Exhibit 4.23
SECURITIES PURCHASE AGREEMENT
dated as of July 21, 2005,
by and among
ADVENTRX PHARMACEUTICALS, INC.
and
ENTITIES LISTED ON APPENDIX A (each a "Purchaser").
Table of Contents
Page
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SECTION 1. PURCHASE AND SALE OF STOCK .................................. 1
SECTION 2. THE CLOSING ................................................. 2
2.1. The Closing.................................................. 2
2.2. Conditions to Closing........................................ 2
SECTION 3. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE
COMPANY................................................... 4
3.1. No Material Misstatements.................................... 4
3.2. Incorporated Documents....................................... 4
3.3. Certain Data................................................. 4
3.4. Financial Statements......................................... 5
3.5. Book and Records; Internal Controls.......................... 5
3.6. Independent Accountants...................................... 6
3.7. Organization; Good Standing.................................. 6
3.8. Absence of Litigation........................................ 6
3.9. Brokers or Finders........................................... 6
3.10. Use of Proceeds ............................................. 7
3.11. Licenses; Leases ............................................ 7
3.12. Intellectual Property........................................ 7
3.13. Real Property ............................................... 8
3.14. Material Contracts........................................... 9
3.15. No Violation ................................................ 9
3.16. Due Authorization and Delivery............................... 9
3.17. No Default .................................................. 10
3.18. Capitalization; Liabilities.................................. 10
3.19. Lock-Up ..................................................... 11
3.20. Employees ................................................... 11
3.21. Related Party Transactions................................... 11
3.22. Market Stabilization......................................... 11
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3.23. Taxes 12
3.24. AMEX Compliance; Listing..................................... 12
3.25. Insurance ................................................... 12
3.26. Environmental Laws........................................... 12
3.27. Investment Company........................................... 13
3.28. Solicitation; Other Issuances of Securities.................. 13
3.29. No Corrupt Practices......................................... 14
3.30. No Money Laundering.......................................... 14
3.31. No OFAC Sanctions ........................................... 14
3.32. ERISA 14
SECTION 4. REPRESENTATIONS, WARRANTIES AND COVENANTS OF EACH
PURCHASER................................................. 15
4.1. Organization................................................. 15
4.2. Authorization, Enforcement, and Validity..................... 15
4.3. Consents and Approvals; No Violation......................... 15
4.4. Investment Experience........................................ 16
4.5. Investment Intent And Limitation On Dispositions............. 16
4.6. Information And Risk......................................... 16
4.7. Restricted Securities........................................ 17
4.8. No Obligation to Register.................................... 18
4.9. Disclosures to the Company................................... 18
4.10. Nature of Purchasers......................................... 18
4.11. Ownership ................................................... 18
4.12. Brokers or Finders........................................... 18
4.13. Acknowledgement ............................................. 18
4.14. No Short Sales............................................... 19
SECTION 5. SURVIVAL OF REPRESENTATIONS AND WARRANTIES................... 19
SECTION 6. REGISTRATION OF THE SHARES; COMPLIANCE WITH THE
SECURITIES ACT............................................ 19
6.1. Registration Procedures And Expenses......................... 19
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6.2. Restrictions on Transferability.............................. 23
6.3. Furnish Information.......................................... 24
6.4. Delay of Registration........................................ 25
6.5. Termination Of Conditions And Obligations.................... 25
SECTION 7. LEGENDS ..................................................... 25
SECTION 8. INDEMNIFICATION ............................................. 26
SECTION 9. NOTICES ..................................................... 29
SECTION 10. MISCELLANEOUS. .............................................. 30
10.1. Amendments .................................................. 30
10.2. Headings .................................................... 30
10.3. Severability ................................................ 30
10.4. Governing Law And Forum...................................... 30
10.5. Counterparts ................................................ 31
10.6. Entire Agreement ............................................ 31
10.7. Independent Nature Of Purchasers' Obligations And Rights..... 31
10.8. Expenses .................................................... 31
Appendix A Schedule of Purchasers
Appendix B Company Counsel Opinion
Appendix C Disclosure Schedules
Appendix D Selling Stockholder Questionnaire
Appendix E Certificate Regarding Resale of Common Stock
Appendix F Form of Warrant
Appendix G Form of Rights Agreement
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SECURITIES PURCHASE AGREEMENT
THIS SECURITIES PURCHASE AGREEMENT (this "Agreement") is made as of the 21st day
of July 2005 by and among ADVENTRX Pharmaceuticals, Inc. (the "Company"), a
Delaware corporation, with its principal offices at ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇
▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, and the entities listed on Appendix A (each, a
"Purchaser").
IN CONSIDERATION of the mutual covenants contained in this Agreement,
and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the Company and the Purchasers hereby agree as follows:
Section 1. Purchase and Sale of Stock and Warrants.
Subject to the terms and conditions of this Agreement, on the Closing
Date (as defined herein), each Purchaser agrees to purchase severally and not
jointly and the Company agrees to issue and sell to such Purchaser severally and
not jointly that number of whole shares of the Company's common stock, $0.001
par value, (the "Common Stock") set forth opposite such Purchaser's name on
Appendix A (the "Shares"), at a purchase price that is equal to One Dollar and
Eighty-Five Cents ($1.85) per Share and a warrant to purchase that number of
shares of Common Stock set forth opposite such Purchaser's name on Appendix A,
at an exercise price of Two Dollars Twenty-Six Cents ($2.26) per share,
substantially in the form attached hereto as Appendix F-1 or with respect to
North Sound Legacy Institutional Fund LLC and North Sound Legacy International
Ltd. in the form attached hereto as Appendix F-2 (each, a "Warrant" and
collectively the "Warrants"). The shares of Common Stock issuable upon exercise
of the Warrants are referred to herein as the Warrant Shares. The Shares and the
Warrants are referred to herein collectively as the "Securities." The Purchasers
and the Company agree and acknowledge that the Company may, at any Purchaser's
prior written request, include in the Warrant issuable to such Purchaser
pursuant to this Agreement a provision, agreed to by such Purchaser and the
Company, pursuant to which such Purchaser would be prohibited from exercising
such Warrant to the extent that such Purchaser would upon exercise beneficially
hold a number of shares of Common Stock in excess of an agreed percentage of the
total number of shares of Common Stock then issued and outstanding.
Section 2. The Closing.
2.1. The Closing.
(a) The purchase and sale of the Securities upon the terms and
conditions hereof will take place at a closing (the "Closing") to be held at the
offices of Cooley Godward LLP, Five Palo Alto Square, ▇▇▇▇ ▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇
▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇, or such other location as the parties may agree, on the
second business day after all conditions to closing set forth in Section 2.2
have been satisfied or waived, but in no event later than July 29, 2005 unless
otherwise agreed to among the Company and the Purchasers (the "Closing Date").
(b) The Company shall provide wire transfer instructions for the
payment of the Purchase Price prior to the Closing.
2.2. Conditions to Closing.
(a) The Company's obligation to complete the purchase and sale of the
Securities and deliver such stock and warrant certificate(s) to each Purchaser
is subject to:
(i) receipt by the Company of immediately available funds in the
full amount of the purchase price for the Securities being purchased
hereunder as set forth opposite such Purchaser's name on Appendix A (the
"Purchase Price"), in accordance with the wire transfer instructions
delivered by the Company pursuant to Section 2.1(b);
(ii) the accuracy in all material respects of the representations
and warranties made by such Purchaser in Section 4 below as of the Closing
Date and the fulfillment in all material respects of those undertakings of
such Purchaser in this Agreement to be fulfilled on or prior to the Closing
Date;
(iii) the aggregate Purchase Price paid by the Purchasers at the
Closing shall be greater than or equal to $15,000,000;
(iv) the Company shall have received notification from American
Stock Exchange LLC ("Amex") that the Shares and Warrant Shares have been
approved for listing with Amex; and
(v) the receipt by the Company from all Purchasers other than
North Sound Legacy Institutional Fund LLC, North Sound Legacy International
Ltd. and Royal Bank of Canada of a copy of the Rights Agreement duly
executed by each such Purchaser.
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(b) Each Purchaser's obligation to complete the purchase and sale of
the Securities is subject to:
(i) the accuracy in all material respects of the representations
and warranties made by the Company in Section 3 below as of the Closing
Date and the fulfillment in all material respects of those undertakings of
the Company in this Agreement to be fulfilled on or prior to the Closing
Date;
(ii) delivery by the Company to such Purchaser of an opinion,
dated as of the Closing Date, from ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ LLP, counsel to the
Company, in the form attached as Appendix B hereto;
(iii) the Company's delivery to its transfer agent of irrevocable
instructions, subject to fulfillment of the conditions set forth in Section
2.2(a), to issue to such Purchaser or in such nominee name(s) as designated
by such Purchaser in writing such number of Shares set forth opposite such
Purchaser's name on Appendix A or, if requested by the Purchaser, one or
more certificates representing such Shares;
(iv) the issuance of or an undertaking by the Company at the
Closing to issue, subject to fulfillment of the conditions set forth in
Section 2.2(a), to such Purchaser or in such nominee name(s) as designated
by such Purchaser in writing a Warrant exercisable for that number of
shares of Common Stock set forth opposite such Purchaser's name on Appendix
A or, if requested by the Purchaser, one or more Warrants representing the
right to purchase such shares;
(v) fulfillment by the Company of the closing conditions set
forth in Section 7(f), (g), (j), (k) and (l) of that certain engagement
letter dated May 16, 2005 between the Company and CIBC World Markets Corp.
("CIBC"), or waiver of such conditions by CIBC;
(vi) the aggregate Purchase Price paid by the Purchasers at the
Closing shall be greater than or equal to $15,000,000;
(vii) the Company shall have received notification from Amex that
the Shares and Warrant Shares have been approved for listing with Amex; and
(viii) the receipt by all Purchasers other than North Sound
Legacy Institutional Fund LLC, North Sound Legacy International Ltd. and
Royal Bank of Canada of a copy of the Rights Agreement in the form of
Exhibit G hereto (the "Rights Agreement") duly executed by the Company.
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Section 3. Representations, Warranties and Covenants of the Company. Except as
set forth on the corresponding sections of the Company's disclosure schedule
attached hereto as Appendix C (the "Disclosure Schedule"), or as specifically
contemplated by this Agreement, the Company hereby represents and warrants to,
and covenants with, each Purchaser as of the Closing Date (or such other date
specified below) as follows:
3.1. No Material Misstatements. The Private Placement Memorandum dated
May 16, 2005, as supplemented June 16, 2005, June 21, 2005 and July 21, 2005,
relating to the offering of the Shares, including all exhibits and annexes
thereto (including, in particular, the Company's Annual Report on Form 10-KSB
for the fiscal year ended December 31, 2004 (the "Annual Report"), the Company's
Proxy Statement for the Annual Meeting Stockholders held on May 24, 2005, and
the Company's Quarterly Report on Form 10-Q for the 3 months ended March 31,
2005 (the "Quarterly Report"), and all exhibits thereto), as the same may be
amended or supplemented, (the "Memorandum"), did not, as of its date, contain
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein not misleading. Except as set forth in the Memorandum, there has been no
material adverse change in the business, financial condition or prospects of the
Company since March 31, 2005.
3.2. Incorporated Documents.
(a) The documents contained in or incorporated by reference in the
Memorandum or distributed by the Company to the Purchasers as a supplement to
the Memorandum, which were filed with the Securities and Exchange Commission
(the "Commission"), at the time they were filed with the Commission, complied in
all material respects with the requirements of the Securities Exchange Act of
1934, as amended (the "Exchange Act"), and the rules and regulations of the
Commission thereunder, and none of such documents contained an 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.
(b) Since January 1, 2003, the Company has filed all documents
required to be filed by it prior to the date hereof with the Commission pursuant
to the reporting requirements of the Exchange Act (the "SEC Documents").
3.3. Certain Data. The statistical and market-related data included in
the Memorandum are based on or derived from sources that the Company believes to
be reliable and accurate.
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3.4. Financial Statements.
(a) The financial statements of the Company (including all notes and
schedules thereto) included in the Memorandum present fairly in all material
respects the financial position of the Company and its consolidated subsidiaries
at the dates indicated and the statement of operations, stockholders' equity and
cash flows of the Company and its consolidated subsidiaries for the periods
specified; and such financial statements and related schedules and notes
thereto, have been prepared in conformity with generally accepted accounting
principles, consistently applied throughout the periods involved (subject, in
the case of any unaudited financial information, to the absence of note
disclosure and normal year-end adjustments). The summary financial data included
in the Memorandum present fairly the information shown therein as at the
respective dates and for the respective periods specified and have been
presented on a basis consistent with the consolidated financial statements set
forth in the Memorandum and other financial information (subject, in the case of
any unaudited financial information, to the absence of note disclosure and
normal year-end adjustments).
(b) As of their respective dates, the financial statements of the
Company included in the SEC Documents complied as to form in all material
respects with applicable accounting requirements and published rules and
regulations of the Commission with respect thereto. Such financial statements
have been prepared in accordance with generally accepted accounting principles,
consistently applied, during the periods involved (except as may be otherwise
indicated in such financial statements or the notes thereto) and fairly present
in all material respects the financial position of the Company as of the dates
thereof and the results of its operations and cash flows for the periods then
ended (subject, in the case of unaudited statements, to the absence of note
disclosure and normal year end audit adjustments).
