so
evaluated the merits and risks of such investment. Such Purchaser is able to bear the
economic risk of an investment in the Securities and, at the present time, is able to afford
a complete loss of such investment.
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(f) Certain Transactions and Confidentiality. Other than consummating the
transactions contemplated hereunder, such Purchaser has not directly or indirectly, nor has
any Person acting on behalf of or pursuant to any understanding with such Purchaser,
executed any purchases or sales, including Short Sales, of the securities of the Company
during the period commencing as of the time that such Purchaser first received information
(written or oral) from the Company or any other Person representing the Company setting
forth the proposed terms of the transactions contemplated hereunder and ending immediately
prior to the execution hereof. Notwithstanding the foregoing, in the case of a Purchaser
that is a multi-managed investment vehicle whereby separate portfolio managers manage
separate portions of such Purchasers assets and the portfolio managers have no direct
knowledge of the investment decisions made by the portfolio managers managing other portions
of such Purchasers assets, the representation set forth above shall only apply with respect
to the portion of assets managed by the portfolio manager that made the investment decision
to purchase the Securities covered by this Agreement. Other than to other Persons party to
this Agreement, such Purchaser has maintained the confidentiality of all disclosures made to
it in connection with this transaction (including the existence and terms of this
transaction). Notwithstanding the foregoing, for avoidance of doubt, nothing contained
herein shall constitute a representation or warranty, or preclude any actions, with respect
to the identification of the availability of, or securing of, available shares to borrow in
order to effect Short Sales or similar transactions in the future.
The Company acknowledges and agrees that the representations contained in Section 3.2 shall not
modify, amend or affect such Purchasers right to rely on the Companys representations and
warranties contained in this Agreement or any representations and warranties contained in any other
Transaction Document or any other document or instrument executed and/or delivered in connection
with this Agreement or the consummation of the transaction contemplated hereby.
ARTICLE IV.
OTHER AGREEMENTS OF THE PARTIES
OTHER AGREEMENTS OF THE PARTIES
4.1 Underlying Shares. The shares of Common Stock underlying the shares of Preferred
Stock shall be issued free of legends.
4.2 Acknowledgment of Dilution. The Company acknowledges that the issuance of the
Securities may result in dilution of the outstanding shares of Common Stock, which dilution may be
substantial under certain market conditions. The Company further acknowledges that its obligations
under the Transaction Documents, including, without limitation, its obligation to issue the
Underlying Shares pursuant to the Transaction Documents, are unconditional and absolute and not
subject to any right of set off, counterclaim, delay or reduction, regardless of the effect of any
such dilution or any claim the Company may have against any Purchaser and regardless of the
dilutive effect that such issuance may have on the ownership of the other stockholders of the
Company.
4.3 Furnishing of Information; Public Information. Until the earliest of the time
that (i) no Purchaser owns Securities or (ii) one year from the Closing Date, the Company covenants
to use its reasonable best efforts to maintain the registration of the Common Stock under Section
12(b) or 12(g) of the Exchange Act and to timely file (or obtain extensions in respect thereof and
file within the applicable grace period) all reports required to be filed by the Company after the
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date hereof pursuant to the Exchange Act even if the Company is not then subject to the
reporting requirements of the Exchange Act. As long as any Purchaser owns Securities, if the
Company is not required to file reports pursuant to the Exchange Act, it will prepare and furnish
to the Purchasers and make publicly available in accordance with Rule 144(c) such information as is
required for the Purchasers to sell the Securities under Rule 144. The Company further covenants
that it will take such further action as any holder of Securities may reasonably request, to the
extent required from time to time to enable such Person to sell such Securities without
registration under the Securities Act within the requirements of the exemption provided by Rule
144.
4.4 Integration. The Company shall not sell, offer for sale or solicit offers to buy
or otherwise negotiate in respect of any security (as defined in Section 2 of the Securities Act)
that would be integrated with the offer or sale of the Securities for purposes of the rules and
regulations of any Trading Market such that it would require shareholder approval prior to the
closing of such other transaction unless shareholder approval is obtained before the closing of
such subsequent transaction.
4.5 Conversion Procedures. The form of Notice of Conversion included in the
Certificate of Designation sets forth the totality of the procedures required of the Purchasers in
order to convert the Preferred Stock. No additional legal opinion, other information or
instructions shall be required of the Purchasers to convert their Preferred Stock. The Company
shall honor conversions of the Preferred Stock and shall deliver Underlying Shares in accordance
with the terms, conditions and time periods set forth in the Transaction Documents.
4.6 Securities Laws Disclosure; Publicity. The Company shall, by 3:30 p.m. (New York
City time) on the date hereof, issue a press release disclosing the material terms of the
transactions contemplated hereby and, by 9:30 a.m. (New York City time) on the Business Day
following the date hereof, shall file a Current Report on Form 8-K, and including the Transaction
Documents as exhibits thereto. From and after the issuance of such press release and the filing of
such Form 8-K, the Company shall have publicly disclosed all material, non-public information
delivered to any of the Purchasers by the Company or any of its subsidiaries, or any of their
respective officers, directors, employees or agents in connection with the transactions
contemplated by the Transaction Documents. The Company and each Purchaser shall consult with each
other in issuing any other press releases with respect to the transactions contemplated hereby, and
neither the Company nor any Purchaser shall issue any such press release nor otherwise make any
such public statement without the prior consent of the Company, with respect to any press release
of any Purchaser, or without the prior consent of each Purchaser, with respect to any press release
of the Company, which consent shall not unreasonably be withheld or delayed, except if such
disclosure is required by law, in which case the disclosing party shall promptly provide the other
party with prior notice of such public statement or communication. Notwithstanding the foregoing,
the Company shall not publicly disclose the name of any Purchaser, or include the name of any
Purchaser in any filing with the Commission or any regulatory agency or Trading Market, without the
prior written consent of such Purchaser, except: (a) as required by federal securities law in
connection with the filing of final Transaction Documents (including signature pages thereto) with
the Commission and (b) to the extent such disclosure is required by law or Trading Market
regulations, in which case the Company shall provide the Purchasers with prior notice of such
disclosure permitted under this clause (b).
4.7 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 Purchaser is an Acquiring
Person
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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 Purchaser could be deemed to trigger the provisions
of any such plan or arrangement, solely by virtue of receiving Securities under the Transaction
Documents or under any other agreement between the Company and the Purchasers.
4.8 Non-Public Information. Except with respect to the material terms and conditions
of the transactions contemplated by the Transaction Documents, the Company covenants and agrees
that neither it, nor any other Person acting on its behalf, will provide any Purchaser or its
agents or counsel with any information that the Company believes constitutes material non-public
information, unless prior thereto such Purchaser shall have executed a written agreement with the
Company regarding the confidentiality and use of such information. The Company understands and
confirms that each Purchaser shall be relying on the foregoing covenant in effecting transactions
in securities of the Company.
4.9 Use of Proceeds. Except as set forth in the Prospectus Supplement, the Company
shall use the net proceeds from the sale of the Securities hereunder for working capital purposes
and shall not use such proceeds for: (a) the satisfaction of any portion of the Companys debt
(other than payment of trade payables in the ordinary course of the Companys business and prior
practices), (b) the redemption of any Common Stock or Common Stock Equivalents or (c) the
settlement of any outstanding litigation.
4.10 Indemnification of Purchasers. Subject to the provisions of this Section 4.10
and to the extent permitted by law, the Company will indemnify and hold each Purchaser and its
directors, officers, shareholders, members, partners, employees and agents (and any other Persons
with a functionally equivalent role of a Person holding such titles notwithstanding a lack of such
title or any other title), each Person who controls such Purchaser (within the meaning of Section
15 of the Securities Act and Section 20 of the Exchange Act), and the directors, officers,
shareholders, agents, members, partners or employees (and any other Persons with a functionally
equivalent role of a Person holding such titles notwithstanding a lack of such title or any other
title) of such controlling persons (each, a Purchaser Party) harmless from any and all
losses, liabilities, obligations, claims, contingencies, damages, costs and expenses, including all
judgments, amounts paid in settlements, court costs and reasonable attorneys fees and costs of
investigation that any such Purchaser Party may suffer or incur as a result of or relating to (a)
any breach of any of the representations, warranties, covenants or agreements made by the Company
in this Agreement or in the other Transaction Documents or (b) any action instituted against a
Purchaser in any capacity, or any of them or their respective Affiliates, by any stockholder of the
Company who is not an Affiliate of such Purchaser, with respect to any of the transactions
contemplated by the Transaction Documents (unless such action is based upon a breach of such
Purchasers representations, warranties or covenants under the Transaction Documents or any
agreements or understandings such Purchaser may have with any such stockholder or any violations by
such Purchaser of state or federal securities laws or any conduct by such Purchaser which
constitutes fraud, gross negligence, willful misconduct or malfeasance). If any action shall be
brought against any Purchaser Party in respect of which indemnity may be sought pursuant to this
Agreement, such Purchaser Party shall promptly notify the Company in writing, and the Company shall
have the right to assume the defense thereof with counsel of its own choosing reasonably acceptable
to the Purchaser Party. Any Purchaser Party shall have the right to employ separate counsel in any
such action and participate in the defense thereof, but the fees and expenses of such counsel shall
be at the expense of such Purchaser Party except to the extent that (i) the employment thereof has
been specifically authorized by the Company in writing, (ii)
22
the Company has failed after a reasonable period of time to assume such defense and to employ
counsel or (iii) in such action there is, in the reasonable opinion of counsel, a material conflict
on any material issue between the position of the Company and the position of such Purchaser Party,
in which case the Company shall be responsible for the reasonable fees and expenses of no more than
one such separate counsel. The Company will not be liable to any Purchaser Party under this
Agreement (y) for any settlement by a Purchaser Party effected without the Companys prior written
consent, which shall not be unreasonably withheld or delayed; or (z) to the extent, but only to the
extent that a loss, claim, damage or liability is attributable to any Purchaser Partys breach of
any of the representations, warranties, covenants or agreements made by such Purchaser Party in
this Agreement or in the other Transaction Documents. The Company will have the exclusive right to
settle any claim or proceeding provided that the Company will not settle any such claim, action or
proceeding without the prior written consent of the Purchaser Party, which shall not be
unreasonably withheld or delayed; provided that such consent shall not be required if the
settlement includes a full and unconditional release of the Purchase Party from all liability
arising or that may arise out of such claim or proceeding and does not include a statement as to or
an admission or fault, culpability or a failure to act by or on behalf of any Purchaser Party.
4.11 Reservation and Listing of Securities.
(a) The Company shall maintain a reserve from its duly authorized shares of Common
Stock for issuance pursuant to the Transaction Documents in such amount as may then be
required to fulfill its obligations in full under the Transaction Documents.
(b) If, on any date, the number of authorized but unissued (and otherwise unreserved)
shares of Common Stock is less than the Required Minimum on such date, then the Board of
Directors shall use commercially reasonable efforts to amend the Companys certificate or
articles of incorporation to increase the number of authorized but unissued shares of Common
Stock to at least the Required Minimum at such time, as soon as possible and in any event
not later than the 75th day after such date.
(c) The Company shall, if applicable: (i) in the time and manner required by the
principal Trading Market, prepare and file with such Trading Market an additional shares
listing application covering a number of shares of Common Stock at least equal to the
Required Minimum on the date of such application, (ii) take all steps necessary to cause
such shares of Common Stock to be approved for listing or quotation on such Trading Market
as soon as possible thereafter, (iii) provide to the Purchasers evidence of such listing or
quotation and (iv) use its reasonable best efforts to maintain the listing or quotation of
such Common Stock on any date at least equal to the Required Minimum on such date on such
Trading Market or another Trading Market.
4.12 Subsequent Equity Sales.
(a) From the date hereof until sixty (60) days after June 12, 2009, 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.
(b) From the date hereof until such time as the earlier of one year after the Closing
Date or the date that no Purchaser holds any of the Securities, the Company shall
23
be prohibited from effecting or entering into an agreement to effect any issuance by
the Company or any of its Subsidiaries of Common Stock or Common Stock Equivalents for cash
consideration (or a combination of units thereof) involving a Variable Rate Transaction.
Variable Rate Transaction means a transaction in which the Company (i) issues or
sells any debt or equity securities that are convertible into, exchangeable or exercisable
for, or include the right to receive, additional shares of Common Stock either (A) at a
conversion price, exercise price or exchange rate or other price that is based upon, and/or
varies with, the trading prices of or quotations for the shares of Common Stock at any time
after the initial issuance of such debt or equity securities or (B) with a conversion,
exercise or exchange price that is subject to being reset at some future date after the
initial issuance of such debt or equity security or upon the occurrence of specified or
contingent events directly or indirectly related to the business of the Company or the
market for the Common Stock or (ii) enters into any agreement, including, but not limited
to, an equity line of credit, whereby the Company may sell securities at a future determined
price. Any Purchaser shall be entitled to obtain injunctive relief against the Company to
preclude any such issuance, which remedy shall be in addition to any right to collect
damages.
(c) Notwithstanding the foregoing, this Section 4.12 shall not apply in respect of an
Exempt Issuance, except that no Variable Rate Transaction shall be an Exempt Issuance.
4.13 Equal Treatment of Purchasers. No consideration (including any modification of
any Transaction Document) shall be offered or paid to any Person to amend or consent to a waiver or
modification of any provision of any of the Transaction Documents unless the same consideration is
also offered to all of the parties to the Transaction Documents. For clarification purposes, this
provision constitutes a separate right granted to each Purchaser by the Company and negotiated
separately by each Purchaser, and is intended for the Company to treat the Purchasers as a class
and shall not in any way be construed as the Purchasers acting in concert or as a group with
respect to the purchase, disposition or voting of Securities or otherwise.
4.14 Certain Transactions and Confidentiality. Each Purchaser, severally and not
jointly with the other Purchasers, covenants that neither it, nor any Affiliate acting on its
behalf or pursuant to any understanding with it will execute any purchases or sales, including
Short Sales, of any of the Companys securities during the period commencing with the execution of
this Agreement and ending at such time that the transactions contemplated by this Agreement are
first publicly announced pursuant to the initial press release as described in Section 4.6. Each
Purchaser, severally and not jointly with the other Purchasers, covenants that until such time as
the transactions contemplated by this Agreement are publicly disclosed by the Company pursuant to
the initial press release as described in Section 4.6, such Purchaser will maintain the
confidentiality of the existence and terms of this transaction and the information included in the
Transaction Documents and the Disclosure Schedules. Notwithstanding the foregoing, and
notwithstanding anything contained in this Agreement to the contrary, the Company expressly
acknowledges and agrees that (i) no Purchaser makes any representation, warranty or covenant hereby
that it will not engage in effecting transactions in any securities of the Company after the time
that the transactions contemplated by this Agreement are first publicly announced pursuant to the
initial press release as described in Section 4.6, (ii) no Purchaser shall be restricted or
prohibited from effecting any transactions in any securities of the Company in accordance with
applicable securities laws from and after the time that the transactions contemplated by this
Agreement are first publicly announced pursuant to the initial press release as described in
24
Section 4.6 and (iii) no Purchaser shall have any duty of confidentiality to the Company or
its Subsidiaries after the issuance of the initial press release as described in Section 4.6.
Notwithstanding the foregoing, in the case of a Purchaser that is a multi-managed investment
vehicle whereby separate portfolio managers manage separate portions of such Purchasers assets and
the portfolio managers have no direct knowledge of the investment decisions made by the portfolio
managers managing other portions of such Purchasers assets, the covenant set forth above shall
only apply with respect to the portion of assets managed by the portfolio manager that made the
investment decision to purchase the Securities covered by this Agreement.
4.15 Delivery of Certificates After Closing. The Company shall deliver, or cause to
be delivered, the respective Securities purchased by each Purchaser to such Purchaser within 3
Trading Days of the Closing Date.
ARTICLE V.
MISCELLANEOUS
MISCELLANEOUS
5.1 Termination. This Agreement may be terminated by any Purchaser, as to such
Purchasers obligations hereunder only and without any effect whatsoever on the obligations between
the Company and the other Purchasers, by written notice to the other parties, if the Closing has
not been consummated on or before July 6, 2009; provided, however, that such termination will not
affect the right of any party to sue for any breach by the other party (or parties).
