UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) of the SECURITIES EXCHANGE ACT OF
1934
Date of Report (Date of earliest event reported): August 31, 2017
VistaGen Therapeutics, Inc.
(Exact name of registrant as specified in its charter)
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NEVADA
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001-37761
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20-5093315
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(State or other jurisdiction of incorporation)
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(Commission File Number)
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(IRS Employer Identification Number)
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343 Allerton Ave.
South San Francisco, California 94090
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(Address of principal executive offices)
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(650) 577-3600
(Registrant’s telephone number, including area
code)
Not Applicable
(Former name or former address, if changed since last
report)
Check the appropriate box below if the Form 8-K filing is intended
to simultaneously satisfy the filing obligation of the registrant
under any of the following provisions:
☐ Written communications
pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
☐ Soliciting material
pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a
-12)
☐ Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17
CFR 240.14d -2(b))
☐ Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17
CFR 240.13e -4(c))
Item 1.01. Entry into a Material Definitive
Agreement.
On August 31, 2017, VistaGen Therapeutics, Inc.
(the “Company”) entered into an underwriting agreement
(the “Underwriting
Agreement”) with
Oppenheimer & Co. Inc. (the “Underwriter”), relating to the issuance and sale (the
“Offering”) of 1,371,430 shares (the
“Shares”) of the Company’s common stock,
$0.001 par value per share (the “Common
Stock”), and warrants to
purchase an aggregate total of 1,892,572 shares of Common Stock,
consisting of Series A1 Warrants to purchase up to 1,388,931 shares
of Common Stock and Series A2 Warrant to purchase up to 503,641
shares of Common Stock (the Series A1 Warrants and Series A2
Warrants are collectively referred herein as the
“Warrants”). Each share of Common Stock is being sold
together with 1.0128 Series A1 Warrants, each whole Series A1
Warrant to purchase one share of Common Stock, and 0.3672 of a
Series A2 Warrant, each whole Series A2 Warrant to purchase one
share of Common Stock, at a
public offering price of $1.75 per share and related
Warrants.
Pursuant
to the terms of the Underwriting Agreement, the Underwriter has
agreed to purchase the Shares and Warrants from the Company at a
price of $1.6275 per share and related Warrants. Each Series A1
Warrant is exercisable six months from the date of issuance, while
the Series A2 Warrants are immediately exercisable. Both Warrants
have an exercise price of $1.82 per whole share, and expire five
years from the date first exercisable.
The
net proceeds to the Company from the sale of the Shares and
Warrants, after deducting the underwriting discount and estimated
offering expenses payable by the Company, are expected to be
approximately $2.0 million. The Offering is expected to close on
September 6, 2017, subject to the satisfaction of customary closing
conditions.
This
Offering is being made pursuant to the Company’s effective
shelf registration statement on Form S-3 (File No. 333-215671)
filed with the Securities and Exchange Commission on January 23,
2017, and declared effective on July 27, 2017, including the base
prospectus dated July 27, 2017 included therein and the related
prospectus supplement.
The
Underwriting Agreement contains customary representations,
warranties and agreements by the Company, customary conditions to
closing, indemnification obligations of the Company and the
Underwriters, including for liabilities under the Securities Act of
1933, as amended, other obligations of the parties, and termination
provisions.
Pursuant
to the Underwriting Agreement, subject to certain exceptions, the
Company has agreed for a period of 75 days after the date of the
final prospectus supplement relating to the Offering and its
directors and officers have agreed for a period of 90 days after
the date of the final prospectus supplement relating to the
Offering not to sell or otherwise dispose of any of the
Company’s securities held by them without first obtaining the
written consent of the Underwriter.
The
foregoing is only a brief description of the material terms of the
Underwriting Agreement, does not purport to be a complete
description of the rights and obligations of the parties
thereunder, and is qualified in its entirety by reference to the
Underwriting Agreement that is filed as Exhibit 1.1 to this Current
Report on Form 8-K and incorporated by reference
herein.
The
Underwriting Agreement has been attached hereto as an exhibit to
provide investors and security holders with information regarding
its terms. It is not intended to provide any other factual
information about the Company. The representations, warranties and
covenants contained in the Underwriting Agreement were made only
for purposes of the Underwriting Agreement and as of specific
dates, were solely for the benefit of the parties to the
Underwriting Agreement, and may be subject to limitations agreed
upon by the contracting parties, including being qualified by
confidential disclosures exchanged between the parties in
connection with the execution of the Underwriting
Agreement.
The
legal opinion of Disclosure Law Group, a Professional Corporation,
relating to the Common Stock and Warrants being offered is filed as
Exhibit 5.1 to this Current Report on Form 8-K.
Item 7.01. Regulation FD Disclosure.
On
August 31, 2017, the Company issued a press release announcing the
pricing and terms of the Offering. A copy of the press release is
attached hereto as Exhibits 99.1, and is each incorporated herein
by reference.
Pursuant
to the rules and regulations of the Securities and Exchange
Commission, the information in this Item 7.01 disclosure, including
Exhibit 99.1 and information set forth therein, is deemed to have
been furnished and shall not be deemed to be “filed”
under the Securities Exchange Act of 1934.
Item 9.01 Financial Statements and
Exhibits.
(d) Exhibits.
Pursuant
to the rules and regulations of the Securities and Exchange
Commission, the attached exhibits are deemed to have been filed
with the Securities and Exchange Commission:
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Exhibit Number
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Description
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Underwriting
Agreement, dated as of August 31, 2017, by and between
VistaGen Therapeutics, Inc. and Oppenheimer & Co.
Inc.
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Form of
Series A1 Warrant
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Form of
Series A2 Warrant
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Opinion
of Disclosure Law Group, a Professional Corporation
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Consent
of Disclosure Law Group, a Professional Corporation (included in
Exhibit 5.1)
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Press
Release issued by VistaGen Therapeutics, Inc. dated August 31,
2017
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Signatures
Pursuant to the
requirements of the Securities Exchange Act of 1934, the registrant
has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
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VistaGen
Therapeutics, Inc.
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Date:
August 31, 2017
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By:
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/s/ Shawn K. Singh
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Shawn
K. Singh
Chief
Executive Officer
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Exhibit
1.1
VistaGen
Therapeutics, Inc.
1,371,430
Shares of Common Stock
Series
A1 Warrants to Purchase up to 1,388,931 Shares of Common
Stock
and
Series
A2 Warrants to Purchase up to 503,641 Shares of Common
Stock
UNDERWRITING
AGREEMENT
August
31, 2017
Oppenheimer &
Co. Inc.
85
Broad Street
New
York, New York 10004
Ladies
and Gentlemen:
VistaGen
Therapeutics, Inc., a Nevada corporation (the "Company") proposes,
subject to the terms and conditions contained herein, to sell to
you (the "Underwriter"), an aggregate of (i) 1,371,430 shares (the
"Shares") of the Company's common stock, $0.001 par value per share
(the "Common Stock"), (ii) Series A1 warrants (the “Series A1
Warrants”) to purchase up to an aggregate of 1,388,931 shares
of Common Stock (the “Series A1 Warrant Shares”) and
(iii) Series A2 warrants (the “Series A2 Warrants”, and
collectively, with the Series A1 Warrants, the
“Warrants”) to purchase an aggregate of 503,641 shares
of Common Stock (the “Series A2 Warrant Shares,” and
collectively, with the Series A1 Warrant Shares, the “Warrant
Shares”). Each Share is being sold together with 1.0128
Series A1 Warrants, each whole Series A1 Warrant to purchase one
Series A1 Warrant Share, and 0.3672 of a Series A2 Warrant, each
Whole Series A2 Warrant to purchase one Series A2 Warrant Share.
The Shares, the Warrants and the Warrant Shares are collectively
referred to as the “Securities”. The Shares and the
Warrants will be issued separately, but will be purchased together
in the offering.
The Company has prepared and filed in conformity
with the requirements of the Securities Act of 1933, as amended
(the "Securities Act"), and the published rules and regulations
thereunder (the "Rules") adopted by the Securities and Exchange
Commission (the "Commission") a registration statement on
Form S-3 (No. 333-215671), including a related
prospectus dated July 27, 2017 (the "Base Prospectus") relating to common stock,
preferred stock, debt securities, warrants and units of the Company
that may be sold from time to time by the Company in accordance
with Rule 415 of the Securities Act, and such amendments
thereof as may have been required to the date of this Agreement.
The Registration Statement is effective and available for the
offering and sale of the Securities as contemplated by this
Agreement. Copies of such Registration Statement (including all
amendments thereof and all documents deemed incorporated by
reference therein) and of the related Base Prospectus have
heretofore been delivered by the Company or are otherwise available
to you.
The term "Registration Statement" as used in this
Agreement means the registration statement, including all exhibits,
financial schedules and all documents and information deemed to be
part of the Registration Statement by incorporation by reference or
otherwise, as amended from time to time, including the
information (if any) contained in the form of final prospectus
filed with the Commission pursuant to Rule 424(b) of the Rules and
deemed to be part thereof at the time of effectiveness pursuant to
Rule 430B of the Rules.
-1-
If the
Company has filed an abbreviated registration statement to register
additional Shares and Warrants pursuant to Rule 462(b) under the
Rules (the "462(b) Registration Statement"), then any reference
herein to the Registration Statement shall also be deemed to
include such 462(b) Registration Statement. The term "Preliminary Prospectus" means the Base
Prospectus, together with any preliminary prospectus supplement
used or filed with the Commission pursuant to Rule 424 of the
Rules, in the form provided to the Underwriter by the
Company for use in connection with the offering of the Securities.
The term "Prospectus" means the Base Prospectus,
any Preliminary Prospectus and any amendments or further
supplements to such prospectus, and including, without limitation,
the final prospectus supplement, filed pursuant to and within the
limits described in Rule 424(b) with the Commission in connection
with the proposed sale of the Securities contemplated by this
Agreement through the date of such Prospectus Supplement. The term
"Effective Date" shall mean each date that the Registration
Statement and any post-effective amendment or amendments thereto
became or becomes effective, including as provided in Section 11(d)
of the Securities Act. Unless otherwise stated herein, any
reference herein to the Registration Statement, any Preliminary
Prospectus, the Statutory Prospectus (as hereinafter defined) and
the Prospectus shall be deemed to refer to and include the
documents incorporated by reference therein, including pursuant to
Item 12 of Form S-3 under the Securities Act, which were filed
under the Securities Exchange Act of 1934, as amended (the
"Exchange Act") on or before the date hereof or are so filed
hereafter. Any reference herein to the terms "amend," "amendment"
or "supplement" with respect to the Registration Statement, any
Preliminary Prospectus, the Statutory Prospectus or the Prospectus
shall be deemed to refer to and include any such document filed or
to be filed under the Exchange Act after the date of the
Registration Statement, any such Preliminary Prospectus, the
Statutory Prospectus or Prospectus, as the case may be, and deemed
to be incorporated therein by reference.
The Company
understands that the Underwriter proposes to make a public offering
of the Shares and the Warrants, as set forth in and pursuant to the
Statutory Prospectus (as hereinafter defined) and the Prospectus,
as soon after the Effective Date and the date of this Agreement as
the Underwriter deems advisable. The Company hereby confirms that
the Underwriter and dealers have been authorized to distribute or
cause to be distributed each Preliminary Prospectus, and each
Issuer Free Writing Prospectus (as hereinafter defined) and are
authorized to distribute the Prospectus (as from time to time
amended or supplemented if the Company furnishes amendments or
supplements thereto to the Underwriter).
1. Sale, Purchase, Delivery and Payment
for the Shares and the Warrants. On the basis of the
representations, warranties and agreements contained in, and
subject to the terms and conditions of, this
Agreement:
(a) The
Company agrees to issue and sell to the Underwriter, and the
Underwriter agrees to purchase from the Company, at a purchase
price of $1.6275 per Share and related Warrants, (i) the number of
Shares set forth opposite the name of the Underwriter under the
column "Number of Shares to be Purchased" on Schedule I to this
Agreement, (ii) the number of Series A1 Warrants set forth opposite
the name of the Underwriter under the column “Number of
Series A1 Warrants to be Purchased” on Schedule I to this
Agreement and (iii) the number of Series A2 Warrants set forth
opposite the name of the Underwriter under the column “Number
of Series A2 Warrants to be Purchased” on Schedule I to this
Agreement.
(b)
Payment of the purchase price for, and delivery of certificates
for, the Shares and the Warrants shall be made at the offices of
Oppenheimer & Co. Inc., 85 Broad
Street, 23rd
Floor New York, New York 10004,
at 10:00 a.m., New York City time, on the third business day
following the date of this Agreement or at such time on such other
date, not later than ten (10) business days after the date of this
Agreement, as shall be agreed upon by the Company and the
Underwriter (such time and date of delivery and payment are called
the "Closing Date").
(c)
Payment shall be made to the Company by wire transfer of
immediately available funds or by certified or official bank check
or checks payable in New York Clearing House (same day) funds drawn
to the order of the Company, against delivery of certificates
representing the Shares and the Warrants to the
Underwriter.
(d)
Certificates evidencing the Shares and the Warrants shall be
registered in such names and shall be in such denominations as the
Underwriter shall request at least two full business days before
the Closing Date and shall be delivered by or on behalf of the
Company (i) in the case of the Shares, to the Underwriter through
the facilities of the Depository Trust Company ("DTC") for the
account of the Underwriter and (ii) in the case of the Warrants, by
physical delivery to be received or directed by the Underwriter no
later than one (1) business day following the Closing Date. The
Company will cause the certificates representing the Warrants to be
made available for checking and packaging, at such place as is
designated by the Underwriter, on the full business day before the
Closing Date.
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2. Representations and Warranties of the
Company. The Company represents and warrants to the
Underwriter as of the date hereof and as of the Closing Date, as
follows:
(a)
The Company meets the requirements for use of Form S-3 under the
Securities Act including the transaction requirements set forth in
General Instruction 1.B.6 of such form. The aggregate market value
of all securities sold by or on behalf of the Company pursuant to
Form S-3 during the period of 12 calendar months immediately prior
to, and including, the offering contemplated hereby is no more than
one-third of the aggregate market value of the voting and
non-voting common equity held by non-affiliates of the Company
(calculated as provided in General Instruction 1.B.6 of Form S-3).
The Company is not, and has not been for at least 12 calendar
months prior to the filing of the Registration Statement, a shell
company. The Company filed with the Commission the Registration
Statement on such Form, including a Base Prospectus, for
registration under the Securities Act of the offering and sale of
the Securities, and the Company has prepared and used a Preliminary
Prospectus in connection with the offer and sale of the Securities.
When the Registration Statement or any amendment thereof or
supplement thereto was or is declared effective and as of the date
of the most recent amendment to the Registration Statement it (i)
complied or will comply, in all material respects, with the
requirements of the Securities Act and the Rules and the Exchange
Act and the rules and regulations of the Commission thereunder and
(ii) did not or will not, 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. When any Preliminary Prospectus or Prospectus was first filed with
the Commission (whether filed as part of the Registration Statement
or any amendment thereto or pursuant to Rule 424 of the Rules) and
when any amendment thereof or supplement thereto was first filed
with the Commission, such Preliminary Prospectus or Prospectus as
amended or supplemented complied in all material respects with the
applicable provisions of the Securities Act and the Rules and did
not or will not, 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, in light of the
circumstances under which they were made, not misleading. If
applicable, each Preliminary Prospectus and the Prospectus
delivered to the Underwriter for use in connection with this
offering was identical to the electronically transmitted copies
thereof filed with the Commission pursuant to EDGAR, except to the
extent permitted by Regulation S-T. Notwithstanding the
foregoing, none of the representations and warranties in this
paragraph 2(a) shall apply to statements in, or omissions from, the
Registration Statement, any Preliminary Prospectus or the
Prospectus made in reliance upon, and in conformity with,
information herein or otherwise furnished in writing by the
Underwriter specifically for use in the Registration Statement, any
Preliminary Prospectus or the Prospectus. With respect to the
preceding sentence, the Company acknowledges that the only
information furnished in writing by the Underwriter for use in the
Registration Statement, any Preliminary Prospectus or the
Prospectus is the statements contained in the 4th and 10th paragraphs under
the caption "Underwriting" in the Prospectus (collectively, the
"Underwriter Information").
(b)
As of the Applicable Time (as hereinafter defined), neither (i) (a)
the Statutory Prospectus (as hereinafter defined), (b) the
information set forth on Schedule III hereto which will be provided
orally to investors, nor (c) the Additional Disclosure (as
hereinafter defined) which has been provided orally to investors,
all considered together (collectively, the “General
Disclosure Package”) nor (ii) any individual Issuer Free
Writing Prospectus when considered together with the General
Disclosure Package, included, includes or will include, nor will it
include any untrue statement of a material fact or omitted, omits
or will omit to state any material fact required to be stated
therein or necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not
misleading; provided, however, that this representation and
warranty shall not apply to statements in or omissions in the
General Disclosure Package made in reliance upon and in conformity
with the Underwriter Information. The Company further represents
and warrants that on or prior to the Applicable Time (as
hereinafter defined), it has provided to investors disclosure
regarding the Company’s current clinical hold substantially
similar to the disclosure in the draft of the Prospectus last
provided to the Underwriter prior to the execution and delivery of
this Agreement (the “Additional
Disclosure”).
Each
Issuer Free Writing Prospectus (as hereinafter defined), including
any electronic road show (including without limitation any
“bona fide electronic road show” as defined in Rule
433(h)(5) under the Securities Act) (each, a “Road
Show”) (i) is identified in Schedule IV hereto and (iii)
complied when issued, and complies, in all material respects with
the requirements of the Securities Act and the Rules and the
Exchange Act and the rules and regulations of the Commission
thereunder.
As used
in this Section and elsewhere in this Agreement:
“Applicable
Time” means 8:00 am (Eastern time) on the date of this
Underwriting Agreement.
“Statutory
Prospectus” as of any time means the Preliminary Prospectus
relating to the Securities that is included in the Registration
Statement immediately prior to the Applicable Time, including any
document incorporated by reference therein and any prospectus
supplement deemed to be a part thereof.
“Issuer Free
Writing Prospectus” means each “free writing
prospectus” (as defined in Rule 405 of the Rules) prepared by
or on behalf of the Company or used or referred to by the Company
in connection with the offering of the Securities, including ,
without limitation, each Road Show.
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(c)
The Registration Statement is
effective under the Securities Act and no stop order preventing or
suspending the effectiveness of the Registration Statement or
suspending or preventing the use of any Preliminary Prospectus, the
Prospectus or any “free writing prospectus,” as defined
in Rule 405 under the Rules, has been issued by the Commission and
no proceedings for that purpose have been instituted or are
threatened under the Securities Act. Any required filing of any
Preliminary Prospectus and/or the Prospectus and any supplement
thereto pursuant to Rule 424(b) of the Rules has been or will be
made in the manner and within the time period required by such Rule
424(b). Any material required to be filed by the Company pursuant
to Rule 443(d) or Rule 163(b)(2) of the Rules has been or will be
made in the manner and within the time period required by such
Rules.
(d)
The documents incorporated by
reference in the Registration Statement, any Preliminary Prospectus
and the Prospectus, at the time they became effective or were filed
with the Commission, as the case may be, complied in all material
respects with the requirements of the Securities Act or the
Exchange Act, as applicable, 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, and any further documents so
filed and incorporated by reference in the Registration Statement,
any Preliminary Prospectus and the Prospectus, when such documents
become effective or are filed with the Commission, as the case may
be, will conform in all material respects to the requirements of
the Securities Act or the Exchange Act, as applicable, and the
rules and regulations of the Commission thereunder and will not
contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances under which
they are made, not misleading.
(e)
Each Issuer Free Writing Prospectus, as of its issue date and at
all subsequent times through the completion of the public offer and
sale of the Securities or until any earlier date that the Company
notified or notifies the Underwriter as described in the next
sentence, did not, does not and will not include any information
that conflicted, conflicts or will conflict with the
information
contained in the
Registration Statement, the Statutory Prospectus or the
Prospectus.
If at
any time following issuance of an Issuer Free Writing Prospectus
there occurred or occurs an event or development as a result of
which such Issuer Free Writing Prospectus conflicted or would
conflict with the information contained in the Registration
Statement, the Statutory Prospectus or the Prospectus or included
or would include an untrue statement of a material fact or omitted
or would omit 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 prevailing at the subsequent time,
not misleading, the Company has promptly notified or will promptly
notify the Underwriter and has promptly amended or will promptly
amend or supplement, at its own expense, such Issuer Free Writing
Prospectus to eliminate or correct such conflict, untrue statement
or omission.
(f)
The financial statements of the
Company (including all notes and schedules thereto) included or
incorporated by reference in the Registration Statement, the
Statutory Prospectus and Prospectus present fairly 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, and the
unaudited financial information filed with the Commission as part
of the Registration Statement, have been prepared in conformity
with generally accepted accounting principles, consistently applied
throughout the periods involved. The summary and selected financial
data, if any, included or incorporated by reference in the
Statutory Prospectus and Prospectus 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
Prospectus and other financial information.
(g)
OUM & Co. LLP (the
“Auditor”) whose reports are filed with the Commission
as a part of the Registration Statement, are and, during the
periods covered by their reports, were independent public
accountants as required by the Securities Act and the
Rules.
(h)
The Company and each of its subsidiaries, including each entity
(corporation, partnership, joint venture, association or other
business organization) controlled directly or indirectly by the
Company (each, a “subsidiary”), is duly organized,
validly existing and in good standing under the laws of their
respective jurisdictions of incorporation or organization and each
such entity has all requisite power and authority to carry on its
business as is currently being conducted as described in the
Statutory Prospectus and the Prospectus, and to own, lease and
operate its properties. All of the issued shares of capital stock
of, or other ownership interests in, each subsidiary have been duly
and validly authorized and issued and are fully paid and
non-assessable and are owned, directly or indirectly, by the
Company, free and clear of any lien, charge, mortgage, pledge,
security interest, claim, limitation on voting rights, equity,
trust or other encumbrance, preferential arrangement, defect or
restriction of any kind whatsoever. 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 have 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. The Company does not own, lease or license any asset
or property or conduct any business outside the United States of
America.
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(i)
The Registration Statement initially became effective within three
years of the date hereof. If, immediately prior to the third
anniversary of the initial effective date of the Registration
Statement, any of the Shares and the Warrants remain unsold by the
Underwriter, the Company will, prior to that third anniversary
file, if it has not already done so, a new shelf registration
statement relating to the Shares and the Warrants, in a form
satisfactory to the Underwriter, will use its best efforts to cause
such registration statement to be declared effective within
180 days after that third anniversary, and will take all other
action necessary or appropriate to permit the public offering and
sale of the Shares and the Warrants to continue as contemplated in
the expired Registration Statement. References herein to the
registration statement relating to the Securities shall include
such new shelf registration statement.
(j)
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 have a Material Adverse Effect. The
Company and each of its subsidiaries has fulfilled and performed in
all material respects all of its 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.
(k) (i)
At the earliest time after the filing of the Registration Statement
that the Company or another offering participant made a
bona fide offer (within the
meaning of Rule 164(h)(2) of the Rules) of the Securities and
(ii) at the date hereof, the Company was
not and is not an “ineligible issuer,” as defined in
Rule 405 of the Rules, including (but not limited to) the
Company or any other subsidiary in the preceding three years not
having been convicted of a felony or misdemeanor or having been
made the subject of a judicial or administrative decree or order as
described in Rule 405 of the Rules.
(l)
The Company and each of its
subsidiaries owns or possesses legally enforceable rights to use
all patents, patent rights, inventions, trademarks, trademark
applications, trade names, service marks, copyrights, copyright
applications, licenses, know-how and other similar rights and
proprietary knowledge (collectively, "Intangibles") necessary for
the conduct of its business. Neither the Company nor any of its
subsidiaries has received any notice of, or is not aware of, any
infringement of or conflict with asserted rights of others with
respect to any Intangibles.
(m)
The Company and each of its subsidiaries has good and marketable
title in fee simple to all real property, and good and marketable
title to all other property owned by it, in each case free and
clear of all liens, encumbrances, claims, security interests and
defects, except such as do not materially affect the value of such
property and do not materially interfere with the use made or
proposed to be made of such property by the Company and its
subsidiaries. All property held under lease by the Company and its
subsidiaries is held by them under valid, existing and enforceable
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.
(n)
Subsequent to the respective dates as
of which information is given in the Registration Statement, the
Statutory Prospectus and the Prospectus, (i) there has not been any
event which could have a Material Adverse Effect; (ii) 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 would have a Material Adverse Effect; and
(iii) since the date of the latest balance sheet included in the
Registration Statement and the Prospectus, neither the Company nor
its subsidiaries has (A) except for the issuance of 250,000 shares
of the Company’s unregistered Common Stock (the “Cato
Shares”) having a cash equivalent value of not less than
$1.75 per share issued to Cato Research Ltd., a North Carolina
corporation, for services rendered, issued any securities or
incurred any liability or obligation, direct or contingent, for
borrowed money, except such liabilities or obligations incurred in
the ordinary course of business, (B) entered into any transaction
not in the ordinary course of business or (C) except for regular
dividends on the Common Stock in amounts per share that are
consistent with past practice, 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.
-5-
(o)
There
is no document, contract or other agreement required to be
described in the Registration Statement, the Statutory Prospectus
or the Prospectus or to be filed as an exhibit to the Registration
Statement which is not described or filed as required by the
Securities Act or Rules. Each description of a contract, document
or other agreement in the Registration Statement, the Statutory
Prospectus or the Prospectus accurately reflects in all respects
the terms of the underlying contract, document or other agreement.
Each contract, document or other agreement described in the
Registration Statement, the Statutory Prospectus or the Prospectus
or listed in the Exhibits to the Registration Statement or
incorporated by reference is in full force and effect and is valid
and enforceable by and against the Company or its subsidiary, 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 such agreement, 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 have 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 subsidiary, 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 may be bound
or affected which default or event, individually or in the
aggregate, would have a Material Adverse Effect.
(p)
The statistical and market related
data included or incorporated by reference in the Registration
Statement, the Statutory Prospectus or the Prospectus are based on
or derived from sources that the Company believes to be reliable
and accurate.
(q)
Neither the Company nor any subsidiary (i) is in violation of its
certificate or articles of incorporation, by-laws, certificate of
formation, limited liability company agreement, partnership
agreement or other organizational documents, (ii) is in default
under, and no event has occurred which, with notice or lapse of
time, or both, would constitute a default under, or result in the
creation or imposition of any lien, charge, mortgage, pledge,
security interest, claim, limitation on voting rights, equity,
trust or other encumbrance, preferential arrangement, defect or
restriction of any kind whatsoever, upon, any property or assets of
the Company or any subsidiary pursuant to, any bond, debenture,
note, indenture, mortgage, deed of trust, loan agreement or other
agreement or instrument to which it is a party or by which it is
bound or to which any of its properties or assets is subject or
(iii) is in violation of any statute, law, rule, regulation,
ordinance, directive, judgment, decree or order of any judicial,
regulatory or other legal or governmental agency or body, foreign
or domestic, except (in the case of clauses (ii) and (iii) above)
for violations or defaults that could not (individually or in the
aggregate) reasonably be expected to have a Material Adverse
Effect.