3.5. Books and Records; Internal Controls. The books, records and
accounts of the Company and its subsidiaries accurately and fairly reflect, in
all material respects, in reasonable detail, the transactions in, and
dispositions of, the assets of, and the results of operations of, the Company
and its subsidiaries. The Company and each of its subsidiaries maintains a
system of internal accounting controls sufficient to provide reasonable
assurances that (i) transactions are executed in accordance with management's
general or specific authorizations, (ii) transactions are recorded as necessary
to permit preparation of financial statements in accordance with generally
accepted accounting principles and to maintain asset accountability, (iii)
access to assets is permitted only in accordance with management's 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 chief executive officer and the
chief financial officer
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of the Company have made all certifications required by the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act
of 2002, as amended (the "▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act"), and any related rules and
regulations promulgated by the Commission, and the statements contained in any
such certification are complete and correct; the Company maintains "disclosure
controls and procedures" (as defined in Rule 13a-14(c) under the Exchange Act);
the Company is otherwise in compliance in all material respects with all
applicable effective provisions of the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act and is actively taking
steps to ensure that it will be in compliance with other applicable provisions
of the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act upon the effectiveness of such provisions.
3.6. Independent Accountants. To the knowledge of the Company, ▇.▇.
▇▇▇▇ LLP, whose reports are included as a part of the Memorandum, is and, during
the periods covered by its reports, was an independent public accounting firm as
required by the Securities Act of 1933, as amended (the "Securities Act"), and
the rules and regulations of the Commission thereunder.
3.7. Organization; Good Standing. The Company and each of its
subsidiaries, is duly organized, validly existing and in good standing under the
laws of their respective jurisdictions of incorporation or organization. The
Company and each of its subsidiaries is duly qualified to do business and is in
good standing as a foreign corporation in each jurisdiction in which the nature
of the business conducted by it or location of the assets or properties owned,
leased or licensed by it requires such qualification, except for such
jurisdictions where the failure to so qualify individually or in the aggregate
would not result in a material adverse effect on the assets, properties,
condition, financial or otherwise, or in the results of operations, business
affairs or business prospects of the Company and its subsidiaries considered as
a whole (a "Material Adverse Effect"); and to the Company's knowledge, no
proceeding has been instituted in any such jurisdiction revoking, limiting or
curtailing, or seeking to revoke, limit or curtail, such power and authority or
qualification and, to the Company's knowledge, no such proceeding is planned or
threatened.
3.8. Absence of Litigation. Except as set forth in the SEC Documents,
there is no action, suit, proceeding, inquiry or investigation before or by any
court, public board, government agency, self-regulatory organization or body
pending or, to the actual knowledge of the executive officers of the Company or
any of its subsidiaries, threatened in writing against the Company or any of the
Company's subsidiaries or any of the Company's or the subsidiaries' officers or
directors in their capacities as such, that, either individually or in the
aggregate, would result in a Material Adverse Effect.
3.9. Brokers or Finders. No broker, investment banker, financial
advisor or other individual, corporation, general or limited partnership,
limited
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liability company, firm, joint venture, association, enterprise, joint
securities company, trust, unincorporated organization or other entity (each a
"Person"), other than CIBC, RBC Capital Markets and ▇▇▇▇▇▇▇ ▇▇▇▇ Partners, a
division of Pali Capital, Inc. (together, the "Placement Agent"), the fees and
expenses of which will be paid by the Company, is entitled to any broker's,
finder's, financial advisor's or other similar fee or commission in connection
with the transactions contemplated by this Agreement based upon arrangements
made by or on behalf of the Company.
3.10. Use of Proceeds. The Company intends to use the net proceeds
from the sale of the Securities hereunder as described in the Memorandum.
3.11. Licenses; Leases. The Company and each of its subsidiaries has
all requisite corporate power and authority, and all necessary authorizations,
approvals, consents, orders, licenses, certificates and permits of and from all
governmental or regulatory bodies or any other person or entity (collectively,
the "Permits"), to own, lease and license its assets and properties and conduct
its business, all of which are valid and in full force and effect, except where
the lack of such Permits, individually or in the aggregate, would not result in
a Material Adverse Effect. The Company and each of its subsidiaries has
fulfilled and performed in all material respects all of its material obligations
with respect to such Permits and no event has occurred that allows, or after
notice or lapse of time would allow, revocation or termination thereof or
results in any other material impairment of the rights of the Company
thereunder. Except as may be required under the Securities Act and state and
foreign Blue Sky laws, no other Permits are required to enter into, deliver and
perform this Agreement and to issue and sell the Securities.
3.12. Intellectual Property.
(a) (i) The Company and its subsidiaries own, or hold under license,
and will have on and after the Closing Date full, legally enforceable rights to
use, free of any Encumbrances (as defined below), all patents, patent rights,
patent applications, licenses, inventions, discoveries, improvements, copyrights
(whether registered or unregistered), writings and other works of authorship
(including software), know-how (including trade secrets and other unpatented
and/or unpatentable proprietary or confidential information, systems or
procedures), trademarks (whether registered or unregistered), trademark
applications, service marks and trade names (collectively, the "Intellectual
Property") that are material and necessary to conduct and operate the business
of the Company as currently conducted, and to the Company's knowledge as
currently proposed to be conducted, as described in the Memorandum (the "Company
Business"), (ii) to the Company's knowledge, neither the use or exploitation of
any of its Intellectual Property nor the conduct and operations of the Company
Business in the manner currently conducted, each as described in the Memorandum,
infringes upon, misappropriates, violates or
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conflicts in any way with the Intellectual Property rights of any other Person,
(iii) to the Company's knowledge, neither the use of any of its Intellectual
Property nor the conduct and operation of the Company Business as currently
proposed to be conducted by the Company, as described in the Memorandum, will
infringe upon, misappropriate, violate or conflict in any way with the
Intellectual Property rights of any other Person, (iv) to the Company's
knowledge, there is no, nor has there been within the last three years, any
pending or threatened assertion or claim related to the use or exploitation of
its Intellectual Property or the conduct or operation of the Company Business as
described in the Memorandum, involving the infringement, misappropriation, or
violation of, or conflict with, in any way the Intellectual Property rights of
any other Person, (v) the Company is not and has not been, a party to any
action, suit, proceeding or, to the knowledge of the Company, investigation, any
of which involve a claim of infringement or misappropriation of any Intellectual
Property of any Person, (vi) the Company has not been the subject of, and the
Company has no actual knowledge of, any claims with respect to the validity,
enforceability or ownership of any of its Intellectual Property and (vii) to the
Company's knowledge, there have been no unauthorized uses, disclosures,
infringements, or misappropriations by any Person of any of its Intellectual
Property or any breaches by any Person, including the Company, of any licenses
or other agreements involving its Intellectual Property, which in each case has
or could reasonably be expected to have a Material Adverse Effect.
(b) To the Company's knowledge, no Person currently is in default with
regard to any agreement relating to its Intellectual Property, and there exists
no condition or event (including the execution, delivery and performance of this
Agreement) which, with the giving of notice or the lapse of time or both, would
constitute a default by the Company under any such agreement, or would give any
Person any right of termination, cancellation or acceleration of any performance
under any such agreement or result in the creation or imposition of any
Encumbrance, in each case.
(c) For purposes of this Section 3.11, "Encumbrance" means (i) any
security interest, pledge, mortgage, deed of trust, hypothecation, lien
(including environmental and tax liens), charge, encumbrance, adverse claim,
preferential arrangement or restriction of any kind, including any restriction
on the use, voting, transfer, receipt of income or other exercise of any
attributes of ownership, (ii) interest of a vendor or a lessor under any
conditional sale agreement, capital lease or title retention agreement (or any
financing lease having substantially the same economic effect) and (iii) any
purchase option, call or similar right of a third Person.
3.13. Real Property. Neither the Company nor any of its subsidiaries
owns any real property. All real property held under lease by the Company and
its subsidiaries is held by them under valid, existing and enforceable
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leases, free and clear of all liens, encumbrances, claims, security interests
and defects, except such as are not material and do not materially interfere
with the use made or proposed to be made of such property by the Company and its
subsidiaries. Neither the Company nor any of its subsidiaries has sustained any
loss or interference with its assets, businesses or properties (whether owned or
leased) from fire, explosion, earthquake, flood or other calamity, whether or
not covered by insurance, or from any labor dispute or any court or legislative
or other governmental action, order or decree which in each case has resulted or
would result in a Material Adverse Effect.
3.14. Material Contracts. The Company has attached to the Annual
Report and the Quarterly Report each document, contract or other agreement that
the Company was required to attach to such report as a material contract
pursuant to Item 601(b)(10) of Regulation S-K under the Securities Act (a
"Material Contract"). Each description of each Material Contract in the Annual
Report or the Quarterly Report reflects in all material respects the material
terms of such Material Contract. Each Material Contract is in full force and
effect and is valid and enforceable by and against the Company or its
subsidiaries, as the case may be, in accordance with its terms. Neither the
Company nor any of its subsidiaries, if a subsidiary is a party, nor to the
Company's knowledge, any other party is in default in the observance or
performance of any term or obligation to be performed by it under any Material
Contract, and no event has occurred which with notice or lapse of time or both
would constitute such a default, in any such case which default or event,
individually or in the aggregate, would result in a Material Adverse Effect. No
default exists, and no event has occurred which with notice or lapse of time or
both would constitute a default, in the due performance and observance of any
term, covenant or condition, by the Company or its subsidiaries, if a subsidiary
is a party thereto, of any other agreement or instrument to which the Company or
any of its subsidiaries is a party or by which Company or its properties or
business or a subsidiary or its properties or business is bound which default or
event, individually or in the aggregate, would result in a Material Adverse
Effect.
3.15. No Violation. Neither the Company nor any of its subsidiaries is
in violation of any term or provision of its charter or by-laws or of any
franchise, license, permit, judgment, decree, order, statute, rule or
regulation, where the consequences of such violation, individually or in the
aggregate, would result in a Material Adverse Effect.
3.16. Due Authorization and Delivery. All necessary corporate action
has been duly and validly taken by the Company to authorize the execution,
delivery and performance of this Agreement and the issuance and sale of the
Securities by the Company. This Agreement has been duly and validly authorized,
executed and delivered by the Company and constitutes and will constitute legal,
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valid and binding obligations of the Company enforceable against the Company in
accordance with its terms, except as the enforceability thereof may be limited
by bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting the enforcement of creditors' rights generally and by general
equitable principles.
3.17. No Default. Neither the execution, delivery and performance of
this Agreement by the Company nor the consummation of any of the transactions
contemplated hereby (including, without limitation, the issuance and sale by the
Company of the Securities) will give rise to a right to terminate or accelerate
the due date of any payment due under, or conflict with or result in the breach
of any term or provision of, or constitute a default (or an event which with
notice or lapse of time or both would constitute a default) under, or require
any consent or waiver under, or result in the execution or imposition of any
lien, charge or encumbrance upon any properties or assets of the Company or its
subsidiaries pursuant to the terms of, any indenture, mortgage, deed of trust or
other agreement or instrument to which the Company or any of its subsidiaries is
a party or by which either the Company or its subsidiaries or any of their
properties or businesses is bound, or any franchise, license, permit, judgment,
decree, order, statute, rule or regulation applicable to the Company or any of
its subsidiaries or violate any provision of the charter or by-laws of the
Company or any of its subsidiaries.
3.18. Capitalization; Liabilities. The Company has authorized capital
stock as set forth under the caption "Description of Common Stock" in the
Memorandum and outstanding capital stock as set forth under the caption "Summary
of Offering Terms" in the Memorandum. The Company has duly authorized the
issuance of certificates evidencing the Shares and the issuance of the Warrants.
When issued the certificates evidencing the Shares and Warrant Shares will be in
due and proper legal form. All of the issued and outstanding shares of Common
Stock have been duly and validly issued and are fully paid and nonassessable.
There are no statutory preemptive or other similar rights to subscribe for or to
purchase or acquire any shares of Common Stock of the Company or any of its
subsidiaries or any such rights pursuant to its Certificate of Incorporation or
by-laws or any agreement or instrument to or by which the Company or any of its
subsidiaries is a party or bound. The Shares and the Warrant Shares, when issued
and sold pursuant to this Agreement and the Warrants, will be duly and validly
issued, fully paid and nonassessable and none of them will be issued in
violation of any preemptive or other similar right. Except as disclosed in the
Memorandum, there is no outstanding option, warrant or other right calling for
the issuance of, and there is no commitment, plan or arrangement to issue, any
share of stock of the Company or any of its subsidiaries or any security
convertible into, or exercisable or exchangeable for, such stock. The Common
Stock and Shares conform in all material respects to all statements in relation
thereto contained in the Memorandum. All outstanding shares of capital stock of
each of the Company's subsidiaries have been duly authorized and
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validly issued, and are fully paid and nonassessable and are owned directly by
the Company or by another wholly-owned subsidiary of the Company free and clear
of any security interests, liens, encumbrances, equities or claims, other than
those described in the Memorandum. Since April 30, 2005, neither the Company nor
its subsidiaries has issued any securities (other than upon the exercise of
outstanding warrants or options that are disclosed in the Memorandum). Since
March 31, 2005, neither the Company nor its subsidiaries has (i) incurred any
liability or obligation, direct or contingent, for borrowed money, except such
liabilities or obligations incurred in the ordinary course of business; (ii)
entered into any transaction not in the ordinary course of business; or (iii)
declared or paid any dividend or made any distribution on any shares of its
stock or redeemed, purchased or otherwise acquired or agreed to redeem, purchase
or otherwise acquire any shares of its capital stock.