5.2 Fees and Expenses. At the Closing, the Company has agreed to reimburse the
Purchasers the non-accountable sum of $25,000 for their legal fees and expenses. Accordingly, in
lieu of the foregoing payments, the aggregate amount that the Purchasers are to pay for the
Securities at the Closing shall be reduced by $25,000 in lieu thereof. Except as expressly set
forth in the Transaction Documents to the contrary, each party shall pay the fees and expenses of
its advisers, counsel, accountants and other experts, if any, and all other expenses incurred by
such party incident to the negotiation, preparation, execution, delivery and performance of this
Agreement. The Company shall pay all Transfer Agent fees, stamp taxes and other taxes and duties
levied in connection with the delivery of any Securities to the Purchasers.
5.3 Entire Agreement. The Transaction Documents, together with the exhibits and
schedules thereto, the Prospectus and the Prospectus Supplement, contain the entire understanding
of the parties with respect to the subject matter hereof and supersede all prior agreements and
understandings, oral or written, with respect to such matters, which the parties acknowledge have
been merged into such documents, exhibits and schedules.
5.4 Notices. Any and all notices or other communications or deliveries required or
permitted to be provided hereunder shall be in writing and shall be deemed given and effective on
the earliest of: (a) the date of transmission, if such notice or communication is delivered via
facsimile at the facsimile number set forth on the signature pages attached hereto prior to 5:30
p.m. (New York City time) on a Trading Day, (b) the next Trading Day after the date of
transmission, if such notice or communication is delivered via facsimile at the facsimile number
set forth on the signature pages attached hereto on a day that is not a Trading Day or later than
5:30 p.m. (New York City time) on any Trading Day, (c) the second (2nd) Trading Day
following the date of mailing, if sent by U.S. nationally recognized overnight courier service or
(d) upon actual receipt by the party to whom such notice is required to be given. The address for
such notices and communications shall be as set forth on the signature pages attached hereto.
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5.5 Amendments; Waivers. No provision of this Agreement may be waived, modified,
supplemented or amended except in a written instrument signed, in the case of an amendment, by the
Company and the Purchasers holding at least 67% in interest of the Securities then outstanding or,
in the case of a waiver, by the party against whom enforcement of any such waived provision is
sought. No waiver of any default with respect to any provision, condition or requirement of this
Agreement shall be deemed to be a continuing waiver in the future or a waiver of any subsequent
default or a waiver of any other provision, condition or requirement hereof, nor shall any delay or
omission of any party to exercise any right hereunder in any manner impair the exercise of any such
right.
5.6 Headings. The headings herein are for convenience only, do not constitute a part
of this Agreement and shall not be deemed to limit or affect any of the provisions hereof.
5.7 Successors and Assigns. This Agreement shall be binding upon and inure to the
benefit of the parties and their successors and permitted assigns. The Company may not assign this
Agreement or any rights or obligations hereunder without the prior written consent of each
Purchaser (other than by merger). Any Purchaser may assign any or all of its rights under this
Agreement to any Person to whom such Purchaser assigns or transfers any Securities, provided that
such transferee agrees in writing to be bound, with respect to the transferred Securities, by the
provisions of the Transaction Documents that apply to the Purchasers.
5.8 No Third-Party Beneficiaries. This Agreement is intended for the benefit of the
parties hereto and their respective successors and permitted assigns and is not for the benefit of,
nor may any provision hereof be enforced by, any other Person, except as otherwise set forth in
Section 4.10.
5.9 Governing Law. All questions concerning the construction, validity, enforcement
and interpretation of the Transaction Documents shall be governed by and construed and enforced in
accordance with the internal laws of the State of New York, without regard to the principles of
conflicts of law thereof. Each party agrees that all legal proceedings concerning the
interpretations, enforcement and defense of the transactions contemplated by this Agreement and any
other Transaction Documents (whether brought against a party hereto or its respective affiliates,
directors, officers, shareholders, employees or agents) shall be commenced exclusively in the state
and federal courts sitting in the City of New York. Each party hereby irrevocably submits to the
exclusive jurisdiction of the state and federal courts sitting in the City of New York, borough of
Manhattan for the adjudication of any dispute hereunder or in connection herewith or with any
transaction contemplated hereby or discussed herein (including with respect to the enforcement of
any of the Transaction Documents), and hereby irrevocably waives, and agrees not to assert in any
suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any
such court, that such suit, action or proceeding is improper or is an inconvenient venue for such
proceeding. Each party hereby irrevocably waives personal service of process and consents to
process being served in any such suit, action or proceeding by mailing a copy thereof via
registered or certified mail or overnight delivery (with evidence of delivery) to such party at the
address in effect for notices to it under this Agreement and agrees that such service shall
constitute good and sufficient service of process and notice thereof. Nothing contained herein
shall be deemed to limit in any way any right to serve process in any other manner permitted by
law. If either party shall commence an action or proceeding to enforce any provisions of the
Transaction Documents, then, in addition to the obligations of the Company under Section 4.10, the
prevailing party in such action or proceeding shall be reimbursed by the
26
other party for its reasonable attorneys fees and other costs and expenses incurred with the
investigation, preparation and prosecution of such action or proceeding.
5.10 Survival. The representations and warranties contained herein shall survive the
Closing and the delivery of the Securities.
5.11 Execution. This Agreement may be executed in two or more counterparts, all of
which when taken together shall be considered one and the same agreement and shall become effective
when counterparts have been signed by each party and delivered to the other party, it being
understood that both parties need not sign the same counterpart. In the event that any signature
is delivered by facsimile transmission or by e-mail delivery of a .pdf format data file, such
signature shall create a valid and binding obligation of the party executing (or on whose behalf
such signature is executed) with the same force and effect as if such facsimile or .pdf signature
page were an original thereof.
5.12 Severability. If any term, provision, covenant or restriction of this Agreement
is held by a court of competent jurisdiction to be invalid, illegal, void or unenforceable, the
remainder of the terms, provisions, covenants and restrictions set forth herein shall remain in
full force and effect and shall in no way be affected, impaired or invalidated, and the parties
hereto shall use their commercially reasonable efforts to find and employ an alternative means to
achieve the same or substantially the same result as that contemplated by such term, provision,
covenant or restriction. It is hereby stipulated and declared to be the intention of the parties
that they would have executed the remaining terms, provisions, covenants and restrictions without
including any of such that may be hereafter declared invalid, illegal, void or unenforceable.
5.13 Rescission and Withdrawal Right. Notwithstanding anything to the contrary
contained in (and without limiting any similar provisions of) any of the other Transaction
Documents, whenever any Purchaser exercises a right, election, demand or option under a Transaction
Document and the Company does not timely perform its related obligations within the periods therein
provided, then such Purchaser may rescind or withdraw, in its sole discretion from time to time
upon written notice to the Company, any relevant notice, demand or election in whole or in part
without prejudice to its future actions and rights; provided, however, that in the case of a
rescission of a conversion of the Preferred Stock, the applicable Purchaser shall be required to
return any shares of Common Stock subject to any such rescinded conversion notice.
5.14 Replacement of Securities. If any certificate or instrument evidencing any
Securities is mutilated, lost, stolen or destroyed, the Company shall issue or cause to be issued
in exchange and substitution for and upon cancellation thereof (in the case of mutilation), or in
lieu of and substitution therefor, a new certificate or instrument, but only upon receipt of
evidence reasonably satisfactory to the Company of such loss, theft or destruction. The applicant
for a new certificate or instrument under such circumstances shall also pay any reasonable
third-party costs (including customary indemnity) associated with the issuance of such replacement
Securities.
5.15 Remedies. In addition to being entitled to exercise all rights provided herein
or granted by law, including recovery of damages, each of the Purchasers and the Company will be
entitled to specific performance under the Transaction Documents. The parties agree that monetary
damages may not be adequate compensation for any loss incurred by reason of any breach of
obligations contained in the Transaction Documents and hereby agree to waive and not
27
to assert in any action for specific performance of any such obligation the defense that a
remedy at law would be adequate.
5.16 Payment Set Aside. To the extent that the Company makes a payment or payments to
any Purchaser pursuant to any Transaction Document or a Purchaser enforces or exercises its rights
thereunder, and such payment or payments or the proceeds of such enforcement or exercise or any
part thereof are subsequently invalidated, declared to be fraudulent or preferential, set aside,
recovered from, disgorged by or are required to be refunded, repaid or otherwise restored to the
Company, a trustee, receiver or any other person under any law (including, without limitation, any
bankruptcy law, state or federal law, common law or equitable cause of action), then to the extent
of any such restoration the obligation or part thereof originally intended to be satisfied shall be
revived and continued in full force and effect as if such payment had not been made or such
enforcement or setoff had not occurred.
5.17 Usury. To the extent it may lawfully do so, the Company hereby agrees not to
insist upon or plead or in any manner whatsoever claim, and will resist any and all efforts to be
compelled to take the benefit or advantage of, usury laws wherever enacted, now or at any time
hereafter in force, in connection with any claim, action or proceeding that may be brought by any
Purchaser in order to enforce any right or remedy under any Transaction Document. Notwithstanding
any provision to the contrary contained in any Transaction Document, it is expressly agreed and
provided that the total liability of the Company under the Transaction Documents for payments in
the nature of interest shall not exceed the maximum lawful rate authorized under applicable law
(the Maximum Rate), and, without limiting the foregoing, in no event shall any rate of
interest or default interest, or both of them, when aggregated with any other sums in the nature of
interest that the Company may be obligated to pay under the Transaction Documents exceed such
Maximum Rate. It is agreed that if the maximum contract rate of interest allowed by law and
applicable to the Transaction Documents is increased or decreased by statute or any official
governmental action subsequent to the date hereof, the new maximum contract rate of interest
allowed by law will be the Maximum Rate applicable to the Transaction Documents from the Closing
Date thereof forward, unless such application is precluded by applicable law. If under any
circumstances whatsoever, interest in excess of the Maximum Rate is paid by the Company to any
Purchaser with respect to indebtedness evidenced by the Transaction Documents, such excess shall be
applied by such Purchaser to the unpaid principal balance of any such indebtedness or be refunded
to the Company, the manner of handling such excess to be at such Purchasers election.
5.18 Independent Nature of Purchasers Obligations and Rights. The obligations of
each Purchaser under any Transaction Document are several and not joint with the obligations of any
other Purchaser, and no Purchaser shall be responsible in any way for the performance or
non-performance of the obligations of any other Purchaser under any Transaction Document. Nothing
contained herein or in any other Transaction Document, and no action taken by any Purchaser
pursuant thereto, shall be deemed to constitute the Purchasers as a partnership, an association, a
joint venture or any other kind of entity, or create a presumption that the Purchasers are in any
way acting in concert or as a group with respect to such obligations or the transactions
contemplated by the Transaction Documents. Each Purchaser shall be entitled to independently
protect and enforce its rights, including, without limitation, the rights arising out of this
Agreement or out of the other Transaction Documents, and it shall not be necessary for any other
Purchaser to be joined as an additional party in any proceeding for such purpose. Each Purchaser
has been represented by its own separate legal counsel in their review and negotiation of the
Transaction Documents. For reasons of administrative convenience only, each Purchaser
28
and its respective counsel have chosen to communicate with the Company through WS. The
Company has elected to provide all Purchasers with the same terms and Transaction Documents for the
convenience of the Company and not because it was required or requested to do so by any of the
Purchasers.
5.19 Liquidated Damages. The Companys obligations to pay any partial liquidated
damages or other amounts owing under the Transaction Documents is a continuing obligation of the
Company and shall not terminate until all unpaid partial liquidated damages and other amounts have
been paid notwithstanding the fact that the instrument or security pursuant to which such partial
liquidated damages or other amounts are due and payable shall have been canceled.
5.20 Saturdays, Sundays, Holidays, etc. If the last or appointed day for the taking
of any action or the expiration of any right required or granted herein shall not be a Business
Day, then such action may be taken or such right may be exercised on the next succeeding Business
Day.
5.21 Construction. The parties agree that each of them and/or their respective
counsel has reviewed and had an opportunity to revise the Transaction Documents and, therefore, the
normal rule of construction to the effect that any ambiguities are to be resolved against the
drafting party shall not be employed in the interpretation of the Transaction Documents or any
amendments hereto. In addition, each and every reference to share prices and shares of Common Stock
in any Transaction Document shall be subject to adjustment for reverse and forward stock splits,
stock dividends, stock combinations and other similar transactions of the Common Stock that occur
after the date of this Agreement.
5.22 WAIVER OF JURY TRIAL. IN ANY ACTION, SUIT, OR PROCEEDING IN ANY JURISDICTION BROUGHT
BY ANY PARTY AGAINST ANY OTHER PARTY, THE PARTIES EACH KNOWINGLY AND INTENTIONALLY, TO THE GREATEST
EXTENT PERMITTED BY APPLICABLE LAW, HEREBY ABSOLUTELY, UNCONDITIONALLY, IRREVOCABLY AND EXPRESSLY
WAIVES FOREVER TRIAL BY JURY.
(Signature Pages Follow)
29
IN WITNESS WHEREOF, the parties hereto have caused this Securities Purchase Agreement to be
duly executed by their respective authorized signatories as of the date first indicated above.
ADVENTRX PHARMACEUTICALS, INC. |
||||
By: | /s/ Brian M. Culley | |||
Name: | Brian M. Culley | |||
Title: | Chief Business Officer and Senior Vice President | |||
Address for Notice:
|
6725 Mesa Ridge Road, Suite 100 | |
San Diego, CA 92121 | ||
Fax: (858) 552-0876 | ||
With a copy to (which shall not constitute notice):
|
DLA Piper LLP (US) | |
4365 Executive Drive, Suite 1100 | ||
San Diego, CA 92121 | ||
Attention: Michael S. Kagnoff Fax: (858) 677-1401 |
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
SIGNATURE PAGE FOR PURCHASER FOLLOWS]
SIGNATURE PAGE FOR PURCHASER FOLLOWS]
[PURCHASER SIGNATURE PAGES TO ANX SECURITIES PURCHASE AGREEMENT]
IN WITNESS WHEREOF, the undersigned has caused this Securities Purchase Agreement to be duly
executed by its authorized signatory as of the date first indicated above.
Name of Purchaser:
Signature of Authorized Signatory of Purchaser:
Name of Authorized Signatory:
Title of Authorized Signatory:
Email Address of Authorized Signatory:
Facsimile Number of Authorized Signatory:
Address
for Notice of Purchaser:
Address for Delivery of Preferred Stock certificate for Purchaser (if not same as address for
notice):
Subscription Amount: _____________
Shares of Preferred Stock: ____________
EIN Number: [PROVIDE THIS UNDER SEPARATE COVER]
Schedule 3.1(a)
Name of Subsidiary | Jurisdiction of Organization | |
SD Pharmaceuticals, Inc.
|
Delaware | |
ADVENRTRX (Europe) Ltd.
|
United Kingdom |
Exhibit 4.2
NEITHER THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE SECURITIES
INTO WHICH THESE SECURITIES ARE EXERCISABLE HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE SECURITIES ACT), OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE
OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION
STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT, OR (B) AN AVAILABLE EXEMPTION FROM, OR IN A
TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE
WITH APPLICABLE STATE SECURITIES LAWS OR BLUE SKY LAWS. THE ISSUER OF THESE SECURITIES MAY REQUIRE
AN OPINION OF COUNSEL, IN FORM AND SUBSTANCE REASONABLY SATISFACTORY TO THE ISSUER, TO THE EFFECT
THAT ANY PROPOSED TRANSFER OR RESALE OF THESE SECURITIES IS IN COMPLIANCE WITH THE SECURITIES ACT
AND ANY APPLICABLE STATE SECURITIES LAWS.
COMMON STOCK PURCHASE WARRANT
ADVENTRX PHARMACEUTICALS, INC.
Warrant No.: CS-09[]
|
Initial Exercise Date: January [], 2010 | |
Warrant Shares: []
|
Issue Date: July [], 2009 |
THIS COMMON STOCK PURCHASE WARRANT (the Warrant) certifies that, for value received,
[] (the Holder) is entitled, upon the terms and subject to the limitations on exercise
and the conditions hereinafter set forth, at any time on or after January [], 2010 (the
Initial Exercise Date) and on or prior to 5:30 p.m. (New York City time) on July [],
2014 (the Termination Date) but not thereafter, to subscribe for and purchase from
ADVENTRX Pharmaceuticals, Inc., a Delaware corporation (the Company), up to [] shares
(the Warrant Shares) of Common Stock. The purchase price of one share of Common Stock
under this Warrant shall be equal to the Exercise Price, as defined in Section 2(b).