(r)
This Agreement has been duly authorized, executed and delivered by
the Company.
(s)
Neither the execution, delivery and performance of this Agreement
and the Warrants 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 Shares and the
Warrants) 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,
except for such consents or waivers which have already been
obtained and are in full force and effect.
(t)
The Company has authorized and outstanding capital stock as set
forth under the caption "Description of Securities We Are Offering"
and “Description of Our Capital Stock” in the Statutory
Prospectus and the Prospectus. The certificates evidencing the
Shares and the Warrants are in due and proper legal form and have
been duly authorized for issuance by the Company. 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 Company has reserved and kept available for the exercise of the
Warrants such number of authorized but unissued shares as are
sufficient to permit the exercise in full of the Warrants. The
Shares, when issued and sold pursuant to this Agreement, and the
Warrant Shares, when issued and sold pursuant to 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 Registration Statement,
the Statutory Prospectus and the Prospectus, 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 exercise price of each option to acquire Common Stock
(each, a “Company Stock Option”) is no less than the
fair market value of a share of Common Stock as determined on the
date of grant of such Company Stock Option. All grants of Company
Stock Options were validly issued and properly approved by the
Board of Directors of the Company or the Compensation Committee
thereof in material compliance with all applicable laws and the
terms of the plans under which such Company Stock Options were
issued and were recorded on the Company financial statements,
including the documents incorporated by reference in the
Registration Statement, the Statutory Prospectus and the
Prospectus, in accordance with GAAP, and no such grants involved
any “back dating”, “forward dating,”
“spring loading” or similar practices with respect to
the effective date of grant. The Common Stock, the Shares and the
Warrants conform in all material respects to all statements in
relation thereto contained in the Registration Statement, the
Statutory Prospectus and the Prospectus. All outstanding shares of
capital stock of each of the Company's subsidiaries have been duly
authorized and 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 Statutory Prospectus and the Prospectus.
-6-
(u)
No holder of any security of the
Company has any right, which has not been waived, to have any
security owned by such holder included in the Registration
Statement or to demand registration of any security owned by such
holder for a period of 180 days after the date of this Agreement.
Each director and executive officer of the Company and each
stockholder of the Company listed on Schedule II hereto has
delivered to the Underwriter his enforceable written lock-up
agreement in the form attached to this Agreement as Exhibit A
hereto ("Lock-Up Agreement").
(v)
There are no legal or governmental
proceedings pending to which the Company or any of its subsidiaries
is a party or of which any property of the Company or any of its
subsidiaries is the subject which, if determined adversely to the
Company or any of its subsidiaries could individually or in the
aggregate have a Material Adverse Effect; and, to the knowledge of
the Company, no such proceedings are threatened or contemplated by
governmental authorities or threatened by
others.
(w)
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
have 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 have a Material
Adverse Effect. The Company is not aware of any threatened or
pending litigation between the Company or its subsidiaries and any
of its executive officers which, if adversely determined, could
have a Material Adverse Effect and has no reason to believe that
such officers will not remain in the employment of the
Company.
(x)
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 required to be described in and is
not described in the Registration Statement, the Statutory
Prospectus and the Prospectus.
(y)
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 Stock
or any security of the Company to facilitate the sale or resale of
any of the Securities.
(z)
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, which if adversely determined would have
a Material Adverse Effect; nor are there any material proposed
additional tax assessments against the Company or any of its
subsidiaries.
(aa)
The Common Stock is registered
pursuant to Section 12(b) of the Exchange Act and is listed on the
Nasdaq Capital Market. The Company has taken no action designed to,
or likely to have the effect of, terminating the registration of
the Common Stock under the Exchange Act or listing of the Common
Stock on the Nasdaq Capital Market. There is no action pending by
the Company or, to the Company’s knowledge, by the Nasdaq
Capital Market to delist the Common Stock from the Nasdaq Capital
Market, nor has the Company received any notification that the
Nasdaq Capital Market is contemplating terminating such listing.
The Company has submitted a Notification Form: Listing of
Additional Shares with the Nasdaq Capital Market with respect to
the Shares and the Warrant Shares and Nasdaq has raised no
objection with respect to the listing of the Shares and the Warrant
Shares which has not been resolved.
-7-
(bb)
The books, records and accounts of the
Company and its subsidiaries accurately and fairly reflect, 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.
(cc)
The Company has established and
maintains disclosure controls and procedures (as such term is
defined in Rule 13a-15 under the Exchange Act), which: (i) are
designed to ensure that material information relating to the
Company is made known to the Company’s principal executive
officer and its principal financial officer by others within the
Company, particularly during the periods in which the periodic
reports required under the Exchange Act are required to be
prepared; (ii) provide for the periodic evaluation of the
effectiveness of such disclosure controls and procedures at the end
of the periods in which the periodic reports are required to be
prepared; and (iii) are effective in all material respects to
perform the functions for which they were
established.
(dd)
Based on the evaluation of its
disclosure controls and procedures, except as disclosed in the
Statutory Prospectus and the Prospectus, the Company is not aware
of (i) any material weakness or significant deficiency in the
design or operation of internal controls which could adversely
affect the Company’s ability to record, process, summarize
and report financial data or any material weaknesses in internal
controls; or (ii) any fraud, whether or not material, that involves
management or other employees who have a role in the
Company’s internal controls.
(ee)
Except as described in the Statutory
Prospectus and the Prospectus and as preapproved in accordance with
the requirements set forth in Section 10A of the Exchange Act, the
Auditor has not been engaged by the Company to perform any
“prohibited activities” (as defined in Section 10A of
the Exchange Act).
(ff)
Except as described in the Statutory
Prospectus and the Prospectus, there are no material off-balance
sheet arrangements (as defined in Item 303 of Regulation S-K) that
have or are reasonably likely to have a material current or future
effect on the Company’s financial condition, revenues or
expenses, changes in financial condition, results of operations,
liquidity, capital expenditures or capital
resources.
(gg)
The Company’s Board of Directors
has validly appointed an audit committee whose composition
satisfies the requirements of Rule 5605 of the NASDAQ Stock Market
and the Board of Directors and/or the audit committee has adopted a
charter that satisfies the requirements of Rule 5605 of the NASDAQ
Stock Market. The audit committee has reviewed the adequacy of its
charter within the past twelve months.
(hh)
There is and has been no failure on
the part of the Company or any of its directors or officers, in
their capacities as such, to comply with any provision of the
Sarbanes-Oxley Act, including, without limitation, Section 402
related to loans and Sections 302 and 906 related to
certifications.
(ii)
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 in the
businesses in which they are engaged or propose to engage after
giving effect to the transactions described in the Statutory
Prospectus and the Prospectus; 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. Neither the Company nor
any of its subsidiaries has been denied any insurance coverage
which it has sought or for which it has
applied.
(jj)
Each approval, consent, order,
authorization, designation, declaration or filing of, by or with
any regulatory, administrative or other governmental body necessary
in connection with the execution and delivery by the Company of
this Agreement and the consummation of the transactions herein
contemplated required to be obtained or performed by the Company
(except such additional steps as may be required by the Financial
Industry Regulatory Authority ("FINRA") or may be necessary to
qualify the Securities for public offering by the Underwriter under
the state securities or Blue Sky laws) has been obtained or made
and is in full force and effect.
-8-
(kk)
There are no affiliations with FINRA
among the Company's officers, directors or, to the best of the
knowledge of the Company, any five percent or greater stockholder
of the Company, except as set forth in the Registration Statement,
the Statutory Prospectus and the Prospectus or otherwise disclosed
in writing to the Underwriter.
(ll)
(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; (iv) to the Company's knowledge,
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 CERCLA
1980.
(mm)
In the ordinary course of its
business, the Company periodically reviews the effect of
Environmental Laws on the business, operations and properties of
the Company and its subsidiaries, in the course of which the
Company identifies and evaluates associated costs and liabilities
(including, without limitation, any capital or operating
expenditures required for clean-up, closure of properties or
compliance with Environmental Laws, or any permit, license or
approval, any related constraints on operating activities and any
potential liabilities to third parties). On the basis of such
review, the Company has reasonably concluded that such associated
costs and liabilities would not, singly or in the aggregate, have a
Material Adverse Effect.
(nn)
The Company is not and, after giving
effect to the offering and sale of the Shares and the Warrants and
the application of proceeds thereof (including any cash exercise of
the Warrants) as described in the Statutory Prospectus and the
Prospectus, will not be an "investment company" within the meaning
of the Investment Company Act of 1940, as amended (the "Investment
Company Act").
(oo)
The Company or 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.
(pp)
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 its subsidiaries with respect to
the Money Laundering Laws is pending, or to the best knowledge of
the Company, threatened.
(qq)
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.
-9-
(rr)
Except as described in the Statutory Prospectus and the Prospectus,
and except for the issuance of the Cato Shares, the Company has not
sold or issued any shares of Common Stock during the six-month
period preceding the date of the Prospectus, including any sales
pursuant to Rule 144A under, or Regulations D or S of, the
Securities Act, other than shares issued pursuant to employee
benefit plans, qualified stock options plans or other employee
compensation plans or pursuant to outstanding options, rights or
warrants.
(ss)
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 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.
(tt)
(uu))
Except as described in the Registration Statement, the General
Disclosure Package and the Prospectus, the Company and each of its
subsidiaries: (A) are and at all times have been, in material
compliance with all statutes, rules and regulations applicable to
the ownership, testing, development, manufacture, packaging,
processing, use, distribution, marketing, labeling, promotion,
sale, offer for sale, storage, import, export or disposal of any
product sold, under development, manufactured or distributed by the
Company or any subsidiary (“Applicable Regulatory
Laws”); (B) have not received any Form 483 from the United
States Food and Drug Administration (“FDA”), notice of
adverse finding, warning letter, or other correspondence or written
notice from the FDA, the Drug Enforcement Administration
(“DEA”) or any other federal, state, local, national or
foreign governmental or regulatory authority alleging or asserting
noncompliance with any Applicable Regulatory Laws or any licenses,
certificates, approvals, clearances, authorizations, permits and
supplements or amendments thereto required by any such Applicable
Regulatory Laws (“Authorizations”); (C) possess all
Authorizations, if any, and such Authorizations are valid and in
full force and effect and neither the Company nor any subsidiary is
in material violation of any term of any such Authorizations; (D)
have not received written notice of any proceeding, hearing,
enforcement, investigation, arbitration or other action from the
FDA, the DEA, or any other federal, state, local, national or
foreign governmental or regulatory authority or third party
alleging that any product, operation or activity is in violation of
any Applicable Regulatory Laws or Authorizations and has no
knowledge that the FDA, the DEA or any other federal, state, local,
national or foreign governmental or regulatory authority or third
party is considering any such proceeding; (E) have not received
written notice that the FDA, DEA or any other federal, state,
local, national or foreign governmental or regulatory authority has
taken, is taking or intends to take action to limit, suspend,
modify or revoke any Authorizations and has no knowledge that the
FDA, DEA or any other federal, state, local, national or foreign
governmental or regulatory authority is considering such action;
(F) have filed, obtained, maintained or submitted all reports,
documents, forms, notices, applications, records, claims,
submissions and supplements or amendments as required by any
Applicable Regulatory Laws or Authorizations except where the
failure to file such reports, documents, forms, notices,
applications, records, claims, submissions and supplements or
amendments would not result in a Material Adverse Effect on the
Company and its subsidiaries, taken as a whole, and that all such
reports, documents, forms, notices, applications, records, claims,
submissions and supplements or amendments were complete and correct
on the date filed (or were corrected or supplemented by a
subsequent submission); and (G) has, and, if still pending, is, to
the Company’s knowledge, conducting all clinical and
preclinical studies in all material respects in accordance with
experimental protocols, procedures and controls generally used by
qualified experts in the clinical or preclinical study of new drugs
or diagnostics as applied to comparable products to those being
developed by the Company. The descriptions of the results of such
studies, trials and tests contained in the Registration Statement,
the Statutory Prospectus and the Prospectus are accurate and
complete in all material respects, and except as set forth in the
Registration Statement, the Statutory Prospectus and the
Prospectus, the Company has no knowledge of any other trials,
studies or tests, the results of which the Company believes
reasonably calls into question the clinical trials, results
described or referred to in the Registration Statement and the
Prospectus when viewed in the context in which such results are
described and the clinical state of development.
-10-
3. Conditions
of the Underwriter’s Obligations. The obligation of
the Underwriter to purchase the Shares and the Warrants is subject
to each of the following terms and conditions:
(a)
The Prospectus shall have been timely
filed with the Commission in accordance with Section 4(a) of this
Agreement and any material required to be filed by the Company
pursuant to Rule 433(d) of the Rules shall have been timely filed
with the Commission in accordance with such
rule.
(b)
No order preventing or suspending the
use of any Preliminary Prospectus, the Prospectus or any
“free writing prospectus” (as defined in Rule 405 of
the Rules) shall have been or shall be in effect and no order
suspending the effectiveness of the Registration Statement shall be
in effect and no proceedings for such purpose shall be pending
before or threatened by the Commission, and any requests for
additional information on the part of the Commission (to be
included in the Registration Statement or the Prospectus or
otherwise) shall have been complied with to the satisfaction of the
Commission and the Underwriter. If the Company has elected to rely
upon Rule 430B, Rule 430B information previously omitted from the
effective Registration Statement pursuant to Rule 430B shall have
been transmitted to the Commission for filing pursuant to Rule
424(b) within the prescribed time period and the Company shall have
provided evidence satisfactory to the Underwriter of such timely
filing, or a post-effective amendment providing such information
shall have been promptly filed and declared effective in accordance
with the requirements of Rule 430B.
(c)
The representations and warranties of
the Company contained in this Agreement and in the certificate
delivered pursuant to Section 3(d) shall be true and correct when
made and on and as of the Closing Date as if made on such date. The
Company shall have performed all covenants and agreements and
satisfied all the conditions contained in this Agreement required
to be performed or satisfied by them at or before the Closing
Date.
(d)
The Underwriter shall have received on
the Closing Date a certificate, addressed to the Underwriter and
dated the Closing Date, of the chief executive or chief operating
officer and the chief financial officer or chief accounting officer
of the Company to the effect that: (i) the representations,
warranties and agreements of the Company in this Agreement were
true and correct when made and are true and correct as of the
Closing Date; (ii) the Company has performed all covenants and
agreements and satisfied all conditions contained herein; (iii)
they have carefully examined the Registration Statement, the
Prospectus, the General Disclosure Package and any Issuer Free
Writing Prospectus, and in their opinion (A) as of the Effective
Date the Registration Statement and Prospectus did not include, and
as of the Applicable Time, neither (i) the General Disclosure
Package, nor (ii) any individual Issuer Free Writing Prospectus,
when considered together with the General Disclosure Package,
included any untrue statement of a material fact and did not omit
to state a material fact required to be stated therein or necessary
to make the statements therein, in light of the circumstances under
which they were made, not misleading, and (B) since the Effective
Date no event has occurred which should have been set forth in a
supplement or otherwise required an amendment to the Registration
Statement, the Statutory Prospectus or the Prospectus; (iv) no stop
order suspending the effectiveness of the Registration Statement
has been issued and, to their knowledge, no proceedings for that
purpose have been instituted or are pending under the Securities
Act and (v) there has not occurred any material adverse change in
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.
(e)
The Underwriter shall have received:
(i) simultaneously with the execution of this Agreement a signed
letter from the Auditor addressed to the Underwriter and dated the
date of this Agreement, in form and substance reasonably
satisfactory to the Underwriter, containing statements and
information of the type ordinarily included in accountants’
“comfort letters” to underwriters with respect to the
financial statements and certain financial information contained in
the Registration Statement and the Disclosure Package, and (ii) on
the Closing Date, a signed letter from the Auditor addressed to the
Underwriter and dated the date of the Closing Date, in form and
substance reasonably satisfactory to the Underwriter containing
statements and information of the type ordinarily included in
accountants' "comfort letters" to underwriters with respect to the
financial statements and certain financial information contained in
the Registration Statement and the Prospectus.
-11-
(f)
The Underwriter shall have received on
the Closing Date from Disclosure Law Group LLP, counsel for the
Company, an opinion and negative assurance statement, addressed to
the Underwriter and dated the Closing Date, in form and substance
reasonably satisfactory to the Underwriter.
(g)
The Underwriter shall have received on
the Closing Date from Reid Adler, Esq., intellectual property
counsel for the Company, an opinion and negative assurance
statement, addressed to the Underwriter and dated the Closing Date,
in form and substance reasonably satisfactory to the
Underwriter.
(h)
The
Underwriter shall have received on the Closing Date from Lowenstein
Sandler LLP, counsel for the Underwriter, an opinion and negative
assurance statement, addressed to the Underwriter and dated the
Closing Date, in form and substance reasonably satisfactory to the
Underwriter.
(i)
All proceedings taken in connection with the sale of the Shares and
the Warrants as herein contemplated shall be reasonably
satisfactory in form and substance to the Underwriter and its
counsel.
(j)
On or prior to the execution and delivery of this Agreement, the
Underwriter shall have received copies of the Lock-up Agreements
executed by each entity or person listed on Schedule II
hereto.
(k)
The Company shall have submitted a Notification Form: Listing of
Additional Shares Application with the Nasdaq Capital Market with
respect to the Shares and Warrant Shares and the Nasdaq Capital
Market shall have raised no objection with respect to the listing
of the Shares and the Warrant Shares which has not been resolved to
the reasonable satisfaction of the Underwriter on or before the
Closing Date.
(l)
The Underwriter shall be reasonably satisfied that since the
respective dates as of which information is given in the
Registration Statement, the Statutory Prospectus, the General
Disclosure Package and the Prospectus, (i) there shall not have
been any material change in the capital stock of the Company or any
material change in the indebtedness (other than in the ordinary
course of business) of the Company, (ii) except as set forth or
contemplated by the Registration Statement, the Statutory
Prospectus, the General Disclosure Package or the Prospectus, no
material oral or written agreement or other transaction shall have
been entered into by the Company that is not in the ordinary course
of business or that could reasonably be expected to result in a
material reduction in the future earnings of the Company, (iii) no
loss or damage (whether or not insured) to the property of the
Company shall have been sustained that had or could reasonably be
expected to have a Material Adverse Effect, (iv) no legal or
governmental action, suit or proceeding affecting the Company or
any of its properties that is material to the Company or that
affects or could reasonably be expected to affect the transactions
contemplated by this Agreement shall have been instituted or
threatened and (v) there shall not have been any material change in
the assets, properties, condition (financial or otherwise), or in
the results of operations, business affairs or business prospects
of the Company or its subsidiaries considered as a whole that makes
it impractical or inadvisable in the Underwriter’s judgment
to proceed with the purchase or offering of the Shares and the
Warrants as contemplated hereby.
(m)
On or before the Closing Date, FINRA shall have confirmed that it
has not raised any objection with respect to the fairness and
reasonableness of the underwriting terms and agreements in
connection with the offering of the Shares and the
Warrants.
(n)
The Company shall have furnished or caused to be furnished to the
Underwriter such further certificates or documents as the
Underwriter shall have reasonably requested.
-12-
4.
Covenants and other
Agreements of the Company and the Underwriter.
(a)
The Company covenants and agrees as follows:
(i)
The Company shall prepare the
Prospectus in a form approved by the Underwriter and file such
Prospectus pursuant to Rule 424(b) under the Securities Act not
later than the Commission's close of business on the second
business day following the execution and delivery of this
Agreement, or, if applicable, such earlier time as may be required
by the Rules. The Company will file with the Commission all Issuer
Free Writing Prospectuses in the time and manner required under
Rules 433(d) or 163(b)(2) as the case may be.
(ii)
The
Company shall promptly advise the Underwriter in writing (A) when
any post-effective amendment to the Registration Statement shall
have become effective or any supplement to the Prospectus shall
have been filed, (B) of any request by the Commission for any
amendment of the Registration Statement or the Prospectus or for
any additional information, (C) of the issuance by the Commission
of any stop order suspending the effectiveness of the Registration
Statement or of any order preventing or suspending the use of any
preliminary prospectus or any “free writing
prospectus,” as defined in Rule 405 of the Rules, or the
institution or threatening of any proceeding for that purpose and
(D) of the receipt by the Company of any notification with respect
to the suspension of the qualification of the Securities for sale
in any jurisdiction or the initiation or threatening of any
proceeding for such purpose. The Company shall not file any
amendment of the Registration Statement or supplement to the
Prospectus or any document incorporated by reference in the
Registration Statement, or any Issuer Free Writing Prospectus
unless the Company has furnished the Underwriter a copy for its
review prior to filing and shall not file any such proposed
amendment or supplement to which the Underwriter reasonably
objects. The Company shall use its best efforts to prevent the
issuance of any such stop order and, if issued, to obtain as soon
as possible the withdrawal thereof.
(iii)
If,
at any time when a prospectus relating to the Securities (or, in
lieu thereof, the notice referred to in Rule 173(a) of the Rules)
is required to be delivered under the Securities Act and any event
occurs as a result of which the Prospectus as then amended or
supplemented would include any untrue statement of a material fact
or omit to state any material fact necessary to make the statements
therein in the light of the circumstances under which they were
made not misleading, or if it shall be necessary to amend or
supplement the Prospectus to comply with the Securities Act or the
Rules, the Company promptly shall prepare and file with the
Commission, subject to the second sentence of paragraph (ii) of
this Section 4(a), an amendment or supplement which shall correct
such statement or omission or an amendment which shall effect such
compliance.
(iv)
If
at any time following issuance of an Issuer Free Writing Prospectus
there occurs an event or development as a result of which such
Issuer Free Writing Prospectus would conflict with the information
contained in the Registration Statement or would include an untrue
statement of a material fact or would omit 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 prevailing at
the subsequent time, not misleading, the Company will promptly
notify the Underwriter and will promptly amend or supplement, at
its own expense, such Issuer Free Writing Prospectus to eliminate
or correct such conflict, untrue statement or
omission.
(v)
The
Company shall make generally available to its security holders and
to the Underwriter as soon as practicable, but not later than 45
days after the end of the 12-month period beginning at the end of
the fiscal quarter of the Company during which the Effective Date
occurs (or 90 days if such 12-month period coincides with the
Company's fiscal year), an earning statement (which need not be
audited) of the Company, covering such 12-month period, which shall
satisfy the provisions of Section 11(a) of the Securities Act or
Rule 158 of the Rules.
(vi)
The
Company shall furnish to the Underwriter and its counsel, without
charge, signed copies of the Registration Statement (including all
exhibits thereto and amendments thereof) and all amendments thereof
and, so long as delivery of a prospectus by the Underwriter or
dealer may be required by the Securities Act or the Rules, as many
copies of any Preliminary Prospectus, any Issuer Free Writing
Prospectus and the Prospectus and any amendments thereof and
supplements thereto as the Underwriter may reasonably request. If
applicable, the copies of the Registration Statement, preliminary
prospectus, any Issuer Free Writing Prospectus and Prospectus and
each amendment and supplement thereto furnished to the Underwriter
will be identical to the electronically transmitted copies thereof
filed with the Commission pursuant to EDGAR, except to the extent
permitted by Regulation S-T.
-13-
(vii)
The
Company shall cooperate with the Underwriter and its counsel in
endeavoring to qualify the Securities for offer and sale in
connection with the offering under the laws of such jurisdictions
as the Underwriter may designate and shall maintain such
qualifications in effect so long as required for the distribution
of the Shares and the Warrants; provided, however, that the Company
shall not be required in connection therewith, as a condition
thereof, to qualify as a foreign corporation or to execute a
general consent to service of process in any jurisdiction or
subject itself to taxation as doing business in any
jurisdiction.
(viii)
The
Company, during the period when the Prospectus (or in lieu thereof,
the notice referred to in Rule 173(a) of the Rules) is required to
be delivered under the Securities Act and the Rules or the Exchange
Act, will file all reports and other documents required to be filed
with the Commission pursuant to Section 13, 14 or 15 of the
Exchange Act within the time periods required by the Exchange Act
and the regulations promulgated thereunder.
(ix)
Without
the prior written consent of the Underwriter, for a period of 75
days after the date of this Agreement, the Company shall not issue,
sell or register with the Commission (other than on Form S-8 or on
any successor form), or otherwise dispose of, directly or
indirectly, any equity securities of the Company (or any securities
convertible into, exercisable for or exchangeable for equity
securities of the Company), except for (i) the issuance of the
Securities pursuant to the Registration Statement; (ii) the
issuance of shares pursuant to the Company's existing stock option
plan or bonus plan as described in the Registration Statement and
the Prospectus and (iii) the issuance of the Cato Shares. In the
event that during this period, (A) any shares are issued pursuant
to the Company's existing stock option plan or bonus plan that are
exercisable during such 75 day period or (B) any registration is
effected on Form S-8 or on any successor form relating to shares
that are exercisable during such 75 day period, the Company shall
obtain the written agreement of such grantee or purchaser or holder
of such registered securities that, for a period of 75 days after
the date of this Agreement, such person will not, without the prior
written consent of the Underwriter, offer for sale, sell,
distribute, grant any option for the sale of, or otherwise dispose
of, directly or indirectly, or exercise any registration rights
with respect to, any shares of Common Stock (or any securities
convertible into, exercisable for, or exchangeable for any shares
of Common Stock) owned by such person. Notwithstanding the
foregoing, the Company represents and warrants that each such
grantee or purchaser or holder of such registered securities shall
be subject to similar lockup restrictions as set forth on Exhibit A
attached hereto and the Company shall enforce such rights and
impose stop-transfer restrictions on any such sale or other
transfer or disposition of such shares until the end of the
applicable period.
(x)
On
or before completion of this offering, the Company shall make all
filings required under applicable securities laws and by the Nasdaq
Capital Market.
(xi)
Prior
to the Closing Date, the Company will issue no press release or
other communications directly or indirectly and hold no press
conference with respect to the Company, the condition, financial or
otherwise, or the earnings, business affairs or business prospects
of any of them, or the offering of the Securities without the prior
written consent of the Underwriter unless in the judgment of the
Company and its counsel, and after notification to the Underwriter,
such press release or communication is required by
law.
(xii)
The
Company will apply the net proceeds from the offering of the Shares
and the Warrants in the manner set forth under "Use of Proceeds" in
the Prospectus.