3.19. Lock-Up. In addition to any applicable provisions of the Rights
Agreement, for a period of ninety (90) days from the effective date of the
Registration Statement (as defined in Section 6.1(a)(i) below), the Company will
not, without the prior written consent of CIBC and Purchasers holding at least
66% of the Shares, sell, contract to sell or otherwise dispose of or issue any
securities of the Company, except pursuant to previously issued warrants or
options, any agreements providing for anti-dilution or other stock purchase or
share issuance rights in existence on the date hereof, any employee benefit or
similar plan of the Company in existence on the date hereof, or any technology
license agreement, strategic alliance or joint venture in existence on the date
hereof. The Company agrees that the provisions of the Rights Agreement are
cumulative to, and are not in any way limited by, the preceding provisions of
this Section 3.19.
3.20. Employees. Neither the Company nor any of its subsidiaries is
involved in any labor dispute nor, to the knowledge of the Company, is any such
dispute threatened, which dispute would result in a Material Adverse Effect. The
Company is not aware of any existing or imminent labor disturbance by the
employees of any of its principal suppliers or contractors which would result in
a Material Adverse Effect.
3.21. Related Party Transactions. Since January 1, 2004, no
transaction has occurred between or among the Company and any of its officers or
directors, shareholders or any affiliate or affiliates of any such officer or
director or shareholder that is not described in the Memorandum.
3.22. Market Stabilization. The Company has not taken, nor will it
take, directly or indirectly, any action designed to or which might reasonably
be expected to cause or result in, or which has constituted or which might
reasonably be expected to constitute, the stabilization or manipulation of the
price of the Common
11
Stock or any security of the Company to facilitate the sale or resale of any of
the Securities.
3.23. Taxes. The Company and each of its subsidiaries has filed all
Federal, state, local and foreign tax returns which are required to be filed
through the date hereof, which returns are true and correct in all material
respects or has received timely extensions thereof, and has paid all taxes shown
on such returns and all assessments received by it to the extent that the same
are material and have become due. There are no tax audits or investigations
pending of which the Company has notice, which if adversely determined would
result in a Material Adverse Effect and to the knowledge of the Company there
are not any material proposed additional tax assessments against the Company or
any of its subsidiaries.
3.24. AMEX Compliance; Listing.
(a) The Company is in compliance with the requirements of Amex for
continued listing of the Common Stock thereon and has not received any
notification that, and has no knowledge that, Amex is contemplating terminating
such listing nor, to the Company's knowledge, is there any basis therefor. The
transactions contemplated by this Agreement will not violate the rules and
regulations of Amex.
(b) The Shares and Warrant Shares have been duly authorized for
listing on the American Stock Exchange.
3.25. Insurance. The Company and its subsidiaries are insured by
insurers of recognized financial responsibility against such losses and risks
and in such amounts as are customary for development stage entities of
approximately equal size to the Company and its subsidiaries which are engaged
in a business similar to the Company's business; all policies of insurance and
fidelity or surety bonds insuring the Company or any of its subsidiaries or the
Company's or its subsidiaries' respective businesses, assets, employees,
officers and directors are in full force and effect; the Company and each of its
subsidiaries are in compliance with the terms of such policies and instruments
in all material respects; and neither the Company nor any subsidiary of the
Company 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 at a
cost that is not materially greater than the current cost. Since January 1,
2003, neither the Company nor any of its subsidiaries has been denied any
insurance coverage which it has sought or for which it has applied.
3.26. Environmental Laws.
12
(a) (i) Each of the Company and each of its subsidiaries is in
compliance in all material respects with all rules, laws and regulation relating
to the use, treatment, storage and disposal of toxic substances and protection
of health or the environment ("Environmental Law") which are applicable to its
business; (ii) neither the Company nor its subsidiaries has received any notice
from any governmental authority or third party of an asserted claim under
Environmental Laws; (iii) each of the Company and each of its subsidiaries has
received all permits, licenses or other approvals required of it under
applicable Environmental Laws to conduct its business and is in compliance with
all terms and conditions of any such permit, license or approval (except where
failure to receive such permits, licenses or approvals would not have a Material
Adverse Effect); (iv) no facts currently exist that will require the Company or
any of its subsidiaries to make future material capital expenditures to comply
with Environmental Laws; and (v) no property which is or has been owned, leased
or occupied by the Company or its subsidiaries has been designated as a
Superfund site pursuant to the Comprehensive Environmental Response,
Compensation of Liability Act of 1980, as amended (42 U.S.C. Section 9601, et.
seq.) or otherwise designated as a contaminated site under applicable state or
local law. Neither the Company nor any of its subsidiaries has been named as a
"potentially responsible party" under the CER, CLA 1980.
3.27. Investment Company. The Company is not and, after giving effect
to the offering and sale of the Securities and the application of proceeds
thereof as described in the Memorandum, will not be an "investment company"
within the meaning of the Investment Company Act of 1940, as amended (the
"Investment Company Act").
3.28. Solicitation; Other Issuances of Securities. Neither the Company
nor any of its subsidiaries or affiliates, nor any Person acting on its or their
behalf, (i) has engaged in any form of general solicitation or general
advertising (within the meaning of Regulation D under the Securities Act) in
connection with the offer or sale of the Securities, (ii) has, directly or
indirectly, made any offers or sales of any security or solicited any offers to
buy any security, under any circumstances that would require registration of the
Securities under the Securities Act or (iii) has issued any shares of Common
Stock or shares of any series of preferred stock or other securities or
instruments convertible into, exchangeable for or otherwise entitling the holder
thereof to acquire shares of Common Stock which would be integrated with the
sale of the Securities to such Purchaser for purposes of the Securities Act or
of any applicable stockholder approval provisions, including, without
limitation, under the rules and regulations of any exchange or automated
quotation system on which any of the securities of the Company are listed or
designated, nor will the Company or any of its subsidiaries or affiliates take
any action or steps that would require registration of any of the Securities
under the Securities Act or cause the offering of the Securities to be
integrated with other
13
offerings. Assuming the accuracy of the representations and warranties of
Purchasers, the offer and sale of the Securities by the Company to the
Purchasers pursuant to this Agreement will be exempt from the registration
requirements of the Securities Act.
3.29. No Corrupt Practices. The Company and any other person
associated with or acting on behalf of the Company including, without
limitation, any director, officer, agent or employee of the Company or its
subsidiaries, has not, directly or indirectly, while acting on behalf of the
Company or its subsidiaries (i) used any corporate funds for unlawful
contributions, gifts, entertainment or other unlawful expenses relating to
political activity; (ii) made any unlawful payment to foreign or domestic
government officials or employees or to foreign or domestic political parties or
campaigns from corporate funds; (iii) violated any provision of the Foreign
Corrupt Practices Act of 1977, as amended; or (iv) made any other unlawful
payment.
3.30. No Money Laundering. The operations of the Company and its
subsidiaries are and have been conducted at all times in compliance with
applicable financial recordkeeping and reporting requirements of the Currency
and Foreign Transactions Reporting Act of 1970, as amended, the money laundering
statutes of all jurisdictions, the rules and regulations thereunder and any
related or similar rules, regulations or guidelines, issued, administered or
enforced by any governmental agency (collectively, the "Money Laundering Laws")
and no action, suit or proceeding by or before any court or governmental agency,
authority or body or any arbitrator involving the Company or any of it
subsidiaries with respect to the Money Laundering Laws is pending, or to the
best knowledge of the Company, threatened.
3.31. No OFAC Sanctions. Neither the Company nor any of its
subsidiaries nor, to the knowledge of the Company, any director, officer, agent,
employee or affiliate of the Company or any of its subsidiaries is currently
subject to any U.S. sanctions administered by the Office of Foreign Assets
Control of the U.S. Treasury Department ("OFAC"); and the Company will not
directly or indirectly use the proceeds of the offering, or lend, contribute or
otherwise make available such proceeds to any subsidiary, joint venture partner
or other person or entity, for the purpose of financing the activities of any
person currently subject to any U.S. sanctions administered by OFAC.
3.32. ERISA. The Company has fulfilled its obligations, if any, under
the minimum funding standards of Section 302 of the U.S. Employee Retirement
Income Security Act of 1974 ("ERISA") and the regulations and published
interpretations thereunder with respect to each "plan" as defined in Section
3(3) of ERISA and such regulations and published interpretations in which its
14
employees are eligible to participate and each such plan is in compliance in all
material respects with the presently applicable provisions of ERISA and such
regulations and published interpretations. No "Reportable Event" (as defined in
12 ERISA) has occurred with respect to any "Pension Plan" (as defined in ERISA)
for which the Company could have any liability.
Section 4. Representations, Warranties and Covenants of Each Purchaser.
Each Purchaser for itself and no other Purchaser hereby represents and
warrants to, and covenants with, the Company as of the Closing Date (or such
other date specified below) as follows:
4.1. Organization. Such Purchaser is an entity duly organized and
validly existing in good standing (to the extent such concepts are applicable)
under the laws of its jurisdiction of organization. Such Purchaser has all
requisite corporate power and authority and all necessary governmental approvals
to carry on its business as now being conducted, except as would not result in a
Material Adverse Effect on such Purchaser's ability to consummate the
transactions contemplated by this Agreement.
4.2. Authorization, Enforcement, and Validity. Such Purchaser has the
requisite power and authority to enter into this Agreement and to consummate the
transactions contemplated hereby. Such Purchaser has taken all necessary action
to authorize the execution, delivery and performance of this Agreement. Upon the
execution and delivery of this Agreement, this Agreement shall constitute a
valid and binding obligation of the Purchaser enforceable in accordance with its
terms, except as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting creditors' and
contracting parties' rights generally and except as enforceability may be
subject to general principles of equity.
4.3. Consents and Approvals; No Violation. The execution, delivery and
performance of this Agreement by such Purchaser and the consummation by such
Purchaser of the transactions contemplated hereby will not (i) result in a
violation of such Purchaser's organizational documents; (ii) conflict with, or
constitute a default or give to others any rights of termination, amendment,
acceleration or cancellation of, any material agreement, indenture or instrument
to which such Purchaser is a party (except for such conflicts, defaults,
terminations, amendments, accelerations, cancellations and violations as would
not, individually or in the aggregate, result in a Material Adverse Effect on
such Purchaser's ability to consummate the transactions contemplated by this
Agreement); or (iii) result in a violation of any law, rule, regulation, order,
judgment or decree applicable to such Purchaser or any of its subsidiaries,
except for such violations as would not,
15
individually or in the aggregate, result in a Material Adverse Effect on such
Purchaser's ability to consummate the transactions contemplated by this
Agreement. Such Purchaser is not required to obtain any consent, authorization
or order of, or make any filing or registration with, any court or governmental
agency or any regulatory or self-regulatory agency (other than a Schedule 13D,
Form 3 or other filing required by the SEC) in order for it to execute, deliver
or perform any of its obligations under or contemplated by this Agreement,
except where the failure to obtain such consents, authorization or orders or to
make such filings or registrations would not, individually or in the aggregate,
result in a Material Adverse Effect on such Purchaser's ability to consummate
the transactions contemplated by this Agreement.
4.4. Investment Experience. Such Purchaser is an accredited investor
within the meaning of Rule 501 of Regulation D promulgated under the Securities
Act, is knowledgeable, sophisticated and experienced in making, and is qualified
to make, decisions with respect to investments in shares representing an
investment decision like that involved in the purchase of the Securities.
4.5. Investment Intent And Limitation On Dispositions. Such Purchaser
is acquiring Securities for its own account for investment only and has no
intention of selling or distributing any of such Securities or the Warrant
Shares or any arrangement or understanding with any other Persons regarding the
sale or distribution of such Securities or the Warrant Shares except in
accordance with the provisions of Section 6. Such Purchaser will not, directly
or indirectly, offer, sell, pledge, transfer or otherwise dispose of (or solicit
any offers to buy, purchase or otherwise acquire or take a pledge of) any of the
Securities or the Warrant Shares except in accordance with the provisions of
Section 6 or pursuant to and in accordance with an exemption from the
registration requirements of Section 5 of the Securities Act.
4.6. Information And Risk.
(a) Such Purchaser has received and reviewed the Memorandum and has
requested, received, reviewed and considered all other information such
Purchaser deems relevant in making an informed decision to purchase the
Securities. Such Purchaser has had an opportunity to discuss the Company's
business, management and financial affairs with its management and also had an
opportunity to ask questions of officers and employees of the Company that were
answered to such Purchaser's satisfaction.