Section 1. Definitions. Capitalized terms used and not otherwise defined
herein shall have the meanings set forth in that certain Securities Purchase Agreement (the
Purchase Agreement), dated June 29, 2009, among the Company and the purchasers signatory
thereto.
Section 2. Exercise.
a) Exercise of Warrant. Exercise of the purchase rights represented by this Warrant
may be made, in whole or in part, at any time or times on or after the Initial Exercise Date and on
or before the Termination Date by delivery to the Company (or such other office or agency of the
Company as it may designate by notice in writing to the registered Holder at the address of the
Holder appearing on the books of the Company) of a duly executed facsimile copy of the Notice of
Exercise Form annexed hereto; and, within three (3) Trading Days of the date said Notice of
Exercise is delivered to the Company, the Company shall have received payment of the aggregate
Exercise Price of the shares thereby purchased by wire transfer or cashiers
1
check drawn on a United States bank or, if available, pursuant to the cashless exercise
procedure specified in Section 2(c) below. Notwithstanding anything herein to the contrary, except
as set forth in Section 2(d)(ii) below, the Holder shall not be required to physically surrender
this Warrant to the Company until the Holder has purchased all of the Warrant Shares available
hereunder and the Warrant has been exercised in full, in which case, the Holder shall surrender
this Warrant to the Company for cancellation within three (3) Trading Days of the date the final
Notice of Exercise is delivered to the Company. Partial exercises of this Warrant resulting in
purchases of a portion of the total number of Warrant Shares available hereunder shall have the
effect of lowering the outstanding number of Warrant Shares purchasable hereunder in an amount
equal to the applicable number of Warrant Shares purchased. The Holder and the Company shall
maintain records showing the number of Warrant Shares purchased and the date of such purchases.
The Company shall deliver any objection to any Notice of Exercise Form within 1 Business Day of
receipt of such notice. In the event of any dispute or discrepancy, the records of the Holder
shall be controlling and determinative in the absence of manifest error. The Holder and any
assignee, by acceptance of this Warrant, acknowledge and agree that, by reason of the provisions of
this paragraph, following the purchase of a portion of the Warrant Shares hereunder, the number of
Warrant Shares available for purchase hereunder at any given time may be less than the amount
stated on the face hereof.
b) Exercise Price. The exercise price per share of the Common Stock under this
Warrant shall be $0.179, subject to adjustment hereunder (the Exercise Price).
c) Cashless Exercise. If at the time of exercise hereof there is no effective
registration statement registering, or the prospectus contained therein is not available for the
issuance of the Warrant Shares to the Holder and all of the Warrant Shares are not then registered
for resale by Holder into the market at market prices from time to time on an effective
registration statement for use on a continuous basis (or the prospectus contained therein is not
available for use), then this Warrant may also be exercised, in whole or in part, at such time by
means of a cashless exercise in which the Holder shall be entitled to receive that number of
Warrant Shares equal to the quotient obtained by dividing [(A-B) (X)] by (A), where:
(A) | = | the VWAP on the Trading Day immediately preceding the date on which Holder elects to exercise this Warrant by means of a cashless exercise, as set forth in the applicable Notice of Exercise; | |
(B) | = | the Exercise Price of this Warrant, as adjusted hereunder; and | |
(X) | = | the number of Warrant Shares that would be issuable upon exercise of this Warrant in accordance with the terms of this Warrant if such exercise were by means of a cash exercise rather than a cashless exercise. |
VWAP means, for any date, the price determined by the first of the following clauses
that applies: (a) if the Common Stock is then listed or quoted on a Trading Market, the daily
volume weighted average price of the Common Stock for such date (or the nearest preceding date) on
the Trading Market on which the Common Stock is then listed or quoted as reported by Bloomberg L.P.
(based on a Trading Day from 9:30 a.m. (New York City time) to 4:02 p.m. (New York City time), (b)
if the OTC Bulletin Board is not a Trading Market, the
2
volume weighted average price of the Common Stock for such date (or the nearest preceding
date) on the OTC Bulletin Board, (c) if the Common Stock is not then listed or quoted for trading
on the OTC Bulletin Board and if prices for the Common Stock are then reported in the Pink Sheets
published by Pink OTC Markets, Inc. (or a similar organization or agency succeeding to its
functions of reporting prices), the most recent bid price per share of the Common Stock so
reported, or (d) in all other cases, the fair market value of a share of Common Stock as determined
by an independent appraiser selected in good faith by the Holders of a majority in interest of the
Securities then outstanding and reasonably acceptable to the Company, the fees and expenses of
which shall be paid by the Company.
Notwithstanding anything herein to the contrary, on the Termination Date, this Warrant shall
be automatically exercised via cashless exercise pursuant to this Section 2(c).
d) Mechanics of Exercise.
i. Delivery of Shares Upon Exercise. Shares purchased hereunder shall be transmitted
by the Transfer Agent to the Holder by crediting the account of the Holders prime broker with the
Depository Trust Company through its Deposit Withdrawal Agent Commission (DWAC) system if
the Company is then a participant in such system and either (A) there is an effective Registration
Statement permitting the issuance of the Warrant Shares to or resale of the Warrant Shares by
Holder or (B) this Warrant is being exercised via cashless exercise more than six months after its
original issue date (or one year in the event there is not adequate current public information
available with respect to the Company as required by subsection (c) of Rule 144) and the Holder is
not and has not been an Affiliate of the Company within 90 days of the date of exercise, and
otherwise by physical delivery of a certificate for such shares to the address specified by the
Holder in the Notice of Exercise by the date that is three (3) Trading Days after the latest of (A)
the delivery to the Company of the Notice of Exercise Form and receipt of the DWAC request from the
Holders prime broker (if applicable), (B) surrender of this Warrant (if required) and (C) payment
of the aggregate Exercise Price as set forth above (including by cashless exercise, if permitted)
(such date, the Warrant Share Delivery Date). This Warrant shall be deemed to have been
exercised on the first date on which all of the foregoing have been delivered to the Company. The
Warrant Shares shall be deemed to have been issued, and Holder or any other person so designated to
be named therein shall be deemed to have become a holder of record of such shares for all purposes,
as of the date the Warrant has been exercised, with payment to the Company of the Exercise Price
(or by cashless exercise, if permitted) and all taxes required to be paid by the Holder, if any,
pursuant to Section 2(d)(vi) prior to the issuance of such shares, having been paid.
ii. Delivery of New Warrants Upon Exercise. If this Warrant shall have been exercised
in part, the Company shall, at the request of a Holder and upon surrender of this Warrant
certificate, at the time of delivery of the certificate or certificates representing Warrant
Shares, deliver to Holder a new Warrant evidencing the rights of Holder to purchase the unpurchased
Warrant Shares called for by this Warrant, which new Warrant shall in all other respects be
identical with this Warrant.
iii. Rescission Rights. If the Company fails to cause the Transfer Agent to transmit
either to the Holders prime broker the Warrant Shares or to the Holder a
3
certificate or the certificates representing the Warrant Shares, as applicable pursuant to
Section 2(d)(i) hereof, by the Warrant Share Delivery Date, then, the Holder will have the right to
rescind such exercise.
iv. Compensation for Buy-In on Failure to Timely Deliver Shares Upon Exercise. In
addition to any other rights available to the Holder, if the Company fails to instruct the Transfer
Agent to transmit to the Holders prime broker the Warrant Shares, or to the Holder a certificate
or the certificates representing the Warrant Shares, pursuant to an exercise on or before the
Warrant Share Delivery Date, and if after such date the Holder is required by its broker to
purchase (in an open market transaction or otherwise) or the Holders brokerage firm otherwise
purchases, shares of Common Stock to deliver in satisfaction of a sale by the Holder of the Warrant
Shares which the Holder anticipated receiving upon such exercise (a Buy-In), then the
Company shall (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 Warrant Shares that the
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
Warrant 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
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 certificates representing shares of Common Stock upon exercise of the Warrant as
required pursuant to the terms hereof.
v. No Fractional Shares or Scrip. No fractional shares or scrip representing
fractional shares shall be issued upon the exercise of this Warrant. As to any fraction of a share
which the Holder would otherwise be entitled to purchase upon such exercise, the Company shall, at
its election, either pay a cash adjustment in respect of such final fraction in an amount equal to
such fraction multiplied by the Exercise Price or round up to the next whole share.
vi. Charges, Taxes and Expenses. Issuance of certificates for Warrant Shares shall be
made without charge to the Holder for any issue or transfer tax or other incidental expense in
respect of the issuance of such certificate, all of which taxes and expenses shall be paid by the
Company, and such certificates shall be issued in the name of the Holder or in such name or names
as may be directed by the Holder; provided, however, that in the event certificates
for Warrant Shares are to be issued in a name other than the name of the Holder, this Warrant when
surrendered for exercise shall be accompanied by the Assignment Form attached
4
hereto duly executed by the Holder and the Company may require, as a condition thereto, the
payment of a sum sufficient to reimburse it for any transfer tax incidental thereto.
vii. Closing of Books. The Company will not close its stockholder books or records in
any manner which prevents the timely exercise of this Warrant, pursuant to the terms hereof.
e) Holders Exercise Limitations. The Company shall not effect any exercise of this
Warrant, and a Holder shall not have the right to exercise any portion of this Warrant, pursuant to
Section 2 or otherwise, to the extent that after giving effect to such issuance after exercise as
set forth on the applicable Notice of Exercise, the Holder (together with the Holders Affiliates,
and any other Persons acting as a group together with the Holder or any of the Holders
Affiliates), would beneficially own in excess of the Beneficial Ownership Limitation (as defined
below). For purposes of the foregoing sentence, the number of shares of Common Stock beneficially
owned by the Holder and its Affiliates shall include the number of shares of Common Stock issuable
upon exercise of this Warrant with respect to which such determination is being made, but shall
exclude the number of shares of Common Stock which would be issuable upon (i) exercise of the
remaining, nonexercised portion of this Warrant beneficially owned by the Holder or any of its
Affiliates and (ii) exercise or conversion of the unexercised or nonconverted portion of any other
securities of the Company (including, without limitation, any other Common Stock Equivalents)
subject to a limitation on conversion or exercise analogous to the limitation contained herein
beneficially owned by the Holder or any of its Affiliates. Except as set forth in the preceding
sentence, for purposes of this Section 2(e), beneficial ownership shall be calculated in accordance
with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder, it
being acknowledged by the Holder that the Company is not representing to the Holder that such
calculation is in compliance with Section 13(d) of the Exchange Act and the Holder is solely
responsible for any schedules required to be filed in accordance therewith. To the extent that
the limitation contained in this Section 2(e) applies, the determination of whether this Warrant is
exercisable (in relation to other securities owned by the Holder together with any Affiliates) and
of which portion of this Warrant is exercisable shall be in the sole discretion of the Holder, and
the submission of a Notice of Exercise shall be deemed to be the Holders determination of whether
this Warrant is exercisable (in relation to other securities owned by the Holder together with any
Affiliates) and of which portion of this Warrant is exercisable, in each case subject to the
Beneficial Ownership Limitation, and the Company shall have no obligation to verify or confirm the
accuracy of such determination. In addition, a determination as to any group status as
contemplated above shall be determined in accordance with Section 13(d) of the Exchange Act and the
rules and regulations promulgated thereunder. For purposes of this Section 2(e), in determining
the number of outstanding shares of Common Stock, a Holder may rely on the number of outstanding
shares of Common Stock as reflected in (A) the Companys most recent periodic or annual report
filed with the Commission, as the case may be, (B) a more recent public announcement by the Company
or (C) a more recent written notice by the Company or the Transfer Agent setting forth the number
of shares of Common Stock outstanding. Upon the written or oral request of a Holder, the Company
shall within two Trading Days confirm orally and in writing to the Holder the number of shares of
Common Stock then outstanding. In any case, the number of outstanding shares of Common Stock shall
be determined after giving effect to the conversion or exercise of securities of the Company,
including this Warrant, by the Holder
5
or its Affiliates since the date as of which such number of outstanding shares of Common Stock
was reported. The Beneficial Ownership Limitation shall be 4.9% of the number of shares
of the Common Stock outstanding immediately after giving effect to the issuance of shares of Common
Stock issuable upon exercise of this Warrant. The Holder, upon not less than 61 days prior notice
to the Company, may increase or decrease the Beneficial Ownership Limitation provisions of this
Section 2(e), provided that the Beneficial Ownership Limitation in no event exceeds 9.99% of the
number of shares of the Common Stock outstanding immediately after giving effect to the issuance of
shares of Common Stock upon exercise of this Warrant held by the Holder and the provisions of this
Section 2(e) shall continue to apply. Any such increase or decrease will not be effective until
the 61st day after such notice is delivered to the Company. The provisions of this
paragraph shall be construed and implemented in a manner otherwise than in strict conformity with
the terms of this Section 2(e) to correct this paragraph (or any portion hereof) which may be
defective or inconsistent with the intended Beneficial Ownership Limitation herein contained or to
make changes or supplements necessary or desirable to properly give effect to such limitation. The
limitations contained in this paragraph shall apply to a successor holder of this Warrant.
Section 3. Certain Adjustments.
a) Stock Dividends and Splits. If the Company, at any time while this Warrant is
outstanding: (i) pays a stock dividend or otherwise makes a distribution or distributions on shares
of its Common Stock or any other equity or equity equivalent securities that is payable in shares
of Common Stock (which, for avoidance of doubt, shall not include any shares of Common Stock issued
by the Company upon exercise of this Warrant), (ii) subdivides outstanding shares of Common Stock
into a larger number of shares, (iii) combines (including by way of reverse stock split)
outstanding shares of Common Stock into a smaller number of shares, or (iv) issues by
reclassification of shares of the Common Stock any shares of capital stock of the Company, then in
each case the Exercise Price shall be multiplied by a fraction of which the numerator shall be the
number of shares of Common Stock (excluding treasury shares, if any) outstanding immediately before
such event and of which the denominator shall be the number of shares of Common Stock outstanding
immediately after such event, and the number of shares issuable upon exercise of this Warrant shall
be proportionately adjusted such that the aggregate Exercise Price of this Warrant shall remain
unchanged. Any adjustment made pursuant to this Section 3(a) shall become effective immediately
after the record date for the determination of stockholders entitled to receive such dividend or
distribution and shall become effective immediately after the effective date in the case of a
subdivision, combination or re-classification.
b) [RESERVED]
c) Subsequent Rights Offerings. If the Company, at any time while the Warrant is
outstanding, shall issue rights, options or warrants to all holders of Common Stock (and not to the
Holders) entitling them to subscribe for or purchase shares of Common Stock at a price per share
less than the VWAP on the record date mentioned below, then, the Exercise Price shall be multiplied
by a fraction, of which the denominator shall be the number of shares of the Common Stock
outstanding on the date of issuance of such rights, options or warrants plus the number of
additional shares of Common Stock offered for subscription or purchase, and of which the numerator
shall be the number of shares of the Common Stock outstanding on the date
6
of issuance of such rights, options or warrants plus the number of shares which the aggregate
offering price of the total number of shares so offered (assuming receipt by the Company in full of
all consideration payable upon exercise of such rights, options or warrants) would purchase at such
VWAP. Such adjustment shall be made whenever such rights, options or warrants are issued, and
shall become effective immediately after the record date for the determination of stockholders
entitled to receive such rights, options or warrants.
d) Pro Rata Distributions. If the Company, at any time while this Warrant is
outstanding, shall distribute to all holders of Common Stock (and not to the Holders) evidences of
its indebtedness or assets (including cash and cash dividends) or rights or warrants to subscribe
for or purchase any security other than the Common Stock (which shall be subject to Section 3(a)),
then in each such case the Exercise Price shall be adjusted by multiplying the Exercise Price in
effect immediately prior to the record date fixed for determination of stockholders entitled to
receive such distribution by a fraction of which the denominator shall be the VWAP determined as of
the record date mentioned above, and of which the numerator shall be such VWAP on such record date
less the then per share fair market value at such record date of the portion of such assets or
evidence of indebtedness so distributed applicable to one outstanding share of the Common Stock as
determined by the Board of Directors in good faith. In each case the adjustments shall be
described in a statement provided to the Holder of the portion of assets or evidences of
indebtedness so distributed or such subscription rights applicable to one share of Common Stock.