(b)
The Company agrees to pay, or
reimburse if paid by the Underwriter, whether or not the
transactions contemplated hereby are consummated or this Agreement
is terminated, all costs and expenses incident to the public
offering of the Securities and the performance of the obligations
of the Company under this Agreement including those relating to:
(i) the preparation, printing, reproduction filing and distribution
of the Registration Statement including all exhibits thereto, each
Preliminary Prospectus, the Prospectus, any Issuer Free Writing
Prospectus, all amendments and supplements thereto and any document
incorporated by reference therein, and the printing, filing and
distribution of this Agreement; (ii) the preparation and delivery
of certificates for the Warrants to or as directed by the
Underwriter (iii) the registration or qualification of the
Securities for offer and sale under the securities or Blue Sky laws
of the various jurisdictions referred to in Section 4(a)(vii) of
this Agreement, including the reasonable fees and disbursements of
counsel for the Underwriter in connection with such registration
and qualification and the preparation, printing, distribution and
shipment of preliminary and supplementary Blue Sky memoranda; (iv)
the furnishing (including costs of shipping and mailing) to the
Underwriter of copies of each Preliminary Prospectus, the
Prospectus and all amendments or supplements to the Prospectus, any
Issuer Free Writing Prospectus and of the several documents
required by this Section to be so furnished, as may be reasonably
requested for use in connection with the offering and sale of the
Shares and the Warrants by the Underwriter or by dealers to whom
Shares and Warrants may be sold; (v) the filing fees of FINRA in
connection with its review of the terms of the public offering and
reasonable fees and disbursements of counsel for the Underwriter in
connection with such review; (vi) listing of the Shares and the
Warrant Shares on the Nasdaq Capital Market; and (vii) all transfer
taxes, if any, with respect to the sale and delivery of the Shares
and the Warrants by the Company to the Underwriter. The Company
will reimburse the Underwriter for its reasonable expenses, in an
amount not to exceed $20,000 without prior written approval by the
Company, and will reimburse the Underwriter for legal fees and
disbursements, in connection with the purchase and sale of the
Shares and the Warrants contemplated hereby in an amount not to
exceed $85,000 (including amounts payable pursuant to clauses (iii)
and (v) above). Subject to the provisions of Section 7, the
Underwriter agrees to pay, whether or not the transactions
contemplated hereby are consummated or this Agreement is
terminated, all costs and expenses incident to the performance of
the obligations of the Underwriter under this Agreement not payable
by the Company pursuant to this paragraph, including, without
limitation, the fees and disbursements of counsel for the
Underwriter in excess of the Company’s reimbursement
obligation as set forth above.
-14-
(c) The
Company acknowledges and agrees that the Underwriter has acted and
is acting solely in the capacity of a principal in an arm’s
length transaction between the Company, on the one hand, and the
Underwriter, on the other hand, with respect to the offering of the
Shares and the Warrants contemplated hereby (including in
connection with determining the terms of the offering) and not as a
financial advisor, agent or fiduciary to the Company or any other
person. Additionally, the Company acknowledges and agrees that the
Underwriter has not and will not advise the Company or any other
person as to any legal, tax, investment, accounting or regulatory
matters in any jurisdiction. The Company has consulted with its own
advisors concerning such matters and shall be responsible for
making its own independent investigation and appraisal of the
transactions contemplated hereby, and the Underwriter shall have no
responsibility or liability to the Company or any other person with
respect thereto, whether arising prior to or after the date hereof.
Any review by the Underwriter of the Company, the transactions
contemplated hereby or other matters relating to such transactions
have been and will be performed solely for the benefit of the
Underwriter and shall not be on behalf of the Company. The Company
agrees that it will not claim that the Underwriter, or any of them,
has rendered advisory services of any nature or respect, or owes a
fiduciary duty to the Company or any other person in connection
with any such transaction or the process leading
thereto.
(d)
The Company represents and agrees
that, unless it obtains the prior consent of the Underwriter, and
the Underwriter represents and agrees that, unless it obtains the
prior consent of the Company, it has not made and will not make any
offer relating to the Shares that would constitute an “issuer
free writing prospectus,” as defined in Rule 433, or
that would otherwise constitute a “free writing
prospectus,” as defined in Rule 405, required to be
filed with the Commission. The Company has complied and will comply
with the requirements of Rule 433 under the Act applicable to any
Issuer Free Writing Prospectus, including timely filing with the
Commission where required, legending and record keeping. The
Company represents that is has satisfied and agrees that it will
satisfy the conditions set forth in Rule 433 of the Rules to avoid
a requirement to file with the Commission any Road
Show.
5. Indemnification.
(a)
The Company agrees to indemnify and hold harmless the Underwriter,
its officers and employees and each person, if any, who controls
the Underwriter within the meaning of Section 15 of the Securities
Act or Section 20 of the Exchange Act against any and all losses,
claims, damages and liabilities, joint or several (including any
reasonable investigation, legal and other expenses incurred in
connection with, and any amount paid in settlement of, any action,
suit or proceeding or any claim asserted), to which it, or any of
them, may become subject under the Securities Act, the Exchange Act
or other Federal or state law or regulation, at common law or
otherwise, insofar as such losses, claims, damages or liabilities
arise out of or are based upon any untrue statement or alleged
untrue statement of a material fact contained in any preliminary
prospectus, the Registration Statement, the Statutory Prospectus,
the Prospectus, any Issuer Free Writing Prospectus or any
“issuer-information” filed or required to be filed
pursuant to Rule 433(d) of the Rules, any amendment thereof or
supplement thereto, or in any Blue Sky application or other
information or other documents executed by the Company filed in any
state or other jurisdiction to qualify any or all of the Securities
under the securities laws thereof (any such application, document
or information being hereinafter referred to as a "Blue Sky
Application") or arise out of or are based upon any omission or
alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein (except
in the case of the Registration Statement, in light of the
circumstances under which they were made) not misleading; provided,
however, that such indemnity shall not inure to the benefit of the
Underwriter (or any person controlling the Underwriter) on account
of any losses, claims, damages or liabilities arising from the sale
of the Shares and the Warrants to any person by the Underwriter if
such untrue statement or omission or alleged untrue statement or
omission was made in such preliminary prospectus, the Registration
Statement, the Prospectus, the Statutory Prospectus, any Issuer
Free Writing Prospectus or such amendment or supplement thereto, or
in any Blue Sky Application in reliance upon and in conformity with
the Underwriter Information. This indemnity agreement will be in
addition to any liability which the Company may otherwise
have.
(b)
The Underwriter agrees to indemnify and hold harmless the Company
and each person, if any, who controls the Company within the
meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act, each director of the Company, and each officer of the
Company who signs the Registration Statement, against any losses,
claims, damages or liabilities to which such party may become
subject, under the Securities Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon an untrue statement or
alleged untrue statement of a material fact contained in any
preliminary prospectus, the Registration Statement, the Statutory
Prospectus, the Prospectus, or any Issuer Free Writing Prospectus
or any “issuer-information” filed or required to be
filed pursuant to Rule 433(d) of the Rules, or any amendment or
supplement thereto, 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 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 any Preliminary Prospectus, the
Registration Statement, the Statutory Prospectus, the Prospectus,
any Issuer Free Writing Prospectus or any such amendment or
supplement thereto in reliance upon and in conformity with the
Underwriter Information; provided, however, that the obligation of
the Underwriter to indemnify the Company (including any controlling
person, director or officer thereof) shall be limited to the amount
of the underwriting discount and commissions applicable to the
Shares and the Warrants to be purchased by the Underwriter
hereunder.
-15-
(c)
Any party that proposes to assert the right to be indemnified under
this Section will, promptly after receipt of notice of commencement
of any action, suit or proceeding against such party in respect of
which a claim is to be made against an indemnifying party or
parties under this Section, notify each such indemnifying party of
the commencement of such action, suit or proceeding, enclosing a
copy of all papers served. No indemnification provided for in
Section 5(a) or 5(b) shall be available to any party who shall fail
to give notice as provided in this Section 5(c) if the party to
whom notice was not given was unaware of the proceeding to which
such notice would have related and was prejudiced by the failure to
give such notice but the omission so to notify such indemnifying
party of any such action, suit or proceeding shall not relieve it
from any liability that it may have to any indemnified party for
contribution or otherwise than under this Section. In case any such
action, suit or proceeding shall be brought against any indemnified
party and it shall notify the indemnifying party of the
commencement thereof, the indemnifying party shall be entitled to
participate in, and, to the extent that it shall wish, jointly with
any other indemnifying party similarly notified, to assume the
defense thereof, with counsel reasonably satisfactory to such
indemnified party, and after notice from the indemnifying party to
such indemnified party of its election so to assume the defense
thereof and the approval by the indemnified party of such counsel,
the indemnifying party shall not be liable to such indemnified
party for any legal or other expenses, except as provided below and
except for the reasonable costs of investigation subsequently
incurred by such indemnified party in connection with the defense
thereof. The indemnified party shall have the right to employ its
counsel in any such action, but the fees and expenses of such
counsel shall be at the expense of such indemnified party unless
(i) the employment of counsel by such indemnified party has been
authorized in writing by the indemnifying parties, (ii) the
indemnified party shall have been advised by counsel that there may
be one or more legal defenses available to it which are different
from or in addition to those available to the indemnifying party
(in which case the indemnifying parties shall not have the right to
direct the defense of such action on behalf of the indemnified
party) or (iii) the indemnifying parties shall not have employed
counsel to assume the defense of such action within a reasonable
time after notice of the commencement thereof, in each of which
cases the fees and expenses of counsel shall be at the expense of
the indemnifying parties. An indemnifying party shall not be liable
for any settlement of any action, suit, and proceeding or claim
effected without its written consent, which consent shall not be
unreasonably withheld or delayed.
6. Contribution.
In order to provide for just and equitable contribution in
circumstances in which the indemnification provided for in Section
5(a) or 5(b) is due in accordance with its terms but for any reason
is unavailable to or insufficient to hold harmless an indemnified
party in respect to any losses, liabilities, claims, damages or
expenses referred to therein, then each indemnifying party shall
contribute to the aggregate losses, liabilities, claims, damages
and expenses (including any investigation, legal and other expenses
reasonably incurred in connection with, and any amount paid in
settlement of, any action, suit or proceeding or any claims
asserted, but after deducting any contribution received by any
person entitled hereunder to contribution from any person who may
be liable for contribution) incurred by such indemnified party, as
incurred, in such proportion as is appropriate to reflect the
relative benefits received by the Company on the one hand and the
Underwriter on the other hand from the offering of the Shares and
the Warrants pursuant to this Agreement or, if such allocation is
not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to
above but also the relative fault of the Company on the one hand
and the Underwriter on the other hand in connection with the
statements or omissions which resulted in such losses, liabilities,
claims, damages or expenses, as well as any other relevant
equitable considerations. The Company and the Underwriter agree
that it would not be just and equitable if contribution pursuant to
this Section 6 were determined by pro rata allocation or by any
other method of allocation which does not take account of the
equitable considerations referred to above. The aggregate amount of
losses, liabilities, claims, damages and expenses incurred by an
indemnified party and referred to above shall be deemed to include
any legal or other expenses reasonably incurred by such indemnified
party in investigating, preparing or defending against any
litigation, or any investigation or proceeding by any governmental
agency or body, commenced or threatened, or any claim whatsoever
based upon any such untrue or alleged untrue statement or omission
or alleged omission. Notwithstanding the provisions of this Section
6, the Underwriter shall not be required to contribute any amount
in excess of the
underwriting discounts and commissions applicable to the Shares and
the Warrants purchased by the Underwriter. No person guilty
of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation.
For purposes of this Section 6, each person, if any, who controls
the Underwriter within the meaning of Section 15 of the Securities
Act or Section 20 of the Exchange Act shall have the same rights to
contribution as the Underwriter, and each director of the Company,
each officer of the Company who signed the Registration Statement,
and each person, if any, who controls the Company within the
meaning of the Section 15 of the Securities Act or Section 20 of
the Exchange Act, shall have the same rights to contribution as the
Company. Any party entitled to contribution will, promptly after
receipt of notice of commencement of any action, suit or proceeding
against such party in respect of which a claim for contribution may
be made against another party or parties under this Section 6,
notify such party or parties from whom contribution may be sought,
but the omission so to notify such party or parties from whom
contribution may be sought shall not relieve the party or parties
from whom contribution may be sought from any other obligation it
or they may have hereunder or otherwise than under this Section 6.
No party shall be liable for contribution with respect to any
action, suit, proceeding or claim settled without its written
consent.
-16-
7. Termination.
(a)
This Agreement may be terminated with respect to the Shares and the
Warrants to be purchased at the Closing Date by the Underwriter by
notifying the Company at any time at or before the Closing Date in
the absolute discretion of the Underwriter if: (i) there has
occurred any material adverse change in the securities markets or
any event, act or occurrence that has materially disrupted, or in
the opinion of the Underwriter, will in the future materially
disrupt, the securities markets or there shall be such a material
adverse change in general financial, political or economic
conditions or the effect of international conditions on the
financial markets in the United States is such as to make it, in
the judgment of the Underwriter, inadvisable or impracticable to
market the Shares and the Warrants or enforce contracts for the
sale of the Shares and the Warrants; (ii) there has occurred any
outbreak or material escalation of hostilities or acts of terrorism
or other calamity or crisis the effect of which on the financial
markets of the United States is such as to make it, in the judgment
of the Underwriter, inadvisable or impracticable to market the
Shares and the Warrants or enforce contracts for the sale of the
Shares and the Warrants; (iii) trading in the Shares or any
securities of the Company has been suspended or materially limited
by the Commission or trading generally on the New York Stock
Exchange, Inc., the NYSE American or the Nasdaq Stock Market has
been suspended or materially limited, or minimum or maximum ranges
for prices for securities shall have been fixed, or maximum ranges
for prices for securities have been required, by any of said
exchanges or by such system or by order of the Commission, FINRA,
or any other governmental or regulatory authority; or (iv) a
banking moratorium has been declared by any state or Federal
authority; or (v) in the judgment of the Underwriter, there has
been, since the time of execution of this Agreement or since the
respective dates as of which information is given in the
Prospectus, any material adverse change in 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, whether or not arising in the
ordinary course of business.
(b)
If this Agreement is terminated pursuant to any of its provisions,
the Company shall not be under any liability to the Underwriter,
and the Underwriter shall not be under any liability to the
Company, except that (x) if this Agreement is terminated by the
Underwriter because of any failure, refusal or inability on the
part of the Company to comply with the terms or to fulfill any of
the conditions of this Agreement, the Company will reimburse the
Underwriter for all out-of-pocket expenses (including the
reasonable fees and disbursements of their counsel) incurred by
them in connection with the proposed purchase and sale of the
Shares and the Warrants or in contemplation of performing their
obligations hereunder and (y) if the Underwriter shall have failed
or refused to purchase the Shares and the Warrants agreed to be
purchased by it under this Agreement, without some reason
sufficient hereunder to justify cancellation or termination of its
obligations under this Agreement, it shall not be relieved of
liability to the Company for damages occasioned by its failure or
refusal.
8. Miscellaneous.
The
respective agreements, representations, warranties, indemnities and
other statements of the Company and the Underwriter, as set forth
in this Agreement or made by or on behalf of them pursuant to this
Agreement, shall remain in full force and effect, regardless of any
investigation (or any statement as to the results thereof) made by
or on behalf of the Underwriter or the Company or any of their
respective officers, directors or controlling persons referred to
in Sections 5 and 6 hereof, and shall survive delivery of and
payment for the Shares and the Warrants. In addition, the
provisions of Sections 4(b), 5, 6 and 7 shall survive the
termination or cancellation of this Agreement.
This
Agreement has been and is made for the benefit of the Underwriter,
the Company and their respective successors and assigns, and, to
the extent expressed herein, for the benefit of persons controlling
the Underwriter, or the Company, and directors and officers of the
Company, and their respective successors and assigns, and no other
person shall acquire or have any right under or by virtue of this
Agreement. The term "successors and assigns" shall not include any
purchaser of Shares and Warrants from the Underwriter merely
because of such purchase.
All
notices and communications hereunder shall be in writing and mailed
or delivered or by telephone or telegraph if subsequently confirmed
in writing, (a) if to the Underwriter, c/o Oppenheimer & Co.
Inc., 85 Broad Street, New York, New York 10004 Attention: Equity
Capital Markets, with a copy to Oppenheimer & Co. Inc., 85
Broad Street, New York, New York 10004 Attention: General Counsel,
and to Lowenstein Sandler LLP, 1251 Avenue of the Americas, New
York, New York 10020, Attention: John D. Hogoboom and (b) if to the Company, to its
agent for service as such agent's address appears on the cover page
of the Registration Statement with a copy to Disclosure Law Group,
a Professional Corporation, 600 West Broadway, Suite 700, San
Diego, California, 92101, Attention: Jessica Sudweeks.
-17-
This Agreement shall be governed by and
construed in accordance with the laws of the State of New
York. This Agreement may be signed in any number of
counterparts, each of which shall be an original, with the same
effect as if the signatures thereto and hereto were upon the same
instrument.
Please
confirm that the foregoing correctly sets forth the agreement among
us.
Very
truly yours,
VISTAGEN
THERAPEUTICS, INC.
By
/s/ Shawn
Singh
Title: Chief Executive Officer
-18-
Confirmed:
OPPENHEIMER &
CO. INC.
By
/s/ Eric
Helenek
Name: Eric Helenek
Title:
Managing Director
[Underwriting
Agreement]
SCHEDULE
I
|
|
|
|
|
|
|
Name
|
|
Number of
Shares to
Be Purchased
|
Number of Series A1 Warrants to Be
Purchased
|
Number of Series A2 Warrants to Be
Purchased
|
|
|
|
|
|
|
|
Oppenheimer &
Co. Inc.
|
|
1,371,430
|
1,388,931
|
503,641
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
1,371,430
|
1,388,931
|
503,641
|
Sch I -
1
SCHEDULE
II
Lock-up
Signatories
Shawn
K. Singh
H.
Ralph Snodgrass,
Ph.D.
Jon S.
Saxe
Brian
J. Underdown,
PhD.
Jerry
B. Gin, Ph.D,
MBA
Mark A.
Smith, M.D.,
Ph.D.
Jerrold
D. Dotson, CPA
SCHEDULE
III
Pricing
Information (to be provided orally only)
Number
of Shares to be Issued: 1,371,430 shares
Number
of Series A1 Warrants to be Issued: Warrants to Purchase 1,388,931
shares of Common Stock
Series
A1 Warrant Coverage: 101.28%
Series
A1 Warrant Exercise Price: $1.82 per share
Number
of Series A2 Warrants to be Issued: Warrants to Purchase 503,641
shares of Common Stock
Series
A2 Warrant Coverage: 36.72%
Series
A2 Warrant Exercise Price: $1.82 per share
Offering Price:
$1.75 per share and related Warrants
Underwriting
Discount: 7.0%
SCHEDULE
IV
Issuer
Free Writing Prospectuses
None.
Exhibit 4.1
SERIES A-1 WARRANT
VISTAGEN THERAPEUTICS, INC.
Warrant To Purchase Common Stock
Warrant
No.:
Number
of Shares of Common Stock:_____________
Date of
Issuance: [___], 2017 ("Issuance
Date")
VistaGen
Therapeutics, Inc., a company organized under the laws of Nevada
(the "Company"), hereby
certifies that, for good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, [HOLDER], the
registered holder hereof or its permitted assigns (the
"Holder"), is entitled,
subject to the terms set forth below, to purchase from the Company,
at the Exercise Price (as defined below) then in effect, at any
time or times on or after March 7, 2018 (the “Initial Exercisability Date”), but
not after 11:59 p.m., New York time, on the Expiration Date, (as
defined below), ______________ (_____________)1 fully paid non-assessable shares of
Common Stock (as defined below), subject to adjustment as provided
herein (the
"Warrant Shares"). Except as
otherwise defined herein, capitalized terms in this Warrant to
Purchase Common Stock (including any Warrants to Purchase Common
Stock issued in exchange, transfer or replacement hereof, this
"Warrant"), shall have the
meanings set forth in Section 16. This Warrant is one of the
Warrants to purchase Common Stock (the "Warrants") issued pursuant to (i) that
certain Underwriting Agreement, dated as of [ ], 2017 (the
"Subscription Date") by and
between the Company and Oppenheimer & Co. Inc., (ii) the
Company's Registration Statement on Form S-3 (File number
333-215671) (the "Registration
Statement") and (iii) the Company's prospectus supplement
dated as of [ ], 2017.
1. EXERCISE
OF WARRANT.
(a) Mechanics of Exercise. Subject
to the terms and conditions hereof (including, without limitation,
the limitations set forth in Section 1(f)), this Warrant may be
exercised by the Holder at any time or times on or after the
Initial Exercisability Date, in
whole or in part, by delivery (whether via facsimile, electronic
mail or otherwise) of a written notice, in the form attached hereto
as Exhibit A (the
"Exercise Notice"), of the
Holder's election to exercise this Warrant. Within one (1) Trading
Day following the delivery of the Exercise Notice, the Holder shall
make payment to the Company of an amount equal to the Exercise
Price in effect on the date of such exercise multiplied by the
number of Warrant Shares as to which this Warrant is being
exercised (the "Aggregate Exercise
Price") in cash by wire transfer of immediately available
funds or, if the provisions of Section 1(d) are applicable, by
notifying the Company that this Warrant is being exercised pursuant
to a Cashless Exercise (as defined in Section 1(d)). The Holder
shall not be required to deliver the original Warrant in order to
effect an exercise hereunder, nor shall any ink-original signature
or medallion guarantee (or other type of guarantee or notarization)
with respect to any Exercise Notice be required. Execution and
delivery of the Exercise Notice with respect to less than all of
the Warrant Shares shall have the same effect as cancellation of
the original Warrant and issuance of a new Warrant evidencing the
right to purchase the remaining number of Warrant Shares. On or
before the first (1st) Trading Day
following the date on which the Company has received the applicable
Exercise Notice, the Company shall transmit by facsimile or
electronic mail an acknowledgment of confirmation of receipt of the
Exercise Notice, in the form attached to the Exercise Notice, to
the Holder and the Company's transfer agent (the "Transfer Agent"). So long as the Holder
delivers the Aggregate Exercise Price (or notice of a Cashless
Exercise) on or prior to the first (1st) Trading Day following the
date on which the Exercise Notice has been delivered to the
Company, then on or prior to the earlier of (i) the second (2nd)
Trading Day and (ii) the number of Trading Days comprising the
Standard Settlement Period, in each case following the date on
which the Exercise Notice has been delivered to the Company, or, if
the Holder does not deliver the Aggregate Exercise Price (or notice
of a Cashless
-1-
Exercise) on or
prior to the first (1st) Trading Day following the date on which
the Exercise Notice has been delivered to the Company, then on or
prior to the first (1st) Trading Day following the date on which
the Aggregate Exercise Price (or notice of a Cashless Exercise) is
delivered (such earlier date, the “Share Delivery Date”), the Company
shall (X) provided that the Transfer Agent is participating in The
Depository Trust Company ("DTC") Fast Automated Securities Transfer
Program, credit such aggregate number of Warrant Shares to which
the Holder is entitled pursuant to such exercise to the Holder's or
its designee's balance account with DTC through its Deposit /
Withdrawal At Custodian system, or (Y) if the Transfer Agent is not
participating in the DTC Fast Automated Securities Transfer
Program, issue and dispatch by overnight courier to the address as
specified in the Exercise Notice, a certificate, registered in the
name of the Holder or its designee, for the number of Warrant
Shares to which the Holder is entitled pursuant to such exercise.
The Company shall be responsible for all fees and expenses of the
Transfer Agent and all fees and expenses with respect to the
issuance of Warrant Shares via DTC, if any, including without
limitation for same day processing. Upon delivery of the Exercise
Notice, the Holder shall be deemed for all corporate purposes to
have become the holder of record and beneficial owner of the
Warrant Shares with respect to which this Warrant has been
exercised, irrespective of the date such Warrant Shares are
credited to the Holder's DTC account or the date of delivery of the
certificates evidencing such Warrant Shares, as the case may be. If
this Warrant is physically delivered to the Company in connection
with any exercise pursuant to this Section 1(a) and the number of
Warrant Shares represented by this Warrant submitted for exercise
is greater than the number of Warrant Shares being acquired upon an
exercise, then the Company shall as soon as practicable and in no
event later than three (3) Trading Days after any exercise and at
its own expense, issue and deliver to the Holder (or its designee)
a new Warrant (in accordance with Section 7(d)) representing the
right to purchase the number of Warrant Shares issuable immediately
prior to such exercise under this Warrant, less the number of
Warrant Shares with respect to which this Warrant is exercised. No
fractional Warrant Shares are to be issued upon the exercise of
this Warrant, but rather the number of Warrant Shares to be issued
shall be rounded to the nearest whole number. The Company shall pay
any and all transfer, stamp, issuance and similar taxes, costs and
expenses (including, without limitation, fees and expenses of the
Transfer Agent) which may be payable with respect to the issuance
and delivery of Warrant Shares upon exercise of this Warrant. The
Company's obligations to issue and deliver Warrant Shares in
accordance with the terms and subject to the conditions hereof are
absolute and unconditional, irrespective of any action or inaction
by the Holder to enforce the same, any waiver or consent with
respect to any provision hereof, the recovery of any judgment
against any Person or any action to enforce the same, or any
setoff, counterclaim, recoupment, limitation or termination;
provided,
however, that the
Company shall not be required to deliver Warrant Shares with
respect to an exercise prior to the Holder’s delivery of the
Aggregate Exercise Price (or notice of a Cashless Exercise) with
respect to such exercise.
(b) Exercise Price. For purposes of
this Warrant, "Exercise
Price" means $1.82 per share, subject to adjustment as
provided herein.
(c) Company's Failure to Timely Deliver
Securities. If either (I) the Company shall fail for any
reason or for no reason to issue to the Holder on or prior to the
applicable Share Delivery Date, if (x) the Transfer Agent is not
participating in the DTC Fast Automated Securities Transfer
Program, a certificate for the number of shares of Common Stock to
which the Holder is entitled and register such Common Stock on the
Company's share register or (y) the Transfer Agent is participating
in the DTC Fast Automated Securities Transfer Program, to credit
the Holder's balance account with DTC, for such number of shares of
Common Stock to which the Holder is entitled upon the Holder's
exercise of this Warrant or (II) a registration statement (which
may be the Registration Statement) covering the issuance or resale
of the Warrant Shares that are the subject of the Exercise Notice
(the "Exercise Notice Warrant
Shares") is not available for the issuance or resale, as
applicable, of such Exercise Notice Warrant Shares and (x) the
Company fails to promptly, but in no event later than one (1)
Business Day after such registration statement becomes unavailable,
to so notify the Holder and (y) the Company is unable to deliver
the Exercise Notice Warrant Shares electronically without any
restrictive legend by crediting such aggregate number of Exercise
Notice Warrant Shares to the Holder’s or its designee’s
balance account with DTC through its Deposit / Withdrawal At
Custodian system (the event described in the immediately foregoing
clause (II) is hereinafter referred as a "Notice Failure" and together with the
event described in clause (I) above, an "Exercise Failure"), then, in addition to
all other remedies available to the Holder, if on or prior to the
applicable Share Delivery Date either (I) if the Transfer Agent is
not participating in the DTC Fast Automated Securities Transfer
Program, the Company shall fail to issue and deliver a certificate
to the Holder and register such shares of Common
-2-
Stock
on the Company's share register or, if the Transfer Agent is
participating in the DTC Fast Automated Securities Transfer
Program, credit the Holder's balance account with DTC for the
number of shares of Common Stock to which the Holder is entitled
upon the Holder's exercise hereunder or pursuant to the Company's
obligation pursuant to clause (ii) below or (II) a Notice Failure
occurs, and if on or after such Trading Day the Holder purchases
(in an open market transaction or otherwise) Common Stock to
deliver in satisfaction of a sale by the Holder of shares of Common
Stock issuable upon such exercise that the Holder anticipated
receiving from the Company (a "Buy-In"), then the Company shall, within
three (3) Trading Days after the Holder's request and in the
Holder's discretion, either (i) pay cash to the Holder in an amount
equal to the Holder's total purchase price (including brokerage
commissions and other out-of-pocket expenses, if any) for the
shares of Common Stock so purchased (the "Buy-In Price"), at which point the
Company's obligation to deliver such certificate (and to issue such
shares of Common Stock) or credit such Holder's balance account
with DTC for such shares of Common Stock shall terminate, or (ii)
promptly honor its obligation to deliver to the Holder a
certificate or certificates representing such shares of Common
Stock or credit such Holder's balance account with DTC, as
applicable, and pay cash to the Holder in an amount equal to the
excess (if any) of the Buy-In Price over the product of (A) such
number of shares of Common Stock, times (B) any trading price of
the Common Stock selected by the Holder in writing as in effect at
any time during the period beginning on the applicable Exercise
Date and ending on the applicable Share Delivery Date. Nothing
shall limit the Holder's right to pursue any other remedies
available to it hereunder, at law or in equity, including, without
limitation, a decree of specific performance and/or injunctive
relief with respect to the Company's failure to timely deliver
certificates representing Warrant Shares (or to electronically
deliver such Warrant Shares) upon the exercise of this Warrant as
required pursuant to the terms hereof. While this Warrant is
outstanding, the Company shall cause its transfer agent to
participate in the DTC Fast Automated Securities Transfer Program.