(b) Such Purchaser recognizes that an investment in the Securities
involves a high degree of risk, including a risk of total loss of such
Purchaser's investment. Such Purchaser is able to bear the economic risk of
holding the
16
Securities for an indefinite period, and has knowledge and experience in the
financial and business matters such that it is capable of evaluating the risks
of the investment in the Securities.
(c) Such Purchaser has, in connection with such Purchaser's decision
to purchase Securities, not relied upon any representations or other information
(whether oral or written) other than as set forth in the representations and
warranties of the Company contained herein or the Memorandum.
(d) Such Purchaser has, with respect to all matters relating to this
Agreement and the offer and sale of the Securities, relied solely upon the
advice of such Purchaser's own counsel and has not relied upon or consulted any
counsel to the Placement Agent or counsel to the Company.
(e) Such Purchaser understands and acknowledges that nothing in the
Memorandum, this Agreement, any other materials presented to the Purchaser or
any communications between the Purchaser and the Placement Agent in connection
with the purchase and sale of the Securities constitutes legal, tax or
investment advice. Such Purchaser has consulted such legal, tax and investment
advisors as it, in its sole discretion, has deemed necessary or appropriate in
connection with its purchase of Securities.
(f) Such Purchaser acknowledges that the Placement Agent has acted
solely as placement agent for the Company in connection with the offering of the
Securities by the Company, that the information and data provided to such
Purchaser in connection with the transactions contemplated hereby have not been
subjected to independent verification by the Placement Agent, and that the
Placement Agent makes no representation or warranty with respect to the accuracy
or completeness of such information, data or other related disclosure material.
Such Purchaser further acknowledges that in making its decision to enter into
this Agreement and to purchase Securities that it has relied on its own
examination of the Company and the terms of, and consequences, of holding the
Securities. Each Purchaser further acknowledges that the provisions of this
Section 4.6 are also for the benefit of, and may also be enforced by, the
Placement Agent.
4.7. Restricted Securities. Such Purchaser understands that the
Securities are and the Warrant Shares upon issuance will be "restricted
securities" as such term is defined in Rule 144 of Regulation D promulgated
under the Securities Act ("Rule 144") and must be held indefinitely unless they
are subsequently registered or qualified under applicable state and federal
securities laws or an exemption from such registration or qualification is
available. Such Purchaser understands that it may resell the Securities and the
Warrant Shares pursuant to Rule
17
144 only after the satisfaction of certain requirements, including the
requirement that the Securities be held for at least one year prior to resale.
4.8. No Obligation to Register. Such Purchaser further acknowledges
and understands that, except as provided in Section 6, the Company is under no
obligation to register the Securities or the Warrant Shares.
4.9. Disclosures to the Company. Such Purchaser understands that the
Company is relying on the statements contained herein to establish an exemption
from registration under federal and state securities laws. In addition, such
Purchaser will promptly notify the Company of any changes in the information set
forth in the Registration Statement (as defined in Section 6.1(a)(i) below)
regarding such Purchaser.
4.10. Nature of Purchasers. Except as set forth on Appendix A, such
Purchaser: (i) is, to its knowledge, not an affiliate (as such term is defined
pursuant to Rule 12b-2 promulgated under the Exchange Act) of any other
Purchaser, (ii) is not constituted as a partnership, association, joint venture
or any other type of joint entity with any other Purchaser, and (iii) to its
knowledge, is not acting as part of a group (as such term is defined under
Section 13(d) of the Exchange Act) with any other Purchaser. If at any time
after the Closing Date such Purchaser becomes an affiliate (as defined herein)
of any other Purchaser (except as set forth above), such Purchaser will provide
prompt written notice to the Company.
4.11. Ownership. Such Purchaser (including any Person controlling,
controlled by, or under common control with such Purchaser, as the term
"control" is defined pursuant to the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements
Act of 1976, as amended, and its implementing regulations (the "HSR Act")) does
not, and upon the consummation of the transactions contemplated by this
Agreement will not, hold voting securities of the Company exceeding an aggregate
fair market value as of the Closing Date of fifty three million one hundred
dollars ($53,100,000), calculated pursuant to the HSR Act.
4.12. Brokers or Finders. No broker, investment banker, financial
advisor or other Person is entitled to any broker's, finder's, financial
advisor's or other similar fee or commission in connection with the transactions
contemplated hereby based upon arrangements made by or on behalf of such
Purchaser.
4.13. Acknowledgement. Such Purchaser acknowledges and agrees that the
Company does not make and has not made any representations or warranties with
respect to the transactions contemplated by this Agreement other than those
specifically set forth in Section 3.
18
4.14. No Short Sales. Between the time such Purchaser learned about
the Offering and the public announcement of the Offering, such Purchaser has not
engaged in any short sales or similar transactions with respect to the Common
stock, nor has such Purchaser, directly or indirectly, caused any Person to
engage in any short sales or similar transactions with respect to the Common
Stock.
Section 5. Survival of Representations and Warranties.
Notwithstanding any investigation made by any party to this Agreement
or by the Placement Agent, all representations and warranties as to each
respective Closing made by the Company and the Purchasers herein shall survive
for a period of 18 months following the Closing Date.
Section 6. Registration of the Shares and Warrant Shares; Compliance with the
Securities Act.
6.1. Registration Procedures And Expenses.
(a) Except for such times as the Company may be required to suspend
the use of a prospectus forming a part of the Registration Statement (as defined
below), the Company will:
(i) as soon as practicable, but in no event later than forty-five
(45) days following the Closing Date, use reasonable best efforts to
prepare and file with the Commission a registration statement on Form S-3
(the "Registration Statement") covering the resale of the Registrable
Securities (as defined in Section 6.1(e) below) by each Purchaser other
than those Registrable Securities held by Purchasers that have not complied
with Section 6.3; provided, however, that within 10 days of receiving the
information required pursuant to Section 6.3 with respect to Registrable
Securities omitted from the Registration Statement, the Company shall amend
or supplement the Registration Statement to register for resale any
Registrable Securities initially omitted therefrom, provided, further,
however, that if the Registration Statement shall have been declared
effective by the Commission, the Company shall have no obligation to make a
post-effective amendment to the Registration Statement pursuant to the
foregoing proviso but shall, to the extent permitted under rules and
regulations promulgated by the Commission, supplement the Registration
Statement to register for resale such omitted Registrable Securities;
(ii) use best efforts to cause the Registration Statement, as
amended, to become effective under the Securities Act as soon as
practicable but in any event no later than ninety (90) days after the
Closing Date;
19
(iii) prepare and file with the Commission such amendments and
supplements to the Registration Statement and the prospectus used in
connection therewith (A) as may be necessary to keep the Registration
Statement continuously effective until the earlier of (i) as to each
Purchaser, such time as all of the Registrable Securities may be sold
pursuant to Rule 144(k) of the Securities Act, or (ii) such time as all
Registrable Securities purchased by the Purchasers have been sold pursuant
to the Registration Statement and (B) as may be reasonably requested by a
Purchaser in order to incorporate information concerning such Purchaser or
such Purchaser's intended method of distribution;
(iv) so long as the Registration Statement is effective covering
the resale of Registrable Securities owned by the Purchasers, furnish to
each Purchaser with respect to the Registrable Securities registered under
the Registration Statement (and to each underwriter, if any, of such
Registrable Securities) such reasonable number of copies of prospectuses
and such other documents as such Purchaser may reasonably request in order
to facilitate the public sale or other disposition of all or any of the
Registrable Securities by such Purchaser;
(v) use commercially reasonable efforts to file documents
required of the Company for normal Blue Sky clearance in states specified
in writing by the Purchasers; provided, however, that the Company shall not
be required to qualify to do business or consent to service of process
generally in any jurisdiction in which the Company is not now so qualified
or has not so consented;
(vi) bear all expenses in connection with the procedures in
paragraphs (a) through (c) of this Section 6.1 and the registration of the
Registrable Securities pursuant to the Registration Statement, other than
fees and expenses, if any, of counsel or other advisers to the Purchasers
or brokerage fees and commissions incurred by the Purchasers, provided,
however, that the Company shall reimburse the Purchasers for the reasonable
documented fees and expenses of one counsel selected by Purchasers holding
a majority of the Shares and reasonably acceptable to all Purchasers and
approved by the Company, which approval shall not be unreasonably withheld;
(vii) use all commercially reasonable efforts to prevent the
issuance of any stop order or other order suspending the effectiveness of
such Registration Statement and, if such an order is issued, to obtain the
withdrawal thereof at the earliest possible time and to notify each
Purchaser of the issuance of such order and the resolution thereof;
20
(viii) furnish to each Purchaser, promptly after the date that
such Registration Statement becomes effective, but in any event within two
business days thereafter, a letter of outside counsel representing the
Company addressed to such Purchaser, confirming the date of effectiveness
of such Registration Statement and the absence of any stop order, to the
knowledge of the Company;
(ix) provide to each Purchaser and its representatives, if
requested, the opportunity to conduct a reasonable inquiry of the Company's
financial and other records during normal business hours and make available
its officers, directors and employees for questions regarding information
which such Purchaser may reasonably request in order to fulfill any due
diligence obligation on its part; and
(x) if requested a reasonable time in advance, permit counsel for
the Purchasers to review the Registration Statement and all amendments and
supplements thereto, and any comments made by the staff of the Commission
and the Company's responses thereto, within a reasonable period of time
prior to the filing thereof with the Commission (or, in the case of
comments made by the staff of the Commission, within a reasonable period of
time following the receipt thereof by the Company);
provided, that in any event, the Company shall not be required to provide, and
shall not provide, any Purchaser with material, non-public information unless
such Purchaser agrees to receive such information and enters into a written
confidentiality agreement with the Company pursuant to which such Purchaser
would be prohibited from using or disclosing such information until such time as
such information becomes public other than by breach of such confidentiality
agreement by such Purchaser, provided, further, however, that the Company shall
use commercially reasonable best efforts to make public such information on or
prior to the date the Commission shall have declared the Registration Statement
effective.
(b) The Company shall be permitted to suspend for one or more periods
(provided that the aggregate length of such suspension shall not exceed twenty
business days in any 365-day period) the actions required under Sections
6.1(a)(i) through (iii) to the extent that the Board of Directors of the Company
concludes in good faith that the disclosure of additional information in the
prospectus is required by law and that such suspension is necessary to permit
such disclosure.
(c) If (i) a Registration Statement covering (A) all of the Shares and
the Warrant Shares and (B) any other shares of Common Stock issued or issuable
in respect to the Shares and the Warrant Shares because of stock splits, stock
dividends,
21
reclassifications, recapitalizations or similar events (together, the
"Registrable Shares") required to be covered thereby and required to be filed by
the Company pursuant to this Section 6.1 is (A) not filed with the SEC on or
before forty-five (45) days after the Closing Date (a "Filing Failure") or (B)
if such Registration Statement is not declared effective by the SEC on or before
(1) ninety (90) days after the Closing Date (an "Effectiveness Failure") or (ii)
on any day after the effective date of the Registration Statement sales of all
the Registrable Shares required to be included on such Registration Statement
cannot be made (other than as permitted during a suspension pursuant to Section
6.1(b) of this Agreement) pursuant to such Registration Statement (including,
without limitation, because of a failure to keep such Registration Statement
effective, to disclose such information as is necessary for sales to be made
pursuant to such Registration Statement or to register sufficient shares of
Shares) (a "Maintenance Failure"), then, the Company shall pay as liquidated
damages (the "Liquidated Damages") for such failure and not as a penalty to any
Purchaser an amount in cash determined in accordance with the formula set forth
below:
For each 30-day period that a Filing Failure, Effectiveness Failure or
Maintenance Failure remains uncured, the Company shall pay an amount equal
to the purchase price paid to the Company for all Shares then held by such
Purchaser multiplied by 1% for the first 30-day period or any portion
thereof and increasing by an additional 1% with regard to each additional
30-day period until such Filing Failure, Effectiveness Failure or
Maintenance Failure is cured. For any partial 30-day period in which a
Filing Failure, Effectiveness Failure or Maintenance Failure exists but is
cured prior to the end of the 30-day period, the Company shall pay the
Purchasers a pro rata portion of the amount which would be due if the
failure continued for the entire 30-day period. For example, if the
purchase price paid for all Shares then held by a Purchaser is $5,000,000,
then, (a) at the end of the 30th day, the Liquidated Damages would be 1% or
$50,000, (b) at the end of the 60th day, the Liquidated Damages for the
first 30-day period would have been 1% or $50,000 and for the second 30-day
period would be 2% or $100,000, and (c) at the end of the 105th day, the
Liquidated Damages for the first 30-day period would have been 1% or
$50,000, for the second 30-day period 2% or $100,000, for the third 30-day
period 3% or $150,000, and for the final 15-day period, 4% applied pro rata
to such 15 days, or $100,000.