Such adjustment shall be made whenever any such distribution is made and shall become effective
immediately after the record date mentioned above.
e) Fundamental Transaction. If, at any time while this Warrant is outstanding, (i) the
Company, directly or indirectly, in one or more related transactions effects any merger or
consolidation of the Company with or into another Person, (ii) the Company, directly or indirectly,
effects any sale, lease, license, assignment, transfer, conveyance or other disposition of all or
substantially all of its assets in one or a series of related transactions, (iii) any, direct or
indirect, purchase offer, tender offer or exchange offer (whether by the Company or another Person)
is completed pursuant to which holders of Common Stock are permitted to sell, tender or exchange
their shares for other securities, cash or property and has been accepted by the holders of 50% or
more of the outstanding Common Stock, (iv) the Company, directly or indirectly, in one or more
related transactions effects any reclassification, reorganization or recapitalization of the Common
Stock or any compulsory share exchange pursuant to which the Common Stock is effectively converted
into or exchanged for other securities, cash or property, (v) the Company, directly or indirectly,
in one or more related transactions consummates a stock or share purchase agreement or other
business combination (including, without limitation, a reorganization, recapitalization, spin-off
or scheme of arrangement) with another Person whereby such other Person acquires more than 50% of
the outstanding shares of Common Stock (not including any shares of Common Stock held by the other
Person or other Persons making or party to, or associated or affiliated with the other Persons
making or party to, such stock or share purchase agreement or other business combination) (each a
Fundamental Transaction), then, upon any subsequent exercise of this Warrant, the Holder
shall have the right to receive 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 the
Holder had been, immediately prior to such Fundamental Transaction, the holder of that number of
shares of Common Stock for which this
7
Warrant is exercisable immediately prior to such Fundamental Transaction (without regard to
any limitation in Section 2(e) on the exercise of this Warrant) (the Alternate
Consideration), and the Holder shall no longer have the right to receive Warrant Shares upon
exercise of this Warrant. For purposes of any such exercise, the Holder shall have the right to
receive the Alternate Consideration for an aggregate exercise price not to exceed that payable if
the Holder had exercised in full the unexercised portion of this Warrant immediately prior to the
consummation of such Fundamental Transaction. If holders of Common Stock are given any choice as
to the securities, cash or property to be received in a Fundamental Transaction, then the Holder
shall be given the same choice as to the Alternate Consideration it receives upon any exercise of
this Warrant following such Fundamental Transaction. Notwithstanding anything to the contrary, in
the event of a Fundamental Transaction other than one in which the Successor Entity (as defined
below) or the Company (if it is the surviving entity) is an entity whose stock is traded on a
national securities exchange, including, but not limited to, the NYSE Amex, the New York Stock
Exchange, the Nasdaq Global Select Market, the Nasdaq Global Market, or the Nasdaq Capital Market,
or approved for quotation on an automated inter-dealer quotation system, the Company or any
Successor Entity (as defined below) shall, at the Holders option, exercisable at any time
concurrently with, or within 30 days after, the consummation of the Fundamental Transaction,
purchase this Warrant from the Holder by paying to the Holder an amount of cash equal to the Black
Scholes Value of the remaining unexercised portion of this Warrant on the date of the consummation
of such Fundamental Transaction. Black Scholes Value means the value of this Warrant
based on the Black and Scholes Option Pricing Model obtained from the OV function on Bloomberg,
L.P. (Bloomberg) determined as of the day of consummation of the applicable Fundamental
Transaction for pricing purposes and reflecting (A) a risk-free interest rate corresponding to the
U.S. Treasury rate for a period equal to the time between the date of the public announcement of
the applicable Fundamental Transaction and the Termination Date, (B) an expected volatility equal
to the greater of 100% and the 100 day volatility obtained from the HVT function on Bloomberg as of
the Trading Day immediately following the public announcement of the applicable Fundamental
Transaction, (C) the underlying price per share used in such calculation shall be the sum of the
price per share being offered in cash, if any, plus the value of any non-cash consideration, if
any, being offered in such Fundamental Transaction and (D) a remaining option time equal to the
time between the date of the public announcement of the applicable Fundamental Transaction and the
Termination Date. The Company shall cause any successor entity in a Fundamental Transaction in
which the Company is not the survivor (the Successor Entity) to assume in writing all of
the obligations of the Company under this Warrant and the other Transaction Documents in accordance
with the provisions of this Section 3(e) pursuant to written agreements and shall, at the option of
the Holder, deliver to the Holder in exchange for this Warrant a security of the Successor Entity
evidenced by a written instrument substantially similar in form and substance to this Warrant which
is exercisable for a corresponding number of shares of capital stock of such Successor Entity (or
its parent entity, as applicable) equivalent to the shares of Common Stock acquirable and
receivable upon exercise of this Warrant prior to such Fundamental Transaction (without regard to
any limitation in Section 2(e) on the exercise of this Warrant), and with an exercise price which
applies the exercise price hereunder to such shares of capital stock (but with an aggregate
exercise price that shall not exceed that payable if the Holder had exercised in full the
unexercised portion of this Warrant immediately prior to the consummation of such Fundamental
Transaction), and which is reasonably satisfactory in form and substance to the Holder. Upon the
8
occurrence of any such Fundamental Transaction, the Successor Entity shall succeed to, and be
substituted for (so that from and after the date of such Fundamental Transaction, the provisions of
this Warrant and the other Transaction Documents referring to the Company shall refer instead to
the Successor Entity), and may exercise every right and power of the Company and shall assume all
of the obligations of the Company under this Warrant and the other Transaction Documents with the
same effect as if such Successor Entity had been named as the Company herein.
f) Calculations. All calculations under this Section 3 shall be made to the nearest
cent or the nearest 1/100th of a share, as the case may be. For purposes of this Section 3, the
number of shares of Common Stock deemed to be issued and outstanding as of a given date shall be
the sum of the number of shares of Common Stock (excluding treasury shares, if any) issued and
outstanding.
g) Notice to Holder.
i. Adjustment to Exercise Price. Whenever the Exercise Price is adjusted pursuant to
any provision of this Section 3, the Company shall promptly mail to the Holder a notice setting
forth the Exercise Price after such adjustment and setting forth a brief statement of the facts
requiring such adjustment.
ii. Notice to Allow Exercise by Holder. If (A) the Company shall declare a dividend
(or any other distribution in whatever form) on the Common Stock, (B) the Company shall declare a
special nonrecurring cash dividend on or a redemption of the Common Stock, (C) the Company shall
authorize the granting to all holders of the Common Stock rights or warrants to subscribe for or
purchase any shares of capital stock of any class or of any rights, (D) the approval of any
stockholders of the Company shall be required in connection with any reclassification of the Common
Stock, any consolidation or merger to which the Company is a party, any sale or transfer of all or
substantially all of the assets of the Company, or any compulsory share exchange whereby the Common
Stock is converted into other securities, cash or property, or (E) the Company shall authorize the
voluntary or involuntary dissolution, liquidation or winding up of the affairs of the Company,
then, in each case, the Company shall cause to be mailed to the Holder at its last address as it
shall appear upon the Warrant Register of the Company, at least 20 calendar days prior to the
applicable record or effective date hereinafter specified, a notice stating (x) the date on which a
record is to be taken for the purpose of such dividend, distribution, redemption, rights or
warrants, or if a record is not to be taken, the date as of which the holders of the Common Stock
of record to be entitled to such dividend, distributions, redemption, rights or warrants are to be
determined or (y) the date on which such reclassification, consolidation, merger, sale, transfer or
share exchange is expected to become effective or close, and the date as of which it is expected
that holders of the Common Stock of record shall be entitled to exchange their shares of the Common
Stock for securities, cash or other property deliverable upon such reclassification, consolidation,
merger, sale, transfer or share exchange; provided that the failure to mail such notice or any
defect therein or in the mailing thereof shall not affect the validity of the corporate action
required to be specified in such notice. To the extent that any notice provided hereunder
constitutes, or contains, material, non-public information regarding the Company or any of the
Subsidiaries, the Company shall simultaneously file such notice with the Commission pursuant to a
Current Report on Form 8-K.
9
The Holder shall remain entitled to exercise this Warrant during the period commencing on the
date of such notice to the effective date of the event triggering such notice except as may
otherwise be expressly set forth herein.
Section 4. Transfer of Warrant.
(a) Transferability. This Warrant and all rights hereunder are transferable, in whole
or in part, upon surrender of this Warrant at the principal office of the Company or its designated
agent, together with a written assignment of this Warrant substantially in the form attached hereto
duly executed by the Holder or its agent or attorney and funds sufficient to pay any transfer taxes
payable upon the making of such transfer. Upon such surrender and, if required, such payment, the
Company shall execute and deliver a new Warrant or Warrants in the name of the assignee or
assignees, as applicable, and in the denomination or denominations specified in such instrument of
assignment, and shall issue to the assignor a new Warrant evidencing the portion of this Warrant
not so assigned, and this Warrant shall promptly be cancelled. The Warrant, if properly assigned
in accordance herewith, may be exercised by a new holder for the purchase of Warrant Shares without
having a new Warrant issued. Notwithstanding the foregoing, for a period of six months after the
issuance date of this Warrant (which shall not be earlier than the closing date of the offering
pursuant to which this Warrant is being issued), neither this Warrant nor any Warrant Shares issued
upon exercise of this Warrant shall be sold, transferred, assigned, pledged, or hypothecated, or be
the subject of any hedging, short sale, derivative, put, or call transaction that would result in
the effective economic disposition of the securities by any person for a period of 180 days
immediately following the date of effectiveness or commencement of sales of the offering pursuant
to which this Warrant is being issued, except the transfer of any security:
(i) by operation of law or by reason of reorganization of the Company;
(ii) to any FINRA member firm participating in the offering and the officers or partners
thereof, if all securities so transferred remain subject to the lock-up restriction in this Section
4 for the remainder of the time period;
(iii) if the aggregate amount of securities of the Company held by the Holder or related
person do not exceed 1% of the securities being offered;
(iv) that is beneficially owned on a pro-rata basis by all equity owners of an investment
fund, provided that no participating member manages or otherwise directs investments by the fund,
and participating members in the aggregate do not own more than 10% of the equity in the fund; or
(v) the exercise or conversion of any security, if all securities received remain subject to
the lock-up restriction in this Section 4 for the remainder of the time period.
(b) New Warrants. This Warrant may be divided or combined with other Warrants upon
presentation hereof at the aforesaid office of the Company, together with a written notice
specifying the names and denominations in which new Warrants are to be issued,
10
signed by the Holder or its agent or attorney. Subject to compliance with Section 4(a), as to
any transfer which may be involved in such division or combination, the Company shall execute and
deliver a new Warrant or Warrants in exchange for the Warrant or Warrants to be divided or combined
in accordance with such notice. All Warrants issued on transfers or exchanges shall be dated the
initial issuance date set forth on the first page of this Warrant and shall be identical with this
Warrant except as to the number of Warrant Shares issuable pursuant thereto.
(c) Warrant Register. The Company shall register this Warrant, upon records to be
maintained by the Company for that purpose (the Warrant Register), in the name of the
record Holder hereof from time to time. The Company may deem and treat the registered Holder of
this Warrant as the absolute owner hereof for the purpose of any exercise hereof or any
distribution to the Holder, and for all other purposes, absent actual notice to the contrary.
(d) Representation by the Holder. The Holder, by the acceptance hereof, represents
and warrants that it is acquiring this Warrant and, upon any exercise hereof, will acquire the
Warrant Shares issuable upon such exercise, for its own account and not with a view to or for
distributing or reselling such Warrant Shares or any part thereof in violation of the Securities
Act or any applicable state securities law, except pursuant to sales registered or exempted under
the Securities Act.
Section 5. Miscellaneous.
a) No Rights as Stockholder Until Exercise. This Warrant does not entitle the Holder
to any voting rights, dividends or other rights as a stockholder of the Company prior to the
exercise hereof as set forth in Section 2(d)(i).
b) Loss, Theft, Destruction or Mutilation of Warrant. The Company covenants that upon
receipt by the Company of evidence reasonably satisfactory to it of the loss, theft, destruction or
mutilation of this Warrant or any stock certificate relating to the Warrant Shares, and in case of
loss, theft or destruction, of indemnity or security reasonably satisfactory to it, and upon
surrender and cancellation of such Warrant or stock certificate, if mutilated, the Company will
make and deliver a new Warrant or stock certificate of like tenor and dated as of such
cancellation, in lieu of such Warrant or stock certificate.
c) Saturdays, Sundays, Holidays, etc. If the last or appointed day for the taking of
any action or the expiration of any right required or granted herein shall not be a Business Day,
then, such action may be taken or such right may be exercised on the next succeeding Business Day.
d) Authorized Shares.
The Company covenants that, during the period the Warrant is outstanding, it will reserve from
its authorized and unissued Common Stock a sufficient number of shares to provide for the issuance
of the Warrant Shares upon the exercise of any purchase rights under this Warrant. The Company
further covenants that its issuance of this Warrant shall constitute full authority to its officers
who are charged with the duty of executing stock certificates to execute and issue the necessary
certificates for the Warrant Shares upon the exercise of the purchase rights under this Warrant.
The Company will take all such reasonable
11
action as may be necessary to assure that such Warrant Shares may be issued as provided herein
without violation of any applicable law or regulation, or of any requirements of the Trading Market
upon which the Common Stock may be listed. The Company covenants that all Warrant Shares which may
be issued upon the exercise of the purchase rights represented by this Warrant will, upon exercise
of the purchase rights represented by this Warrant and payment for such Warrant Shares in
accordance herewith, be duly authorized, validly issued, fully paid and nonassessable and free from
all taxes, liens and charges created by the Company in respect of the issue thereof (other than
taxes in respect of any transfer occurring contemporaneously with such issue).
Except and to the extent as waived or consented to by the Holder, the Company shall not by any
action, including, without limitation, amending its certificate of incorporation or through any
reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities
or any other voluntary action, avoid or seek to avoid the observance or performance of any of the
terms of this Warrant, but will at all times in good faith assist in the carrying out of all such
terms and in the taking of all such actions as may be necessary or appropriate to protect the
rights of Holder as set forth in this Warrant against impairment. Without limiting the generality
of the foregoing, the Company will (i) not increase the par value of any Warrant Shares above the
amount payable therefor upon such exercise immediately prior to such increase in par value, (ii)
take all such action as may be necessary or appropriate in order that the Company may validly and
legally issue fully paid and nonassessable Warrant Shares upon the exercise of this Warrant and
(iii) use commercially reasonable efforts to obtain all such authorizations, exemptions or consents
from any public regulatory body having jurisdiction thereof, as may be, necessary to enable the
Company to perform its obligations under this Warrant.