In addition to the foregoing rights, (i) if the Company fails to
deliver the applicable number of Warrant Shares upon an exercise
pursuant to Section 1 by the applicable Share Delivery Date, then
the Holder shall have the right to rescind such exercise in whole
or in part and retain and/or have the Company return, as the case
may be, any portion of this Warrant that has not been exercised
pursuant to such Exercise Notice; provided that the rescission of
an exercise shall not affect the Company’s obligation to make
any payments that have accrued prior to the date of such notice
pursuant to this Section 1(c) or otherwise, and (ii) if a
registration statement (which may be the Registration Statement)
covering the issuance or resale of the Warrant Shares that are
subject to an Exercise Notice is not available for the issuance or
resale, as applicable, of such Exercise Notice Warrant Shares and
the Holder has submitted an Exercise Notice prior to receiving
notice of the non-availability of such registration statement and
the Company has not already delivered the Warrant Shares underlying
such Exercise Notice electronically without any restrictive legend
by crediting such aggregate number of Warrant Shares to which the
Holder is entitled pursuant to such exercise to the Holder’s
or its designee’s balance account with DTC through its
Deposit / Withdrawal At Custodian system, the Holder shall have the
option, by delivery of notice to the Company, to (x) rescind such
Exercise Notice in whole or in part and retain or have returned, as
the case may be, any portion of this Warrant that has not been
exercised pursuant to such Exercise Notice; provided that the
rescission of an Exercise Notice shall not affect the
Company’s obligation to make any payments that have accrued
prior to the date of such notice pursuant to this Section 1(c) or
otherwise, and/or (y) switch some or all of such Exercise Notice
from a cash exercise to a Cashless Exercise.
(d) Cashless Exercise. Notwithstanding anything contained
herein to the contrary, if a registration statement (which may be
the Registration Statement) covering the issuance or resale of the
Exercise Notice Warrant Shares is not available for the issuance or
resale, as applicable, of such Exercise Notice Warrant Shares, the
Holder may, in its sole discretion, exercise this Warrant in whole
or in part and, in lieu of making the cash payment otherwise
contemplated to be made to the Company upon such exercise in
payment of the Aggregate Exercise Price, elect instead to receive
upon such exercise the "Net Number" of shares of Common Stock
determined according to the following formula (a "Cashless Exercise"):
-3-
Net
Number = (A x B) - (A x
C)
B
For
purposes of the foregoing formula:
A= the
total number of shares with respect to which this Warrant is then
being exercised.
B= as
applicable: (i) the Closing Sale Price of the Common Stock on the
Trading Day immediately preceding the date of the applicable
Exercise Notice if such Exercise Notice is (1) both executed and
delivered pursuant to Section 1(a) hereof on a day that is not a
Trading Day or (2) both executed and delivered pursuant to Section
1(a) hereof on a Trading Day prior to the opening of “regular
trading hours” (as defined in Rule 600(b)(64) of Regulation
NMS promulgated under the federal securities laws) on such Trading
Day, (ii) at the option of the Holder, either (y) the Weighted
Average Price on the Trading Day immediately preceding the date of
the applicable Notice of Exercise or (z) the Bid Price of the
Common Stock as of the time of the Holder’s execution of the
applicable Exercise Notice if such Exercise Notice is executed
during “regular trading hours” on a Trading Day and is
delivered within two (2) hours thereafter pursuant to Section 1(a)
hereof or (iii) the Closing Sale Price of the Common Stock on the
date of the applicable Exercise Notice if the date of such Exercise
Notice is a Trading Day and such Exercise Notice is both executed
and delivered pursuant to Section 1(a) hereof after the close of
“regular trading hours” on such Trading
Day.
C= the
Exercise Price then in effect for the applicable Warrant Shares at
the time of such exercise.
If Warrant Shares are issued in such a cashless exercise, the
Company acknowledges and agrees that in accordance with Section
3(a)(9) of the Securities Act of 1933, as amended, the Warrant
Shares shall take on the registered characteristics of the Warrants
being exercised, and the holding period of the Warrants being
exercised may be tacked on to the holding period of the Warrant
Shares. The Company agrees not to take any position contrary to
this Section 1(d).
(e) Disputes. In the case of a
dispute as to the determination of the Exercise Price or the
arithmetic calculation of the Warrant Shares, the Company shall
promptly issue to the Holder the number of Warrant Shares that are
not disputed and resolve such dispute in accordance with Section
11.
(f) Beneficial
Ownership. Notwithstanding
anything to the contrary contained herein, the Company shall not
effect the exercise of any portion of this Warrant, and the Holder
shall not have the right to exercise any portion of this Warrant,
pursuant to the terms and conditions of this Warrant and any such
exercise shall be null and void and treated as if never made, to
the extent that after giving effect to such exercise, the Holder
together with the other Attribution Parties collectively would
beneficially own in excess of [4.99][9.99]% (the
"Maximum
Percentage") of the number
of shares of Common Stock outstanding immediately after giving effect to
such exercise. For purposes of the foregoing sentence, the
aggregate number of shares of Common Stock beneficially owned by the Holder and the other
Attribution Parties shall include the number of shares of
Common Stock held by the Holder and
all other Attribution Parties plus the number of shares of
Common Stock issuable upon exercise of
this Warrant with respect to which the determination of such
sentence is being made, but shall exclude the number of
shares of Common Stock which would be
issuable upon (A) exercise of the remaining, unexercised portion of
this Warrant beneficially owned by the Holder or any of the other
Attribution Parties and (B) exercise or conversion of the
unexercised or unconverted portion of any other securities of the
Company (including, without limitation, any convertible notes or
convertible preferred stock or warrants, including the other
Warrants) beneficially owned by the Holder or any other Attribution
Party subject to a limitation on conversion or exercise analogous
to the limitation contained in this Section 1(f). For purposes of
this Section 1(f), beneficial ownership shall be calculated in
accordance with Section 13(d) of the Securities Exchange Act of
1934, as amended (the "1934 Act"). For purposes of this Warrant, in determining
the number of outstanding shares of Common Stock
the Holder may acquire upon the
exercise of this Warrant without exceeding the Maximum Percentage,
the Holder may rely on the number of outstanding shares of
Common Stock as reflected in (x) the
Company's most recent Annual Report on
-4-
Form 10-K, Quarterly Report on Form 10-Q and
Current Reports on Form 8-K or other public filing with the
Securities and Exchange Commission (the "SEC"), as the case may be, (y) a more
recent public announcement by the Company or (3) any other written
notice by the Company or the Transfer
Agent setting forth the number of shares of Common Stock
outstanding (the "Reported Outstanding Share
Number"). If the Company
receives an Exercise Notice from the Holder at a time when the
actual number of outstanding shares of Common Stock
is less than the Reported Outstanding
Share Number, the Company shall (i) notify the Holder in writing of
the number of shares of Common Stock then outstanding and, to the extent that such
Exercise Notice would otherwise cause the Holder's beneficial
ownership, as determined pursuant to this Section 1(f), to exceed
the Maximum Percentage, the Holder must notify the Company of a
reduced number of Warrant Shares to be purchased pursuant to such
Exercise Notice (the number of
shares by which such purchase is reduced, the "Reduction
Shares") and (ii) as soon as
reasonably practicable, the Company shall return to the Holder any
exercise price paid by the Holder for the Reduction Shares.
For any reason at any time, upon the written or oral request of the
Holder, the Company shall within one
(1) Business Day confirm orally and in writing or by electronic
mail to the Holder the number of shares of Common Stock
then outstanding. In any case, the
number of outstanding shares of Common Stock shall be determined after giving effect to the
conversion or exercise of securities of the Company, including this
Warrant, by the Holder and any other Attribution Party since the
date as of which the Reported Outstanding Share Number was
reported. In the event that the issuance of Common Stock
to the Holder upon exercise of this
Warrant results in the Holder and the other Attribution Parties
being deemed to beneficially own, in the aggregate, more than the
Maximum Percentage of the number of outstanding shares of
Common Stock (as determined under
Section 13(d) of the 1934 Act), the number of shares so issued by
which the Holder's and the other Attribution Parties' aggregate
beneficial ownership exceeds the Maximum Percentage (the
"Excess
Shares") shall be deemed null
and void and shall be cancelled ab initio, and the Holder shall not
have the power to vote or to transfer the Excess Shares. As soon as
reasonably practicable after the issuance of the Excess Shares has
been deemed null and void, the Company shall return to the Holder
the exercise price paid by the Holder for the Excess Shares.
Upon delivery of a written notice to the Company, the Holder may
from time to time increase or decrease the Maximum Percentage to
any other percentage not in excess of 9.99% as specified in such
notice; provided that (i) any such increase in the Maximum
Percentage will not be effective until the sixty-first
(61st) day
after such notice is delivered to the Company and (ii) any such
increase or decrease will apply only to the Holder and the other
Attribution Parties and not to any other holder of Warrants that is
not an Attribution Party of the Holder. For purposes of clarity,
the shares of Common Stock issuable pursuant to the terms of this
Warrant in excess of the Maximum Percentage shall not be deemed to
be beneficially owned by the Holder for any purpose including for
purposes of Section 13(d) or Rule 16a-1(a)(1) of the 1934 Act. No
prior inability to exercise this Warrant pursuant to this paragraph
shall have any effect on the applicability of the provisions of
this paragraph with respect to any subsequent determination of
exercisability. The provisions of this
paragraph shall be construed and implemented in a manner otherwise
than in strict conformity with the terms of this Section 1(f) to
the extent necessary to correct this paragraph or any portion of
this paragraph which may be defective or inconsistent with the
intended beneficial ownership limitation contained in this Section
1(f) or to make changes or supplements necessary or desirable to properly give effect to
such limitation. The limitation contained in this paragraph may not
be waived and shall apply to a successor holder of this
Warrant.
(g) Required Reserve Amount.
So long as this Warrant remains outstanding, the Company shall at
all times keep reserved for issuance under this Warrant a number of
shares of Common Stock at least equal to 100% of the maximum number
of shares of Common Stock as shall be necessary to satisfy the
Company’s obligation to issue shares of Common Stock under
the Warrants then outstanding (without regard to any limitations on
exercise) (the "Required Reserve
Amount"); provided that at no time shall
the number of shares of Common Stock reserved pursuant to this
Section 1(g) be reduced other than in connection with any exercise
of Warrants or such other event covered by Section 2(c)
below. The Required Reserve Amount (including, without
limitation, each increase in the number of shares so reserved)
shall be allocated pro rata among the holders of the Warrants based
on the number of shares of Common Stock issuable upon exercise of
Warrants held by each holder thereof on the Issuance Date (without
regard to any limitations on exercise) (the "Authorized Share Allocation"). In the
event that a holder shall sell or otherwise transfer any of such
holder’s Warrants, each transferee shall be allocated a pro
rata portion of such holder’s Authorized Share Allocation.
Any shares of Common Stock reserved and allocated to any Person
which ceases to hold any Warrants shall be allocated to the
remaining holders of Warrants, pro rata based on the number of
shares of Common Stock issuable upon exercise of the Warrants then
held by such holders thereof (without regard to any limitations on
exercise).
-5-
(h) Insufficient Authorized Shares.
If at any time while this Warrant remains outstanding the Company
does not have a sufficient number of authorized and unreserved
shares of Common Stock to satisfy its obligation to reserve for
issuance the Required Reserve Amount (an "Authorized Share Failure"), then the
Company shall promptly take all action reasonably necessary to
increase the Company's authorized shares of Common Stock to an
amount sufficient to allow the Company to reserve the Required
Reserve Amount for this Warrant then outstanding. Without limiting
the generality of the foregoing sentence, as soon as practicable
after the date of the occurrence of an Authorized Share Failure,
but in no event later than ninety (90) days after the occurrence of
such Authorized Share Failure, the Company shall hold a meeting of
its stockholders for the approval of an increase in the number of
authorized shares of Common Stock. In connection with such meeting,
the Company shall provide each stockholder with a proxy statement
and shall use its reasonable best efforts to solicit its
stockholders' approval of such increase in authorized shares of
Common Stock and to cause its Board of Directors to recommend to
the stockholders that they approve such proposal. Notwithstanding
the foregoing, if at any such time of an Authorized Share Failure,
the Company is able to obtain the written consent of a majority of
the shares of its issued and outstanding shares of Common Stock to
approve the increase in the number of authorized shares of Common
Stock, the Company may satisfy this obligation by obtaining such
consent and submitting for filing with the SEC an Information
Statement on Schedule 14C.
2. ADJUSTMENT OF EXERCISE PRICE AND
NUMBER OF WARRANT SHARES. The Exercise Price and the number
of Warrant Shares shall be adjusted from time to time as
follows:
(a) Voluntary Adjustment
By Company. The Company may at
any time during the term of this Warrant reduce the then current
Exercise Price to any amount and for any period of time deemed
appropriate by the Board of Directors of the
Company.
(b) Adjustment
Upon Subdivision or Combination of
Common Stock. If the Company at any time on or after the
Subscription Date subdivides (by any stock split, stock dividend,
recapitalization or otherwise) one or more classes of its
outstanding shares of Common Stock into a greater number of shares,
the Exercise Price in effect immediately prior to such subdivision
will be proportionately reduced and the number of Warrant Shares
will be proportionately increased. If the Company at any time on or
after the Subscription Date combines (by combination, reverse stock
split or otherwise) one or more classes of its outstanding shares
of Common Stock into a smaller number of shares, the Exercise Price
in effect immediately prior to such combination will be
proportionately increased and the number of Warrant Shares will be
proportionately decreased. Any adjustment under this Section 2(c)
shall become effective at the close of business on the date the
subdivision or combination becomes effective.
(c) Other
Events. If any event occurs of
the type contemplated by the provisions of this Section 2 but not
expressly provided for by such provisions (including, without
limitation, the granting of stock appreciation rights, phantom
stock rights or other rights with equity features), then the
Company's Board of Directors will make an appropriate adjustment in
the Exercise Price and the number of Warrant Shares, as mutually
determined by the Company’s Board of Directors and the
Required Holders, so as to protect the rights of the Holder;
provided that no such adjustment pursuant to this Section 2(d) will
increase the Exercise Price or decrease the number of Warrant
Shares as otherwise determined pursuant to this Section
2.
3. RIGHTS UPON DISTRIBUTION OF
ASSETS. In addition to any adjustments pursuant to Section 2
above, if, on or after the Subscription Date and on or prior to the
Expiration Date, the Company shall declare or make any dividend or
other distribution of its assets (or rights to acquire its assets)
to holders of shares of Common Stock, by way of return of capital
or otherwise (including, without limitation, any distribution of
cash, stock or other securities, property, options, evidence of
indebtedness or any other assets by way of a dividend, spin off,
reclassification, corporate rearrangement, scheme of arrangement or
other similar transaction) (a "Distribution"), at any time after the
issuance of this Warrant, then, in each such case, the Holder shall
be entitled to participate in such Distribution to the same extent
that the Holder would have participated therein if the Holder had
held the number of shares of Common Stock acquirable upon complete
exercise of this Warrant (without regard to any limitations or
restrictions on exercise of this Warrant, including without
limitation, the Maximum Percentage) immediately before the date on
which a record is taken for such Distribution, or, if no such
record is taken, the date as of which the record holders of shares
of Common Stock are to be determined for the participation in
such
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Distribution
(provided,
however, that to
the extent that the Holder's right to participate in any such
Distribution would result in the Holder and the other Attribution
Parties exceeding the Maximum Percentage, then the Holder shall not
be entitled to participate in such Distribution to such extent (and
shall not be entitled to beneficial ownership of such shares of
Common Stock as a result of such Distribution (and beneficial
ownership) to such extent) and the portion of such Distribution
shall be held in abeyance for the benefit of the Holder until such
time or times as its right thereto would not result in the Holder
and the other Attribution Parties exceeding the Maximum Percentage,
at which time or times the Holder shall be granted such
Distribution (and any Distributions declared or made on such
initial Distribution or on any subsequent Distribution held
similarly in abeyance) to the same extent as if there had been no
such limitation).
4. PURCHASE RIGHTS; FUNDAMENTAL
TRANSACTIONS.
(a) Purchase Rights. In addition to
any adjustments pursuant to Section 2 above, if at any time on or
after the Subscription Date and on or prior to the Expiration Date
the Company grants, issues or sells any Options, Convertible
Securities or rights to purchase stock, warrants, securities or
other property pro rata to the record holders of any class of
Common Stock but excluding shares of Common Stock deemed to have
been issued or sold by the Company in connection with any Excluded
Securities (the "Purchase Rights"), then the Holder will be
entitled to acquire, upon the terms applicable to such Purchase
Rights, the aggregate Purchase Rights which the Holder could have
acquired if the Holder had held the number of shares of Common
Stock acquirable upon complete exercise of this Warrant (without
regard to any limitations or restrictions on exercise of this
Warrant, including without limitation, the Maximum Percentage)
immediately before the date on which a record is taken for the
grant, issuance or sale of such Purchase Rights, or, if no such
record is taken, the date as of which the record holders of Common
Stock are to be determined for the grant, issuance or sale of such
Purchase Rights (provided, however, that to the extent
that the Holder's right to participate in any such Purchase Right
would result in the Holder and the other Attribution Parties
exceeding the Maximum Percentage, then the Holder shall not be
entitled to participate in such Purchase Right to such extent (and
shall not be entitled to beneficial ownership of such Common Stock
as a result of such Purchase Right (and beneficial ownership) to
such extent) and such Purchase Right to such extent shall be held
in abeyance for the benefit of the Holder until such time or times as its right thereto
would not result in the Holder and the other Attribution
Parties exceeding the Maximum
Percentage, at which time or times the Holder shall be granted such
right (and any Purchase Right granted, issued or sold on
such initial Purchase Right or on any subsequent Purchase Right to
be held similarly in abeyance) to the
same extent as if there had been no such
limitation).
(b) Fundamental Transaction.
The Company shall not enter into or be party to a Fundamental
Transaction unless the Successor Entity assumes in writing all of
the obligations of the Company under this Warrant in accordance
with the provisions of this Section 4(b), including agreements to
deliver to the Holder in exchange for this Warrant a security of
the Successor Entity evidenced by a written instrument
substantially similar in form and substance to this Warrant,
including, without limitation, which is exercisable for a
corresponding number of shares of capital stock equivalent to the
shares of Common Stock acquirable and receivable upon exercise of
this Warrant (without regard to any limitations on the exercise of
this Warrant) prior to such Fundamental Transaction, and with an
exercise price which applies the exercise price hereunder to such
shares of capital stock (but taking into account the relative value
of the shares of Common Stock pursuant to such Fundamental
Transaction and the value of such shares of capital stock, such
adjustments to the number of shares of capital stock and such
exercise price being for the purpose of protecting the economic
value of this Warrant immediately prior to the consummation of such
Fundamental Transaction). Upon the consummation of each Fundamental
Transaction, the Successor Entity shall succeed to, and be
substituted for the Company (so that from and after the date of the
applicable Fundamental Transaction, the provisions of this Warrant
and the other Transaction Documents referring to the
“Company” shall refer instead to the Successor Entity),
and may exercise every right and power of the Company and shall
assume all of the obligations of the Company under this Warrant
with the same effect as if such Successor Entity had been named as
the Company herein. Upon consummation of each Fundamental
Transaction, the Successor Entity shall deliver to the Holder
confirmation that there shall be issued upon exercise of this
Warrant at any time after the consummation of the applicable
Fundamental Transaction, in lieu of the shares of Common Stock (or
other securities, cash, assets or other property (except such items
still issuable under Sections 3 and 4(a) above, which shall
continue to be receivable thereafter)) issuable upon
the
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exercise of this
Warrant prior to the applicable Fundamental Transaction, such
shares of common stock (or its equivalent) of the Successor Entity
(including its Parent Entity) which the Holder would have been
entitled to receive upon the happening of the applicable
Fundamental Transaction had this Warrant been exercised immediately
prior to the applicable Fundamental Transaction (without regard to
any limitations on the exercise of this Warrant), as adjusted in
accordance with the provisions of this Warrant. Notwithstanding the
foregoing, and without limiting Section 1(f) hereof, the Holder may
elect, at its sole option, by delivery of written notice to the
Company to waive this Section 4(b) to permit the Fundamental
Transaction without the assumption of this Warrant. In addition to
and not in substitution for any other rights hereunder, prior to
the consummation of each Fundamental Transaction pursuant to which
holders of shares of Common Stock are entitled to receive
securities or other assets with respect to or in exchange for
shares of Common Stock (a “Corporate Event”), the Company
shall make appropriate provision to insure that the Holder will
thereafter have the right to receive upon an exercise of this
Warrant at any time after the consummation of the applicable
Fundamental Transaction but prior to the Expiration Date, in lieu
of the shares of the Common Stock (or other securities, cash,
assets or other property (except such items still issuable under
Sections 3 and 4(a) above, which shall continue to be receivable
thereafter)) issuable upon the exercise of the Warrant prior to
such Fundamental Transaction, such shares of stock, securities,
cash, assets or any other property whatsoever (including warrants
or other purchase or subscription rights) (collectively, the
“Corporate Event
Consideration”) which the Holder would have been
entitled to receive upon the happening of the applicable
Fundamental Transaction had this Warrant been exercised immediately
prior to the applicable Fundamental Transaction (without regard to
any limitations on the exercise of this Warrant). The provision
made pursuant to the preceding sentence shall be in a form and
substance reasonably satisfactory to the Holder. The provisions of
this Section 4(b) shall apply similarly and equally to successive
Fundamental Transactions and Corporate Events. Notwithstanding the
foregoing, in the event of a Change of Control (other than a Change
of Control which was not approved by the Board of Directors, as to
which this right shall not apply), at the request of the Holder
delivered before the 30th day after such Change of Control, the
Company (or the Successor Entity) shall purchase this Warrant from
the Holder by paying to the Holder, within five Business Days after
such request (or, if later, on the effective date of the Change of
Control), an amount equal to the Black Scholes Value of the
remaining unexercised portion of this Warrant on the effective date
of such Change of Control, payable in cash; provided, that if the
applicable Change of Control was not approved by the Company's
Board of Directors, such amount shall be payable, at the option of
the Company in either (x) Common Stock (or corresponding Corporate
Event Consideration, as applicable) valued at the value of the
consideration received by the shareholders in such Change of
Control or (y) cash.
5. NONCIRCUMVENTION. The Company
hereby covenants and agrees that the Company will not, by amendment
of its Restated and Amended Articles of Incorporation or Bylaws, or
through any reorganization, transfer of assets, consolidation,
merger, scheme of arrangement, dissolution, issuance or sale of
securities, or any other voluntary action, avoid or seek to avoid
the observance or performance of any of the terms of this Warrant,
and will at all times in good faith carry out all of the provisions
of this Warrant and take all action as may be required to protect
the rights of the Holder. Without limiting the generality of the
foregoing, the Company (i) shall not increase the par value of
any shares of Common Stock receivable upon the exercise of this
Warrant above the Exercise Price then in effect, (ii) shall
take all such actions as may be necessary or appropriate in order
that the Company may validly and legally issue fully paid and
nonassessable shares of Common Stock upon the exercise of this
Warrant, and (iii) shall, so long as any of the Warrants are
outstanding, take all action necessary to reserve and keep
available out of its authorized and unissued shares of Common
Stock, solely for the purpose of effecting the exercise of the
Warrants, the number of shares of Common Stock as shall from time
to time be necessary to effect the exercise of the Warrants then
outstanding (without regard to any limitations on
exercise).
-8-
6. WARRANT HOLDER NOT DEEMED A
STOCKHOLDER. Except as otherwise specifically provided
herein, the Holder, solely in such Person's capacity as a holder of
this Warrant, shall not be entitled to vote or receive dividends or
be deemed the holder of capital stock of the Company for any
purpose, nor shall anything contained in this Warrant be construed
to confer upon the Holder, solely in such Person's capacity as the
Holder of this Warrant, any of the rights of a stockholder of the
Company or any right to vote, give or withhold consent to any
corporate action (whether any reorganization, issue of stock,
reclassification of stock, consolidation, merger, conveyance or
otherwise), receive notice of meetings, receive dividends or
subscription rights, or otherwise, prior to the issuance to the
Holder of the Warrant Shares which such Person is then entitled to
receive upon the due exercise of this Warrant. In addition, nothing
contained in this Warrant shall be construed as imposing any
liabilities on the Holder to purchase any securities (upon exercise
of this Warrant or otherwise) or as a stockholder of the Company,
whether such liabilities are asserted by the Company or by
creditors of the Company. Notwithstanding this Section 6, the
Company shall provide the Holder with copies of the same notices
and other information given to the stockholders of the Company
generally, contemporaneously with the giving thereof to the
stockholders.
7. REISSUANCE OF
WARRANTS.
(a) Transfer of Warrant. If this
Warrant is to be transferred, the Holder shall surrender this
Warrant to the Company, whereupon the Company will forthwith issue
and deliver upon the order of the Holder a new Warrant (in
accordance with Section 7(d)), registered as the Holder may
request, representing the right to purchase the number of Warrant
Shares being transferred by the Holder and, if less than the total
number of Warrant Shares then underlying this Warrant is being
transferred, a new Warrant (in accordance with Section 7(d)) to the
Holder representing the right to purchase the number of Warrant
Shares not being transferred.
(b) Lost, Stolen or Mutilated
Warrant. Upon receipt by the Company of evidence reasonably
satisfactory to the Company of the loss, theft, destruction or
mutilation of this Warrant, and, in the case of loss, theft or
destruction, of any indemnification undertaking by the Holder to
the Company in customary form (but without the obligation to post a
bond) and, in the case of mutilation, upon surrender and
cancellation of this Warrant, the Company shall execute and deliver
to the Holder a new Warrant (in accordance with Section 7(d))
representing the right to purchase the Warrant Shares then
underlying this Warrant.