Payments to be made pursuant to this Section 6.2(c) shall be due and payable to
the Purchasers at the end of each calendar month during which Liquidated Damages
shall have accrued. The parties agree that the Liquidated Damages represent a
reasonable estimate on the part of the parties, as of the date of this
Agreement, of the amount of damages that may be incurred by the holders of
Registrable Shares if a
22
Filing Failure, Effectiveness Failure or Maintenance Failure occurs. The parties
agree that Liquidated Damages shall be the exclusive monetary damages under this
Agreement with respect to any Filing Failure, Effectiveness Failure or
Maintenance Failure. Notwithstanding the foregoing, no Liquidated Damages shall
be due or payable to a Purchaser in any event if as of the date of the Filing
Failure, Effectiveness Failure or Maintenance Failure such Purchaser could sell
all of the Registrable Shares such Purchaser then holds without registration by
reason of Rule 144(k) of the Securities Act.
(d) With a view to making available to the Purchasers the benefits of
Rule 144 (or its successor rule) and any other rule or regulation of the
Commission that may at any time permit the Purchaser to sell Registrable
Securities to the public without registration, the Company covenants and agrees
to: (i) make and keep public information available, as those terms are
understood and defined in Rule 144, until the earlier of (A) six months after
such date as all of the Purchasers' Registrable Securities may be resold
pursuant to Rule 144(k) or any other rule of similar effect or (B) such date as
all of the Purchasers' Registrable Securities shall have been resold; (ii) file
with the Commission in a timely manner all reports and other documents required
of the Company under the Exchange Act; and (iii) furnish to the Purchaser upon
request, as long as the Purchaser owns any Registrable Securities, (A) a written
statement by the Company that it has complied with the reporting requirements of
the Exchange Act, and (B) such information other than publicly-available SEC
filings filed via ▇▇▇▇▇ as may be reasonably requested in order to avail the
Purchaser of any rule or regulation of the Commission that permits the selling
of any such Registrable Securities without registration.
(e) For purposes of this Agreement, the term "Registrable Securities"
shall mean (A) the Shares and Warrant Shares; and (B) any other shares of Common
Stock issued or issuable in respect to the Shares and Warrant Shares because of
stock splits, stock dividends, reclassifications, recapitalizations or similar
events.
6.2. Restrictions on Transferability.
(a) Each Purchaser agrees that it will not effect any disposition of
the Warrants or Registrable Securities that would constitute a sale within the
meaning of the Securities Act or pursuant to any applicable state securities or
Blue Sky laws of any state, except (i) as contemplated in the Registration
Statement referred to in Section 6.1 above, (ii) pursuant to the requirements of
Rule 144 (in which case such Purchaser will provide the Company with reasonable
evidence of such Purchaser's compliance therewith) or (iii) pursuant to an
exemption from the registration requirements of Section 5 of the Securities Act
as supported by a written opinion of legal counsel reasonably satisfactory to
the Company and addressed to the Company
23
to the effect that registration is not required in connection with the proposed
transfer; whereupon the holder of such securities shall be entitled to transfer
such securities; provided, however, that notwithstanding the foregoing
provisions of this section 6.2(a), no such restrictions shall apply to a
transfer by a Purchaser that is (A) a partnership transferring to its partners
or former partners in accordance with partnership interests and without
consideration, (B) a corporation transferring to a wholly-owned subsidiary or a
parent corporation that owns all of the capital stock of the Purchaser, (C) a
limited liability company transferring to its members or former members in
accordance with their interest in the limited liability company and without
consideration, or (D) an individual transferring to the Purchaser's family
member or trust for the benefit of an individual Purchaser. Each certificate
evidencing the securities transferred as above provided shall bear the
appropriate restrictive legends as may be required by Section 7.
(b) Each Purchaser agrees that there may occasionally be times when
the Company must suspend the use of the prospectus forming a part of the
Registration Statement until such time as an amendment or supplement to the
Registration Statement has been filed by the Company and declared effective, or
until such time as the Company has filed an appropriate report with the
Commission pursuant to the Exchange Act. Each Purchaser hereby covenants that
such Purchaser will not sell any Registrable Securities pursuant to said
prospectus during the period commencing at the time at which the Company gives
the Purchasers written notice of the suspension of the use of said prospectus
and ending at the time the Company gives the Purchasers written notice that the
Purchasers may thereafter effect sales pursuant to said prospectus. The Company
agrees to file such amendment, supplement or report as soon as practicable
following such notice of suspension.
(c) None of the Registrable Securities or Warrants shall be
transferable except upon the conditions specified in this Section 6, which are
intended to ensure compliance with the provisions of the Securities Act. Each
Purchaser will cause any proposed transferee of the Registrable Securities or
Warrants held by such Purchaser to agree to take and hold such securities
subject to the provisions and upon the conditions specified in this Section 6 if
and to the extent that such securities continue to be restricted securities in
the hands of the transferee, and each such transferee, upon making such
agreement, shall be deemed a Purchaser for the purposes of Sections 6, 7, 8, 9
and 10 hereof, and shall be entitled to the benefits of a Purchaser thereunder
and subject to the terms and conditions applicable to Purchasers thereunder.
6.3. Furnish Information. It shall be a condition to the Company's
obligations to take any action under this Agreement with respect to the
registration of a Purchaser's Registrable Securities that such Purchaser shall
promptly furnish to the Company, upon request, such information regarding
itself, such Purchaser's
24
Registrable Securities, and the intended method of disposition of such
Registrable Securities as required by the form of Selling Stockholder
Questionnaire attached hereto as Appendix D. In connection therewith, each
Purchaser shall be required to represent to the Company that all such
information which is given is both complete and accurate in all material
respects when made.
6.4. Delay of Registration. The Purchasers shall have no right to
obtain or seek an injunction restraining or otherwise delaying any such
registration as the result of any controversy that might arise with respect to
the interpretation or implementation of the terms of this Agreement.
6.5. Termination Of Conditions And Obligations.
(a) The conditions precedent imposed by Section 6.2 above regarding
the transferability of the Registrable Securities and Warrants shall cease and
terminate as to any particular number of the Shares upon the date on which the
Purchaser may sell without volume limitations all such securities then held by
the Purchaser without registration by reason of Rule 144 or any other rule of
similar effect.
(b) The expiration or termination of this Agreement for any reason
will have no effect on the rights of any of the parties under the provisions of
this Section 6.
Section 7. Legends.
(a) Such Purchaser understands and agrees that each certificate or
other document evidencing any of the Shares, Warrant Shares or Warrants shall be
endorsed with the legend substantially in the form set forth below, and such
Purchaser covenants that such Purchaser will not transfer such securities
represented by any such certificate or document without complying with the
restrictions on transfer described in the legend endorsed thereon (unless there
is in effect a registration statement under the Securities Act covering such
proposed transfer, such securities have been sold under Rule 144 promulgated
under the Securities Act ("Rule 144") or as otherwise permitted by the
provisions of Section 6.2 above) and understands that the Company will refuse to
register a transfer of any such securities unless the conditions specified in
the following legend are satisfied:
"THE SHARES/WARRANTS REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE
SECURITIES LAWS. EXCEPT AS SPECIFIED IN THIS LEGEND, SUCH SHARES MAY NOT BE
SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED, OR
25
OTHERWISE TRANSFERRED IN THE ABSENCE OF A REGISTRATION STATEMENT IN EFFECT
WITH RESPECT THERETO UNDER SUCH ACT UNLESS SOLD PURSUANT TO RULE 144 OF
SUCH ACT OR UNLESS SUCH SALE, PLEDGE, HYPOTHECATION OR TRANSFER IS
OTHERWISE EXEMPT FROM REGISTRATION AND ANY APPLICABLE STATE SECURITIES
LAWS. THE COMPANY MAY REQUEST A WRITTEN OPINION OF COUNSEL, REASONABLY
SATISFACTORY TO THE COMPANY, TO THE EFFECT THAT REGISTRATION IS NOT
REQUIRED IN CONNECTION WITH SUCH SALE OR OTHER TRANSFER."
(b) Such certificates shall not contain the above legend (i) following
any sale of such Registrable Securities pursuant to an effective Registration
Statement or Rule 144, or (ii) if the securities represented by such certificate
are eligible for sale under Rule 144(k) and the Purchaser has requested removal
of such legend. Following the effective date of the Registration Statement or at
such earlier time as a legend is no longer required for certain Shares, the
Company will, no later than three trading days following the delivery by a
Purchaser to the Company or the Company's transfer agent of a legended
certificate representing such Shares and a properly completed and executed copy
of the Certificate Regarding Resale of Common Stock in the form of Appendix E
hereto (or a form of certification substantially similar), deliver or cause to
be delivered to such Purchaser a certificate representing such Shares that is
free from all restrictive and other legends.
(c) Such Purchaser covenants that such Purchaser will not transfer the
securities represented by any such certificate without complying with any
applicable requirements under the Securities Act to deliver the final prospectus
included in the effective Registration Statement to any offeree of Registrable
Securities.
Section 8. Indemnification.
(a) Definitions.
(i) For purposes of this Section 8, but not Section 8(c), the
term "Purchaser" shall include the Purchaser and any affiliate (as such
term is defined pursuant to Rule 12b-2 promulgated under the Exchange Act)
of such Purchaser;
(ii) For purposes of this Section 8, the term "Prospectus" shall
mean the prospectus and any amendment or supplement thereto in the form
first filed with the Commission pursuant to Rule 424(b) promulgated under
the Securities Act or, if no Rule 424(b) filing is required, filed as part
26
of the Registration Statement at the time of effectiveness, as supplemented
or amended from time to time; and
(iii) For purposes of this Section 8, the term "Registration
Statement" shall include any final prospectus, exhibit, supplement or
amendment included in or relating to the Registration Statement.
(b) The Company agrees to indemnify and hold harmless each of the
Purchasers and each Person, if any, who controls any Purchaser within the
meaning of the Securities Act, against any losses, claims, damages, liabilities
or expenses, joint or several, to which such Purchasers or such controlling
Person may become subject, under the Securities Act, the Exchange Act, or any
other federal or state statutory law or regulation, or at common law or
otherwise (including in settlement of any litigation, if such settlement is
effected with the written consent of the Company), insofar as such losses,
claims, damages, liabilities or expenses (or actions in respect thereof as
contemplated below) arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained in the Registration
Statement or Prospectus, or arise out of or are based upon the omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances in
which they were made, not misleading, or arise out of or are based in whole or
in part on any inaccuracy in the representations and warranties of the Company
contained in this Agreement, or any failure of the Company to perform its
obligations hereunder, and will reimburse each Purchaser and each such
controlling Person for any legal and other expenses reasonably incurred as such
expenses are reasonably incurred by such Purchaser or such controlling Person in
connection with investigating, defending, settling, compromising or paying any
such loss, claim, damage, liability, expense or action; provided, however, that
the Company will not be liable in any such case to the extent that any such
loss, claim, damage, liability or expense arises out of or is based upon (i) an
untrue statement or alleged untrue statement or omission or alleged omission
made in the Registration Statement or Prospectus in reliance upon and in
conformity with written information furnished to the Company by or on behalf of
the Purchaser expressly for use therein, (ii) the failure of such Purchaser to
comply with the covenants and agreements contained in Section 6.2 above
respecting the sale of the Securities, (iii) the inaccuracy of any
representations made by such Purchaser herein or (iv) any statement or omission
in any Prospectus that is corrected in any subsequent Prospectus that was
delivered to the Purchaser a reasonable time prior to the pertinent sale or
sales by the Purchaser, and provided that the Purchaser has been notified by the
Company that such earlier Prospectus should no longer be delivered by the
Purchaser.
(c) Each Purchaser will severally, and not jointly, indemnify and hold
harmless the Company, each of its directors, each of its officers who signed the
27
Registration Statement and each Person, if any, who controls the Company within
the meaning of the Securities Act, against any losses, claims, damages,
liabilities or expenses to which the Company, each of its directors, each of its
officers who signed the Registration Statement or controlling Person may become
subject, under the Securities Act, the Exchange Act, or any other federal or
state statutory law or regulation, or at common law or otherwise (including in
settlement of any litigation, if such settlement is effected with the written
consent of such Purchaser) insofar as such losses, claims, damages, liabilities
or expenses (or actions in respect thereof as contemplated below) arise out of
or are based upon (i) any failure by such Purchaser to comply with the covenants
and agreements contained in Section 6.2 above respecting the sale of the
Securities, (ii) the inaccuracy of any representation made by such Purchaser
herein or (iii) any untrue or alleged untrue statement of any material fact
contained in the Registration Statement or the Prospectus, or the omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances in
which they were made, not misleading, in each case to the extent, but only to
the extent, that such untrue statement or alleged untrue statement or omission
or alleged omission was made in the Registration Statement or Prospectus in
reliance upon and in conformity with written information furnished to the
Company by or on behalf of such Purchaser expressly for use therein, and will
reimburse the Company, each of its directors, each of its officers who signed
the Registration Statement or controlling Person for any legal and other expense
reasonably incurred, as such expenses are reasonably incurred by the Company,
each of its directors, each of its officers who signed the Registration
Statement or controlling Person in connection with investigating, defending,
settling, compromising or paying any such loss, claim, damage, liability,
expense or action; provided, however, that the aggregate liability of any
Purchaser hereunder shall not exceed the Purchase Price paid by such Purchaser
to the Company on the Closing Date. No Purchaser shall be liable for the
indemnification obligations of any other Purchaser.