Before taking any action which would result in an adjustment in the number of Warrant Shares
for which this Warrant is exercisable or in the Exercise Price, the Company shall obtain all such
authorizations or exemptions thereof, or consents thereto, as may be necessary from any public
regulatory body or bodies having jurisdiction thereof.
e) Jurisdiction. All questions concerning the construction, validity, enforcement and
interpretation of this Warrant shall be determined in accordance with the provisions of the
Purchase Agreement.
f) Restrictions. The Holder acknowledges that the Warrant Shares acquired upon the
exercise of this Warrant, if not registered, will have restrictions upon resale imposed by state
and federal securities laws unless the Holder utilizes the cashless exercise provisions hereof
after at least one year has elapsed from the original issue date (or six months as long as there is
adequate current public information available with respect to the Company as required by subsection
(c) of Rule 144) and the Holder is not and has not been an Affiliate of the Company within 90 days
of the date of exercise.
g) Nonwaiver and Expenses. No course of dealing or any delay or failure to exercise
any right hereunder on the part of Holder shall operate as a waiver of such right or otherwise
prejudice Holders rights, powers or remedies. Without limiting any other provision of this
Warrant or the Purchase Agreement, if the Company willfully and knowingly fails to
12
comply with any provision of this Warrant, which results in any material damages to the
Holder, the Company shall pay to Holder such amounts as shall be sufficient to cover any costs and
expenses including, but not limited to, reasonable attorneys fees, including those of appellate
proceedings, incurred by Holder in collecting any amounts due pursuant hereto or in otherwise
enforcing any of its rights, powers or remedies hereunder.
h) Notices. Any notice, request or other document required or permitted to be given
or delivered to the Holder by the Company shall be delivered in accordance with the notice
provisions of the Purchase Agreement.
i) Limitation of Liability. No provision hereof, in the absence of any affirmative
action by Holder to exercise this Warrant to purchase Warrant Shares, and no enumeration herein of
the rights or privileges of Holder, shall give rise to any liability of Holder for the purchase
price of any Common Stock or as a stockholder of the Company, whether such liability is asserted by
the Company or by creditors of the Company.
j) Remedies. The Holder, in addition to being entitled to exercise all rights granted
by law, including recovery of damages, will be entitled to specific performance of its rights under
this Warrant. The Company agrees that monetary damages would not be adequate compensation for any
loss incurred by reason of a breach by it of the provisions of this Warrant and hereby agrees to
waive and not to assert the defense in any action for specific performance that a remedy at law
would be adequate.
k) Successors and Assigns. Subject to applicable securities laws, this Warrant and
the rights and obligations evidenced hereby shall inure to the benefit of and be binding upon the
successors and permitted assigns of the Company and the successors and permitted assigns of Holder.
The provisions of this Warrant are intended to be for the benefit of any Holder from time to time
of this Warrant and shall be enforceable by the Holder or holder of Warrant Shares.
l) Amendment. This Warrant may be modified or amended or the provisions hereof waived
with the written consent of the Company and Holders holding Warrants at least equal to 67% of the
Warrant Shares issuable upon exercise of all then outstanding Warrants.
m) Severability. Wherever possible, each provision of this Warrant shall be
interpreted in such manner as to be effective and valid under applicable law, but if any provision
of this Warrant shall be prohibited by or invalid under applicable law, such provision shall be
ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of
such provisions or the remaining provisions of this Warrant.
n) Headings. The headings used in this Warrant are for the convenience of reference
only and shall not, for any purpose, be deemed a part of this Warrant.
********************
(Signature Page Follows)
13
IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by its officer
thereunto duly authorized as of the date first above indicated.
ADVENTRX PHARMACEUTICALS, INC. |
||||
By: | ||||
Name: | Brian M. Culley | |||
Title: | Chief Business Officer and Senior Vice President | |||
[SIGNATURE PAGE TO COMMON STOCK PURCHASE WARRANT NO. CS-09A[]
NOTICE OF EXERCISE
TO: ADVENTRX PHARMACEUTICALS, INC.
(1) The undersigned hereby elects to purchase Warrant Shares of the Company pursuant
to the terms of Warrant No. CS-09[]- (the Warrant), and tenders herewith payment of the
exercise price in full, together with all applicable transfer taxes, if any.
(2) Payment shall take the form of (check applicable box):
o in lawful money of the United States; or
o [if permitted] the cancellation of such number of Warrant Shares as is
necessary, in accordance with the formula set forth in subsection 2(c), to
exercise the Warrant with respect to the maximum number of Warrant Shares
purchasable pursuant to the cashless exercise procedure set forth in subsection
2(c).
(3) Unless said Warrant Shares will be delivered electronically via DWAC, 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:
and deliver the physical certificate representing said Warrant Shares to the following address:
If the Warrant Shares will be delivered electronically via DWAC, please issue them to the following
account:
Name of DTC Participant (broker-dealer at which the
account of Holder to be
credited with the Warrant Shares is maintained):
|
||
DTC Participant Number:
|
||
Name of Account at DTC Participant to be credited with the Shares:
|
||
Account Number at DTC Participant to be credited with the Shares:
|
[SIGNATURE OF HOLDER]
Name of Investing Entity:
Signature of Authorized Signatory of Investing Entity:
Name of Authorized Signatory:
Title of Authorized Signatory:
Date:
ASSIGNMENT FORM
(To assign the foregoing warrant, execute
this form and supply required information.
Do not use this form to exercise the warrant.)
this form and supply required information.
Do not use this form to exercise the warrant.)
FOR VALUE RECEIVED, [ ] all of or [ ] of the shares of Warrant No. CS-09
CS-09[]- (enclosed herewith) and all rights evidenced thereby are hereby assigned to
whose address is
..
Dated:
,
Holders Signature: | |
||
Holders Address: | |
||
|
Signature Guaranteed:
NOTE: The signature to this Assignment Form must correspond with the name as it appears on the
face of the Warrant, without alteration or enlargement or any change whatsoever, and must be
guaranteed by a bank or trust company. Officers of corporations and those acting in a fiduciary or
other representative capacity should file proper evidence of authority to assign the foregoing
Warrant.
Exhibit 5.1
DLA Piper LLP (US)
4365 Executive Drive, Suite 1100
San Diego, California 92121-2133
www.dlapiper.com
4365 Executive Drive, Suite 1100
San Diego, California 92121-2133
www.dlapiper.com
T 858.677.1400
F 858.677.1401
F 858.677.1401
June 29, 2009
ADVENTRX Pharmaceuticals, Inc.
6725 Mesa Ridge Road, Suite 100
San Diego, California 92121
6725 Mesa Ridge Road, Suite 100
San Diego, California 92121
Ladies and Gentlemen:
You have requested our opinion with respect to certain matters in connection with the sale and
issuance by ADVENTRX Pharmaceuticals, Inc., a Delaware corporation (the Company), of up to an
aggregate of 1,361 shares of 5% Series B Convertible Preferred Stock, par value $0.001 per share,
of the Company (the Preferred Shares) and 9,504,189 shares of Common Stock of the Company
issuable upon conversion of the Preferred Shares (the Conversion Shares and together with the
Preferred Shares, the Securities), pursuant to a Registration Statement on Form S-3 (File No.
333-159376) (the Registration Statement) filed with the Securities and Exchange Commission (the
Commission) under the Securities Act of 1933, as amended (the Act), the related prospectus
included therein (the Prospectus) and the prospectus supplement no. 2 to be filed with the
Commission pursuant to Rule 424(b) promulgated under the Act (the Prospectus Supplement).
In connection with this opinion, we have examined and relied upon the Registration Statement
and the related Prospectus and Prospectus Supplement, the Securities Purchase Agreement, dated June
29, 2009, by and among the Company and each purchaser identified on the signature pages thereto
(the Securities Purchase Agreement), the Certificate of Designation of Preferences, Rights and
Limitations of 5% Series B Convertible Preferred Stock (the Certificate of Designation) to be
filed as an exhibit to a Current Report of the Company on Form 8-K, the Companys Amended and
Restated Certificate of Incorporation and Amended and Restated Bylaws, as currently in effect, and
the originals or copies certified to our satisfaction of such other documents, records,
certificates, memoranda and other instruments as in our judgment are necessary or appropriate to
enable us to render the opinion expressed below.
In rendering this opinion, we have assumed the genuineness and authenticity of all signatures
on original documents; the genuineness and authenticity of all documents submitted to us as
originals; the conformity to originals of all documents submitted to us as copies; the accuracy,
completeness and authenticity of certificates of public officials; and the due authorization,
execution and delivery of all documents where due authorization, execution and delivery are
prerequisites to the effectiveness of such documents. With regard to the Conversion Shares, we have
assumed that at the time of issuance or sale, a sufficient number of shares of Common Stock are
authorized and available for issuance.
On the basis of the foregoing, and in reliance thereon, we are of the opinion that (i) the
Preferred Shares, when issued and sold against payment therefore as provided in the Securities
Purchase Agreement and in accordance with the Registration Statement and the related
ADVENTRX Pharmaceuticals, Inc.
June 29, 2009
Page Two
June 29, 2009
Page Two
Prospectus and
Prospectus Supplement, will be validly issued, fully paid and nonassessable, and (ii) the
Conversion Shares, when issued in accordance with the terms of the Securities Purchase Agreement
and the Certificate of Designation and in accordance with the Registration Statement and the
related Prospectus and Prospectus Supplement, will be validly issued, fully paid and nonassessable.
In addition to the qualifications set forth above, the foregoing opinion is further qualified as
follows:
(a) The foregoing opinion is rendered as of the date hereof. We assume no obligation
to update such opinion to reflect any facts or circumstances that may hereafter come to our
attention or changes in the law which may hereafter occur.
(b) We are members of the Bar of the State of California and we do not express any
opinion herein concerning any law other than the Delaware General Corporation Law, the
substantive law of the State of California and the substantive federal securities laws of
the United States of America. We express no opinion as to the laws of any other state or
jurisdiction of the United States or of any foreign jurisdiction. We have made no inquiry
into the laws and regulations or as to laws relating to choice of law or conflicts of law
principles. The opinion expressed herein is subject to the effect of judicial decisions
which may permit the introduction of parol evidence to modify the terms or the
interpretation of agreements.
(c) We express no opinion as to compliance with the securities (or blue sky), broker
licensing, real estate syndication or mortgage lending laws of any jurisdiction.
(d) The opinion stated herein relating to the validity and binding nature of
obligations of the Company is subject to (i) the effect of any applicable bankruptcy,
insolvency (including, without limitation, all laws relating to fraudulent transfers),
reorganization, moratorium or similar laws affecting creditors rights generally and (ii)
the effect of general principles of equity (regardless of whether considered in a proceeding
in equity or at law).
(e) This opinion is limited to the matters set forth herein, and no other opinion
should be inferred beyond the matters expressly stated.
ADVENTRX Pharmaceuticals, Inc.
June 29, 2009
Page Three
June 29, 2009
Page Three
We consent to the reference to our firm under the caption Legal Matters in the Prospectus
Supplement and to the filing of this opinion as an exhibit to a Current Report of the Company on
Form 8-K. In giving our consent, we do not thereby admit that we are in the category of persons
whose consent is required under Section 7 of the Securities Act or the rules and regulations of the
Commission thereunder.
Very truly yours,
/s/ DLA Piper LLP (US)
DLA Piper LLP (US)
Exhibit
10.1
![(RODMAN & RENSHAW LOGO)](https://cdn.kscope.io/23cb3aee2090e587e3e6818ec7ab72ec-a53035a5303501.gif)
June 26, 2009
STRICTLY CONFIDENTIAL
Mr. Brian M. Culley
Chief Business Officer
Adventrx Pharmaceuticals Inc.
6725 Mesa Ridge Road
Suite 100
San Diego, CA 92121
Chief Business Officer
Adventrx Pharmaceuticals Inc.
6725 Mesa Ridge Road
Suite 100
San Diego, CA 92121
Dear Mr. Culley:
This letter (the Agreement) constitutes the agreement between Adventrx Pharmaceuticals Inc.
(the Company) and Rodman & Renshaw, LLC (Rodman) that Rodman shall serve as the exclusive
placement agent (the Services) for the Company, on a best efforts basis, in connection with the
proposed offer and placement (the Offering) by the Company of approximately $1.5 million of
securities of the Company (the Securities), including convertible preferred securities. The terms
of the Offering and the Securities shall be mutually agreed upon by the Company and the investors
and nothing herein implies that Rodman would have the power or authority to bind the Company or an
obligation for the Company to issue any Securities or complete the Offering. The Company expressly
acknowledges and agrees that Rodmans obligations hereunder are on a reasonable best efforts basis
only and that the execution of this Agreement does not constitute a commitment by Rodman to
purchase the Securities and does not ensure the successful placement of the Securities or any
portion thereof or the success of Rodman with respect to securing any other financing on behalf of
the Company. As the Offering will consist of registered securities, the provisions of Annex A will
apply in addition to the provisions set forth herein.
A. Fees and Expenses. In connection with the Services described above, the Company
shall pay to Rodman the following compensation:
1. Placement Agents Fee. The Company shall pay to Rodman a cash placement fee (the
Placement Agents Fee) equal to 7% of the aggregate purchase price paid by each purchaser of
Securities that are placed in the Offering. The Placement Agents Fee shall be paid at the closing
of the Offering (the Closing) from the gross proceeds of the Securities sold.
2. Warrants. As additional compensation for the Services, the Company shall issue to
Rodman or its designees at the closing of the Offering (the Closing), warrants (the Rodman
Warrants) to purchase that number of shares of common stock of the Company (Shares) equal to 5%
of the aggregate number of Shares placed in the Offering. The Rodman Warrants shall have the same
terms, including exercise price and registration rights, as the warrants issued to investors
(Investors) in the Offering. If no warrants are issued to Investors, the Rodman Warrants shall
have an exercise price equal to 125% of the price at which Shares are issued to Investors, or, if
no Shares are issued, 125% of the current market price of the Shares at Closing, an exercise period
of five years and registration rights for the Shares underlying the Rodman Warrants equivalent to
those granted with respect to the Securities.
Rodman
& Renshaw, LLC 1251 Avenue of the Americas, 20th Floor, New York, NY 10020
Tel: 212 356 0500 Fax: 212 581 5690 www.rodm.com Member: FINRA, SIPC
Tel: 212 356 0500 Fax: 212 581 5690 www.rodm.com Member: FINRA, SIPC
B. Term and Termination of Engagement. The term (the Term) of Rodmans engagement
will begin on the date hereof and end on the earlier of the consummation of the Offering or two
business days after the receipt by either party hereto of written notice of termination; provided
that no such notice may be given by the Company for a period of 30 days after the date hereof.
Notwithstanding anything to the contrary contained herein, the provisions concerning
confidentiality, indemnification and contribution contained herein and the Companys obligations
contained in Section H hereof will survive any expiration or termination of this Agreement, and the
Companys obligation to pay fees actually earned and payable and to reimburse expenses actually
incurred and reimbursable pursuant to Section A hereof, will survive any expiration or termination
of this Agreement.
C. [Intentionally Omitted]
D. Use of Information. The Company will furnish Rodman such written information as
Rodman reasonably requests in connection with the performance of its services hereunder. The
Company understands, acknowledges and agrees that, in performing its services hereunder, Rodman
will use and rely entirely upon such information as well as publicly available information
regarding the Company and other potential parties to an Offering and that Rodman does not assume
responsibility for independent verification of the accuracy or completeness of any information,
whether publicly available or otherwise furnished to it, concerning the Company or otherwise
relevant to an Offering, including, without limitation, any financial information, forecasts or
projections considered by Rodman in connection with the provision of its services.
E. Confidentiality. In the event of the consummation or public announcement of any
Offering, Rodman shall have the right to disclose its participation in such Offering, including,
without limitation, the placement at its cost of tombstone advertisements in financial and other
newspapers and journals. Rodman agrees not to use any confidential information concerning the
Company provided to Rodman by the Company for any purposes other than those contemplated under this
Agreement.
F. Securities Matters. The Company shall be responsible for any and all compliance
with the securities laws applicable to it, including Regulation D and the Securities Act of 1933,
as amended (the Securities Act), and Rule 506 promulgated thereunder, and unless otherwise agreed
in writing, all state securities (blue sky) laws. Rodman agrees to cooperate with counsel to the
Company in that regard.
G. Company Acknowledgement. The Company acknowledges that the Offering of convertible
Securities may create significant risks, including the risk that the Company may have insufficient
cash resources and/or registered shares to timely meet its payment and conversion obligations. The
Company further acknowledges that, depending on the number and price of new shares issued, such
transaction may result in substantial dilution which could adversely affect the market price of the
Companys shares.