(c) Exchangeable for Multiple
Warrants. This Warrant is exchangeable, upon the surrender
hereof by the Holder at the principal office of the Company, for a
new Warrant or Warrants (in accordance with Section 7(d))
representing in the aggregate the right to purchase the number of
Warrant Shares then underlying this Warrant, and each such new
Warrant will represent the right to purchase such portion of such
Warrant Shares as is designated by the Holder at the time of such
surrender.
(d) Issuance of New Warrants.
Whenever the Company is required to issue a new Warrant pursuant to
the terms of this Warrant, such new Warrant (i) shall be of like
tenor with this Warrant, (ii) shall represent, as indicated on the
face of such new Warrant, the right to purchase the Warrant Shares
then underlying this Warrant (or in the case of a new Warrant being
issued pursuant to Section 7(a) or Section 7(c), the Warrant Shares
designated by the Holder which, when added to the number of shares
of Common Stock underlying the other new Warrants issued in
connection with such issuance, does not exceed the number of
Warrant Shares then underlying this Warrant), (iii) shall have an
issuance date, as indicated on the face of such new Warrant which
is the same as the Issuance Date, and (iv) shall have the same
rights and conditions as this Warrant.
-9-
8. NOTICES. Whenever notice is
required to be given under this Warrant, unless otherwise provided
herein, such notice shall be given in writing, (i) if delivered (a)
from within the domestic United States, by first-class registered
or certified airmail, or nationally recognized overnight express
courier, postage prepaid, electronic mail or by facsimile or (b)
from outside the United States, by International Federal Express,
electronic mail or facsimile, and (ii) will be deemed given (A) if
delivered by first-class registered or certified mail domestic,
three (3) Business Days after so mailed, (B) if delivered by
nationally recognized overnight carrier, one (1) Business Day after
so mailed, (C) if delivered by International Federal Express, two
(2) Business Days after so mailed and (D) on the date of
transmission, if delivered by electronic mail to each of the email
addresses specified in this Section 8 prior to 5:00 p.m. (New York
time) on a Trading Day, (E) the next Trading Day after the date of
transmission, if delivered by electronic mail to each of the email
addresses specified in this Section 8 on a day that is not a
Trading Day or later than 5:00 p.m. (New York time) on any Trading
Day and (E) if delivered by facsimile, upon electronic confirmation
of receipt of such facsimile, and will be delivered and addressed
as follows:
(i)
if to the Company, to:
VistaGen
Therapeutics, Inc.
343
Allerton Ave.
South
San Francisco, CA 94090
Attention: [
]
Facsimile: [
]
Email:
[ ]
(ii) if
to the Holder, at such address or other contact information
delivered by the Holder to Company or as is on the books and
records of the Company.
The
Company shall provide the Holder with prompt written notice of all
actions taken pursuant to this Warrant, including in reasonable
detail a description of such action and the reason therefor.
Without limiting the generality of the foregoing, the Company will
give written notice to the Holder (i) immediately upon any
adjustment of the Exercise Price, setting forth in reasonable
detail, and certifying, the calculation of such adjustment and (ii)
at least fifteen (15) days prior to the date on which the Company
closes its books or takes a record (A) with respect to any dividend
or distribution upon the shares of Common Stock, (B) with respect
to any grants, issuances or sales of any Options, Convertible
Securities or rights to purchase stock, warrants, securities or
other property to holders of shares of Common Stock or (C) for
determining rights to vote with respect to any Fundamental
Transaction, dissolution or liquidation; provided in each case that such
information shall be made known to the public prior to or in
conjunction with such notice being provided to the Holder. It is
expressly understood and agreed that the time of exercise specified
by the Holder in each Exercise Notice shall be definitive and may
not be disputed or challenged by the Company.
9. AMENDMENT AND WAIVER. Except as
otherwise provided herein, the provisions of this Warrant may be
amended or waived and the Company may take any action herein
prohibited, or omit to perform any act herein required to be
performed by it, only if the Company has obtained the written
consent of the Holder.
-10-
10. GOVERNING LAW; JURISDICTION; JURY
TRIAL. This Warrant shall be governed by and construed and
enforced in accordance with, and all questions concerning the
construction, validity, interpretation and performance of this
Warrant shall be governed by, the internal laws of the State of New
York, without giving effect to any choice of law or conflict of law
provision or rule (whether of the State of New York or any other
jurisdictions) that would cause the application of the laws of any
jurisdictions other than the State of New York. The Company hereby
irrevocably submits to the exclusive jurisdiction of the state and
federal courts sitting in The City of New York, Borough of
Manhattan, for the adjudication of any dispute hereunder or in
connection herewith or with any transaction contemplated hereby or
discussed herein, and hereby irrevocably waives, and agrees not to
assert in any suit, action or proceeding, any claim that it is not
personally subject to the jurisdiction of any such court, that such
suit, action or proceeding is brought in an inconvenient forum or
that the venue of such suit, action or proceeding is improper. The
Company hereby irrevocably waives personal service of process and
consents to process being served in any such suit, action or
proceeding by mailing a copy thereof to the Company at the address
set forth in Section 8(i) above or such other address as the
Company subsequently delivers to the Holder and agrees that such
service shall constitute good and sufficient service of process and
notice thereof. Nothing contained herein shall be deemed to limit
in any way any right to serve process in any manner permitted by
law. Nothing contained herein shall be deemed or operate to
preclude the Holder from bringing suit or taking other legal action
against the Company in any other jurisdiction to collect on the
Company's obligations to the Holder, to realize on any collateral
or any other security for such obligations, or to enforce a
judgment or other court ruling in favor of the Holder. THE COMPANY HEREBY IRREVOCABLY WAIVES ANY RIGHT
IT MAY HAVE, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE
ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION WITH OR
ARISING OUT OF THIS WARRANT OR ANY TRANSACTION CONTEMPLATED
HEREBY.
11. VARIABLE RATE TRANSACTIONS.
Notwithstanding anything to the contrary contained herein, from and
after the Subscription Date and on or prior to the Expiration Date,
the Company shall be prohibited from effecting or entering into an
agreement to effect any issuance by the Company or any of its
Subsidiaries of Common Stock, Convertible Securities or Options (or
a combination thereof) involving a Variable Rate Transaction. As
used herein, "Variable Rate
Transaction" means a transaction in which the Company or any
of its Subsidiaries (i) issues or sells any debt or equity security
that are convertible into, exchangeable or exercisable for, or
include the right to receive additional shares of Common Stock
either (A) at a conversion price, exercise price or exchange rate
or other price that is based upon and/or varies with the trading
prices of or quotations for the shares of Common Stock at any time
after the initial issuance of such debt or equity securities., or
(B) with a conversion, exercise or exchange price that is subject
to being reset at some future date after the initial issuance of
such debt or equity security or upon the occurrence of specified or
contingent events directly or indirectly related to the business of
the Company or the market for the Common Stock or (ii) enters into
any agreement, including, but not limited to an equity line of
credit or at-the-market offering, whereby the Company or any of its
Subsidiaries may issue securities at a future determined price. For
the avoidance of doubt, the issuance of a Common Stock Equivalent
with a fixed exercise or conversion price with a standard price
only full ratchet or weighted average anti-dilution provision shall
not be considered to be a Variable Rate Transaction.
12. DISPUTE RESOLUTION. In the case
of a dispute as to the determination of the Exercise Price or the
arithmetic calculation of the Warrant Shares, the Company shall
submit the disputed determinations or arithmetic calculations via
facsimile or electronic mail within two (2) Business Days of
receipt of the Exercise Notice or other event giving rise to such
dispute, as the case may be, to the Holder. If the Holder and the
Company are unable to agree upon such determination or calculation
of the Exercise Price or the Warrant Shares within three (3)
Business Days of such disputed determination or arithmetic
calculation being submitted to the Holder, then the Company shall,
within two (2) Business Days submit via facsimile or electronic
mail (a) the disputed determination of the Exercise Price to an
independent, reputable investment bank selected by the Company and
approved by the Holder or (b) the disputed arithmetic calculation
of the Warrant Shares to the Company's independent, outside
accountant. The Company shall cause at its expense the investment
bank or the accountant, as the case may be, to perform the
determinations or calculations and notify the Company and the
Holder of the results no later than ten (10) Business Days from the
time it receives the disputed determinations or calculations. Such
investment bank's or accountant's determination or calculation, as
the case may be, shall be binding upon all parties absent
demonstrable error.
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13. REMEDIES, OTHER OBLIGATIONS, BREACHES
AND INJUNCTIVE RELIEF. The remedies provided in this Warrant
shall be cumulative and in addition to all other remedies available
under this Warrant and any other Transaction Documents, at law or
in equity (including a decree of specific performance and/or other
injunctive relief), and nothing herein shall limit the right of the
Holder to pursue actual damages for any failure by the Company to
comply with the terms of this Warrant. The Company acknowledges
that a breach by it of its obligations hereunder will cause
irreparable harm to the Holder and that the remedy at law for any
such breach may be inadequate. The Company therefore agrees that,
in the event of any such breach or threatened breach, the holder of
this Warrant shall be entitled, in addition to all other available
remedies, to an injunction restraining any breach, without the
necessity of showing economic loss and without any bond or other
security being required.
14. TRANSFER. This Warrant
and the Warrant Shares may be offered for sale, sold, transferred,
pledged or assigned without the consent of the
Company.
15. SEVERABILITY; CONSTRUCTION;
HEADINGS. If any provision of this Warrant is
prohibited by law or otherwise determined to be invalid or
unenforceable by a court of competent jurisdiction, the provision
that would otherwise be prohibited, invalid or unenforceable shall
be deemed amended to apply to the broadest extent that it would be
valid and enforceable, and the invalidity or unenforceability of
such provision shall not affect the validity of the remaining
provisions of this Warrant so long as this Warrant as so modified
continues to express, without material change, the original
intentions of the parties as to the subject matter hereof and the
prohibited nature, invalidity or unenforceability of the
provision(s) in question does not substantially impair the
respective expectations or reciprocal obligations of the parties or
the practical realization of the benefits that would otherwise be
conferred upon the parties. The parties will endeavor in good faith
negotiations to replace the prohibited, invalid or unenforceable
provision(s) with a valid provision(s), the effect of which comes
as close as possible to that of the prohibited, invalid or
unenforceable provision(s). This Warrant shall be deemed to be
jointly drafted by the Company and the Holder and shall not be
construed against any Person as the drafter hereof. The headings of
this Warrant are for convenience of reference and shall not form
part of, or affect the interpretation of, this
Warrant.
16. DISCLOSURE. Upon receipt or
delivery by the Company of any notice in accordance with the terms
of this Warrant, unless the Company has in good faith determined
that the matters relating to such notice do not constitute
material, nonpublic information relating to the Company or its
subsidiaries, the Company shall contemporaneously with any such
receipt or delivery publicly disclose such material, nonpublic
information on a Current Report on Form 8-K or otherwise. In the
event that the Company believes that a notice contains material,
nonpublic information relating to the Company or its subsidiaries,
the Company so shall indicate to such Holder contemporaneously with
delivery of such notice, and in the absence of any such indication,
the Holder shall be allowed to presume that all matters relating to
such notice do not constitute material, nonpublic information
relating to the Company or its subsidiaries.
17. CERTAIN DEFINITIONS. For
purposes of this Warrant, the following terms shall have the
following meanings:
(a) "Affiliate" means, with respect to any
Person, any other Person that directly or indirectly controls, is
controlled by, or is under common control with, such Person, it
being understood for purposes of this definition that "control" of
a Person means the power directly or indirectly either to vote 10%
or more of the stock having ordinary voting power for the election
of directors of such Person or direct or cause the direction of the
management and policies of such Person whether by contract or
otherwise.
-12-
(b) "Approved Stock Plan" means the
Company’s 2016 Amended and Restated Stock Incentive Plan and
any employee benefit plan which has been approved by a majority of
the disinterested members of the Board of Directors of the Company,
in each case pursuant to which the Company’s securities may
be issued to any employee, officer or director for services
provided to the Company.
(c) "Attribution Parties" means,
collectively, the following Persons and entities: (i) any
investment vehicle, including, any funds, feeder funds or managed
accounts, currently, or from time to time after the Subscription
Date, directly or indirectly managed or advised by the Holder's
investment manager or any of its Affiliates or principals, (ii) any
direct or indirect Affiliates of the Holder or any of the
foregoing, (iii) any Person acting or who could be deemed to be
acting as a Group together with the Holder or any of the foregoing
and (iv) any other Persons whose beneficial ownership of the
Company's Common Stock would or could be aggregated with the
Holder's and the other Attribution Parties for purposes of Section
13(d) of the 1934 Act. For clarity, the purpose of the foregoing is
to subject collectively the Holder and all other Attribution
Parties to the Maximum Percentage.
(d) “Bid
Price” means, for any security as of the particular
time of determination, the bid price for such security on the
Principal Market as reported by Bloomberg as of such time of
determination, or, if the Principal Market is not the principal
securities exchange or trading market for such security, the bid
price of such security on the principal securities exchange or
trading market where such security is listed or traded as reported
by Bloomberg as of such time of determination, or if the foregoing
does not apply, the bid price of such security in the
over-the-counter market on the electronic bulletin board for such
security as reported by Bloomberg as of such time of determination,
or, if no bid price is reported for such security by Bloomberg as
of such time of determination, the average of the bid prices of any
market makers for such security as reported in the “pink
sheets” by OTC Markets Group Inc. (formerly Pink Sheets LLC)
as of such time of determination. If the Bid Price cannot be
calculated for a security as of the particular time of
determination on any of the foregoing bases, the Bid Price of such
security as of such time of determination shall be the fair market
value as mutually determined by the Company and the Holder. If the
Company and the Holder are unable to agree upon the fair market
value of such security, then such dispute shall be resolved in
accordance with the procedures in Section 11. All such
determinations shall be appropriately adjusted for any stock
dividend, stock split, stock combination or other similar
transaction during such period.
(e) "Black Scholes Value" means the value of
this Warrant based on the Black-Scholes Option Pricing Model
obtained from the "OV" function on Bloomberg determined as of the
day immediately following the first public announcement of the
applicable Fundamental Transaction, or, if the Fundamental
Transaction is not publicly announced, the date the Fundamental
Transaction is consummated, for pricing purposes and reflecting (i)
a risk-free interest rate corresponding to the U.S. Treasury rate
for a period equal to the remaining term of this Warrant as of such
date of request, (ii) an expected volatility equal to the greater
of 100% and the 100-day volatility obtained from the HVT function
on Bloomberg as of the day immediately following the public
announcement of the applicable Fundamental Transaction, or, if the
Fundamental Transaction is not publicly announced, the date the
Fundamental Transaction is consummated, (iii) the underlying price
per share used in such calculation shall be the highest Weighted
Average Price during the five (5) Trading Days prior to the closing
of the Fundamental Transaction, (iv) a zero cost of borrow and (v)
a 360 day annualization factor.
(f) "Bloomberg" means Bloomberg Financial
Markets.
(g) "Business Day" means any day other than
Saturday, Sunday or other day on which commercial banks in The City
of New York are authorized or required by law to remain
closed.
-13-
(h) “Change of Control” means any
Fundamental Transaction other than (i) any reorganization,
recapitalization or reclassification of the Common Stock in which
holders of the Company’s voting power immediately prior to
such reorganization, recapitalization or reclassification continue
after such reorganization, recapitalization or reclassification to
hold publicly traded securities and, directly or indirectly, are,
in all material respect, the holders of the voting power of the
surviving entity (or entities with the authority or voting power to
elect the members of the board of directors (or their equivalent if
other than a corporation) of such entity or entities) after such
reorganization, recapitalization or reclassification, (ii) pursuant
to a migratory merger effected solely for the purpose of changing
the jurisdiction of incorporation of the Company or (iii) a merger
in connection with a bona fide acquisition by the Company of any
Person in which (x) the gross consideration paid, directly or
indirectly, by the Company in such acquisition is not greater than
20% of the Company’s market capitalization as calculated on
the date of the consummation of such merger and (y) such merger
does not contemplate a change to the identity of a majority of the
board of directors of the Company. Notwithstanding anything herein
to the contrary, any transaction or series of transaction that,
directly or indirectly, results in the Company or the Successor
Entity not having Common Stock or common stock, as applicable,
registered under the 1934 Act and listed on an Eligible Market
shall be deemed a Change of Control.
(i) "Closing Bid Price" and "Closing Sale Price" means, for any
security as of any date, the last closing bid price and last
closing trade price, respectively, for such security on the
Principal Market, as reported by Bloomberg, or, if the Principal
Market begins to operate on an extended hours basis and does not
designate the closing bid price or the closing trade price, as the
case may be, then the last bid price or the last trade price,
respectively, of such security prior to 4:00:00 p.m., New York
time, as reported by Bloomberg, or, if the Principal Market is not
the principal securities exchange or trading market for such
security, the last closing bid price or last trade price,
respectively, of such security on the principal securities exchange
or trading market where such security is listed or traded as
reported by Bloomberg, or if the foregoing do not apply, the last
closing bid price or last trade price, respectively, of such
security in the over-the-counter market on the electronic bulletin
board for such security as reported by Bloomberg, or, if no closing
bid price or last trade price, respectively, is reported for such
security by Bloomberg, the average of the bid prices, or the ask
prices, respectively, of any market makers for such security as
reported in the OTC Link or "pink sheets" by OTC Markets Group Inc.
(formerly Pink OTC Markets Inc.). If the Closing Bid Price or the
Closing Sale Price cannot be calculated for a security on a
particular date on any of the foregoing bases, the Closing Bid
Price or the Closing Sale Price, as the case may be, of such
security on such date shall be the fair market value as mutually
determined by the Company and the Holder. If the Company and the
Holder are unable to agree upon the fair market value of such
security, then such dispute shall be resolved pursuant to Section
11. All such determinations to be appropriately adjusted for any
stock dividend, stock split, stock combination, reclassification or
other similar transaction during the applicable calculation
period.
(j) "Common Stock" means (i) the
Company's Common Stock, par value $0.001 per share, and
(ii) any capital stock into which such Common Stock shall have
been changed or any capital stock resulting from a reclassification
of such Common Stock.
(k) "Convertible Securities" means any stock
or securities (other than Options) directly or indirectly
convertible into or exercisable or exchangeable for shares of
Common Stock.
(l) "Eligible Market" means The NASDAQ
Capital Market, the NYSE American LLC, The NASDAQ Global Select
Market, The NASDAQ Global Market or The New York Stock Exchange,
Inc.
-14-
(m) "Excluded Securities" means any shares of
Common Stock issued or issuable, or deemed issued or issuable
pursuant to Section 2(a): (i) in connection with any Approved Stock
Plan, (ii) upon exercise of the Warrants; provided, that the terms
of such Warrants are not amended, modified or changed on or after
the Subscription Date, (iii) upon conversion, exercise or exchange
of any Options or Convertible Securities which are outstanding on
the day immediately preceding the Subscription Date.; provided, that the terms
of such Options or Convertible Securities are not amended, modified
or changed on or after the Subscription Date and (iv) issued as
payment of regular dividends pursuant to the terms of the
Company’s Series B Preferred Stock; provided, that the
terms of the Series B Preferred Stock are not amended, modified or
changed on or after the Subscription Date.
(n) "Expiration Date" means the date
[sixty
(60)] months
after the Initial Exercisability Date or, if such date falls on a day other
than a Business Day or on which trading does not take place on the
Principal Market (a "Holiday"), the next day that is not a
Holiday.
(o) "Fundamental Transaction" means (A) that
the Company shall, directly or indirectly, including through
subsidiaries, Affiliates or otherwise, in one or more related
transactions, (i) consolidate or merge with or into (whether or not
the Company is the surviving corporation) another Subject Entity,
or (ii) sell, assign, transfer, convey or otherwise dispose of all
or substantially all of the properties or assets of the Company or
any of its "significant subsidiaries" (as defined in Rule 1-02 of
Regulation S-X) to one or more Subject Entities, or (iii) make, or
allow one or more Subject Entities to make, or allow the Company to
be subject to or have its shares of Common Stock be subject to or
party to one or more Subject Entities making, a purchase, tender or
exchange offer that is accepted by the holders of at least either
(x) 50% of the outstanding shares of Common Stock, (y) 50% of the
outstanding shares of Common Stock calculated as if any shares of
Common Stock held by all Subject Entities making or party to, or
Affiliated with any Subject Entities making or party to, such
purchase, tender or exchange offer were not outstanding; or (z)
such number of shares of Common Stock such that all Subject
Entities making or party to, or Affiliated with any Subject Entity
making or party to, such purchase, tender or exchange offer, become
collectively the beneficial owners (as defined in Rule 13d-3 under
the 1934 Act) of at least 50% of the outstanding shares of Common
Stock, or (iv) consummate a stock purchase agreement or other
business combination (including, without limitation, a
reorganization, recapitalization, spin-off or scheme of
arrangement) with one or more Subject Entities whereby all such
Subject Entities, individually or in the aggregate, acquire, either
(x) at least 50% of the outstanding shares of Common Stock, (y) at
least 50% of the outstanding shares of Common Stock calculated as
if any shares of Common Stock held by all the Subject Entities
making or party to, or Affiliated with any Subject Entity making or
party to, such stock purchase agreement or other business
combination were not outstanding; or (z) such number of shares of
Common Stock such that the Subject Entities become collectively the
beneficial owners (as defined in Rule 13d-3 under the 1934 Act) of
at least 50% of the outstanding shares of Common Stock, or (v)
reorganize, recapitalize or reclassify its shares of Common Stock.,
(B) that the Company shall, directly or indirectly, including
through subsidiaries, Affiliates or otherwise, in one or more
related transactions, allow any Subject Entity individually or the
Subject Entities in the aggregate to be or become the "beneficial
owner" (as defined in Rule 13d-3 under the 1934 Act), directly or
indirectly, whether through acquisition, purchase, assignment,
conveyance, tender, tender offer, exchange, reduction in
outstanding shares of Common Stock, merger, consolidation, business
combination, reorganization, recapitalization, spin-off, scheme of
arrangement, reorganization, recapitalization or reclassification
or otherwise in any manner whatsoever, of either (x) at least 50%
of the aggregate ordinary voting power represented by issued and
outstanding shares of Common Stock, (y) at least 50% of the
aggregate ordinary voting power represented by issued and
outstanding shares of Common Stock not held by all such Subject
Entities as of the Subscription Date calculated as if any shares of
Common Stock held by all such Subject Entities were not
outstanding, or (z) a percentage of the aggregate ordinary voting
power represented by issued and outstanding shares of Common Stock
or other equity securities of the Company sufficient to allow such
Subject Entities to effect a statutory short form merger or other
transaction requiring other stockholders of the Company to
surrender their Common Stock without approval of the stockholders
of the Company or (C) directly or indirectly, including through
subsidiaries, Affiliates or otherwise, in one or more related
transactions, the issuance of or the entering into any other
instrument or transaction structured in a manner to circumvent, or
that circumvents, the intent of this definition in which case this
definition shall be construed and implemented in a manner otherwise
than in strict conformity with the terms of this definition to the
extent necessary to correct this definition or any portion of this
definition which may be defective or inconsistent with the intended
treatment of such instrument or transaction.
-15-
(p) "Group" means a "group" as that term is
used in Section 13(d) of the 1934 Act and as defined in Rule 13d-5
thereunder.
(q) "Option Value" means the value of an
Option based on the Black-Scholes Option Pricing model obtained
from the "OV" function on Bloomberg determined as of the day of the
most recent Closing Sale Price of the Common Stock prior to the
public announcement of the pricing of the applicable Option (or, if
the pricing is not publicly announced, on the most recent Closing
Sale Price of the Common Stock prior to the pricing of the
applicable Option) and reflecting (i) a risk-free interest rate
corresponding to the U.S. Treasury rate for a period equal to the
remaining term of the applicable Option as of the applicable date
of determination, (ii) an expected volatility equal to the greater
of 100% and the 100 day volatility obtained from the HVT function
on Bloomberg as of (A) the Trading Day immediately following the
first public announcement of the pricing of the transaction that
includes the applicable Option if such pricing is publicly
announced or (B) the Trading Day immediately following the issuance
of the applicable Option if the pricing of such transaction is not
publicly announced, (iii) an underlying price per share equal to
the most recent Closing Sale Price of the Common Stock prior to the
public announcement of the pricing of the applicable Option (or, if
the pricing is not publicly announced, on the most recent Closing
Sale Price of the Common Stock prior to the pricing of the
applicable Option), (iv) a zero cost of borrow and (v) a 360-day
annualization factor.
(r) "Options" means any rights, warrants or
options to subscribe for or purchase shares of Common Stock or
Convertible Securities.
(s) "Parent Entity" of a Person means an
entity that, directly or indirectly, controls the applicable
Person, including such entity whose common stock or equivalent
equity security is quoted or listed on an Eligible Market (or, if
so elected by the Holder, any other market, exchange or quotation
system), or, if there is more than one such Person or such entity,
the Person or such entity designated by the Holder or in the
absence of such designation, such Person or entity with the largest
public market capitalization as of the date of consummation of the
Fundamental Transaction.
(t) "Person" means an individual, a limited
liability company, a partnership, a joint venture, a corporation, a
trust, an unincorporated organization, any other entity and a
government or any department or agency thereof.
(u) "Principal Market" means The NASDAQ
Capital Market.
(v) "Required Holders" means the holders of
the Warrants representing at least a majority of the shares of
Common Stock underlying the Warrants then outstanding.
(w) “Standard Settlement Period”
means the standard settlement period, expressed in a number of
Trading Days, for the Company’s primary trading market or
quotation system with respect to the Common Stock that is in effect
on the date of receipt of an applicable Conversion
Notice.
(x) "Subject Entity" means any Person,
Persons or Group or any Affiliate or associate of any such Person,
Persons or Group.
(y) "Successor Entity" means one or more
Person or Persons (or, if so elected by the Holder, the Company or
Parent Entity) formed by, resulting from or surviving any
Fundamental Transaction or one or more Person or Persons (or, if so
elected by the Holder, the Company or the Parent Entity) with which
such Fundamental Transaction shall have been entered
into.
-16-
(z) "Trading Day" means any day on which the
Common Stock is traded on the Principal Market, or, if the
Principal Market is not the principal trading market for the Common
Stock, then on the principal securities exchange or securities
market on which the Common Stock is then traded.
(aa) “Transaction
Documents” means any agreement entered into by and
between the Company and the Holder, as applicable.