(d) Promptly after receipt by an indemnified party under this Section
8 of notice of the threat or commencement of any action, such indemnified party
will, if a claim in respect thereof is to be made against an indemnifying party
under this Section 8, promptly notify the indemnifying party in writing thereof,
but the omission so to notify the indemnifying party will not relieve it from
any liability which it may have to any indemnified party hereunder or otherwise
to the extent it is not prejudiced as a result of such failure. In case any such
action is brought against any indemnified party and such indemnified party seeks
or intends to seek indemnity from an indemnifying party, the indemnifying party
will be entitled to participate in, and, to the extent that it may wish, jointly
with all other indemnifying parties similarly notified, to assume the defense
thereof with counsel reasonably satisfactory to such indemnified party;
provided, however, if the defendants in any such action include both the
indemnified party and the indemnifying party and the indemnified
28
party shall have reasonably concluded that there may be a conflict between the
positions of the indemnifying party and the indemnified party in conducting the
defense of any such action or that there may be legal defenses available to it
and/or other indemnified parties which are different from or additional to those
available to the indemnifying party, the indemnified party or parties shall have
the right to select separate counsel to assume such legal defenses and to
otherwise participate in the defense of such action on behalf of such
indemnified party or parties. Upon receipt of notice from the indemnifying party
to such indemnified party of its election to assume the defense of such action
and approval by the indemnified party of counsel, (which approval shall not be
unreasonably withheld), the indemnifying party will not be liable to such
indemnified party under this Section 8 for any legal or other expenses
subsequently incurred by such indemnified party in connection with the defense
thereof unless (i) the indemnified party shall have employed such counsel in
connection with the assumption of legal defenses in accordance with the proviso
to the preceding sentence (it being understood, however, that the indemnifying
party shall not be liable for the expenses of more than one separate counsel,
reasonably satisfactory to the indemnifying party, representing the indemnified
parties who are parties to such action) or (ii) the indemnifying party shall not
have employed counsel reasonably satisfactory to the indemnified party to
represent the indemnified party within a reasonable time after notice of
commencement of action, in each of which cases the reasonable fees and expenses
of counsel shall be at the expense of the indemnifying party. No indemnifying
party, in the defense of any claim covered by this Section 8, shall, except with
the prior written consent of the indemnified party, which consent shall not be
unreasonably conditioned, withheld or delayed, consent to entry of any judgment
or enter into any settlement which does not include as an unconditional term
thereof the giving by the claimant or plaintiff to such indemnified party of a
release from all liability in respect to such claim. An indemnified party shall
cooperate with the indemnifying party in the defense of any claim brought
against such indemnified party.
Section 9. Notices.
(a) All notices, requests, consents and other communications hereunder
shall be in writing, shall be mailed by first-class registered or certified
airmail, confirmed facsimile or nationally recognized overnight express courier
postage prepaid, and shall be as addressed as follows:
if to the Company, to:
ADVENTRX Pharmaceuticals, Inc.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇,
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇, Chief Executive Officer
29
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇ ▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ LLP
Three ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
and if to any Purchaser, at its address as set forth in Appendix A hereto, or at
such other address or addresses as may have been previously furnished to the
Company in writing in accordance with this Section 9.
(b) Such notices or other communications shall be deemed delivered
upon receipt, in the case of overnight delivery, personal delivery, facsimile
transmission (as evidenced by the confirmation thereof), or mail.
Section 10. Miscellaneous.
10.1. Amendments. Any term of this Agreement may be amended and the
observance of any term of this Agreement may be waived (either generally or in a
particular instance and either retroactively or prospectively) only with the
written consent of the Company and each Purchaser. Any amendment or waiver
effected in accordance with this Section 10.1 shall be binding upon each holder
of any securities purchased under this Agreement at the time outstanding
(including securities into which such securities are convertible), each future
holder of all such securities, and the Company.
10.2. Headings. The headings of the various sections of this Agreement
are for convenience of reference only and shall not be deemed to be part of this
Agreement.
10.3. Severability. In the event that any provision in this Agreement
is held to be invalid, illegal or unenforceable in any respect, the validity,
legality and enforceability of the remaining provisions contained herein shall
not in any way be affected or impaired thereby.
10.4. Governing Law And Forum. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York
30
applicable to agreements made and to be fully performed therein. The parties
hereto agree to submit to the exclusive jurisdiction of the federal and state
courts of the State of New York with respect to the interpretation of this
Agreement or for the purposes of any action arising out of or related to this
Agreement.
10.5. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall constitute an original, and all of which
together shall constitute one and the same instrument. In the event that any
signature is delivered via facsimile transmission, such signature shall create a
valid and binding obligation of the party executing (or on whose behalf such
signature is executed) the same with the same force and effect as if such
facsimile signature page were an original hereof.
10.6. Entire Agreement. This Agreement contains the entire
understanding of the parties with respect to the matters covered herein,
supersedes all prior agreements and understandings with respect to such matters
and executed by and among the Company and any of the Purchasers, and, except as
specifically set forth herein, neither the Company nor the Purchasers make any
representation, warranty, covenant or undertaking with respect to such matters.
10.7. Independent Nature Of Purchasers' Obligations And Rights. The
obligations of each Purchaser under this Agreement are several and not joint
with the obligations of any other Purchaser, and no Purchaser shall be
responsible in any way for the performance of the obligations of any other
Purchaser under this Agreement. Nothing contained herein 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, or are deemed affiliates (as such term is defined under the Exchange
Act) with respect to such obligations or the transactions contemplated by this
Agreement. Each Purchaser shall be entitled to independently protect and enforce
its rights, including without limitation the rights arising out of this
Agreement, and it shall not be necessary for any other Purchaser to be joined as
an additional party in any proceeding for such purpose.
10.8. Expenses. Each party hereto shall pay all costs and expenses
incurred by it in connection with the execution and delivery of this Agreement,
and all the transactions contemplated thereby, including fees of legal counsel.
31
IN WITNESS WHEREOF, the parties hereto have caused this Securities
Purchase Agreement to be executed and delivered by their duly authorized
representatives as of the day and year first above written.
ADVENTRX PHARMACEUTICALS, INC.
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
ICAHN PARTNERS LP
By:
------------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Authorized Signatory
ICAHN PARTNERS MASTER FUND LP
By:
------------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Authorized Signatory
HIGH RIVER LIMITED PARTNERSHIP
BY: ▇▇▇▇▇▇ INVESTMENTS, LLC, ITS GENERAL
PARTNER
BY: BARBERRY CORP., ITS SOLE MEMBER
By:
------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Authorized Signatory
SIGNATURE PAGE TO SECURITIES PURCHASE AGREEMENT
VIKING GLOBAL EQUITIES LP
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
VGE III PORTFOLIO LTD.
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
NORTH SOUND LEGACY INSTITUTIONAL FUND
LLC
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
NORTH SOUND LEGACY INTERNATIONAL LTD.
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
ROYAL BANK OF CANADA
BY: RBC CAPITAL MARKETS CORPORATION,
ITS AGENT
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
SIGNATURE PAGE TO SECURITIES PURCHASE AGREEMENT
APPENDIX A
SCHEDULE OF PURCHASERS
NAME IN WHICH
CERTIFICATE AGGREGATE
SHOULD BE MADE AGGREGATE NUMBER OF
TO PURCHASER ADDRESS, NUMBER OF WARRANT TOTAL AGGREGATE
PURCHASER (IF DIFFERENT): TELEPHONE AND CONTACT PERSON SHARES SHARES PURCHASE PRICE TAX ID NUMBER
--------------------- --------------- ---------------------------- --------- --------- --------------- -------------
Icahn Partners LP* ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇▇▇▇▇▇▇, Esq.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇ 1,660,540 1,660,540 $3,071,999.00
Icahn Partners Master ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ Floor
Fund ▇▇* ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇▇▇▇▇▇▇, Esq.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇ 1,798,919 1,798,919 $3,328,000.15
High River Limited ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇* ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇▇▇▇▇▇▇, Esq.
Telephone.: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇ 864,865 864,865 $1,600,000.25
----------
* These three Purchasers are affiliates as such term is defined pursuant to
Rule 12b-2 promulgated under the Exchange Act and acting as a group as such
term is defined under Section 13(d) of the Exchange Act.
NAME IN WHICH
CERTIFICATE AGGREGATE
SHOULD BE MADE AGGREGATE NUMBER OF
TO PURCHASER ADDRESS, NUMBER OF WARRANT TOTAL AGGREGATE
PURCHASER (IF DIFFERENT): TELEPHONE AND CONTACT PERSON SHARES SHARES PURCHASE PRICE TAX ID NUMBER
--------------------- --------------- ---------------------------- --------- --------- --------------- -------------
Viking Global ▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Equities LP** ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇ 1,832,483 1,832,483 $3,390,093.55 ▇▇-▇▇▇▇▇▇▇
VGE III Portfolio ▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇.** ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇ 1,951,300 1,951,300 $3,609,905.00 ▇▇-▇▇▇▇▇▇▇
North Sound Legacy c/o North Sound Capital LLC
Institutional Fund Prior to Aug. 1, 2005:
LLC*** ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
After Aug. 1, 2005:
▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇ 378,378 378,378 $ 699,999.30
North Sound Legacy c/o North Sound Capital LLC
International Ltd.*** Prior to Aug. 1, 2005: 972,973 972,973 $1,800,000.05
----------
** These two Purchasers are affiliates as such term is defined pursuant to
Rule 12b-2 promulgated under the Exchange Act and acting as a group as such
term is defined under Section 13(d) of the Exchange Act.
*** These two Purchasers are affiliates as such term is defined pursuant to
Rule 12b-2 promulgated under the Exchange Act and acting as a group as such
term is defined under Section 13(d) of the Exchange Act.
2
NAME IN WHICH
CERTIFICATE AGGREGATE
SHOULD BE MADE AGGREGATE NUMBER OF
TO PURCHASER ADDRESS, NUMBER OF WARRANT TOTAL AGGREGATE
PURCHASER (IF DIFFERENT): TELEPHONE AND CONTACT PERSON SHARES SHARES PURCHASE PRICE TAX ID NUMBER
--------------------- --------------- ---------------------------- --------- --------- --------------- -------------
▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
After Aug. 1, 2005:
▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Royal Bank of Canada ▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇ ▇▇▇▇▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Telecopy:
For delivery of
stock certificates and
warrants:
c/o RBC Capital Markets
▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇▇▇▇▇▇▇ 1,351,351 1,351,351 $2,499,999.35
▇
▇▇▇▇▇▇▇▇ ▇
FORM OF COMPANY COUNSEL OPINION
CIBC and the Purchasers shall receive on the Closing Date from counsel for the
Company, an opinion (containing the customary exceptions and assumptions),
addressed to CIBC and the Purchasers and dated such Closing Date, and stating in
effect that:
(a) The Company has been duly incorporated and is validly existing as
a corporation in good standing under the laws of the State of Delaware.
(b) The Company has all requisite corporate power and authority to
own, lease and operate its properties and to conduct its business as now being
conducted and as described in the Memorandum and with respect to the Company to
enter into and perform its obligations under the Agreement and the Rights
Agreement and to issue and sell the Shares, Warrants and Warrant Shares.
(c) The authorized capital stock of the Company consists of
100,000,000 shares of Common Stock, par value $0.001 per share, and 1,000,000
shares of Preferred Stock, $0.01 par value.
(d) The Shares, Warrants and Warrant Shares to be issued and sold by
the Company pursuant to the Agreement and the Warrants have been duly authorized
for issuance and sale to the Purchasers pursuant to the Agreement and, when
issued and delivered by the Company pursuant to the Agreement and the Warrants
against payment of the consideration set forth herein, will be validly issued,
fully paid and nonassessable. The Warrant Shares have been duly and validly
reserved for issuance by the Company. The issuance and sale of the Shares,
Warrants and Warrant Shares by the Company is not subject to any preemptive
rights, rights of first refusal or any restriction upon the voting or transfer
of the Common Stock pursuant to the Delaware General Corporation Law (the
"DGCL"), the Company's Certificate of Incorporation as amended (including any
Certificate of Designation) (the "Certificate of Incorporation"), the Company's
bylaws, or any material agreement listed on Exhibit B to this opinion (the
"Material Contracts"). The description of the Common Stock set forth in the
Memorandum under "Description of Common Stock" fairly presents, in all material
respects, the information required by Item 202 of Regulation S-K promulgated by
the Securities and Exchange Commission with respect to the Common Stock. The
form of certificate used to evidence the Common Stock complies in all material
respects with the DGCL and any applicable requirements of the Certificate of
Incorporation or bylaws of the Company.
(e) All necessary corporate action has been duly and validly taken by
the Company to authorize the execution, delivery and performance of the
Agreement and the issuance and sale of the Shares, Warrants and Warrant Shares.
The Agreement, the Warrants and the Rights Agreement have been duly and validly
authorized, executed and delivered by the Company and constitute the legal,
valid and binding obligation of the Company enforceable against the Company in
accordance with its terms except as such enforceability may be limited by
applicable bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and other similar laws affecting the enforcement of creditors' rights
generally and by general equitable principles.