H. Indemnity.
1. In connection with the Companys engagement of Rodman as placement agent, the Company
hereby agrees to indemnify and hold harmless Rodman and its affiliates, and the respective
controlling persons, directors, officers, shareholders, agents and employees of any of the
foregoing (collectively the Indemnified Persons), from and against any and all claims, actions,
suits, proceedings (including those of shareholders), damages, liabilities and expenses incurred by
any of them (including the reasonable fees and expenses of counsel), as incurred, (collectively a
Claim), that are (A) related to or arise out of (i) any actions taken or omitted to be taken
(including any untrue statements made or any
2
statements omitted to be made) by the Company, or (ii) any actions taken or omitted to be
taken by any Indemnified Person in connection with the Companys engagement of Rodman, or (B)
otherwise relate to or arise out of Rodmans activities on the Companys behalf under Rodmans
engagement, and the Company shall reimburse any Indemnified Person for all expenses (including the
reasonable fees and expenses of counsel) as incurred by such Indemnified Person in connection with
investigating, preparing or defending any such claim, action, suit or proceeding, whether or not in
connection with pending or threatened litigation in which any Indemnified Person is a party. The
Company will not, however, be responsible for any Claim, that is finally judicially determined to
have resulted from the gross negligence or willful misconduct of any person seeking indemnification
for such Claim. The Company further agrees that no Indemnified Person shall have any liability to
the Company for or in connection with the Companys engagement of Rodman except for any Claim
incurred by the Company as a result of such Indemnified Persons gross negligence or willful
misconduct.
2. The Company further agrees that it will not, without the prior written consent of Rodman,
settle, compromise or consent to the entry of any judgment in any pending or threatened Claim in
respect of which indemnification may be sought hereunder (whether or not any Indemnified Person is
an actual or potential party to such Claim), unless such settlement, compromise or consent includes
an unconditional, irrevocable release of each Indemnified Person from any and all liability arising
out of such Claim.
3. Promptly upon receipt by an Indemnified Person of notice of any complaint or the assertion
or institution of any Claim with respect to which indemnification is being sought hereunder, such
Indemnified Person shall notify the Company in writing of such complaint or of such assertion or
institution but failure to so notify the Company shall not relieve the Company from any obligation
it may have hereunder, except and only to the extent such failure results in the forfeiture by the
Company of substantial rights and defenses. If the Company so elects or is requested by such
Indemnified Person, the Company will assume the defense of such Claim, including the employment of
counsel reasonably satisfactory to such Indemnified Person and the payment of the fees and expenses
of such counsel. In the event, however, that legal counsel to such Indemnified Person reasonably
determines that having common counsel would present such counsel with a conflict of interest or if
the defendant in, or target of, any such Claim, includes an Indemnified Person and the Company, and
legal counsel to such Indemnified Person reasonably concludes that there may be legal defenses
available to it or other Indemnified Persons different from or in addition to those available to
the Company, then such Indemnified Person may employ its own separate counsel to represent or
defend him, her or it in any such Claim and the Company shall pay the reasonable fees and expenses
of such counsel. Notwithstanding anything herein to the contrary, if the Company fails timely or
diligently to defend, contest, or otherwise protect against any Claim, the relevant Indemnified
Party shall have the right, but not the obligation, to defend, contest, compromise, settle, assert
crossclaims, or counterclaims or otherwise protect against the same, and shall be fully indemnified
by the Company therefor, including without limitation, for the reasonable fees and expenses of its
counsel and all amounts paid as a result of such Claim or the compromise or settlement thereof. In
addition, with respect to any Claim in which the Company assumes the defense, the Indemnified
Person shall have the right to participate in such Claim and to retain his, her or its own counsel
therefor at his, her or its own expense.
4. The Company agrees that if any indemnity sought by an Indemnified Person hereunder is held
by a court to be unavailable for any reason then (whether or not Rodman is the Indemnified Person),
the Company and Rodman shall contribute to the Claim for which such indemnity is held unavailable
in such proportion as is appropriate to reflect the relative benefits to the Company, on the one
hand, and Rodman on the other, in connection with Rodmans engagement referred to above, subject to
the limitation that in no event shall the amount of Rodmans contribution to such Claim exceed the
amount of fees actually received by Rodman from the Company pursuant to Rodmans engagement. The
3
Company hereby agrees that the relative benefits to the Company, on the one hand, and Rodman
on the other, with respect to Rodmans engagement shall be deemed to be in the same proportion as
(a) the total value paid or proposed to be paid or received by the Company or its stockholders as
the case may be, pursuant to the Offering (whether or not consummated) for which Rodman is engaged
to render services bears to (b) the fee paid or proposed to be paid to Rodman in connection with
such engagement.
5. The Companys indemnity, reimbursement and contribution obligations under this Agreement
(a) shall be in addition to, and shall in no way limit or otherwise adversely affect any rights
that any Indemnified Party may have at law or at equity and (b) shall be effective whether or not
the Company is at fault in any way.
I. Limitation of Engagement to the Company. The Company acknowledges that Rodman has
been retained only by the Company, that Rodman is providing services hereunder as an independent
contractor (and not in any fiduciary or agency capacity) and that the Companys engagement of
Rodman is not deemed to be on behalf of, and is not intended to confer rights upon, any
shareholder, owner or partner of the Company or any other person not a party hereto as against
Rodman or any of its affiliates, or any of its or their respective officers, directors, controlling
persons (within the meaning of Section 15 of the Securities Act or Section 20 of the Securities
Exchange Act of 1934, as amended (the Exchange Act)), employees or agents. Unless otherwise
expressly agreed in writing by Rodman, no one other than the Company is authorized to rely upon
this Agreement or any other statements or conduct of Rodman, and no one other than the Company is
intended to be a beneficiary of this Agreement. The Company acknowledges that any recommendation
or advice, written or oral, given by Rodman to the Company in connection with Rodmans engagement
is intended solely for the benefit and use of the Companys management and directors in considering
a possible Offering, and any such recommendation or advice is not on behalf of, and shall not
confer any rights or remedies upon, any other person or be used or relied upon for any other
purpose. Rodman shall not have the authority to make any commitment binding on the Company. The
Company, in its sole discretion, shall have the right to reject any investor introduced to it by
Rodman. The Company agrees that it will perform and comply with the covenants and other
obligations set forth in the purchase agreement and related transaction documents between the
Company and the investors in the Offering, and that Rodman will be entitled to rely on the
representations, warranties, agreements and covenants of the Company contained in such purchase
agreement and related transaction documents as if such representations, warranties, agreements and
covenants were made directly to Rodman by the Company.
J. Limitation of Rodmans Liability to the Company. Rodman and the Company further
agree that neither Rodman nor any of its affiliates or any of its their respective officers,
directors, controlling persons (within the meaning of Section 15 of the Securities Act or Section
20 of the Exchange Act), employees or agents shall have any liability to the Company, its security
holders or creditors, or any person asserting claims on behalf of or in the right of the Company
(whether direct or indirect, in contract, tort, for an act of negligence or otherwise) for any
losses, fees, damages, liabilities, costs, expenses or equitable relief arising out of or relating
to this Agreement or the Services rendered hereunder, except for losses, fees, damages,
liabilities, costs or expenses that arise out of or are based on any action of or failure to act by
Rodman and that are finally judicially determined to have resulted solely from the gross negligence
or willful misconduct of Rodman.
K. Governing Law. This Agreement shall be governed by and construed in accordance
with the laws of the State of New York applicable to agreements made and to be fully performed
therein. Any disputes that arise under this Agreement, even after the termination of this
Agreement, will be heard only in the state or federal courts located in the City of New York, State
of New York. The parties hereto expressly agree to submit themselves to the jurisdiction of the
foregoing courts in the City of New York, State of New York. The parties hereto expressly waive any
rights they may have to contest the
4
jurisdiction, venue or authority of any court sitting in the City and State of New York. In
the event of the bringing of any action, or suit by a party hereto against the other party hereto,
arising out of or relating to this Agreement, the party in whose favor the final judgment or award
shall be entered shall be entitled to have and recover from the other party the costs and expenses
incurred in connection therewith, including its reasonable attorneys fees. Any rights to trial by
jury with respect to any such action, proceeding or suit are hereby waived by Rodman and the
Company.
L. Notices. All notices hereunder will be in writing and sent by certified mail, hand
delivery, overnight delivery or fax, if sent to Rodman, to Rodman & Renshaw, LLC, at the address
set forth on the first page hereof, fax number (646) 841-1640, Attention: General Counsel, and if
sent to the Company, to the address set forth on the first page hereof, fax number (858) 552-0876,
Attention: Chief Business Officer. Notices sent by certified mail shall be deemed received five
days thereafter, notices sent by hand delivery or overnight delivery shall be deemed received on
the date of the relevant written record of receipt, and notices delivered by fax shall be deemed
received as of the date and time printed thereon by the fax machine.
M. Miscellaneous. This Agreement shall not be modified or amended except in writing
signed by Rodman and the Company. This Agreement shall be binding upon and inure to the benefit of
both Rodman and the Company and their respective assigns, successors, and legal representatives.
This Agreement constitutes the entire agreement of Rodman and the Company with respect to this
Offering and supersedes any prior agreements with respect to the subject matter hereof, and the May
22, 2009 engagement agreement between the parties shall continue in accordance with its terms other
than with respect to this Offering. If any provision of this Agreement is determined to be invalid
or unenforceable in any respect, such determination will not affect such provision in any other
respect, and the remainder of the Agreement shall remain in full force and effect. This Agreement
may be executed in counterparts (including facsimile counterparts), each of which shall be deemed
an original but all of which together shall constitute one and the same instrument.
5
In acknowledgment that the foregoing correctly sets forth the understanding reached by Rodman
and the Company, please sign in the space provided below, whereupon this letter shall constitute a
binding Agreement as of the date indicated above.
Very truly yours, RODMAN & RENSHAW, LLC |
||||
By: | /s/ John Borer | |||
Name: | John Borer | |||
Title: | Senior Managing Director | |||
Accepted and Agreed: ADVENTRX PHARMACEUTICALS INC. |
||||
By: | /s/ Brian M. Culley | |||
Mr. Brian M. Culley | ||||
Chief Business Officer |
6
Annex A
Additional Provisions With Respect to a Registered Offering
SECTION 1. WARRANTS The Rodman Warrants described in Section A.2 shall not be transferable
except as permitted by FINRA Rule 5110.
SECTION 2. REGISTRATION STATEMENT.
The Company represents and warrants to, and agrees with, the Placement Agent that:
(A) The Company has filed with the Securities and Exchange Commission (the Commission) a
registration statement on Form S-3 (Registration File No. 333-159376) under the Securities Act of
1933, as amended (the Securities Act), which became effective on June 4, 2009, for the
registration under the Securities Act of the Shares. At the time of such filing, the Company met
the requirements of Form S-3 under the Securities Act. Such registration statement meets the
requirements set forth in Rule 415(a)(1)(x) under the Securities Act and complies with said Rule.
The Company will file with the Commission pursuant to Rule 424(b) under the Securities Act, and the
rules and regulations (the Rules and Regulations) of the Commission promulgated thereunder, a
supplement to the form of prospectus included in such registration statement relating to the
placement of the Shares and the plan of distribution thereof and has advised the Placement Agent of
all further information (financial and other) with respect to the Company required to be set forth
therein. Such registration statement, including the exhibits thereto, as amended at the date of
this Agreement, is hereinafter called the Registration Statement; such prospectus in the form in
which it appears in the Registration Statement is hereinafter called the Base Prospectus; and the
supplemented form of prospectus, in the form in which it will be filed with the Commission pursuant
to Rule 424(b) (including the Base Prospectus as so supplemented) is hereinafter called the
Prospectus Supplement. Any reference in this Agreement to the Registration Statement, the Base
Prospectus or the Prospectus Supplement shall be deemed to refer to and include the documents
incorporated by reference therein (the Incorporated Documents) pursuant to Item 12 of Form S-3
which were filed under the Securities Exchange Act of 1934, as amended (the Exchange Act), on or
before the date of this Agreement, or the issue date of the Base Prospectus or the Prospectus
Supplement, as the case may be; and any reference in this Agreement to the terms amend,
amendment or supplement with respect to the Registration Statement, the Base Prospectus or the
Prospectus Supplement shall be deemed to refer to and include the filing of any document under the
Exchange Act after the date of this Agreement, or the issue date of the Base Prospectus or the
Prospectus Supplement, as the case may be, deemed to be incorporated therein by reference. All
references in this Agreement to financial statements and schedules and other information which is
contained, included, described, referenced, set forth or stated in the Registration
Statement, the Base Prospectus or the Prospectus Supplement (and all other references of like
import) shall be deemed to mean and include all such financial statements and schedules and other
information which is or is deemed to be incorporated by reference in the Registration Statement,
the Base Prospectus or the Prospectus Supplement, as the case may be. No stop order suspending the
effectiveness of the Registration Statement or the use of the Base Prospectus 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 and the
Time of Sale Prospectus means the preliminary prospectus, if any, together with the free writing
prospectuses, if any, used in connection with the Placement, including any documents incorporated
by reference therein.
7
(B) 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, 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 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 Base Prospectus, the Time of Sale
Prospectus, if any, and the Prospectus Supplement, each as of its respective date, comply in all
material respects with the Securities Act and the Exchange Act and the applicable Rules and
Regulations. Each of the Base Prospectus, the Time of Sale Prospectus, if any, and the Prospectus
Supplement, as amended or supplemented, did not and will not contain as of the date thereof any
untrue statement of a material fact or omit to state a material fact necessary in order to make the
statements therein, in light of the circumstances under which they were made, not misleading. The
Incorporated Documents, when they were filed with the Commission, conformed in all material
respects to the requirements of the Exchange Act and the applicable Rules and Regulations, and none
of such documents, when 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 Incorporated Documents incorporated by reference in the Base Prospectus or Prospectus
Supplement), in light of the circumstances under which they were made not misleading; and any
further documents so filed and incorporated by reference in the Base Prospectus, the Time of Sale
Prospectus, if any, or Prospectus Supplement, when such documents are filed with the Commission,
will conform in all material respects to the requirements of the Exchange Act and the applicable
Rules and Regulations, as applicable, and will not contain any untrue statement of a material fact
or omit to state a material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. 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 Base Prospectus,
the Time of Sale Prospectus, if any, or Prospectus Supplement, or to be filed as exhibits or
schedules to the Registration Statement, which have not been described or filed as required.
(C) The Company is eligible to use free writing prospectuses in connection with the Placement
pursuant to Rules 164 and 433 under the Securities Act. Any free writing prospectus that the
Company is required to file pursuant to Rule 433(d) under the Securities Act has been, or will be,
filed with the Commission in accordance with the requirements of the Securities Act and the
applicable rules and regulations of the Commission thereunder. Each free writing prospectus that
the Company has filed, or is required to file, pursuant to Rule 433(d) under the Securities Act or
that was prepared by or behalf of or used by the Company complies or will comply in all material
respects with the requirements of the Securities Act and the applicable rules and regulations of
the Commission thereunder. The Company will not, without the prior consent of the Placement Agent,
prepare, use or refer to, any free writing prospectus.
(D) The Company has delivered, or will as promptly as practicable deliver, to the Placement
Agent complete conformed copies of the Registration Statement and of each consent and certificate
of experts, as applicable, filed as a part thereof, and conformed copies of the Registration
Statement (without exhibits), the Base Prospectus, the Time of Sale Prospectus, if any, and the
Prospectus Supplement, as amended or supplemented, in such quantities and at such places as the
Placement Agent reasonably requests. Neither the Company nor any of its directors and officers has
distributed and none of them will distribute, prior to the Closing Date, any offering material in
connection with the offering and sale of the
8
Shares other than the Base Prospectus, the Time of Sale Prospectus, if any, the Prospectus
Supplement, the Registration Statement, copies of the documents incorporated by reference therein
and any other materials permitted by the Securities Act.
SECTION 3. REPRESENTATIONS AND WARRANTIES. Except as set forth under the
corresponding section of the Disclosure Schedules or as disclosed in the SEC Reports (as defined
below) or the Registration Statement, the Company hereby makes the representations and warranties
set forth below to the Placement Agent.