(bb) "Weighted
Average Price" means, for any security as of any date, the
dollar volume-weighted average price for such security on the
Principal Market during the period beginning at 9:30:01 a.m., New
York time (or such other time as the Principal Market publicly
announces is the official open of trading), and ending at 4:00:00
p.m., New York time (or such other time as the Principal Market
publicly announces is the official close of trading), as reported
by Bloomberg through its "Volume at Price" function or, if the
foregoing does not apply, the dollar volume-weighted average price
of such security in the over-the-counter market on the electronic
bulletin board for such security during the period beginning at
9:30:01 a.m., New York time (or such other time as such market
publicly announces is the official open of trading), and ending at
4:00:00 p.m., New York time (or such other time as such market
publicly announces is the official close of trading), as reported
by Bloomberg, or, if no dollar volume-weighted average price is
reported for such security by Bloomberg for such hours, the average
of the highest Closing Bid Price and the lowest closing ask price
of any of the market makers for such security as reported in the
OTC Link or "pink sheets" by OTC Markets Group Inc. (formerly Pink
OTC Markets Inc.). If the Weighted Average Price cannot be
calculated for a security on a particular date on any of the
foregoing bases, the Weighted Average Price of such security on
such date shall be the fair market value as mutually determined by
the Company and the Holder. If the Company and the Holder are
unable to agree upon the fair market value of such security, then
such dispute shall be resolved pursuant to Section 11 with the term
"Weighted Average Price" being substituted for the term "Exercise
Price." All such determinations shall be appropriately adjusted for
any stock dividend, stock split, stock combination,
reclassification or other similar transaction during the applicable
calculation period.
[Signature Page Follows]
-17-
IN WITNESS WHEREOF, the Company has
caused this Warrant to Purchase Common Stock to be duly executed as
of the Issuance Date set out above.
VISTAGEN
THERAPEUTICS, INC.
By:___________________________
Name:
Title:
-18-
EXHIBIT A
EXERCISE NOTICE
TO BE EXECUTED BY THE REGISTERED HOLDER TO EXERCISE
THIS
WARRANT TO PURCHASE COMMON STOCK
VISTAGEN THERAPEUTICS, INC.
The
undersigned holder hereby exercises the right to purchase
_________________ of the shares of Common Stock ("Warrant Shares") of VistaGen
Therapeutics, Inc., a company organized under the laws of Nevada
(the "Company"), evidenced
by the attached Warrant to Purchase Common Stock (the "Warrant"). Capitalized terms used herein
and not otherwise defined shall have the respective meanings set
forth in the Warrant.
1. Form
of Exercise Price. The Holder intends that payment of the Exercise
Price shall be made as:
____________
a "Cash Exercise" with respect to
_________________ Warrant Shares; and/or
____________
a "Cashless Exercise" with
respect to _______________ Warrant Shares.
2.
Payment of Exercise Price. In the event that the holder has elected
a Cash Exercise with respect to some or all of the Warrant Shares
to be issued pursuant hereto, the holder shall pay the Aggregate
Exercise Price in the sum of $___________________ to the Company in
accordance with the terms of the Warrant.
3.
Delivery of Warrant Shares. The Company shall deliver to the holder
__________ Warrant Shares in accordance with the terms of the
Warrant.
4.
Variable Price Securities. By checking the box in this Item 4, the
holder elects to exercise the Warrant by substituting the Variable
Price for the Exercise Price pursuant to Section 2(d) of the
Warrant, which Variable Price equals $___________ per share.
☐
Date:
_______________ __, ______
Name
of Registered Holder
By:
Name:
Title:
-19-
ACKNOWLEDGMENT
The
Company hereby acknowledges this Exercise Notice and hereby directs
[TRANSFER AGENT] to issue the above indicated number of shares of
Common Stock on or prior to the applicable Share Delivery
Date.
VISTAGEN
THERAPEUTICS, INC.
By:________________________________
Name:
Title:
-20-
Exhibit 4.2
SERIES A-2 WARRANT
VISTAGEN THERAPEUTICS, INC.
Warrant To Purchase Common Stock
Warrant
No.:
Number
of Shares of Common Stock:_____________
Date of
Issuance: [___], 2017 ("Issuance
Date")
VistaGen
Therapeutics, Inc., a company organized under the laws of Nevada
(the "Company"), hereby
certifies that, for good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, [HOLDER], the
registered holder hereof or its permitted assigns (the
"Holder"), is entitled,
subject to the terms set forth below, to purchase from the Company,
at the Exercise Price (as defined below) then in effect, at any
time or times on or after the Issuance Date (the
“Initial Exercisability
Date”), but not after 11:59 p.m., New York time, on
the Expiration Date, (as defined below), ______________
(_____________)1 fully paid non-assessable shares of
Common Stock (as defined below), subject to adjustment as provided
herein (the
"Warrant Shares"). Except as
otherwise defined herein, capitalized terms in this Warrant to
Purchase Common Stock (including any Warrants to Purchase Common
Stock issued in exchange, transfer or replacement hereof, this
"Warrant"), shall have the
meanings set forth in Section 16. This Warrant is one of the
Warrants to purchase Common Stock (the "Warrants") issued pursuant to (i) that
certain Underwriting Agreement, dated as of [ ], 2017 (the
"Subscription Date") by and
between the Company and Oppenheimer & Co. Inc., (ii) the
Company's Registration Statement on Form S-3 (File number
333-215671) (the "Registration
Statement") and (iii) the Company's prospectus supplement
dated as of [ ], 2017.
1. EXERCISE
OF WARRANT.
(a) Mechanics of Exercise. Subject
to the terms and conditions hereof (including, without limitation,
the limitations set forth in Section 1(f)), this Warrant may be
exercised by the Holder at any time or times on or after the
Initial Exercisability Date, in
whole or in part, by delivery (whether via facsimile, electronic
mail or otherwise) of a written notice, in the form attached hereto
as Exhibit A (the
"Exercise Notice"), of the
Holder's election to exercise this Warrant. Within one (1) Trading
Day following the delivery of the Exercise Notice, the Holder shall
make payment to the Company of an amount equal to the Exercise
Price in effect on the date of such exercise multiplied by the
number of Warrant Shares as to which this Warrant is being
exercised (the "Aggregate Exercise
Price") in cash by wire transfer of immediately available
funds or, if the provisions of Section 1(d) are applicable, by
notifying the Company that this Warrant is being exercised pursuant
to a Cashless Exercise (as defined in Section 1(d)). The Holder
shall not be required to deliver the original Warrant in order to
effect an exercise hereunder, nor shall any ink-original signature
or medallion guarantee (or other type of guarantee or notarization)
with respect to any Exercise Notice be required. Execution and
delivery of the Exercise Notice with respect to less than all of
the Warrant Shares shall have the same effect as cancellation of
the original Warrant and issuance of a new Warrant evidencing the
right to purchase the remaining number of Warrant Shares. On or
before the first (1st) Trading Day
following the date on which the Company has received the applicable
Exercise Notice, the Company shall transmit by facsimile or
electronic mail an acknowledgment of confirmation of receipt of the
Exercise Notice, in the form attached to the Exercise Notice, to
the Holder and the Company's transfer agent (the "Transfer Agent"). So long as the Holder
delivers the Aggregate Exercise Price (or notice of a Cashless
Exercise) on or prior to the first (1st) Trading Day following the
date on which the Exercise Notice has been delivered to the
Company, then on or prior to the earlier of (i) the second (2nd)
Trading Day and (ii) the number of Trading Days comprising the
Standard Settlement Period, in each case following the date on
which the Exercise Notice has been delivered to the Company, or, if
the Holder does not deliver the Aggregate Exercise Price (or notice
of a Cashless
-1-
(b) Exercise Price. For purposes of
this Warrant, "Exercise
Price" means $1.82 per share, subject to adjustment as
provided herein.
(c) Company's Failure to Timely Deliver
Securities. If either (I) the Company shall fail for any
reason or for no reason to issue to the Holder on or prior to the
applicable Share Delivery Date, if (x) the Transfer Agent is not
participating in the DTC Fast Automated Securities Transfer
Program, a certificate for the number of shares of Common Stock to
which the Holder is entitled and register such Common Stock on the
Company's share register or (y) the Transfer Agent is participating
in the DTC Fast Automated Securities Transfer Program, to credit
the Holder's balance account with DTC, for such number of shares of
Common Stock to which the Holder is entitled upon the Holder's
exercise of this Warrant or (II) a registration statement (which
may be the Registration Statement) covering the issuance or resale
of the Warrant Shares that are the subject of the Exercise Notice
(the "Exercise Notice Warrant
Shares") is not available for the issuance or resale, as
applicable, of such Exercise Notice Warrant Shares and (x) the
Company fails to promptly, but in no event later than one (1)
Business Day after such registration statement becomes unavailable,
to so notify the Holder and (y) the Company is unable to deliver
the Exercise Notice Warrant Shares electronically without any
restrictive legend by crediting such aggregate number of Exercise
Notice Warrant Shares to the Holder’s or its designee’s
balance account with DTC through its Deposit / Withdrawal At
Custodian system (the event described in the immediately foregoing
clause (II) is hereinafter referred as a "Notice Failure" and together with the
event described in clause (I) above, an "Exercise Failure"), then, in addition to
all other remedies available to the Holder, if on or prior to the
applicable Share Delivery Date either (I) if the Transfer Agent is
not participating in the DTC Fast Automated Securities
Transfer
-2-
Program, the
Company shall fail to issue and deliver a certificate to the Holder
and register such shares of Common Stock on the Company's share
register or, if the Transfer Agent is participating in the DTC Fast
Automated Securities Transfer Program, credit the Holder's balance
account with DTC for the number of shares of Common Stock to which
the Holder is entitled upon the Holder's exercise hereunder or
pursuant to the Company's obligation pursuant to clause (ii) below
or (II) a Notice Failure occurs, and if on or after such Trading
Day the Holder purchases (in an open market transaction or
otherwise) Common Stock to deliver in satisfaction of a sale by the
Holder of shares of Common Stock issuable upon such exercise that
the Holder anticipated receiving from the Company (a "Buy-In"), then the Company shall, within
three (3) Trading Days after the Holder's request and in the
Holder's discretion, either (i) pay cash to the Holder in an amount
equal to the Holder's total purchase price (including brokerage
commissions and other out-of-pocket expenses, if any) for the
shares of Common Stock so purchased (the "Buy-In Price"), at which point the
Company's obligation to deliver such certificate (and to issue such
shares of Common Stock) or credit such Holder's balance account
with DTC for such shares of Common Stock shall terminate, or (ii)
promptly honor its obligation to deliver to the Holder a
certificate or certificates representing such shares of Common
Stock or credit such Holder's balance account with DTC, as
applicable, and pay cash to the Holder in an amount equal to the
excess (if any) of the Buy-In Price over the product of (A) such
number of shares of Common Stock, times (B) any trading price of
the Common Stock selected by the Holder in writing as in effect at
any time during the period beginning on the applicable Exercise
Date and ending on the applicable Share Delivery Date. Nothing
shall limit the Holder's right to pursue any other remedies
available to it hereunder, at law or in equity, including, without
limitation, a decree of specific performance and/or injunctive
relief with respect to the Company's failure to timely deliver
certificates representing Warrant Shares (or to electronically
deliver such Warrant Shares) upon the exercise of this Warrant as
required pursuant to the terms hereof. While this Warrant is
outstanding, the Company shall cause its transfer agent to
participate in the DTC Fast Automated Securities Transfer Program.
In addition to the foregoing rights, (i) if the Company fails to
deliver the applicable number of Warrant Shares upon an exercise
pursuant to Section 1 by the applicable Share Delivery Date, then
the Holder shall have the right to rescind such exercise in whole
or in part and retain and/or have the Company return, as the case
may be, any portion of this Warrant that has not been exercised
pursuant to such Exercise Notice; provided that the rescission of
an exercise shall not affect the Company’s obligation to make
any payments that have accrued prior to the date of such notice
pursuant to this Section 1(c) or otherwise, and (ii) if a
registration statement (which may be the Registration Statement)
covering the issuance or resale of the Warrant Shares that are
subject to an Exercise Notice is not available for the issuance or
resale, as applicable, of such Exercise Notice Warrant Shares and
the Holder has submitted an Exercise Notice prior to receiving
notice of the non-availability of such registration statement and
the Company has not already delivered the Warrant Shares underlying
such Exercise Notice electronically without any restrictive legend
by crediting such aggregate number of Warrant Shares to which the
Holder is entitled pursuant to such exercise to the Holder’s
or its designee’s balance account with DTC through its
Deposit / Withdrawal At Custodian system, the Holder shall have the
option, by delivery of notice to the Company, to (x) rescind such
Exercise Notice in whole or in part and retain or have returned, as
the case may be, any portion of this Warrant that has not been
exercised pursuant to such Exercise Notice; provided that the
rescission of an Exercise Notice shall not affect the
Company’s obligation to make any payments that have accrued
prior to the date of such notice pursuant to this Section 1(c) or
otherwise, and/or (y) switch some or all of such Exercise Notice
from a cash exercise to a Cashless Exercise.
(d) Cashless Exercise. Notwithstanding anything contained
herein to the contrary, if a registration statement (which may be
the Registration Statement) covering the issuance or resale of the
Exercise Notice Warrant Shares is not available for the issuance or
resale, as applicable, of such Exercise Notice Warrant Shares, the
Holder may, in its sole discretion, exercise this Warrant in whole
or in part and, in lieu of making the cash payment otherwise
contemplated to be made to the Company upon such exercise in
payment of the Aggregate Exercise Price, elect instead to receive
upon such exercise the "Net Number" of shares of Common Stock
determined according to the following formula (a "Cashless Exercise"):
-3-
Net
Number = (A x B) - (A x
C)
B
For
purposes of the foregoing formula:
A= the
total number of shares with respect to which this Warrant is then
being exercised.
B= as
applicable: (i) the Closing Sale Price of the Common Stock on the
Trading Day immediately preceding the date of the applicable
Exercise Notice if such Exercise Notice is (1) both executed and
delivered pursuant to Section 1(a) hereof on a day that is not a
Trading Day or (2) both executed and delivered pursuant to Section
1(a) hereof on a Trading Day prior to the opening of “regular
trading hours” (as defined in Rule 600(b)(64) of Regulation
NMS promulgated under the federal securities laws) on such Trading
Day, (ii) at the option of the Holder, either (y) the Weighted
Average Price on the Trading Day immediately preceding the date of
the applicable Notice of Exercise or (z) the Bid Price of the
Common Stock as of the time of the Holder’s execution of the
applicable Exercise Notice if such Exercise Notice is executed
during “regular trading hours” on a Trading Day and is
delivered within two (2) hours thereafter pursuant to Section 1(a)
hereof or (iii) the Closing Sale Price of the Common Stock on the
date of the applicable Exercise Notice if the date of such Exercise
Notice is a Trading Day and such Exercise Notice is both executed
and delivered pursuant to Section 1(a) hereof after the close of
“regular trading hours” on such Trading
Day.
C= the
Exercise Price then in effect for the applicable Warrant Shares at
the time of such exercise.
If Warrant Shares are issued in such a cashless exercise, the
Company acknowledges and agrees that in accordance with Section
3(a)(9) of the Securities Act of 1933, as amended, the Warrant
Shares shall take on the registered characteristics of the Warrants
being exercised, and the holding period of the Warrants being
exercised may be tacked on to the holding period of the Warrant
Shares. The Company agrees not to take any position contrary to
this Section 1(d).
(e) Disputes. In the case of a
dispute as to the determination of the Exercise Price or the
arithmetic calculation of the Warrant Shares, the Company shall
promptly issue to the Holder the number of Warrant Shares that are
not disputed and resolve such dispute in accordance with Section
11.
(f) Beneficial
Ownership. Notwithstanding
anything to the contrary contained herein, the Company shall not
effect the exercise of any portion of this Warrant, and the Holder
shall not have the right to exercise any portion of this Warrant,
pursuant to the terms and conditions of this Warrant and any such
exercise shall be null and void and treated as if never made, to
the extent that after giving effect to such exercise, the Holder
together with the other Attribution Parties collectively would
beneficially own in excess of [4.99][9.99]% (the
"Maximum
Percentage") of the number
of shares of Common Stock outstanding immediately after giving effect to
such exercise. For purposes of the foregoing sentence, the
aggregate number of shares of Common Stock beneficially owned by the Holder and the other
Attribution Parties shall include the number of shares of
Common Stock held by the Holder and
all other Attribution Parties plus the number of shares of
Common Stock issuable upon exercise of
this Warrant with respect to which the determination of such
sentence is being made, but shall exclude the number of
shares of Common Stock which would be
issuable upon (A) exercise of the remaining, unexercised portion of
this Warrant beneficially owned by the Holder or any of the other
Attribution Parties and (B) exercise or conversion of the
unexercised or unconverted portion of any other securities of the
Company (including, without limitation, any convertible notes or
convertible preferred stock or warrants, including the other
Warrants) beneficially owned by the Holder or any other Attribution
Party subject to a limitation on conversion or exercise analogous
to the limitation contained in this Section 1(f). For purposes of
this Section 1(f), beneficial ownership shall be calculated in
accordance with Section 13(d) of the Securities Exchange Act of
1934, as amended (the "1934 Act"). For purposes of this Warrant, in determining
the number of outstanding shares of Common Stock
the Holder may acquire upon the
exercise of this Warrant without exceeding the Maximum Percentage,
the Holder may rely on the number of outstanding shares of
Common Stock as reflected in (x) the
Company's most recent Annual Report on
-4-
Form 10-K, Quarterly Report on Form 10-Q and
Current Reports on Form 8-K or other public filing with the
Securities and Exchange Commission (the "SEC"), as the case may be, (y) a more
recent public announcement by the Company or (3) any other written
notice by the Company or the Transfer
Agent setting forth the number of shares of Common Stock
outstanding (the "Reported Outstanding Share
Number"). If the Company
receives an Exercise Notice from the Holder at a time when the
actual number of outstanding shares of Common Stock
is less than the Reported Outstanding
Share Number, the Company shall (i) notify the Holder in writing of
the number of shares of Common Stock then outstanding and, to the extent that such
Exercise Notice would otherwise cause the Holder's beneficial
ownership, as determined pursuant to this Section 1(f), to exceed
the Maximum Percentage, the Holder must notify the Company of a
reduced number of Warrant Shares to be purchased pursuant to such
Exercise Notice (the number of
shares by which such purchase is reduced, the "Reduction
Shares") and (ii) as soon as
reasonably practicable, the Company shall return to the Holder any
exercise price paid by the Holder for the Reduction Shares.
For any reason at any time, upon the written or oral request of the
Holder, the Company shall within one
(1) Business Day confirm orally and in writing or by electronic
mail to the Holder the number of shares of Common Stock
then outstanding. In any case, the
number of outstanding shares of Common Stock shall be determined after giving effect to the
conversion or exercise of securities of the Company, including this
Warrant, by the Holder and any other Attribution Party since the
date as of which the Reported Outstanding Share Number was
reported. In the event that the issuance of Common Stock
to the Holder upon exercise of this
Warrant results in the Holder and the other Attribution Parties
being deemed to beneficially own, in the aggregate, more than the
Maximum Percentage of the number of outstanding shares of
Common Stock (as determined under
Section 13(d) of the 1934 Act), the number of shares so issued by
which the Holder's and the other Attribution Parties' aggregate
beneficial ownership exceeds the Maximum Percentage (the
"Excess
Shares") shall be deemed null
and void and shall be cancelled ab initio, and the Holder shall not
have the power to vote or to transfer the Excess Shares. As soon as
reasonably practicable after the issuance of the Excess Shares has
been deemed null and void, the Company shall return to the Holder
the exercise price paid by the Holder for the Excess Shares.
Upon delivery of a written notice to the Company, the Holder may
from time to time increase or decrease the Maximum Percentage to
any other percentage not in excess of 9.99% as specified in such
notice; provided that (i) any such increase in the Maximum
Percentage will not be effective until the sixty-first
(61st) day
after such notice is delivered to the Company and (ii) any such
increase or decrease will apply only to the Holder and the other
Attribution Parties and not to any other holder of Warrants that is
not an Attribution Party of the Holder. For purposes of clarity,
the shares of Common Stock issuable pursuant to the terms of this
Warrant in excess of the Maximum Percentage shall not be deemed to
be beneficially owned by the Holder for any purpose including for
purposes of Section 13(d) or Rule 16a-1(a)(1) of the 1934 Act. No
prior inability to exercise this Warrant pursuant to this paragraph
shall have any effect on the applicability of the provisions of
this paragraph with respect to any subsequent determination of
exercisability. The provisions of this
paragraph shall be construed and implemented in a manner otherwise
than in strict conformity with the terms of this Section 1(f) to
the extent necessary to correct this paragraph or any portion of
this paragraph which may be defective or inconsistent with the
intended beneficial ownership limitation contained in this Section
1(f) or to make changes or supplements necessary or desirable to properly give effect to
such limitation. The limitation contained in this paragraph may not
be waived and shall apply to a successor holder of this
Warrant.
(g) Required Reserve Amount.
So long as this Warrant remains outstanding, the Company shall at
all times keep reserved for issuance under this Warrant a number of
shares of Common Stock at least equal to 100% of the maximum number
of shares of Common Stock as shall be necessary to satisfy the
Company’s obligation to issue shares of Common Stock under
the Warrants then outstanding (without regard to any limitations on
exercise) (the "Required Reserve
Amount"); provided that at no time shall
the number of shares of Common Stock reserved pursuant to this
Section 1(g) be reduced other than in connection with any exercise
of Warrants or such other event covered by Section 2(c)
below. The Required Reserve Amount (including, without
limitation, each increase in the number of shares so reserved)
shall be allocated pro rata among the holders of the Warrants based
on the number of shares of Common Stock issuable upon exercise of
Warrants held by each holder thereof on the Issuance Date (without
regard to any limitations on exercise) (the "Authorized Share Allocation"). In the
event that a holder shall sell or otherwise transfer any of such
holder’s Warrants, each transferee shall be allocated a pro
rata portion of such holder’s Authorized Share Allocation.
Any shares of Common Stock reserved and allocated to any Person
which ceases to hold any Warrants shall be allocated to the
remaining holders of Warrants, pro rata based on the number of
shares of Common Stock issuable upon exercise of the Warrants then
held by such holders thereof (without regard to any limitations on
exercise).
-5-
(h) Insufficient Authorized Shares.
If at any time while this Warrant remains outstanding the Company
does not have a sufficient number of authorized and unreserved
shares of Common Stock to satisfy its obligation to reserve for
issuance the Required Reserve Amount (an "Authorized Share Failure"), then the
Company shall promptly take all action reasonably necessary to
increase the Company's authorized shares of Common Stock to an
amount sufficient to allow the Company to reserve the Required
Reserve Amount for this Warrant then outstanding. Without limiting
the generality of the foregoing sentence, as soon as practicable
after the date of the occurrence of an Authorized Share Failure,
but in no event later than ninety (90) days after the occurrence of
such Authorized Share Failure, the Company shall hold a meeting of
its stockholders for the approval of an increase in the number of
authorized shares of Common Stock. In connection with such meeting,
the Company shall provide each stockholder with a proxy statement
and shall use its reasonable best efforts to solicit its
stockholders' approval of such increase in authorized shares of
Common Stock and to cause its Board of Directors to recommend to
the stockholders that they approve such proposal. Notwithstanding
the foregoing, if at any such time of an Authorized Share Failure,
the Company is able to obtain the written consent of a majority of
the shares of its issued and outstanding shares of Common Stock to
approve the increase in the number of authorized shares of Common
Stock, the Company may satisfy this obligation by obtaining such
consent and submitting for filing with the SEC an Information
Statement on Schedule 14C.
2. ADJUSTMENT OF EXERCISE PRICE AND
NUMBER OF WARRANT SHARES. The Exercise Price and the number
of Warrant Shares shall be adjusted from time to time as
follows:
(a) Adjustment Upon Issuance of Common
Stock. If and whenever on or after the Subscription Date
until the Trading Day immediately following the date of
consummation of the transaction pursuant to which the Company has
raised, through the issuance of Common Stock and/or Common Stock
Equivalents from and after the date of issuance of this Warrant, at
least $20.0 million in gross proceeds in the aggregate (not
including, for the avoidance of doubt, any proceeds raised by the
Company pursuant to the issuance or exercise of this Warrant or
other warrants issued contemporaneously with this Warrant or the
issuance of any shares of Common Stock issued contemporaneously
with the issuance of this Warrant), the Company issues or sells, or
in accordance with this Section 2 is deemed to have issued or sold,
any shares of Common Stock (including the issuance or sale of
shares of Common Stock owned or held by or for the account of the
Company, but excluding shares of Common Stock deemed to have been
issued or sold by the Company, either before or after the
Subscription Date, in connection with any Excluded Securities) for
a consideration per share (the "New
Issuance Price") less than a price (the "Applicable Price") equal to the Exercise
Price in effect immediately prior to such issuance or sale or
deemed issuance or sale (the foregoing a "Dilutive Issuance"), then immediately
after such Dilutive Issuance, the Exercise Price then in effect
shall be reduced to an amount equal to the New Issuance
Price. For purposes of
determining the adjusted Exercise Price under this Section 2(a),
the following shall be applicable:
(i) Issuance
of Options. If the Company in any manner grants or sells any
Options and the lowest price per share for which one share of
Common Stock is issuable upon the exercise of any such Options or
upon conversion, exercise or exchange of any Convertible Securities
issuable upon exercise of any such Options is less than the
Applicable Price, then such share of Common Stock shall be deemed
to be outstanding and to have been issued and sold by the Company
at the time of the granting or sale of such Options for such price
per share. For purposes of this Section 2(a)(i), the "lowest price
per share for which one share of Common Stock is issuable upon the
exercise of any such Options or upon conversion, exercise or
exchange of any Convertible Securities issuable upon exercise of
any such Options" shall be equal to the sum of the lowest amounts
of consideration (if any) received or receivable by the Company
with respect to any one share of Common Stock upon the granting or
sale of the Options, upon exercise of the Options and upon
conversion, exercise or exchange of any Convertible Security
issuable upon exercise of such Options less any consideration paid
or payable by the Company with respect to such one share of Common
Stock upon the granting or sale of such Options, upon exercise of
such Options and upon conversion exercise or exchange of any
Convertible Security issuable upon exercise of such Options. No
further adjustment of the Exercise Price shall be made upon the
actual issuance of such shares of Common Stock or of such
Convertible Securities upon the exercise of such Options or upon
the actual issuance of such shares of Common Stock upon conversion,
exercise or exchange of such Convertible Securities.
-6-
(ii) Issuance
of Convertible Securities. If the Company in any manner
issues or sells any Convertible Securities and the lowest price per
share for which one share of Common Stock is issuable upon the
conversion, exercise or exchange thereof is less than the
Applicable Price, then such share of Common Stock shall be deemed
to be outstanding and to have been issued and sold by the Company
at the time of the issuance or sale of such Convertible Securities
for such price per share. For the purposes of this Section
2(a)(ii), the "lowest price per share for which one share of Common
Stock is issuable upon the conversion, exercise or exchange
thereof" shall be equal to the sum of the lowest amounts of
consideration (if any) received or receivable by the Company with
respect to any one share of Common Stock upon the issuance or sale
of the Convertible Security and upon conversion, exercise or
exchange of such Convertible Security less any consideration paid
or payable by the Company with respect to such one share of Common
Stock upon the issuance or sale of such Convertible Security and
upon conversion, exercise or exchange of such Convertible Security.
No further adjustment of the Exercise Price shall be made upon the
actual issuance of such shares of Common Stock upon conversion,
exercise or exchange of such Convertible Securities, and if any
such issuance or sale of such Convertible Securities is made upon
exercise of any Options for which adjustment of the Exercise Price
has been or is to be made pursuant to other provisions of this
Section 2(a), no further adjustment of the Exercise Price shall be
made by reason of such issuance or sale.