(f) Neither the execution, delivery and performance of the Agreement
or the Rights Agreement by the Company nor the consummation of any of the
transactions contemplated thereby (including, without limitation, the issuance
and sale by the Company of the Shares, Warrants and Warrant Shares) will give
rise to a right to terminate or accelerate the due date of any payment due
under, or result in the breach of any term or provision of, or constitute a
default (or any event which with notice or lapse of time, or both, would
constitute a default) under, or require consent or waiver under, or result in
the execution or imposition of any lien, security interest or encumbrance upon
any properties or assets of the Company or any subsidiary pursuant to the terms
of any Material Contract, or any order, writ, judgment, injunction, decree,
determination or award which has been entered against the Company and of which
we have knowledge, or the DGCL or any statute, rule or regulation of the State
of California, as currently in effect, or violate any provision of the
Certificate of Incorporation or bylaws of the Company or any subsidiary, as
currently in effect.
(g) No consent, approval, authorization, license, registration,
filing, qualification or order of any court, governmental agency or regulatory
authority of the United States of America or the State of California is required
under any statute, rule or regulation of the United States of America or the
State of California, as currently in effect, for the due authorization,
execution, delivery or performance of the Agreement or the Rights Agreement by
the Company or the issuance of the Shares and Warrants contemplated thereby,
except such as have been made or obtained and such as may be required under
state securities or Blue Sky laws of any state in connection with the purchase
of the Shares by, or the issuance of the Warrants to, the several Purchasers and
the filing of a Form D with the SEC pursuant to Regulation D under the Act.
(h) To our knowledge, there is no any action, suit, proceeding or
other investigation, before any court or administrative agency or before or by
any public body or board pending or threatened against, or involving the assets,
properties or businesses of, the Company which is not disclosed in the
Memorandum and which
2
would reasonably be expected to have a material adverse effect on the Company or
its subsidiaries.
(i) The Shares and Warrant Shares have been approved for listing on
the American Stock Exchange.
(j) The Company is not, and after giving effect to the offering and
sale of the Securities and application of the proceeds thereof as described
under the heading "Use of Proceeds" in the Memorandum, will not be, required to
register as an "investment company" as such term is defined in the Investment
Company Act of 1940, as amended.
(k) The offer and sale of the Securities are exempt from the
registration requirements of the Securities Act of 1933, as amended, subject to
the timely filing of a Form D pursuant to SEC Regulation D.
To the extent deemed advisable by such counsel, such counsel may rely as to
matters of fact on certificates of responsible officers of the Company and
public officials and on the opinions of other counsel reasonably satisfactory to
CIBC as to matters which are governed by laws other than the laws of the States
of California and New York, the DGCL and the Federal laws of the United States;
provided that such counsel shall state that in their opinion the Purchasers and
CIBC are justified in relying on such other opinions. Copies of such
certificates and other opinions shall be furnished to CIBC and counsel for the
Purchasers.
3
APPENDIX C
DISCLOSURE SCHEDULE
This Disclosure Schedule (this "Schedule") sets forth exceptions to the
representations and warranties made by ADVENTRX Pharmaceuticals, Inc., a
Delaware corporation (the "Company"), in the Securities Purchase Agreement,
dated July 21, 2005, among the Company and the Purchasers listed on Appendix A
thereto (the "Agreement"). Capitalized terms not otherwise defined in this
Schedule have the meanings set forth in the Agreement.
This Schedule is arranged in separate parts corresponding to the numbered
sections contained in Section 3 of the Agreement, and the information disclosed
in any numbered part, as set forth herein, shall be deemed to relate to and to
qualify the particular representation or warranty set forth in the corresponding
numbered section in Section 3 of the Agreement.
Contracts and other documents are mentioned in this Schedule for identification
purposes only, and their inclusion should not be deemed an admission by the
Company that any such listed contract or document is material. Any summary or
description of any such contract or document contained in this Schedule is
necessarily incomplete, and the entire contract or document should be reviewed.
Copies of all such contracts and other documents have been provided to the
Placement Agent or counsel to the Placement Agent.
SCHEDULE 3.5
BOOKS AND RECORDS; INTERNAL CONTROLS
Under the supervision of our Chief Executive Officer and our Chief Financial
Officer, the Company evaluated the effectiveness of its disclosure controls and
procedures as of December 31, 2004 and March 31, 2005. Based upon that
evaluation, the Company's Chief Executive Officer and Chief Financial Officer
concluded that as of both dates, the Company's disclosure controls and
procedures were not effective to ensure that the Company's management is alerted
to material information required to be disclosed by the Company in the reports
it files with the Commission and that such material information is recorded and
reported within the time periods specified in the Commission's rules and forms.
In connection with ▇.▇. ▇▇▇▇ LLP's audit of the Company's financial statements
for the fiscal year ended December 31, 2004, ▇.▇. ▇▇▇▇, the Company's
independent registered public accounting firm, advised the Company's Audit
Committee that it had identified material weaknesses in the Company's accounting
function that need to be re-evaluated and strengthened. The material weaknesses
identified by ▇.▇. ▇▇▇▇ and the ineffective disclosure controls and procedures
identified by the Company are as follows: (1) the Company's accounting system
software has limitations that may not allow the Company to ensure prior period
financial information is not changed and is limited in its ability to provide
the Company with accurate costing information; and (2) the Company lacks a
formal process to review and document journal entries. The Company is unaware of
any instances in which any users of the Company's accounting system software
made any changes to historical financial data. Since March 31, 2005, the Company
has enhanced its internal accounting capability by hiring a controller, and by
engaging an independent accounting firm with the appropriate level of technical
tax accounting expertise. The Company has engaged a consulting firm to migrate
its accounting system to a new system with fewer limitations and greater
controls. The Company has also engaged service providers to design, document and
implement a formal review and documentation process based on current industry
best-practices.
2
SCHEDULE 3.8
ABSENCE OF LITIGATION
The Company received a letter dated March 28, 2005 from counsel to
Sanofi-Aventis ("Sanofi"), a large pharmaceutical company, in which Sanofi
asserts that the Company's use of the ▇▇▇▇ "ADVENTRX" infringes on Sanofi's
"AVENTIS" trademark and demands that the Company discontinue use of the
"ADVENTRX" name and ▇▇▇▇. As of the date hereof, to the Company's knowledge
Sanofi has not filed any claim or instituted any action with respect to this
matter. On May 11, 2005, the Company transmitted a letter to counsel to Sanofi
in response to the March 28 letter stating that the Company does not believe
that its use of the word "ADVENTRX" as a trade name infringes the "AVENTIS"
trademark held by Sanofi.
3
SCHEDULE 3.12(A)
INTELLECTUAL PROPERTY
Schedule 3.8 is incorporated herein by reference.
On July 3, 2001, Karo Bio USA, Inc. ("Karo") filed a lawsuit in the United
States District Court for the District of Delaware, Civil Action No. 01-455
(RRM) (the "Karo Suit") naming the Company, formerly known as Biokeys
Pharmaceuticals, Inc., as the defendant claiming that the Company's use of the
name "Biokey" and "Biokeys" infringed on Karo's registered trademark BIOKEY.
Karo and the Company entered into a Settlement Agreement, effective March 14,
2002, pursuant to which, among other things, the Company agreed to refrain from
using the names "Biokey" and "Biokeys" in commerce, the Company and Karo agreed
to dismiss the Karo Suit with prejudice and the Company and Karo each provided
the other with a release of claims. A stipulation of dismissal of the Karo Suit
was entered on March 26, 2002 with the United States District Court for the
District of Delaware.
4
SCHEDULE 3.12(B)
INTELLECTUAL PROPERTY
As reported in the Quarterly Report, the Company received a letter dated April
13, 2005 from the University of Texas M.D. ▇▇▇▇▇▇▇▇ Cancer Center and the Board
of Regents of The University of Texas System (collectively, "MD ▇▇▇▇▇▇▇▇")
notifying the Company of MD Anderson's intent to terminate the Patent and
Technology License Agreement, dated June 14 1996, as amended June 15, 2000 (the
"MDA Agreement"), between the Company and MD ▇▇▇▇▇▇▇▇. Pursuant to the MDA
Agreement, MD ▇▇▇▇▇▇▇▇ licensed to the Company certain patents required for the
development of the Company's pre-clinical drug Eradicaide, which the Company had
planned to develop for use as a viral entry inhibitor against HIV. In the April
13 letter, MD ▇▇▇▇▇▇▇▇ asserted that the Company was in breach of the provisions
of the MDA Agreement that require the Company to pay certain expenses of MD
▇▇▇▇▇▇▇▇, provide reports to MD ▇▇▇▇▇▇▇▇ and commercialize the technology
licensed under the MDA Agreement. Pursuant to terms of the MDA Agreement, the
MDA Agreement automatically terminated 30 days after MD Anderson's notice
because the Company did not cure the alleged breaches. The Company does not
currently believe that it owes any expense reimbursement to MD ▇▇▇▇▇▇▇▇ under
the MDA Agreement due to the existence of a number of potential counterclaims
against MD ▇▇▇▇▇▇▇▇. Nevertheless, because the Company believed that the
estimated costs and technical risks of developing the technology licensed under
the MDA Agreement outweighed the benefit the Company could reasonably realize if
it were able to bring any of the licensed technology to market, the Company
determined not to cure any of the alleged breaches and allowed the MDA Agreement
to automatically terminate by its terms.
5
SCHEDULE 3.18
CAPITALIZATION
Since March 31, 2005, the Company has issued 915,349 shares of Common Stock upon
the cash exercise of warrants and 67,750 shares of Common Stock upon the
cashless exercise of warrants to purchase 125,635 shares of Common Stock. Each
of these warrants was outstanding as of March 31, 2005. As of the date hereof,
55,122,921 shares of Common Stock were issued and outstanding and the Company
was obligated to issue (i) 9,951,889 shares of Common Stock pursuant to
outstanding warrants, and (ii) 2,942,000 shares of Common Stock pursuant to
outstanding options to employees, directors and consultants.
6
CONFIDENTIAL
APPENDIX D
ADVENTRX PHARMACEUTICALS, INC.
SELLING STOCKHOLDER QUESTIONNAIRE
Pursuant to Section 6.1 of the Securities Purchase Agreement, dated July
21, 2005 (the "Purchase Agreement"), among ADVENTRX Pharmaceuticals, Inc., a
Delaware corporation (the "Company"), you and the other Purchasers named
therein, the Company is required to use reasonable best efforts to prepare and
file with the Securities and Exchange Commission (the "SEC") a registration
statement on Form S-3 (the "Registration Statement") covering the resale of the
shares of Common Stock, par value $0.001 per share, of the Company ("Common
Stock") purchased by you and the other Purchasers, and issuable upon exercise of
the warrants purchased by you and the other Purchasers. Pursuant to Section 6.3
of the Purchase Agreement, it is a condition to the Company's obligations to you
under Section 6.1 of the Purchase Agreement that you promptly furnish to the
Company, upon request, such information regarding you as shall be reasonably
necessary to effect the registration of the shares of Common Stock you purchased
pursuant to the Purchase Agreement, and that are exercisable upon exercise of
the Warrants purchased thereunder. To that end, the Company requests that you
complete this Selling Stockholder Questionnaire (this "Questionnaire").
IF "NONE" OR "NOT APPLICABLE" IS THE APPROPRIATE RESPONSE TO ANY PARTICULAR
QUESTION IN THIS QUESTIONNAIRE, PLEASE SO INDICATE RATHER THAN LEAVING THE
QUESTION BLANK. If the space provided in this Questionnaire is inadequate,
please state your answer on an attached sheet. All questions should be answered
as of the date you sign this Questionnaire, unless otherwise specified.
STOCKHOLDER NAME AND CONTACT INFORMATION
1. Please provide your name and other contact information:
STOCKHOLDER NAME: _________________________________________________________
CONTACT NAME: _________________________________________________________
ADDRESS: _________________________________________________________
_________________________________________________________
_________________________________________________________
PHONE: _________________________________________________________
FACSIMILE: _________________________________________________________
EMAIL: _________________________________________________________
RELATIONSHIP WITH THE COMPANY
2. Within the past three years, have you held any position or office or had
any other relationship (other than in connection with the Purchase
Agreement) with the Company or any of its predecessors or affiliates?
If "yes", please describe:
___________________________________________________________________________
CONFIDENTIAL
SECURITY OWNERSHIP
3. (a) List below the number of shares of Common Stock you beneficially own
(see Exhibit A for further information regarding beneficial ownership,
voting power and investment power).
NUMBER OF SHARES RECORD HOLDER SOLE VOTING POWER? SOLE INVESTMENT POWER?
---------------- ------------- ------------------ ----------------------
(b) List below each derivative security (e.g., stock options, warrants, etc.)
you currently own representing the right to receive or acquire shares of
Common Stock.
SOLE
TYPE OF SECURITY SOLE VOTING INVESTMENT
NUMBER OF SHARES ISSUE DATE EXERCISE PRICE POWER? POWER?