(A) Organization and Qualification. All of the direct and indirect subsidiaries
(individually, a Subsidiary) of the Company are set forth on Schedule 3(A). The Company
owns, directly or indirectly, all of the capital stock or other equity interests of each Subsidiary
free and clear of any Liens (which for purposes of this Agreement shall mean a lien,
charge, security interest, encumbrance, right of first refusal, preemptive right or other
restriction), and all the issued and outstanding shares of capital stock of each Subsidiary are
validly issued and are fully paid, non-assessable and free of preemptive and similar rights to
subscribe for or purchase securities. The Company and each of the Subsidiaries is an entity duly
incorporated or otherwise organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation or organization (as applicable), with the requisite power and
authority to own and use its properties and assets and to carry on its business as currently
conducted. Neither the Company nor any Subsidiary is in violation or default of any of the
provisions of its respective certificate or articles of incorporation, bylaws or other
organizational or charter documents. Each of the Company and the Subsidiaries is duly qualified to
conduct business and is in good standing as a foreign corporation or other entity in each
jurisdiction in which the nature of the business conducted or property owned by it makes such
qualification necessary, except where the failure to be so qualified or in good standing, as the
case may be, could not have or reasonably be expected to result in (i) a material adverse effect on
the legality, validity or enforceability of any Transaction Document, (ii) a material adverse
effect on the results of operations, assets, business, 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 (any of (i), (ii) or (iii), a Material Adverse
Effect) and no Proceeding (which for purposes of this Agreement shall mean any
action, claim, suit, investigation or proceeding (including, without limitation, an investigation
or partial proceeding, such as a deposition), whether commenced or threatened) has been instituted
in any such jurisdiction revoking, limiting or curtailing or seeking to revoke, limit or curtail
such power and authority or qualification.
(B) Authorization; Enforcement. The Company has the requisite corporate power and
authority to enter into and to consummate the transactions contemplated by each of the Transaction
Documents and otherwise to carry out its obligations hereunder and thereunder. The execution and
delivery of each of the Transaction Documents by the Company and the consummation by it of the
transactions contemplated thereby have been duly authorized by all necessary action on the part of
the Company and no further action is required by the Company, its board of directors or its
stockholders in connection therewith other than in connection with the Required Approvals
(as defined in subsection 3(D) below). Each Transaction Document has been (or upon delivery will
have been) duly executed by the Company and, when delivered in accordance with the terms hereof and
thereof, will constitute the valid and binding obligation of the Company enforceable against the
Company in accordance with its terms except (i) as limited by applicable bankruptcy, insolvency,
reorganization, moratorium and other laws of general application affecting enforcement of
creditors rights generally and (ii) as limited by laws relating to the availability of specific
performance, injunctive relief or other equitable remedies.
(C) No Conflicts. The execution, delivery and performance of the Transaction
Documents by the Company, the issuance and sale of the Securities and the consummation by the
Company of the other transactions contemplated hereby and thereby do not and will not (i) conflict
with or violate any provision of
9
the Companys or any Subsidiarys certificate or articles of incorporation, bylaws or other
organizational or charter documents, or (ii) conflict with, or constitute a default (or an event
that with notice or lapse of time or both would become a default) under, result in the creation of
any Lien upon any of the properties or assets of the Company or any Subsidiary, or give to others
any rights of termination, amendment, acceleration or cancellation (with or without notice, lapse
of time or both) of, any agreement, credit facility, debt or other instrument (evidencing a Company
or Subsidiary debt or otherwise) or other understanding to which the Company or any Subsidiary is a
party or by which any property or asset of the Company or any Subsidiary is bound or affected, or
(iii) subject to the Required Approvals, conflict with or result in a violation of any law, rule,
regulation, order, judgment, injunction, decree or other restriction of any court or governmental
authority to which the Company or a Subsidiary is subject (including federal and state securities
laws and regulations), or by which any property or asset of the Company or a Subsidiary is bound or
affected; except in the case of each of clauses (ii) and (iii), such as could not have or
reasonably be expected to result in a Material Adverse Effect.
(D) Filings, Consents and Approvals. The Company is not required to obtain any
consent, waiver, authorization or order of, give any notice to, or make any filing or registration
with, any court or other federal, state, local or other governmental authority or other
Person (defined as an individual or corporation, partnership, trust, incorporated or
unincorporated association, joint venture, limited liability company, joint stock company,
government (or an agency or subdivision thereof) or other entity of any kind, including, without
limitation, any Trading Market) in connection with the execution, delivery and performance by the
Company of the Transaction Documents, other than such filings as are required to be made under
applicable Federal and state securities laws, under the applicable rules of the NYSE Amex
(AMEX) or that certain Rights Agreement, dated July 27, 2005, as amended (the Rights
Agreement) (collectively, the Required Approvals).
(E) Issuance of the Securities; Registration. 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
other than restrictions on transfer provided for in the Transaction Documents. The Company has
reserved from its duly authorized capital stock the maximum number of shares of Common Stock
issuable pursuant to the Transaction Documents. The issuance by the Company of the Securities has
been registered under the Securities Act and all of the Securities are freely transferable and
tradable by the Purchasers without restriction (other than any restrictions arising solely from an
act or omission of a Purchaser). The Securities are being issued pursuant to the Registration
Statement and the issuance of the Securities has been registered by the Company under the
Securities Act. The Registration Statement is effective and available for the issuance of the
Securities thereunder and the Company has not received any notice that the Commission has issued or
intends to issue a stop-order with respect to the Registration Statement or that the Commission
otherwise has suspended or withdrawn the effectiveness of the Registration Statement, either
temporarily or permanently, or intends or has threatened in writing to do so. The Plan of
Distribution section under the Registration Statement permits the issuance and sale of the
Securities hereunder. Upon receipt of the Securities, the Purchasers will have good and marketable
title to such Securities and the Securities will be freely tradable on the Trading Market
(which, for purposes of this Agreement shall mean means the following markets or exchanges on which
the Common Stock is listed or quoted for trading on the date in question: the Nasdaq Capital
Market, the NYSE Alternext US, the New York Stock Exchange, the Nasdaq National Market or the OTC
Bulletin Board).
(F) Capitalization. The capitalization of the Company is as set forth on Schedule
3(F). The Company has not issued any capital stock since its most recently filed periodic report
under the Exchange Act, other than pursuant to the exercise of employee stock options under the
Companys stock option plans, the issuance of shares of Common Stock to employees pursuant to the
Companys employee stock purchase
10
plan and pursuant to the conversion or exercise of securities exercisable, exchangeable or
convertible into Common Stock (Common Stock Equivalents). No Person has any right of
first refusal, preemptive right, right of participation, or any similar right to participate in the
transactions contemplated by the Transaction Documents. Except as a result of the purchase and
sale of the Securities, there are no outstanding options, warrants, script rights to subscribe to,
calls or commitments of any character whatsoever relating to, or securities, rights or obligations
convertible into or exercisable or exchangeable for, or giving any Person any right to subscribe
for or acquire, any shares of Common Stock, or contracts, commitments, understandings or
arrangements by which the Company or any Subsidiary is or may become bound to issue additional
shares of Common Stock or 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 Purchasers) and will not result in a right of any holder of Company securities to adjust
the exercise, conversion, exchange or reset price under such securities. All of the outstanding
shares of capital stock of the Company are validly issued, fully paid and nonassessable, have been
issued in compliance with all federal and state securities laws, and none of such outstanding
shares was issued in violation of any preemptive rights or similar rights to subscribe for or
purchase securities. 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 Securities. Other
than the Rights Agreement, 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.
(G) SEC Reports; Financial Statements. The Company has complied in all material
respects with requirements to file all reports, schedules, forms, statements and other documents
required to be filed by it under the Securities Act and the Exchange Act, including pursuant to
Section 13(a) or 15(d) thereof, for the two years preceding the date hereof (or such shorter period
as the Company was required by law to file such material) (the foregoing materials, including the
exhibits thereto and documents incorporated by reference therein, being collectively referred to
herein as the SEC Reports) on a timely basis or has received a valid extension of such
time of filing and has filed any such SEC Reports prior to the expiration of any such extension.
As of their respective dates, the SEC Reports complied in all material respects with the
requirements of the 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 the light of the circumstances under which
they were made, not misleading. The financial statements of the Company included in the SEC
Reports comply in all material respects with applicable accounting requirements and the rules and
regulations of the Commission with respect thereto as in effect at the time of filing. Such
financial statements have been prepared in accordance with United States generally accepted
accounting principles applied on a consistent basis during the periods involved (GAAP),
except as may be otherwise specified in such financial statements or the notes thereto and except
that unaudited financial statements may not contain all footnotes required by GAAP, and fairly
present in all material respects the financial position of the Company and its consolidated
subsidiaries as of and for the dates thereof and the results of operations and cash flows for the
periods then ended, subject, in the case of unaudited statements, to normal, immaterial, year-end
audit adjustments.
(H) Material Changes; Undisclosed Events, Liabilities or Developments. Since the date
of the latest audited financial statements included 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, (ii) the Company has
not incurred any liabilities (contingent or otherwise) other than (A) trade payables and accrued
expenses incurred in the ordinary course of business consistent with past practice and (B)
liabilities not required to be reflected in the 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, (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
11
to purchase or redeem any shares of its capital stock and (v) the Company has not issued any
equity securities to any officer, director or Affiliate (defined as any Person that,
directly or indirectly through one or more intermediaries, controls or is controlled by or is under
common control with a Person, as such terms are used in and construed under Rule 144 under the
Securities Act), except pursuant to existing Company stock option plans. The Company does not have
pending before the Commission any request for confidential treatment of information. Except for
the issuance of the Securities contemplated by this Agreement or as set forth on Schedule 3(H), no
event, liability or development has occurred or exists with respect to the Company or its
Subsidiaries or their respective business, properties, operations or financial condition, that
would be required to be disclosed by the Company under applicable securities laws at the time this
representation is made that has not been publicly disclosed 1 Trading Day prior to the date that
this representation is made.
(I) Litigation. There is no action, suit, inquiry, notice of violation, Proceeding or
investigation pending or, to the knowledge of the Company, threatened against or affecting the
Company, any Subsidiary or any of their respective properties before or by any court, arbitrator,
governmental or administrative agency or regulatory authority (federal, state, county, local or
foreign) (collectively, an Action) which (i) adversely affects or challenges the
legality, validity or enforceability of any of the Transaction Documents or the Securities or (ii)
could, if there were an unfavorable decision, have or reasonably be expected to result in a
Material Adverse Effect. Neither the Company nor any Subsidiary, nor any director or officer
thereof, is or has been the subject of any Action involving a claim of violation of or liability
under federal or state securities laws or a claim of breach of fiduciary duty. There has not been,
and to the knowledge of the Company, there is not pending or contemplated, any investigation by the
Commission involving the Company or any current or former director or officer of the Company. The
Commission has not issued any stop order or other order suspending the effectiveness of any
registration statement filed by the Company or any Subsidiary under the Exchange Act or the
Securities Act. None of the Companys or its Subsidiaries employees is a member of a union that
relates to such employees relationship with the Company, and neither the Company or any of its
Subsidiaries is a party to a collective bargaining agreement, and the Company and its Subsidiaries
believe that their relationships with their employees are good. No executive officer, to the
knowledge of the Company, is, or is now expected to be, in violation of any material term of any
employment contract, confidentiality, disclosure or proprietary information agreement or
non-competition agreement, or any other contract or agreement or any restrictive covenant, and the
continued employment of each such executive officer does not subject the Company or any of its
Subsidiaries to any liability with respect to any of the foregoing matters. The Company and its
Subsidiaries are in compliance with all U.S. federal, state, local and foreign laws and regulations
relating to employment and employment practices, terms and conditions of employment and wages and
hours, except where the failure to be in compliance could not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect.
(J) Labor Relations. No material labor dispute exists or, to the knowledge of the
Company, is imminent with respect to any of the employees of the Company which could reasonably be
expected to result in a Material Adverse Effect.
(K) Compliance. Neither the Company nor any Subsidiary (i) is in default under or in
violation of (and no event has occurred that has not been waived that, with notice or lapse of time
or both, would result in a default by the Company or any Subsidiary under), nor has the Company or
any Subsidiary received notice of a claim that it is in default under or that it is in violation
of, any indenture, loan or credit agreement or any other agreement or instrument to which it is a
party or by which it or any of its properties is bound (whether or not such default or violation
has been waived), (ii) is in violation of any order of any court, arbitrator or governmental body,
or (iii) is or has been in violation of any statute, rule or regulation of any governmental
authority, including without limitation all foreign, federal, state and local laws applicable to
its business and all such laws that affect the environment, except in each case as could not have a
Material Adverse Effect.
12
(L) Regulatory Permits. The Company and the Subsidiaries possess all certificates,
authorizations and permits issued by the appropriate federal, state, local or foreign regulatory
authorities necessary to conduct their respective businesses as described in the SEC Reports,
except where the failure to possess such permits could not have or reasonably be expected to result
in a Material Adverse Effect (Material Permits), and neither the Company nor any
Subsidiary has received any notice of proceedings relating to the revocation or modification of any
Material Permit. For clarity, the Company has not received the approval of any regulatory agency
to market any of its product candidates.
(M) Title to Assets. The Company and the Subsidiaries have good and marketable title
in fee simple to all real property owned by them that is material to the business of the Company
and the Subsidiaries and good and marketable title in all personal property owned by them that is
material to the business of the Company and the Subsidiaries, in each case free and clear of all
Liens, except for Liens as do not materially affect the value of such property and do not
materially interfere with the use made and proposed to be made of such property by the Company and
the Subsidiaries and Liens for the payment of federal, state or other taxes, the payment of which
is neither delinquent nor subject to penalties. Any real property and facilities held under lease
by the Company and the Subsidiaries are held by them under valid, subsisting and enforceable leases
of which the Company and the Subsidiaries are in compliance.
(N) Patents and Trademarks. The Company and the Subsidiaries have, or have rights to
use, all patents, patent applications, trademarks, trademark applications, service marks, trade
names, trade secrets, inventions, copyrights, licenses and other similar intellectual property
rights necessary or material for use in connection with their respective businesses as described in
the SEC Reports and which the failure to so have could have a Material Adverse Effect
(collectively, the Intellectual Property Rights). Neither the Company nor any Subsidiary
has received a notice (written or otherwise) that the Intellectual Property Rights used by the
Company or any Subsidiary violates or infringes upon the rights of any Person. To the knowledge of
the Company, all such Intellectual Property Rights are enforceable (other than patent and trademark
applications) and there is no existing infringement by another Person of any of the Intellectual
Property Rights of others. 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.
(O) Insurance. The Company and the Subsidiaries are insured by insurers of recognized
financial responsibility against such losses and risks and in such amounts as are prudent and
customary in the businesses in which the Company and the Subsidiaries are engaged, including, but
not limited to, directors and officers insurance coverage at least equal to the aggregate
subscription amount under the Transaction Documents. To the knowledge of the Company, such
insurance contracts and policies are accurate and complete. Neither the Company nor any Subsidiary
has any reason to believe that it will not be able to renew its existing insurance coverage as and
when such coverage expires or to obtain similar coverage from similar insurers as may be necessary
to continue its business without a significant increase in cost.
(P) Transactions With Affiliates and Employees. Except as set forth in the SEC
Reports, none of the officers or directors of the Company and, to the knowledge of the Company,
none of the employees of the Company is presently a party to any transaction with the Company or
any Subsidiary (other than for services as employees, officers and directors), including any
contract, agreement or other arrangement providing for the furnishing of services to or by,
providing for rental of real or personal property to or from, or otherwise requiring payments to or
from any officer, director or such employee or, to the knowledge of the Company, any entity in
which any officer, director, or any such employee has a substantial interest or is an officer,
director, trustee or partner, other than (i) for payment of salary or consulting fees for services
rendered, (ii) reimbursement for expenses incurred on behalf of the Company and (iii) for other
employee benefits, including stock option agreements under any stock option plan of the Company.
13
(Q) Sarbanes-Oxley. Except as disclosed in the SEC Reports or the Registration
Statement, the Company is in material compliance with all provisions of the Sarbanes-Oxley Act of
2002 which are applicable to it as of the date hereof and of the closing date of the Placement.
(R) Certain Fees. Except as otherwise provided in this Agreement, no brokerage or
finders fees or commissions are or will be payable by the Company to any broker, financial advisor
or consultant, finder, placement agent, investment banker, bank or other Person with respect to the
transactions contemplated by the Transaction Documents. The Purchasers shall have no obligation
with respect to any fees or with respect to any claims made by or on behalf of other Persons for
fees of a type contemplated in this Section that may be due in connection with the transactions
contemplated by the Transaction Documents.
(S) Trading Market Rules. The issuance and sale of the Securities hereunder does not
contravene the rules and regulations of the Trading Market.