(iii) Change
in Option Price or Rate of Conversion. If the purchase price
provided for in any Options, the additional consideration, if any,
payable upon the issue, conversion, exercise or exchange of any
Convertible Securities, or the rate at which any Convertible
Securities are convertible into or exercisable or exchangeable for
shares of Common Stock increases or decreases at any time, the
Exercise Price in effect at the time of such increase or decrease
shall be adjusted to the Exercise Price, which would have been in
effect at such time had such Options or Convertible Securities
provided for such increased or decreased purchase price, additional
consideration or increased or decreased conversion rate, as the
case may be, at the time initially granted, issued or sold. For
purposes of this Section 2(a)(iii), if the terms of any Option or
Convertible Security that was outstanding as of the Subscription
Date are increased or decreased in the manner described in the
immediately preceding sentence, then such Option or Convertible
Security and the shares of Common Stock deemed issuable upon
exercise, conversion or exchange thereof shall be deemed to have
been issued as of the date of such increase or decrease. No
adjustment pursuant to this Section 2(a) shall be made if such
adjustment would result in an increase of the Exercise Price then
in effect.
(iv) Calculation
of Consideration Received. In case any Option is issued in
connection with the issuance or sale of other securities of the
Company, together comprising one integrated transaction, (x) the
Options will be deemed to have been issued for the Option Value of
such Options and (y) the other securities issued or sold in such
integrated transaction shall be deemed to have been issued or sold
for the difference of (I) the aggregate consideration received by
the Company less any consideration paid or payable by the Company
pursuant to the terms of such other securities of the Company, less
(II) the Option Value of such Options; provided, that if the value
determined pursuant to clause (y) above would result in a value
less than the par value of the Common Stock, then the other
securities issued or sold in such integrated transaction shall be
deemed to have been issued or sold for the par value of the Common
Stock. If any shares of Common Stock, Options or Convertible
Securities are issued or sold or deemed to have been issued or sold
for cash, the consideration received therefor will be deemed to be
the net amount received by the Company therefor. If any shares of
Common Stock, Options or Convertible Securities are issued or sold
for a consideration other than cash, the amount of such
consideration received by the Company will be the fair value of
such consideration, except where such consideration consists of
publicly traded securities, in which case the amount of
consideration received by the Company will be the Closing Sale
Price of such publicly traded securities on the date of receipt of
such publicly traded securities. If any shares of Common Stock,
Options or Convertible Securities are issued to the owners of the
non-surviving entity in connection with any merger in which the
Company is the surviving entity, the amount of consideration
therefor will be deemed to be the fair value of such portion of the
net assets and business of the non-surviving entity as is
attributable to such shares of Common Stock, Options or Convertible
Securities, as the case may be. The fair value of any consideration
other than cash or publicly traded securities will be determined
jointly by the Company and the Required Holders. If such parties
are unable to reach agreement within ten (10) days after the
occurrence of an event requiring valuation (the "Valuation Event"), the fair value of
such consideration will be determined within five (5) Business Days
after the tenth (10th) day following the Valuation Event by an
independent, reputable appraiser jointly selected by the Company
and the Required Holders. The determination of such appraiser shall
be final and binding upon all parties absent manifest error and the
fees and expenses of such appraiser shall be borne by the
Company.
(v) Record
Date. If the Company takes a record of the holders of Common
Stock for the purpose of entitling them (A) to receive a
dividend or other distribution payable in shares of Common Stock,
Options or in Convertible Securities or (B) to subscribe for
or purchase shares of Common Stock, Options or Convertible
Securities, then such record date will be deemed to be the date of
the issuance or sale of the shares of Common Stock deemed to have
been issued or sold upon the declaration of such dividend or the
making of such other distribution or the date of the granting of
such right of subscription or purchase, as the case may
be.
(vi) No
Readjustments. For the avoidance of doubt, in the event the
Exercise Price has been adjusted pursuant to this Section 2(a) and
the Dilutive Issuance that triggered such adjustment is unwound or
is cancelled after the facts for any reason whatsoever, in no event
shall the Exercise Price be readjusted to the Exercise Price that
would have been in effect if such Dilutive Issuance had not
occurred or been consummated.]
(b) Voluntary Adjustment By
Company. The Company may at any time during the term of this
Warrant reduce the then current Exercise Price to any amount and
for any period of time deemed appropriate by the Board of Directors
of the Company.
(c) Adjustment Upon Subdivision or
Combination of Common Stock. If the Company at any time on
or after the Subscription Date subdivides (by any stock split,
stock dividend, recapitalization or otherwise) one or more classes
of its outstanding shares of Common Stock into a greater number of
shares, the Exercise Price in effect immediately prior to such
subdivision will be proportionately reduced and the number of
Warrant Shares will be proportionately increased. If the Company at
any time on or after the Subscription Date combines (by
combination, reverse stock split or otherwise) one or more classes
of its outstanding shares of Common Stock into a smaller number of
shares, the Exercise Price in effect immediately prior to such
combination will be proportionately increased and the number of
Warrant Shares will be proportionately decreased. Any adjustment
under this Section 2(c) shall become effective at the close of
business on the date the subdivision or combination becomes
effective.
(d) Other Events. If any event
occurs of the type contemplated by the provisions of this Section 2
but not expressly provided for by such provisions (including,
without limitation, the granting of stock appreciation rights,
phantom stock rights or other rights with equity features), then
the Company's Board of Directors will make an appropriate
adjustment in the Exercise Price and the number of Warrant Shares,
as mutually determined by the Company’s Board of Directors
and the Required Holders, so as to protect the rights of the
Holder; provided
that no such adjustment pursuant to this Section 2(d) will increase
the Exercise Price or decrease the number of Warrant Shares as
otherwise determined pursuant to this Section 2.]
3. RIGHTS UPON DISTRIBUTION OF
ASSETS. In addition to any adjustments pursuant to Section 2
above, if, on or after the Subscription Date and on or prior to the
Expiration Date, the Company shall declare or make any dividend or
other distribution of its assets (or rights to acquire its assets)
to holders of shares of Common Stock, by way of return of capital
or otherwise (including, without limitation, any distribution of
cash, stock or other securities, property, options, evidence of
indebtedness or any other assets by way of a dividend, spin off,
reclassification, corporate rearrangement, scheme of arrangement or
other similar transaction) (a "Distribution"), at any time after the
issuance of this Warrant, then, in each such case, the Holder shall
be entitled to participate in such Distribution to the same extent
that the Holder would have participated therein if the Holder had
held the number of shares of Common Stock acquirable upon complete
exercise of this Warrant (without regard to any limitations or
restrictions on exercise of this Warrant, including without
limitation, the Maximum Percentage) immediately before the date on
which a record is taken for such Distribution, or, if no such
record is taken, the date as of which the record holders of shares
of Common Stock are to be determined for the participation in such
Distribution (provided, however, that to the extent
that the Holder's right to participate in any such Distribution
would result in the Holder and the other Attribution Parties
exceeding the Maximum Percentage, then the Holder
-7-
shall
not be entitled to participate in such Distribution to such extent
(and shall not be entitled to beneficial ownership of such shares
of Common Stock as a result of such Distribution (and beneficial
ownership) to such extent) and the portion of such Distribution
shall be held in abeyance for the benefit of the Holder until such
time or times as its right thereto would not result in the Holder
and the other Attribution Parties exceeding the Maximum Percentage,
at which time or times the Holder shall be granted such
Distribution (and any Distributions declared or made on such
initial Distribution or on any subsequent Distribution held
similarly in abeyance) to the same extent as if there had been no
such limitation).
4. PURCHASE RIGHTS; FUNDAMENTAL
TRANSACTIONS.
(a) Purchase Rights. In addition to
any adjustments pursuant to Section 2 above, if at any time on or
after the Subscription Date and on or prior to the Expiration Date
the Company grants, issues or sells any Options, Convertible
Securities or rights to purchase stock, warrants, securities or
other property pro rata to the record holders of any class of
Common Stock but excluding shares of Common Stock deemed to have
been issued or sold by the Company in connection with any Excluded
Securities (the "Purchase Rights"), then the Holder will be
entitled to acquire, upon the terms applicable to such Purchase
Rights, the aggregate Purchase Rights which the Holder could have
acquired if the Holder had held the number of shares of Common
Stock acquirable upon complete exercise of this Warrant (without
regard to any limitations or restrictions on exercise of this
Warrant, including without limitation, the Maximum Percentage)
immediately before the date on which a record is taken for the
grant, issuance or sale of such Purchase Rights, or, if no such
record is taken, the date as of which the record holders of Common
Stock are to be determined for the grant, issuance or sale of such
Purchase Rights (provided, however, that to the extent
that the Holder's right to participate in any such Purchase Right
would result in the Holder and the other Attribution Parties
exceeding the Maximum Percentage, then the Holder shall not be
entitled to participate in such Purchase Right to such extent (and
shall not be entitled to beneficial ownership of such Common Stock
as a result of such Purchase Right (and beneficial ownership) to
such extent) and such Purchase Right to such extent shall be held
in abeyance for the benefit of the Holder until such time or times as its right thereto
would not result in the Holder and the other Attribution
Parties exceeding the Maximum
Percentage, at which time or times the Holder shall be granted such
right (and any Purchase Right granted, issued or sold on
such initial Purchase Right or on any subsequent Purchase Right to
be held similarly in abeyance) to the
same extent as if there had been no such
limitation).
(b) Fundamental
Transaction. The Company shall not enter into or
be party to a Fundamental Transaction unless the Successor Entity
assumes in writing all of the obligations of the Company under this
Warrant in accordance with the provisions of this Section 4(b),
including agreements to deliver to the Holder in exchange for this
Warrant a security of the Successor Entity evidenced by a written
instrument substantially similar in form and substance to this
Warrant, including, without limitation, which is exercisable for a
corresponding number of shares of capital stock equivalent to the
shares of Common Stock acquirable and receivable upon exercise of
this Warrant (without regard to any limitations on the exercise of
this Warrant) prior to such Fundamental Transaction, and with an
exercise price which applies the exercise price hereunder to such
shares of capital stock (but taking into account the relative value
of the shares of Common Stock pursuant to such Fundamental
Transaction and the value of such shares of capital stock, such
adjustments to the number of shares of capital stock and such
exercise price being for the purpose of protecting the economic
value of this Warrant immediately prior to the consummation of such
Fundamental Transaction). Upon the consummation of each Fundamental
Transaction, the Successor Entity shall succeed to, and be
substituted for the Company (so that from and after the date of the
applicable Fundamental Transaction, the provisions of this Warrant
and the other Transaction Documents referring to the
“Company” shall refer instead to the Successor Entity),
and may exercise every right and power of the Company and shall
assume all of the obligations of the Company under this Warrant
with the same effect as if such Successor Entity had been named as
the Company herein. Upon consummation of each Fundamental
Transaction, the Successor Entity shall deliver to the Holder
confirmation that there shall be issued upon exercise of this
Warrant at any time after the consummation of the applicable
Fundamental Transaction, in lieu of the shares of Common Stock (or
other securities, cash, assets or other property (except such items
still issuable under Sections 3 and 4(a) above, which shall
continue to be receivable thereafter)) issuable upon the exercise
of this Warrant prior to the applicable Fundamental Transaction,
such shares of common stock (or its
-8-
equivalent) of the
Successor Entity (including its Parent Entity) which the Holder
would have been entitled to receive upon the happening of the
applicable Fundamental Transaction had this Warrant been exercised
immediately prior to the applicable Fundamental Transaction
(without regard to any limitations on the exercise of this
Warrant), as adjusted in accordance with the provisions of this
Warrant. Notwithstanding the foregoing, and without limiting
Section 1(f) hereof, the Holder may elect, at its sole option, by
delivery of written notice to the Company to waive this Section
4(b) to permit the Fundamental Transaction without the assumption
of this Warrant. In addition to and not in substitution for any
other rights hereunder, prior to the consummation of each
Fundamental Transaction pursuant to which holders of shares of
Common Stock are entitled to receive securities or other assets
with respect to or in exchange for shares of Common Stock (a
“Corporate
Event”), the Company shall make appropriate provision
to insure that the Holder will thereafter have the right to receive
upon an exercise of this Warrant at any time after the consummation
of the applicable Fundamental Transaction but prior to the
Expiration Date, in lieu of the shares of the Common Stock (or
other securities, cash, assets or other property (except such items
still issuable under Sections 3 and 4(a) above, which shall
continue to be receivable thereafter)) issuable upon the exercise
of the Warrant prior to such Fundamental Transaction, such shares
of stock, securities, cash, assets or any other property whatsoever
(including warrants or other purchase or subscription rights)
(collectively, the “Corporate
Event Consideration”) which the Holder would have been
entitled to receive upon the happening of the applicable
Fundamental Transaction had this Warrant been exercised immediately
prior to the applicable Fundamental Transaction (without regard to
any limitations on the exercise of this Warrant). The provision
made pursuant to the preceding sentence shall be in a form and
substance reasonably satisfactory to the Holder. The provisions of
this Section 4(b) shall apply similarly and equally to successive
Fundamental Transactions and Corporate Events. Notwithstanding the
foregoing, in the event of a Change of Control (other than a Change
of Control which was not approved by the Board of Directors, as to
which this right shall not apply), at the request of the Holder
delivered before the 30th day after such Change of Control, the
Company (or the Successor Entity) shall purchase this Warrant from
the Holder by paying to the Holder, within five Business Days after
such request (or, if later, on the effective date of the Change of
Control), an amount equal to the Black Scholes Value of the
remaining unexercised portion of this Warrant on the effective date
of such Change of Control, payable in cash; provided, that if the
applicable Change of Control was not approved by the Company's
Board of Directors, such amount shall be payable, at the option of
the Company in either (x) Common Stock (or corresponding Corporate
Event Consideration, as applicable) valued at the value of the
consideration received by the shareholders in such Change of
Control or (y) cash.
5. NONCIRCUMVENTION. The Company
hereby covenants and agrees that the Company will not, by amendment
of its Restated and Amended Articles of Incorporation or Bylaws, or
through any reorganization, transfer of assets, consolidation,
merger, scheme of arrangement, dissolution, issuance or sale of
securities, or any other voluntary action, avoid or seek to avoid
the observance or performance of any of the terms of this Warrant,
and will at all times in good faith carry out all of the provisions
of this Warrant and take all action as may be required to protect
the rights of the Holder. Without limiting the generality of the
foregoing, the Company (i) shall not increase the par value of
any shares of Common Stock receivable upon the exercise of this
Warrant above the Exercise Price then in effect, (ii) shall
take all such actions as may be necessary or appropriate in order
that the Company may validly and legally issue fully paid and
nonassessable shares of Common Stock upon the exercise of this
Warrant, and (iii) shall, so long as any of the Warrants are
outstanding, take all action necessary to reserve and keep
available out of its authorized and unissued shares of Common
Stock, solely for the purpose of effecting the exercise of the
Warrants, the number of shares of Common Stock as shall from time
to time be necessary to effect the exercise of the Warrants then
outstanding (without regard to any limitations on
exercise).
6. WARRANT HOLDER NOT DEEMED A
STOCKHOLDER. Except as otherwise specifically provided
herein, the Holder, solely in such Person's capacity as a holder of
this Warrant, shall not be entitled to vote or receive dividends or
be deemed the holder of capital stock of the Company for any
purpose, nor shall anything contained in this Warrant be construed
to confer upon the Holder, solely in such Person's capacity as the
Holder of this Warrant, any of the rights of a stockholder of the
Company or any right to vote, give or withhold consent to any
corporate action (whether any reorganization, issue of stock,
reclassification of stock, consolidation, merger, conveyance or
otherwise), receive notice of meetings, receive dividends or
subscription rights, or otherwise, prior to the issuance to the
Holder of the Warrant Shares which such Person is then entitled to
receive upon the due exercise of this Warrant. In addition, nothing
contained in this Warrant shall be construed as imposing any
liabilities on the Holder to purchase any securities (upon exercise
of this Warrant or otherwise) or as a stockholder of the Company,
whether such liabilities are asserted by the Company or by
creditors of the Company. Notwithstanding this Section 6, the
Company shall provide the Holder with copies of the same notices
and other information given to the stockholders of the Company
generally, contemporaneously with the giving thereof to the
stockholders.
-9-
7. REISSUANCE OF
WARRANTS.
(a) Transfer of Warrant. If this
Warrant is to be transferred, the Holder shall surrender this
Warrant to the Company, whereupon the Company will forthwith issue
and deliver upon the order of the Holder a new Warrant (in
accordance with Section 7(d)), registered as the Holder may
request, representing the right to purchase the number of Warrant
Shares being transferred by the Holder and, if less than the total
number of Warrant Shares then underlying this Warrant is being
transferred, a new Warrant (in accordance with Section 7(d)) to the
Holder representing the right to purchase the number of Warrant
Shares not being transferred.
(b) Lost, Stolen or Mutilated
Warrant. Upon receipt by the Company of evidence reasonably
satisfactory to the Company of the loss, theft, destruction or
mutilation of this Warrant, and, in the case of loss, theft or
destruction, of any indemnification undertaking by the Holder to
the Company in customary form (but without the obligation to post a
bond) and, in the case of mutilation, upon surrender and
cancellation of this Warrant, the Company shall execute and deliver
to the Holder a new Warrant (in accordance with Section 7(d))
representing the right to purchase the Warrant Shares then
underlying this Warrant.
(c) Exchangeable for Multiple
Warrants. This Warrant is exchangeable, upon the surrender
hereof by the Holder at the principal office of the Company, for a
new Warrant or Warrants (in accordance with Section 7(d))
representing in the aggregate the right to purchase the number of
Warrant Shares then underlying this Warrant, and each such new
Warrant will represent the right to purchase such portion of such
Warrant Shares as is designated by the Holder at the time of such
surrender.
(d) Issuance of New Warrants.
Whenever the Company is required to issue a new Warrant pursuant to
the terms of this Warrant, such new Warrant (i) shall be of like
tenor with this Warrant, (ii) shall represent, as indicated on the
face of such new Warrant, the right to purchase the Warrant Shares
then underlying this Warrant (or in the case of a new Warrant being
issued pursuant to Section 7(a) or Section 7(c), the Warrant Shares
designated by the Holder which, when added to the number of shares
of Common Stock underlying the other new Warrants issued in
connection with such issuance, does not exceed the number of
Warrant Shares then underlying this Warrant), (iii) shall have an
issuance date, as indicated on the face of such new Warrant which
is the same as the Issuance Date, and (iv) shall have the same
rights and conditions as this Warrant.
8. NOTICES. Whenever notice is
required to be given under this Warrant, unless otherwise provided
herein, such notice shall be given in writing, (i) if delivered (a)
from within the domestic United States, by first-class registered
or certified airmail, or nationally recognized overnight express
courier, postage prepaid, electronic mail or by facsimile or (b)
from outside the United States, by International Federal Express,
electronic mail or facsimile, and (ii) will be deemed given (A) if
delivered by first-class registered or certified mail domestic,
three (3) Business Days after so mailed, (B) if delivered by
nationally recognized overnight carrier, one (1) Business Day after
so mailed, (C) if delivered by International Federal Express, two
(2) Business Days after so mailed and (D) on the date of
transmission, if delivered by electronic mail to each of the email
addresses specified in this Section 8 prior to 5:00 p.m. (New York
time) on a Trading Day, (E) the next Trading Day after the date of
transmission, if delivered by electronic mail to each of the email
addresses specified in this Section 8 on a day that is not a
Trading Day or later than 5:00 p.m. (New York time) on any Trading
Day and (E) if delivered by facsimile, upon electroni
-10-
9. confirmation of
receipt of such facsimile, and will be delivered and addressed as
follows:
(i)
if to the Company, to:
VistaGen
Therapeutics, Inc.
343
Allerton Ave.
South
San Francisco, CA 94090
Attention: [
]
Facsimile: [
]
Email:
[ ]
(ii) if
to the Holder, at such address or other contact information
delivered by the Holder to Company or as is on the books and
records of the Company.
The
Company shall provide the Holder with prompt written notice of all
actions taken pursuant to this Warrant, including in reasonable
detail a description of such action and the reason therefor.
Without limiting the generality of the foregoing, the Company will
give written notice to the Holder (i) immediately upon any
adjustment of the Exercise Price, setting forth in reasonable
detail, and certifying, the calculation of such adjustment and (ii)
at least fifteen (15) days prior to the date on which the Company
closes its books or takes a record (A) with respect to any dividend
or distribution upon the shares of Common Stock, (B) with respect
to any grants, issuances or sales of any Options, Convertible
Securities or rights to purchase stock, warrants, securities or
other property to holders of shares of Common Stock or (C) for
determining rights to vote with respect to any Fundamental
Transaction, dissolution or liquidation; provided in each case that such
information shall be made known to the public prior to or in
conjunction with such notice being provided to the Holder. It is
expressly understood and agreed that the time of exercise specified
by the Holder in each Exercise Notice shall be definitive and may
not be disputed or challenged by the Company.
10. AMENDMENT AND WAIVER. Except as
otherwise provided herein, the provisions of this Warrant may be
amended or waived and the Company may take any action herein
prohibited, or omit to perform any act herein required to be
performed by it, only if the Company has obtained the written
consent of the Holder.
11. GOVERNING LAW; JURISDICTION; JURY
TRIAL. This Warrant shall be governed by and construed and
enforced in accordance with, and all questions concerning the
construction, validity, interpretation and performance of this
Warrant shall be governed by, the internal laws of the State of New
York, without giving effect to any choice of law or conflict of law
provision or rule (whether of the State of New York or any other
jurisdictions) that would cause the application of the laws of any
jurisdictions other than the State of New York. The Company hereby
irrevocably submits to the exclusive jurisdiction of the state and
federal courts sitting in The City of New York, Borough of
Manhattan, for the adjudication of any dispute hereunder or in
connection herewith or with any transaction contemplated hereby or
discussed herein, and hereby irrevocably waives, and agrees not to
assert in any suit, action or proceeding, any claim that it is not
personally subject to the jurisdiction of any such court, that such
suit, action or proceeding is brought in an inconvenient forum or
that the venue of such suit, action or proceeding is improper. The
Company hereby irrevocably waives personal service of process and
consents to process being served in any such suit, action or
proceeding by mailing a copy thereof to the Company at the address
set forth in Section 8(i) above or such other address as the
Company subsequently delivers to the Holder and agrees that such
service shall constitute good and sufficient service of process and
notice thereof. Nothing contained herein shall be deemed to limit
in any way any right to serve process in any manner permitted by
law. Nothing contained herein shall be deemed or operate to
preclude the Holder from bringing suit or taking other legal action
against the Company in any other jurisdiction to collect on the
Company's obligations to the Holder, to realize on any collateral
or any other security for such obligations, or to enforce a
judgment or other court ruling in favor of the Holder. THE COMPANY HEREBY IRREVOCABLY WAIVES ANY RIGHT
IT MAY HAVE, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE
ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION WITH OR
ARISING OUT OF THIS WARRANT OR ANY TRANSACTION CONTEMPLATED
HEREBY.
-11-
12. VARIABLE RATE TRANSACTIONS.
Notwithstanding anything to the contrary contained herein,
including without limitation, the provisions set forth in Section
2(d) of this Warrant], from and after the Subscription Date and on
or prior to the Expiration Date, the Company shall be prohibited
from effecting or entering into an agreement to effect any issuance
by the Company or any of its Subsidiaries of Common Stock,
Convertible Securities or Options (or a combination thereof)
involving a Variable Rate Transaction. As used herein,
"Variable Rate Transaction"
means a transaction in which the Company or any of its Subsidiaries
(i) issues or sells any debt or equity security that are
convertible into, exchangeable or exercisable for, or include the
right to receive additional shares of Common Stock either (A) at a
conversion price, exercise price or exchange rate or other price
that is based upon and/or varies with the trading prices of or
quotations for the shares of Common Stock at any time after the
initial issuance of such debt or equity securities., or (B) with a
conversion, exercise or exchange price that is subject to being
reset at some future date after the initial issuance of such debt
or equity security or upon the occurrence of specified or
contingent events directly or indirectly related to the business of
the Company or the market for the Common Stock or (ii) enters into
any agreement, including, but not limited to an equity line of
credit or at-the-market offering, whereby the Company or any of its
Subsidiaries may issue securities at a future determined price. For
the avoidance of doubt, the issuance of a Common Stock Equivalent
with a fixed exercise or conversion price with a standard price
only full ratchet or weighted average anti-dilution provision shall
not be considered to be a Variable Rate Transaction.
13. DISPUTE RESOLUTION. In the case
of a dispute as to the determination of the Exercise Price or the
arithmetic calculation of the Warrant Shares, the Company shall
submit the disputed determinations or arithmetic calculations via
facsimile or electronic mail within two (2) Business Days of
receipt of the Exercise Notice or other event giving rise to such
dispute, as the case may be, to the Holder. If the Holder and the
Company are unable to agree upon such determination or calculation
of the Exercise Price or the Warrant Shares within three (3)
Business Days of such disputed determination or arithmetic
calculation being submitted to the Holder, then the Company shall,
within two (2) Business Days submit via facsimile or electronic
mail (a) the disputed determination of the Exercise Price to an
independent, reputable investment bank selected by the Company and
approved by the Holder or (b) the disputed arithmetic calculation
of the Warrant Shares to the Company's independent, outside
accountant. The Company shall cause at its expense the investment
bank or the accountant, as the case may be, to perform the
determinations or calculations and notify the Company and the
Holder of the results no later than ten (10) Business Days from the
time it receives the disputed determinations or calculations. Such
investment bank's or accountant's determination or calculation, as
the case may be, shall be binding upon all parties absent
demonstrable error.
14. REMEDIES, OTHER OBLIGATIONS, BREACHES
AND INJUNCTIVE RELIEF. The remedies provided in this Warrant
shall be cumulative and in addition to all other remedies available
under this Warrant and any other Transaction Documents, at law or
in equity (including a decree of specific performance and/or other
injunctive relief), and nothing herein shall limit the right of the
Holder to pursue actual damages for any failure by the Company to
comply with the terms of this Warrant. The Company acknowledges
that a breach by it of its obligations hereunder will cause
irreparable harm to the Holder and that the remedy at law for any
such breach may be inadequate. The Company therefore agrees that,
in the event of any such breach or threatened breach, the holder of
this Warrant shall be entitled, in addition to all other available
remedies, to an injunction restraining any breach, without the
necessity of showing economic loss and without any bond or other
security being required.
15. TRANSFER. This
Warrant and the Warrant Shares may be offered for sale, sold,
transferred, pledged or assigned without the consent of the
Company.