---------------- ---------- -------------- ----------- ----------
PLAN OF DISTRIBUTION
4. Attached as Exhibit B hereto is a draft of the "Plan of Distribution"
section of the Registration Statement. Do you propose to offer or sell any
shares of Common Stock to be registered on the Registration Statement
("Registered Shares") by means other than those described in Exhibit B?
Yes [ ] No [ ]
If "yes", please describe the manner in which you propose to offer or sell
such Registered Shares:
___________________________________________________________________________
___________________________________________________________________________
___________________________________________________________________________
-2-
CONFIDENTIAL
5. Do you currently have specific plans to offer any Registered Shares through
the selling efforts of brokers or dealers?
Yes [ ] No [ ]
If yes, briefly describe the terms of any agreement, arrangement or
understanding, entered into or proposed to be entered into with any broker
or dealer, including any discounts or commissions to be paid to dealers:
___________________________________________________________________________
___________________________________________________________________________
___________________________________________________________________________
6. Are any of the Registered Shares to be offered otherwise than for cash?
Yes [ ] No [ ]
If yes, briefly describe:
___________________________________________________________________________
___________________________________________________________________________
___________________________________________________________________________
7. Are any finders to be involved in the offering or sale of any of the
Registered Shares?
Yes [ ] No [ ]
If yes, briefly describe:
___________________________________________________________________________
___________________________________________________________________________
___________________________________________________________________________
-3-
CONFIDENTIAL
BROKER-DEALER STATUS OR AFFILIATION
8. (a) Are you a broker(1) or a dealer(2)?
Yes [ ] No [ ]
(b) If you answered "yes" to question 8(a), are you registered?
Yes [ ] No [ ]
(c) If you answered "yes" to question 8(b), please list you NASD
registration number below?
______________________________________________________________________
9. (a) Are you an affiliate of a broker or a dealer?
Yes [ ] No [ ]
(b) If you answered "yes" to question 9(a), did you acquire the Registered
Shares in the ordinary course of business?
Yes [ ] No [ ]
* * * * * * * * * *
----------
(1) A "broker" is any person engaged in the business of effecting transactions
in securities for the account of others.
(2) A "dealer" is any person engaged in the business of buying and selling
securities for such person's own account through a broker or otherwise. The
term "dealer" does not include a person that buys or sells securities for
such person's own account, either individually or in a fiduciary capacity,
but not as part of a regular business.
-4-
CONFIDENTIAL
CERTIFICATION
I understand that the information in this Questionnaire is for use in
connection with the filing of the Registration Statement with the SEC, and that
the answers to the questions submitted will be relied on by the Company and its
officers and directors in preparing and filing the Registration Statement. The
information contained in this Questionnaire is true, complete and correct.
I WILL NOTIFY THE COMPANY PROMPTLY OF ANY CHANGES IN THE FOREGOING
INFORMATION (PARTICULARLY WITH RESPECT TO OWNERSHIP OF THE COMPANY'S SECURITIES)
THAT MAY OCCUR PRIOR TO THE ACTUAL DATE OF THE FILING WITH THE SEC.
Dated: _____________ ____, 2005
Stockholder:
-------------------------
(please print)
--------------------------------------
(signature)
Name:
--------------------------------
(please print)
Title:
--------------------------------
(please print)
Please return the completed and executed Questionnaire to:
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ LLP
THREE ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
ATTENTION: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ESQ.
▇▇▇▇▇▇▇.▇▇▇▇▇▇@▇▇▇▇▇▇▇.▇▇▇
FAX NO. (▇▇▇) ▇▇▇-▇▇▇▇
-5-
CONFIDENTIAL
EXHIBIT A
BENEFICIAL OWNERSHIP
Beneficial, or beneficially, as applied to the ownership of securities, has been
defined by the Securities and Exchange Commission to mean the following:
A beneficial owner of a security includes any person (as defined below)
who, directly or indirectly, through any contract, arrangement,
understanding, relationship, or otherwise has or shares:
(i) Voting power, which includes the power to vote, or to direct the
voting of, such security, or
(ii) Investment power, which includes the power to dispose, or to direct
the disposition, of such security.
Note that more than one person may have a beneficial interest in the same
securities; one may have voting power and the other may have investment power.
Even if a person, directly or indirectly, creates or uses a trust, proxy, power
of attorney, pooling arrangement or any other contract, arrangement or device
with the purpose or effect of divesting such person of beneficial ownership of a
security or preventing the vesting of such beneficial ownership to avoid the
reporting requirements of section 13(d) of the Securities Exchange Act, he will
still be deemed to be the beneficial owner of such security.
A person is deemed to be the beneficial owner of a security if that person has
the right to acquire beneficial ownership of such security at any time within 60
days, including but not limited to any right to acquire:
(a) through the exercise of any option, warrant (including the warrants you
purchased pursuant to the Purchase Agreement) or right;
(b) through the conversion of a security;
(c) pursuant to the power to revoke a trust, discretionary account, or similar
arrangement; or
(d) pursuant to the automatic termination of a trust, discretionary account or
similar arrangement.
A member of a national securities exchange is not deemed to be a beneficial
owner of securities held directly or indirectly by it on behalf of another
person solely because such member is the record holder of such securities and,
pursuant to the rules of such exchange, may direct the vote of such securities,
without instruction, on other than contested matters or matters that may affect
substantially the rights or privileges of the holders of the securities to be
voted, but is otherwise precluded by the rules of such exchange from voting
without instruction.
A person who in the ordinary course of business is a pledgee of securities
pursuant to a bona fide pledge agreement will not be deemed to be the beneficial
owner of such pledged securities merely because there has been a default under
such an agreement, except during such time as the event of default shall remain
uncured for more than 30 days or at any time before a default is cured if the
power acquired by the pledgee pursuant to the default enables him to change or
influence control of the issuer.
A person may also be regarded as the beneficial owner of securities held in the
name of his spouse, his minor children or other relatives of his or her spouse
sharing his home, or held in a trust of which he is a beneficiary or trustee, if
the relationships are such that he has voting power or investment power with
respect to such securities.
IF YOU HAVE ANY REASON TO BELIEVE THAT ANY INTEREST YOU HAVE, HOWEVER REMOTE,
MIGHT BE DESCRIBED AS A BENEFICIAL INTEREST, PLEASE DESCRIBE SUCH INTEREST.
A-1
EXHIBIT B
PLAN OF DISTRIBUTION
We are registering the shares of common stock covered by this prospectus on
behalf of the selling security holders listed in this prospectus. Sales of
shares may be made by selling security holders, including their respective
donees or other successors-in-interest directly to purchasers or to or through
underwriters, broker-dealers or through agents. Sales may be made from time to
time on the American Stock Exchange, any other exchange or market upon which our
shares may trade in the future, in the over-the-counter market or otherwise, at
market prices prevailing at the time of sale, at prices related to market
prices, or at negotiated or fixed prices. The shares may be sold by one or more
of, or a combination of, the following:
- a block trade in which the broker-dealer so engaged will attempt to sell
the shares as agent but may position and resell a portion of the block as
principal to facilitate the transaction (including crosses in which the
same broker acts as agent for both sides of the transaction);
- purchases by a broker-dealer as principal and resale by such broker-dealer,
including resales for its account, pursuant to this prospectus;
- ordinary brokerage transactions and transactions in which the broker-dealer
solicits purchases;
- through options, swaps or derivatives;
- in privately negotiated transactions;
- in making short sales or in transactions to cover short sales entered into
after the date of this prospectus;
- put or call option transactions relating to the shares; or
- any other method permitted by applicable law.
The selling security holders may effect these transactions by selling
shares directly to purchasers or to or through broker-dealers, which may act as
agents or principals. These broker-dealers may receive compensation in the form
of discounts, concessions or commissions from the selling security holders or
the purchasers of shares for whom such broker-dealers may act as agents or to
whom they sell as principals, or both (which compensation as to a particular
broker-dealer might be in excess of customary commissions). Each of the selling
security holders has advised us that they have not entered into any agreements,
understandings or arrangements with any underwriters or broker-dealers regarding
the sale of their securities.
Each selling security holder will act independently of us in making
decisions regarding the timing, manner and size of each sale of shares of common
stock covered by this registration statement.
Each of the selling security holders may enter into hedging transactions
with broker-dealers or other financial institutions. In connection with those
transactions, the broker-dealers or other financial institutions may engage in
short sales of the shares or of securities convertible into or exchangeable for
the shares in the course of hedging positions they assume with the selling
security
A-1
holders. Each of the selling security holders may also enter into options or
other transactions with broker-dealers or other financial institutions which
require the delivery of shares offered by this prospectus to those
broker-dealers or other financial institutions. The broker-dealer or other
financial institution may then resell the shares pursuant to this prospectus (as
amended or supplemented, if required by applicable law, to reflect those
transactions).
Each of the selling security holders and any broker-dealers that act in
connection with the sale of shares may be deemed to be "underwriters" within the
meaning of Section 2(11) of the Securities Act of 1933, as amended (the
"Securities Act"), and any commissions received by broker-dealers or any profit
on the resale of the shares sold by them while acting as principals may be
deemed to be underwriting discounts or commissions under the Securities Act.
Each of the selling security holders may agree to indemnify any agent, dealer or
broker-dealer that participates in transactions involving sales of the shares
against liabilities, including liabilities arising under the Securities Act. We
have agreed to indemnify each of the selling security holders and each selling
security holder has agreed, severally and not jointly, to indemnify us against
some liabilities in connection with the offering of the shares, including
liabilities arising under the Securities Act.
Each selling security holder and any other persons participating in a
distribution of the securities covered by this registration statement will be
subject to the prospectus delivery requirements of the Securities Act and will
be subject to applicable provisions of the Securities Exchange Act of 1934, as
amended (the "Exchange Act") and the rules and regulations thereunder,
including, without limitation, Regulation M, which may restrict certain
activities of, and limit the timing of purchases and sales of securities by,
selling security holders and other persons participating in a distribution of
securities. Furthermore, under Regulation M, persons engaged in a distribution
of securities are prohibited from simultaneously engaging in market making and
certain other activities with respect to such securities for a specified period
of time prior to the commencement of such distribution, subject to specified
exceptions or exemptions. All of the foregoing may affect the marketability of
the securities offered hereby.
Each of the selling security holders also may resell all or a portion of
the shares in open market transactions in reliance upon Rule 144 under the
Securities Act rather than under this prospectus, provided they meet the
criteria and conform to the requirements of Rule 144.
Upon being notified by a selling security holder that a material
arrangement has been entered into with a broker-dealer for the sale of shares
through a block trade, special offering, exchange distribution or secondary
distribution or a purchase by a broker or dealer, we will file a supplement to
this prospectus, if required pursuant to Rule 424(b) under the Securities Act,
disclosing:
- the name of each such selling security holder and of the participating
broker-dealer(s);
- the number of shares involved;
- the initial price at which the shares were sold;
- the commissions paid or discounts or concessions allowed to the
broker-dealer(s), where applicable;
- that such broker-dealer(s) did not conduct any investigation to verify the
information set out or incorporated by reference in this prospectus; and
- other facts material to the transactions.
-2-
In addition, if required under applicable law or the rules or regulations
of the Commission, we will file a supplement to this prospectus when a selling
security holder notifies us that a donee intends to sell more than 500 shares of
common stock.
We are paying all expenses and fees customarily paid by the issuer in connection
with the registration of the shares. Each of the selling security holders will
bear all brokerage or underwriting discounts or commissions paid to
broker-dealers and any transfer agent fees in connection with the sale of the
shares.
-3-
APPENDIX E
CERTIFICATE REGARDING RESALE OF COMMON STOCK
_____________________________, a selling securityholder listed in the
Prospectus (File No. 333-_________) of ADVENTRX Pharmaceuticals, Inc. (the
"Company"), dated ___________, 2005 (the "Prospectus"), covering the resale of
up to _____________ shares of Common Stock of the Company (the "Covered Shares")
by the selling securityholders named therein, hereby certifies and represents
and warrants to and for the benefit of the Company, the Company's legal counsel
and _________________, the Company's transfer agent, in connection with the sale
of certain of the Covered Shares held by the undersigned (the "Resold Shares")
that the undersigned has sold the Resold Shares pursuant to the Prospectus and
in a manner described under the caption "Plan of Distribution" in the Prospectus
and that such sale complied with all applicable securities laws, including,
without limitation, the prospectus delivery requirements of the Securities Act
of 1933, as amended, and Regulation M promulgated under the Securities Exchange
Act of 1934, as amended.
Stock Certificate #: _________________________________________________
Number of Resold Shares: _____________________________________________
Date of Sale: _______________________________________________________
IN WITNESS WHEREOF, the undersigned has signed this Certificate Regarding
Resale of Common Stock on ________________________, 200__.
Signature:
-----------------------------
Name:
----------------------------------
(print name of person signing)
Title:
---------------------------------
(print title if signing on behalf
of an entity)
APPENDIX F-1
FORM OF WARRANT
APPENDIX F-2
FORM OF WARRANT
(North Sound Legacy Institutional Fund LLC and North Sound Legacy International
Ltd.)
APPENDIX G
FORM OF RIGHTS AGREEMENT