(T) Investment Company. The Company is not, and is not an Affiliate of, and
immediately after receipt of payment for the Securities, will not be or be an Affiliate of, an
investment company within the meaning of the Investment Company Act of 1940, as amended. The
Company shall conduct its business in a manner so that it will not become subject to the Investment
Company Act.
(U) Registration Rights. No Person has any right to cause the Company to effect the
registration under the Securities Act of any securities of the Company.
(V) Listing and Maintenance Requirements. The Companys Common Stock is registered
pursuant to Section 12(b) or 12(g) of the Exchange Act, and the Company has taken no action
designed to, or 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. Except as set
forth in Schedule 3(V), the Company has not, in the 12 months preceding the date hereof, received
notice from any Trading Market on which the Common Stock is or has been listed or quoted to the
effect that the Company is not in compliance with the listing or maintenance requirements of such
Trading Market.
(W) Application of Takeover Protections. Except as set forth in the Registration
Statement, 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) or the laws of its state of
incorporation that is or could become applicable to the Purchasers as a result of the Purchasers
and the Company fulfilling their obligations or exercising their rights under the Transaction
Documents, including without limitation as a result of the Companys issuance of the Securities and
the Purchasers ownership of the Securities.
(X) Solvency. Based on the financial condition of the Company as of the Closing Date
after giving effect to the receipt by the Company of the proceeds from the sale of the Securities
hereunder, (i) the Companys fair saleable value of its assets exceeds the amount that will be
required to be paid on or in respect of the Companys existing debts and other liabilities
(including known contingent liabilities) as they mature and (ii) the current cash flow of the
Company, together with the proceeds the Company would receive, were it to liquidate all of its
assets, after taking into account all anticipated uses of the cash, would be sufficient to pay all
amounts on or in respect of its debt when such amounts are required to be paid. The Company does
not intend to incur debts beyond its ability to pay such debts as they mature (taking into account
the timing and amounts of cash to be payable on or in respect of its debt). The SEC Reports set
forth as of the dates thereof all outstanding secured and unsecured Indebtedness of the Company or
any Subsidiary, or for which the Company or any Subsidiary has commitments. For the purposes of
this
14
Agreement, Indebtedness shall mean (a) any liabilities for borrowed money or amounts
owed in excess of $50,000 (other than trade accounts payable incurred in the ordinary course of
business), (b) all guaranties, endorsements and other contingent obligations in respect of
Indebtedness of others, whether or not the same are or should be reflected in the Companys balance
sheet (or the notes thereto), except guaranties by endorsement of negotiable instruments for
deposit or collection or similar transactions in the ordinary course of business; and (c) the
present value of any lease payments in excess of $50,000 due under leases required to be
capitalized in accordance with GAAP. Neither the Company nor any Subsidiary is in default with
respect to any Indebtedness.
(Y) Tax Status. Except for matters that would not, individually or in the aggregate,
have or reasonably be expected to result in a Material Adverse Effect, the Company and each
Subsidiary has filed all necessary federal, state and foreign income and franchise tax returns and
has paid or accrued all taxes shown as due thereon, and the Company has no knowledge of a tax
deficiency which has been asserted or threatened against the Company or any Subsidiary.
(Z) Foreign Corrupt Practices. Neither the Company, nor to the knowledge of the
Company, any agent or other person acting on behalf of the Company, has (i) directly or indirectly,
used any funds for unlawful contributions, gifts, entertainment or other unlawful expenses related
to foreign or domestic political activity, (ii) made any unlawful payment to foreign or domestic
government officials or employees or to any foreign or domestic political parties or campaigns from
corporate funds, (iii) failed to disclose fully any contribution made by the Company (or made by
any person acting on its behalf of which the Company is aware) which is in violation of law, or
(iv) violated in any material respect any provision of the Foreign Corrupt Practices Act of 1977,
as amended.
(AA) Accountants. The Companys accountants are set forth on Schedule 3(AA) of the
Disclosure Schedule. To the knowledge of the Company, such accountants, who the Company expects
will express their opinion with respect to the financial statements to be included in the Companys
next Annual Report on Form 10-K, are a registered public accounting firm as required by the
Securities Act.
(BB) Regulation M Compliance. The Company has not, and to its knowledge no one acting
on its behalf has, (i) taken, directly or indirectly, any action designed to cause or to result in
the stabilization or manipulation of the price of any security of the Company to facilitate the
sale or resale of any of the Securities, (ii) sold, bid for, purchased, or, paid any compensation
for soliciting purchases of, any of the Securities (other than for the placement agents placement
of the Securities), or (iii) paid or agreed to pay to any person any compensation for soliciting
another to purchase any other securities of the Company.
(CC) Approvals. The issuance and listing on the AMEX of the Shares requires no
further approvals, including but not limited to, the approval of shareholders.
(DD) FINRA Affiliations. There are no affiliations with any FINRA member firm among
the Companys officers, directors or, to the knowledge of the Company, any five percent (5%) or
greater stockholder of the Company, except as set forth in the Base Prospectus.
15
SECTION 4. CLOSING. The obligations of the Placement Agent and the Purchasers,
and the closing of the sale of the Securities hereunder are subject to the accuracy, when made and
on the Closing Date, of the representations and warranties on the part of the Company and its
Subsidiaries contained herein, to the accuracy of the statements of the Company and its
Subsidiaries made in any certificates pursuant to the provisions hereof, to the performance by the
Company and its Subsidiaries of their obligations hereunder, and to each of the following
additional terms and conditions:
(A) No stop order suspending the effectiveness of the Registration Statement shall have been
issued and no proceedings for that purpose shall have been initiated or threatened by the
Commission, and any request for additional information on the part of the Commission (to be
included in the Registration Statement, the Base Prospectus or the Prospectus Supplement or
otherwise) shall have been complied with to the reasonable satisfaction of the Placement Agent.
(B) The Placement Agent shall not have discovered and disclosed to the Company on or prior to
the Closing Date that the Registration Statement, the Base Prospectus or the Prospectus Supplement
or any amendment or supplement thereto contains an untrue statement of a fact which, in the opinion
of counsel for the Placement Agent, is material or omits to state any fact which, in the opinion of
such counsel, is material and is required to be stated therein or is necessary to make the
statements therein not misleading.
(C) All corporate proceedings and other legal matters incident to the authorization, form,
execution, delivery and validity of each of this Agreement, the Securities, the Registration
Statement, the Base Prospectus and the Prospectus Supplement and all other legal matters relating
to this Agreement and the transactions contemplated hereby shall be reasonably satisfactory in all
material respects to counsel for the Placement Agent, and the Company shall have furnished to such
counsel all documents and information that they may reasonably request to enable them to pass upon
such matters.
(D) The Placement Agent shall have received from outside counsel to the Company such counsels
written opinion, addressed to the Placement Agent and the Purchasers dated as of the Closing Date,
in form and substance reasonably satisfactory to the Placement Agent, which opinion shall include a
10b-5 representation from such counsel.
(E) Neither the Company nor any of its Subsidiaries shall have sustained since the date of the
latest audited financial statements included or incorporated by reference in the Base Prospectus,
any loss or interference with its business from fire, explosion, flood, terrorist act or other
calamity, whether or not covered by insurance, or from any labor dispute or court or governmental
action, order or decree, otherwise than as set forth in or contemplated by the Base Prospectus and
(ii) since such date there shall not have been any change in the capital stock or long-term debt of
the Company or any of its Subsidiaries or any change, or any development involving a prospective
change, in or affecting the business, general affairs, management, financial position,
stockholders equity, results of operations or prospects of the Company and its Subsidiaries,
otherwise than as set forth in or contemplated by the Base Prospectus, the effect of which, in any
such case described in clause (i) or (ii), is, in the judgment of the Placement Agent, so material
and adverse as to make it impracticable or inadvisable to proceed with the sale or delivery of the
Securities on the terms and in the manner contemplated by the Base Prospectus, the Time of Sale
Prospectus, if any, and the Prospectus Supplement.
(F) The Common Stock is registered under the Exchange Act and, as of the Closing Date, the
Shares shall be listed and admitted and authorized for trading on AMEX, and satisfactory evidence
of such actions shall have been provided to the Placement Agent. The Company shall have taken no
action designed to, or likely to have the effect of terminating the registration of the Common
Stock under the Exchange Act or delisting or suspending from trading the Common Stock from AMEX,
nor has the
16
Company received any information suggesting that the Commission or AMEX is contemplating
terminating such registration or listing.
(G) Subsequent to the execution and delivery of this Agreement, there shall not have occurred
any of the following: (i) trading in securities generally on the New York Stock Exchange, the
Nasdaq National Market or the NYSE Alternext US or in the over-the-counter market, or trading in
any securities of the Company on any exchange or in the over-the-counter market, shall have been
suspended or minimum or maximum prices or maximum ranges for prices shall have been established on
any such exchange or such market by the Commission, by such exchange or by any other regulatory
body or governmental authority having jurisdiction, (ii) a banking moratorium shall have been
declared by federal or state authorities or a material disruption has occurred in commercial
banking or securities settlement or clearance services in the United States, (iii) the United
States shall have become engaged in hostilities in which it is not currently engaged, the subject
of an act of terrorism, there shall have been an escalation in hostilities involving the United
States, or there shall have been a declaration of a national emergency or war by the United States,
or (iv) there shall have occurred any other calamity or crisis or any change in general economic,
political or financial conditions in the United States or elsewhere, if the effect of any such
event in clause (iii) or (iv) makes it, in the sole judgment of the Placement Agent, impracticable
or inadvisable to proceed with the sale or delivery of the Securities on the terms and in the
manner contemplated by the Base Prospectus and the Prospectus Supplement.
(H) No action shall have been taken and no statute, rule, regulation or order shall have been
enacted, adopted or issued by any governmental agency or body which would, as of the Closing Date,
prevent the issuance or sale of the Securities or materially and adversely affect or potentially
and adversely affect the business or operations of the Company; and no injunction, restraining
order or order of any other nature by any federal or state court of competent jurisdiction shall
have been issued as of the Closing Date which would prevent the issuance or sale of the Securities
or materially and adversely affect or potentially and adversely affect the business or operations
of the Company.
(I) The Company shall have prepared and filed with the Commission a Current Report on Form 8-K
with respect to the Placement, including as an exhibit thereto this Agreement.
(J) The Company shall have entered into subscription agreements with each of the Purchasers
and such agreements shall be in full force and effect and shall contain representations and
warranties of the Company as agreed between the Company and the Purchasers.
(K) FINRA shall have raised no objection to the fairness and reasonableness of the terms and
arrangements of this Agreement. In addition, the Company shall, if requested by the Placement
Agent, make or authorize Placement Agents counsel to make on the Companys behalf, an Issuer
Filing with FINRA pursuant to FINRA Rule 5110 with respect to the Registration Statement and pay
all filing fees required in connection therewith.
(L) Prior to the Closing Date, the Company shall have furnished to the Placement Agent such
further information, certificates and documents as the Placement Agent may reasonably request.
All opinions, letters, evidence and certificates mentioned above or elsewhere in this
Agreement shall be deemed to be in compliance with the provisions hereof only if they are in form
and substance reasonably satisfactory to counsel for the Placement Agent.
17
Exhibit 99.1
ADVENTRX PHARMACEUTICALS ANNOUNCES FINANCING
SAN DIEGO June 29, 2009 ADVENTRX Pharmaceuticals, Inc. (NYSE Amex: ANX) announced
today that it has obtained a commitment to purchase shares of its 5% Series B convertible preferred
stock pursuant to a registered direct offering to a single institutional investor, representing
gross proceeds of approximately $1.36 million. Twenty-five percent, or approximately $340,250, of
the gross proceeds will be placed in an escrow account, which amounts will be released to make the
dividend and other payments described below.
The preferred stock is convertible into shares of ADVENTRXs common stock at the option of the
investor at a price of $0.1432 per share and will accrue a 5% dividend until July 6, 2014. If the
convertible preferred stock is converted at any time prior to July 6, 2014, ADVENTRX will pay the
holder an amount equal to the total dividend that would accrue on the convertible preferred stock
from the conversion date through July 6, 2014, or $250 per $1,000 principal amount of notes
converted less any dividend payments made with respect to the converted convertible preferred
stock.
The closing of the offering is expected to take place on or before July 3, 2009, subject to the
satisfaction of customary closing conditions. ADVENTRX plans to use the net proceeds from
the offering to fund activities related to seeking FDA approval to market ANX-530 (vinorelbine
emulsion) in the United States, including manufacturing-related activities, and for general
corporate purposes, including general and administrative expenses.
The shares are being offered by ADVENTRX pursuant to an effective shelf registration
statement filed with the Securities and Exchange Commission (SEC). A prospectus supplement
relating to the offering will be filed with the SEC. Rodman & Renshaw, LLC, a wholly owned
subsidiary of Rodman & Renshaw Capital Group, Inc. (NasdaqGM: RODM), acted as the exclusive
placement agent for the transaction.
This press release shall not constitute an offer to sell or the solicitation of an offer to buy nor
shall there be any sale of the securities in any state or jurisdiction in which such offer,
solicitation or sale would be unlawful prior to registration or qualification under the securities
laws of any such state or jurisdiction. The securities may only be offered by means of a
prospectus. Copies of the prospectus supplement and accompanying base prospectus can be obtained
directly from the ADVENTRX at 6725 Mesa Ridge Road, Suite 100, San Diego, California 92121 or from
the SECs website at www.sec.gov.
About ADVENTRX Pharmaceuticals Inc.
ADVENTRX Pharmaceuticals is a biopharmaceutical company whose product candidates are designed to
improve the safety of existing cancer treatments. More information can be found on the Companys
web site at www.adventrx.com.
Forward Looking Statement
ADVENTRX cautions you that statements included in this press release that are not a description of
historical facts are forward-looking statements that involve risks and assumptions that, if they
materialize or do not prove to be accurate, could cause ADVENTRXs results to differ materially
from historical results or those expressed or implied by such forward-looking statements. These
risks and uncertainties include, but are not limited to: the risk that ADVENTRXs common stock will
be delisted by the NYSE Amex, including as a result of failing to comply with applicable
stockholder approval requirements or failing to maintain sufficient stockholders equity or a
sufficient stock price; the risk that the provisions of Delaware General Corporation Law will
prohibits ADVENTRX from making the dividend and other payments due its 5% Series B convertible
preferred stock (or to the holders thereof), which may be a breach of its certificate of
incorporation or other contractual obligations and expose ADVENTRX to corresponding liability; the
risk that ADVENTRX will be unable to raise sufficient additional capital on a timely basis to
submit an NDA for ANX-530, to fund operations, including pre-launch activities, during the FDA
review period, if an NDA is submitted, or to conduct launch activities, should an NDA for ANX-530
be approved; the risk that ADVENTRX will be unable to raise sufficient additional capital on a
timely basis to continue as a going concern; the risk that ADVENTRX will seek protection under the
provisions of the U.S. Bankruptcy Code; the risk that ADVENTRX will reassess the results of the
ANX-530 bioequivalence study and determine to conduct additional bioequivalence studies of ANX-530,
including in humans; the
potential for regulatory authorities to require additional preclinical
work and/or clinical activities to support regulatory filings, including prior to the submission or
the approval of an NDA for ANX-530, which activities may increase the cost and timeline to NDA
submission or approval; the risk the FDA will determine that ANX-530 and Navelbine® are not
bioequivalent, including as a result of performing pharmacokinetic equivalence analysis based on a
patient population other than the population on which ADVENTRX based its analysis; difficulties or
delays in manufacturing, obtaining regulatory approval for and marketing ANX-530, including
validating commercial manufacturing processes and manufacturers, as well as suppliers; the risk
that we will trigger a maintenance failure under that certain Rights Agreement, dated July 27,
2005, as amended, and be required to pay liquidated damages, including as a result of losing our
eligibility to use Form S-3 if our common stock is delisted from the NYSE Amex; and other risks and
uncertainties more fully described in ADVENTRXs press releases and in the prospectus supplement
relating to this offering, which will be filed with the Securities and Exchange Commission.
ADVENTRXs public filings with the Securities and Exchange Commission are available at www.sec.gov.
You are cautioned not to place undue reliance on these forward-looking statements, which speak only
as of the date when made. ADVENTRX does not intend to update any forward-looking statement as set
forth in this press release to reflect events or circumstances arising after the date on which it
was made.