16. SEVERABILITY; CONSTRUCTION;
HEADINGS. If any provision of this Warrant
is prohibited by law or otherwise determined to be invalid or
unenforceable by a court of competent jurisdiction, the provision
that would otherwise be prohibited, invalid or unenforceable shall
be deemed amended to apply to the broadest extent that it would be
valid and enforceable, and the invalidity or unenforceability of
such provision shall not affect the validity of the remaining
provisions of this Warrant so long as this Warrant as so modified
continues to express, without material change, the original
intentions of the parties as to the subject matter hereof and the
prohibited nature, invalidity or unenforceability of the
provision(s) in question does not substantially impair the
respective expectations or reciprocal obligations of the parties or
the practical realization of the benefits that would otherwise be
conferred upon the parties. The parties will endeavor in good faith
negotiations to replace the prohibited, invalid or unenforceable
provision(s) with a valid provision(s), the effect of which comes
as close as possible to that of the prohibited, invalid or
unenforceable provision(s). This Warrant shall be deemed to be
jointly drafted by the Company and the Holder and shall not be
construed against any Person as the drafter hereof. The headings of
this Warrant are for convenience of reference and shall not form
part of, or affect the interpretation of, this
Warrant.
-12-
17. DISCLOSURE. Upon receipt or
delivery by the Company of any notice in accordance with the terms
of this Warrant, unless the Company has in good faith determined
that the matters relating to such notice do not constitute
material, nonpublic information relating to the Company or its
subsidiaries, the Company shall contemporaneously with any such
receipt or delivery publicly disclose such material, nonpublic
information on a Current Report on Form 8-K or otherwise. In the
event that the Company believes that a notice contains material,
nonpublic information relating to the Company or its subsidiaries,
the Company so shall indicate to such Holder contemporaneously with
delivery of such notice, and in the absence of any such indication,
the Holder shall be allowed to presume that all matters relating to
such notice do not constitute material, nonpublic information
relating to the Company or its subsidiaries.
18. CERTAIN DEFINITIONS. For
purposes of this Warrant, the following terms shall have the
following meanings:
(a) "Affiliate" means, with respect to any
Person, any other Person that directly or indirectly controls, is
controlled by, or is under common control with, such Person, it
being understood for purposes of this definition that "control" of
a Person means the power directly or indirectly either to vote 10%
or more of the stock having ordinary voting power for the election
of directors of such Person or direct or cause the direction of the
management and policies of such Person whether by contract or
otherwise.
(b) "Approved Stock Plan" means the
Company’s 2016 Amended and Restated Stock Incentive Plan and
any employee benefit plan which has been approved by a majority of
the disinterested members of the Board of Directors of the Company,
in each case pursuant to which the Company’s securities may
be issued to any employee, officer or director for services
provided to the Company.
(c) "Attribution Parties" means,
collectively, the following Persons and entities: (i) any
investment vehicle, including, any funds, feeder funds or managed
accounts, currently, or from time to time after the Subscription
Date, directly or indirectly managed or advised by the Holder's
investment manager or any of its Affiliates or principals, (ii) any
direct or indirect Affiliates of the Holder or any of the
foregoing, (iii) any Person acting or who could be deemed to be
acting as a Group together with the Holder or any of the foregoing
and (iv) any other Persons whose beneficial ownership of the
Company's Common Stock would or could be aggregated with the
Holder's and the other Attribution Parties for purposes of Section
13(d) of the 1934 Act. For clarity, the purpose of the foregoing is
to subject collectively the Holder and all other Attribution
Parties to the Maximum Percentage.
(d) “Bid
Price” means, for any security as of the particular
time of determination, the bid price for such security on the
Principal Market as reported by Bloomberg as of such time of
determination, or, if the Principal Market is not the principal
securities exchange or trading market for such security, the bid
price of such security on the principal securities exchange or
trading market where such security is listed or traded as reported
by Bloomberg as of such time of determination, or if the foregoing
does not apply, the bid price of such security in the
over-the-counter market on the electronic bulletin board for such
security as reported by Bloomberg as of such time of determination,
or, if no bid price is reported for such security by Bloomberg as
of such time of determination, the average of the bid prices of any
market makers for such security as reported in the “pink
sheets” by OTC Markets Group Inc. (formerly Pink Sheets LLC)
as of such time of determination. If the Bid Price cannot be
calculated for a security as of the particular time of
determination on any of the foregoing bases, the Bid Price of such
security as of such time of determination shall be the fair market
value as mutually determined by the Company and the Holder. If the
Company and the Holder are unable to agree upon the fair market
value of such security, then such dispute shall be resolved in
accordance with the procedures in Section 11. All such
determinations shall be appropriately adjusted for any stock
dividend, stock split, stock combination or other similar
transaction during such period.
-13-
(e) "Black Scholes Value" means the value of
this Warrant based on the Black-Scholes Option Pricing Model
obtained from the "OV" function on Bloomberg determined as of the
day immediately following the first public announcement of the
applicable Fundamental Transaction, or, if the Fundamental
Transaction is not publicly announced, the date the Fundamental
Transaction is consummated, for pricing purposes and reflecting (i)
a risk-free interest rate corresponding to the U.S. Treasury rate
for a period equal to the remaining term of this Warrant as of such
date of request, (ii) an expected volatility equal to the greater
of 100% and the 100-day volatility obtained from the HVT function
on Bloomberg as of the day immediately following the public
announcement of the applicable Fundamental Transaction, or, if the
Fundamental Transaction is not publicly announced, the date the
Fundamental Transaction is consummated, (iii) the underlying price
per share used in such calculation shall be the highest Weighted
Average Price during the five (5) Trading Days prior to the closing
of the Fundamental Transaction, (iv) a zero cost of borrow and (v)
a 360 day annualization factor.
(f) "Bloomberg" means Bloomberg Financial
Markets.
(g) "Business Day" means any day other than
Saturday, Sunday or other day on which commercial banks in The City
of New York are authorized or required by law to remain
closed.
(h) “Change of Control” means any
Fundamental Transaction other than (i) any reorganization,
recapitalization or reclassification of the Common Stock in which
holders of the Company’s voting power immediately prior to
such reorganization, recapitalization or reclassification continue
after such reorganization, recapitalization or reclassification to
hold publicly traded securities and, directly or indirectly, are,
in all material respect, the holders of the voting power of the
surviving entity (or entities with the authority or voting power to
elect the members of the board of directors (or their equivalent if
other than a corporation) of such entity or entities) after such
reorganization, recapitalization or reclassification, (ii) pursuant
to a migratory merger effected solely for the purpose of changing
the jurisdiction of incorporation of the Company or (iii) a merger
in connection with a bona fide acquisition by the Company of any
Person in which (x) the gross consideration paid, directly or
indirectly, by the Company in such acquisition is not greater than
20% of the Company’s market capitalization as calculated on
the date of the consummation of such merger and (y) such merger
does not contemplate a change to the identity of a majority of the
board of directors of the Company. Notwithstanding anything herein
to the contrary, any transaction or series of transaction that,
directly or indirectly, results in the Company or the Successor
Entity not having Common Stock or common stock, as applicable,
registered under the 1934 Act and listed on an Eligible Market
shall be deemed a Change of Control.
(i) "Closing Bid Price" and "Closing Sale Price" means, for any
security as of any date, the last closing bid price and last
closing trade price, respectively, for such security on the
Principal Market, as reported by Bloomberg, or, if the Principal
Market begins to operate on an extended hours basis and does not
designate the closing bid price or the closing trade price, as the
case may be, then the last bid price or the last trade price,
respectively, of such security prior to 4:00:00 p.m., New York
time, as reported by Bloomberg, or, if the Principal Market is not
the principal securities exchange or trading market for such
security, the last closing bid price or last trade price,
respectively, of such security on the principal securities exchange
or trading market where such security is listed or traded as
reported by Bloomberg, or if the foregoing do not apply, the last
closing bid price or last trade price, respectively, of such
security in the over-the-counter market on the electronic bulletin
board for such security as reported by Bloomberg, or, if no closing
bid price or last trade price, respectively, is reported for such
security by Bloomberg, the average of the bid prices, or the ask
prices, respectively, of any market makers for such security as
reported in the OTC Link or "pink sheets" by OTC Markets Group Inc.
(formerly Pink OTC Markets Inc.). If the Closing Bid Price or the
Closing Sale Price cannot be calculated for a security on a
particular date on any of the foregoing bases, the Closing Bid
Price or the Closing Sale Price, as the case may be, of such
security on such date shall be the fair market value as mutually
determined by the Company and the Holder. If the Company and the
Holder are unable to agree upon the fair market value of such
security, then such dispute shall be resolved pursuant to Section
11. All such determinations to be appropriately adjusted for any
stock dividend, stock split, stock combination, reclassification or
other similar transaction during the applicable calculation
period.
(j) "Common Stock" means (i) the
Company's Common Stock, par value $0.001 per share, and
(ii) any capital stock into which such Common Stock shall have
been changed or any capital stock resulting from a reclassification
of such Common Stock.
-14-
(k) "Convertible Securities" means any stock
or securities (other than Options) directly or indirectly
convertible into or exercisable or exchangeable for shares of
Common Stock.
(l) "Eligible Market" means The NASDAQ
Capital Market, the NYSE American LLC, The NASDAQ Global Select
Market, The NASDAQ Global Market or The New York Stock Exchange,
Inc.
(m) "Excluded Securities" means any shares of
Common Stock issued or issuable, or deemed issued or issuable
pursuant to Section 2(a): (i) in connection with any Approved Stock
Plan, (ii) upon exercise of the Warrants; provided, that the terms
of such Warrants are not amended, modified or changed on or after
the Subscription Date, (iii) upon conversion, exercise or exchange
of any Options or Convertible Securities which are outstanding on
the day immediately preceding the Subscription Date.; provided, that the terms
of such Options or Convertible Securities are not amended, modified
or changed on or after the Subscription Date and (iv) issued as
payment of regular dividends pursuant to the terms of the
Company’s Series B Preferred Stock; provided, that the
terms of the Series B Preferred Stock are not amended, modified or
changed on or after the Subscription Date.
(n) "Expiration Date" means the date
[sixty
(60)] months
after the Initial Exercisability Date or, if such date falls on a day other
than a Business Day or on which trading does not take place on the
Principal Market (a "Holiday"), the next day that is not a
Holiday.
(o) "Fundamental Transaction" means (A) that
the Company shall, directly or indirectly, including through
subsidiaries, Affiliates or otherwise, in one or more related
transactions, (i) consolidate or merge with or into (whether or not
the Company is the surviving corporation) another Subject Entity,
or (ii) sell, assign, transfer, convey or otherwise dispose of all
or substantially all of the properties or assets of the Company or
any of its "significant subsidiaries" (as defined in Rule 1-02 of
Regulation S-X) to one or more Subject Entities, or (iii) make, or
allow one or more Subject Entities to make, or allow the Company to
be subject to or have its shares of Common Stock be subject to or
party to one or more Subject Entities making, a purchase, tender or
exchange offer that is accepted by the holders of at least either
(x) 50% of the outstanding shares of Common Stock, (y) 50% of the
outstanding shares of Common Stock calculated as if any shares of
Common Stock held by all Subject Entities making or party to, or
Affiliated with any Subject Entities making or party to, such
purchase, tender or exchange offer were not outstanding; or (z)
such number of shares of Common Stock such that all Subject
Entities making or party to, or Affiliated with any Subject Entity
making or party to, such purchase, tender or exchange offer, become
collectively the beneficial owners (as defined in Rule 13d-3 under
the 1934 Act) of at least 50% of the outstanding shares of Common
Stock, or (iv) consummate a stock purchase agreement or other
business combination (including, without limitation, a
reorganization, recapitalization, spin-off or scheme of
arrangement) with one or more Subject Entities whereby all such
Subject Entities, individually or in the aggregate, acquire, either
(x) at least 50% of the outstanding shares of Common Stock, (y) at
least 50% of the outstanding shares of Common Stock calculated as
if any shares of Common Stock held by all the Subject Entities
making or party to, or Affiliated with any Subject Entity making or
party to, such stock purchase agreement or other business
combination were not outstanding; or (z) such number of shares of
Common Stock such that the Subject Entities become collectively the
beneficial owners (as defined in Rule 13d-3 under the 1934 Act) of
at least 50% of the outstanding shares of Common Stock, or (v)
reorganize, recapitalize or reclassify its shares of Common Stock.,
(B) that the Company shall, directly or indirectly, including
through subsidiaries, Affiliates or otherwise, in one or more
related transactions, allow any Subject Entity individually or the
Subject Entities in the aggregate to be or become the "beneficial
owner" (as defined in Rule 13d-3 under the 1934 Act), directly or
indirectly, whether through acquisition, purchase, assignment,
conveyance, tender, tender offer, exchange, reduction in
outstanding shares of Common Stock, merger, consolidation, business
combination, reorganization, recapitalization, spin-off, scheme of
arrangement, reorganization, recapitalization or reclassification
or otherwise in any manner whatsoever, of either (x) at least 50%
of the aggregate ordinary voting power represented by issued and
outstanding shares of Common Stock, (y) at least 50% of the
aggregate ordinary voting power represented by issued and
outstanding shares of Common Stock not held by all such Subject
Entities as of the Subscription Date calculated as if any shares of
Common Stock held by all such Subject Entities were not
outstanding, or (z) a percentage of the aggregate ordinary voting
power represented by issued and outstanding shares of Common Stock
or other equity securities of the Company sufficient to allow such
Subject Entities to effect a
-15-
statutory short
form merger or other transaction requiring other stockholders of
the Company to surrender their Common Stock without approval of the
stockholders of the Company or (C) directly or indirectly,
including through subsidiaries, Affiliates or otherwise, in one or
more related transactions, the issuance of or the entering into any
other instrument or transaction structured in a manner to
circumvent, or that circumvents, the intent of this definition in
which case this definition shall be construed and implemented in a
manner otherwise than in strict conformity with the terms of this
definition to the extent necessary to correct this definition or
any portion of this definition which may be defective or
inconsistent with the intended treatment of such instrument or
transaction.
(p) "Group" means a "group" as that term is
used in Section 13(d) of the 1934 Act and as defined in Rule 13d-5
thereunder.
(q) "Option Value" means the value of an
Option based on the Black-Scholes Option Pricing model obtained
from the "OV" function on Bloomberg determined as of the day of the
most recent Closing Sale Price of the Common Stock prior to the
public announcement of the pricing of the applicable Option (or, if
the pricing is not publicly announced, on the most recent Closing
Sale Price of the Common Stock prior to the pricing of the
applicable Option) and reflecting (i) a risk-free interest rate
corresponding to the U.S. Treasury rate for a period equal to the
remaining term of the applicable Option as of the applicable date
of determination, (ii) an expected volatility equal to the greater
of 100% and the 100 day volatility obtained from the HVT function
on Bloomberg as of (A) the Trading Day immediately following the
first public announcement of the pricing of the transaction that
includes the applicable Option if such pricing is publicly
announced or (B) the Trading Day immediately following the issuance
of the applicable Option if the pricing of such transaction is not
publicly announced, (iii) an underlying price per share equal to
the most recent Closing Sale Price of the Common Stock prior to the
public announcement of the pricing of the applicable Option (or, if
the pricing is not publicly announced, on the most recent Closing
Sale Price of the Common Stock prior to the pricing of the
applicable Option), (iv) a zero cost of borrow and (v) a 360-day
annualization factor.
(r) "Options" means any rights, warrants or
options to subscribe for or purchase shares of Common Stock or
Convertible Securities.
(s) "Parent Entity" of a Person means an
entity that, directly or indirectly, controls the applicable
Person, including such entity whose common stock or equivalent
equity security is quoted or listed on an Eligible Market (or, if
so elected by the Holder, any other market, exchange or quotation
system), or, if there is more than one such Person or such entity,
the Person or such entity designated by the Holder or in the
absence of such designation, such Person or entity with the largest
public market capitalization as of the date of consummation of the
Fundamental Transaction.
(t) "Person" means an individual, a limited
liability company, a partnership, a joint venture, a corporation, a
trust, an unincorporated organization, any other entity and a
government or any department or agency thereof.
(u) "Principal Market" means The NASDAQ
Capital Market.
(v) "Required Holders" means the holders of
the Warrants representing at least a majority of the shares of
Common Stock underlying the Warrants then outstanding.
(w) “Standard Settlement Period”
means the standard settlement period, expressed in a number of
Trading Days, for the Company’s primary trading market or
quotation system with respect to the Common Stock that is in effect
on the date of receipt of an applicable Conversion
Notice.
(x) "Subject Entity" means any Person,
Persons or Group or any Affiliate or associate of any such Person,
Persons or Group.
-16-
(y) "Successor Entity" means one or more
Person or Persons (or, if so elected by the Holder, the Company or
Parent Entity) formed by, resulting from or surviving any
Fundamental Transaction or one or more Person or Persons (or, if so
elected by the Holder, the Company or the Parent Entity) with which
such Fundamental Transaction shall have been entered
into.
(z) "Trading Day" means any day on which the
Common Stock is traded on the Principal Market, or, if the
Principal Market is not the principal trading market for the Common
Stock, then on the principal securities exchange or securities
market on which the Common Stock is then traded.
(aa) “Transaction
Documents” means any agreement entered into by and
between the Company and the Holder, as applicable.
(bb) "Weighted
Average Price" means, for any security as of any date, the
dollar volume-weighted average price for such security on the
Principal Market during the period beginning at 9:30:01 a.m., New
York time (or such other time as the Principal Market publicly
announces is the official open of trading), and ending at 4:00:00
p.m., New York time (or such other time as the Principal Market
publicly announces is the official close of trading), as reported
by Bloomberg through its "Volume at Price" function or, if the
foregoing does not apply, the dollar volume-weighted average price
of such security in the over-the-counter market on the electronic
bulletin board for such security during the period beginning at
9:30:01 a.m., New York time (or such other time as such market
publicly announces is the official open of trading), and ending at
4:00:00 p.m., New York time (or such other time as such market
publicly announces is the official close of trading), as reported
by Bloomberg, or, if no dollar volume-weighted average price is
reported for such security by Bloomberg for such hours, the average
of the highest Closing Bid Price and the lowest closing ask price
of any of the market makers for such security as reported in the
OTC Link or "pink sheets" by OTC Markets Group Inc. (formerly Pink
OTC Markets Inc.). If the Weighted Average Price cannot be
calculated for a security on a particular date on any of the
foregoing bases, the Weighted Average Price of such security on
such date shall be the fair market value as mutually determined by
the Company and the Holder. If the Company and the Holder are
unable to agree upon the fair market value of such security, then
such dispute shall be resolved pursuant to Section 11 with the term
"Weighted Average Price" being substituted for the term "Exercise
Price." All such determinations shall be appropriately adjusted for
any stock dividend, stock split, stock combination,
reclassification or other similar transaction during the applicable
calculation period.
[Signature Page Follows]
-17-
IN WITNESS WHEREOF, the Company has
caused this Warrant to Purchase Common Stock to be duly executed as
of the Issuance Date set out above.
VISTAGEN
THERAPEUTICS, INC.
By:___________________________
Name:
Title:
-18-
EXHIBIT A
EXERCISE NOTICE
TO BE EXECUTED BY THE REGISTERED HOLDER TO EXERCISE
THIS
WARRANT TO PURCHASE COMMON STOCK
VISTAGEN THERAPEUTICS, INC.
The
undersigned holder hereby exercises the right to purchase
_________________ of the shares of Common Stock ("Warrant Shares") of VistaGen
Therapeutics, Inc., a company organized under the laws of Nevada
(the "Company"), evidenced
by the attached Warrant to Purchase Common Stock (the "Warrant"). Capitalized terms used herein
and not otherwise defined shall have the respective meanings set
forth in the Warrant.
1. Form
of Exercise Price. The Holder intends that payment of the Exercise
Price shall be made as:
____________
a "Cash Exercise" with respect to
_________________ Warrant Shares; and/or
____________
a "Cashless Exercise" with
respect to _______________ Warrant Shares.
2.
Payment of Exercise Price. In the event that the holder has elected
a Cash Exercise with respect to some or all of the Warrant Shares
to be issued pursuant hereto, the holder shall pay the Aggregate
Exercise Price in the sum of $___________________ to the Company in
accordance with the terms of the Warrant.
3.
Delivery of Warrant Shares. The Company shall deliver to the holder
__________ Warrant Shares in accordance with the terms of the
Warrant.
4.
Variable Price Securities. By checking the box in this Item 4, the
holder elects to exercise the Warrant by substituting the Variable
Price for the Exercise Price pursuant to Section 2(d) of the
Warrant, which Variable Price equals $___________ per share.
☐
Date:
_______________ __, ______
Name
of Registered Holder
By:
Name:
Title:
-19-
ACKNOWLEDGMENT
The
Company hereby acknowledges this Exercise Notice and hereby directs
[TRANSFER AGENT] to issue the above indicated number of shares of
Common Stock on or prior to the applicable Share Delivery
Date.
VISTAGEN
THERAPEUTICS, INC.
By:________________________________
Name:
Title:
-20-
Exhibit
5.1
August 31, 2017
VistaGen Therapeutics, Inc.
343 Allerton Ave.
South San Francisco, CA 94090
Ladies and Gentlemen:
You have requested our opinion, as counsel to
VistaGen Therapeutics, Inc., a Nevada corporation (the
“Company”), with respect to certain matters in
connection with the offering by the Company of up to (i)
1,371,430 shares of its common stock,
par value $0.001 (the “Shares”); (ii) Series A1 warrants (the
“Series A1
Warrants”) to purchase up to an aggregate of 1,388,931
Shares (the “Series A1
Warrant Shares”); and (iii) Series A2 warrants (the
“Series A2
Warrants”, and collectively, with the Series A1
Warrants, the “Warrants”) to purchase an
aggregate of 503,641 Shares (the “Series A2 Warrant Shares,” and
collectively, with the Series A1 Warrant Shares, the
“Warrant
Shares”), each pursuant
to the Registration Statement on Form S-3 (No. 333-215671) (the
“Registration
Statement”) filed with
the Securities and Exchange Commission (the
“Commission”) under the Securities Act of 1933 (the
“Act”), the prospectus included within the
Registration Statement declared effective July 27, 2017 (the
“Base
Prospectus”), and the
prospectus supplement dated August 31, 2017 filed with the
Commission pursuant to Rule 424(b) of the Rules and Regulations of
the Act (the “Prospectus
Supplement”). (The Base
Prospectus and Prospectus Supplement are collectively referred to
as the “Prospectus.”). The Shares, the Warrants and the
Warrant Shares are to be sold by the Company as described in the
Registration Statement and the Prospectus.
We
have examined and relied upon the Registration Statement and the
Prospectus, the Company’s Certificate of Incorporation and
Bylaws, as currently in effect, and the originals or copies
certified to our satisfaction of such records, documents,
certificates, memoranda and other instruments as we have deemed
relevant in connection with this opinion. We have assumed the
genuineness and authenticity of all documents submitted to us as
originals, the conformity to originals of all documents submitted
to us as copies, and the accuracy, completeness and authenticity of
certificates of public officials.
The
opinions set forth in this letter are limited to the Nevada Revised
Statutes and the law of the State of California, in each case as in
effect on the date hereof. We are not rendering any opinion as to
compliance with any federal or state antifraud law, rule or
regulation relating to securities or to the sale or issuance
thereof. With regard to our opinion regarding the Warrant Shares to
be sold upon exercise of the Warrants after the date hereof, we
express no opinion to the extent that, notwithstanding its current
reservation of shares of Common Stock, future issuances by the
Company of securities, including the Warrant Shares, and
antidilution adjustments to outstanding securities, including the
Warrants, may cause the Warrants to be exercisable for more shares
of Common Stock than the number of shares of Common Stock which
then are authorized but unissued.
On
the basis of the foregoing, and in reliance thereon, and subject to
the qualifications herein stated, we are of the opinion that (i)
the Shares, when issued and sold in accordance with the
Registration Statement and the Prospectus, will be validly issued,
fully paid and nonassessable, (ii) provided that the Warrants have
been duly executed and delivered by the Company and duly delivered
to the purchasers thereof against payment therefor, the Warrants,
when issued and sold as contemplated in the Registration Statement
and Prospectus, will be valid and legally binding obligations of
the Company, enforceable against the Company in accordance with
their terms, except as enforcement thereof may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar
laws relating to or affecting creditors’ rights generally and
by general equitable principles (regardless of whether such
enforceability is considered in a proceeding at law or in equity),
and (iii) the Warrant Shares, when issued and paid for in
accordance with the terms of the Warrants, will be validly issued,
fully paid and nonassessable.
We
consent to the reference to our firm under the caption “Legal
Matters” in the Prospectus and to the filing of this opinion
as an exhibit to a Current Report on Form 8-K to be filed with the
Commission for incorporation by reference into the Registration
Statement. In giving this consent, we do not admit that we are
“experts” within the meaning of Section 11 of the
Securities Act or within the category of persons whose consent is
required by Section 7 of the Securities Act.
Very
truly yours,
/s/
Disclosure Law Group, a Professional Corporation
Exhibit
99.1
VistaGen Announces Pricing of Underwritten Offering of Common Stock
and Warrants to Purchase Common Stock
South San Francisco, CA (August 31, 2017) –
VistaGen Therapeutics,
Inc. (NASDAQ: VTGN) (“VistaGen” or the
“Company”), a clinical-stage biopharmaceutical company
focused on developing new generation medicines for depression and
other central nervous system disorders, today announced the pricing
of an underwritten public offering of 1,371,430 shares of its
common stock and warrants to purchase up to 1,892,572 shares of
common stock at an offering price of $1.75 per share and related
warrants. Each share of common stock is being sold together with
1.0128 Series A1 Warrants and 0.3672 of a Series A2 Warrant, with
each whole Series A1 Warrant and each whole Series A2 Warrant
exercisable to purchase one whole share of common stock. The
warrants have an exercise price of $1.82 per full share, and will
terminate 5 years from the time each warrant is first exercisable.
Series A1 Warrants to purchase up to 1,388,931 shares of common
stock are not exercisable until 6 months after issuance. Series A2
Warrants to purchase up to 503,641 shares of common stock are
immediately exercisable. The gross proceeds of the offering are
expected to be approximately $2.4 million, before deducting the
underwriting discount and other estimated offering
expenses.
Oppenheimer
& Co. Inc. is acting as sole underwriter for the
offering.
The
closing of the offering is expected to occur on or about September
6, 2017, subject to the satisfaction of customary closing
conditions.
VistaGen
currently intends to use the net proceeds from the offering for
general corporate purposes, including research and development
related to preparations for the Company’s AV-101 MDD Phase 2
Adjunctive Treatment Study, and working capital.
The
offering is being conducted pursuant to the Company’s shelf
registration statement on Form S-3 (File No. 333-215671) previously
filed with and subsequently declared effective by the Securities
and Exchange Commission (the SEC) on July 27, 2017. A prospectus
supplement and accompanying base prospectus relating to the
offering will be filed with the SEC and will be available on the
SEC's website at http://www.sec.gov.
This
press release does not constitute an offer to sell or the
solicitation of an offer to buy any of the securities described
herein, nor shall there be any sale of these securities in any
jurisdiction in which such offer, solicitation or sale would be
unlawful prior to registration or qualification under the
securities laws of any such jurisdiction. Copies of the prospectus
supplement and the accompanying base prospectus, when available,
relating to this offering may be obtained from Oppenheimer &
Co. Inc., Attention: Syndicate Prospectus Department, 85 Broad
Street, 26th Floor, New York, New York, 10004, or by telephone at
212-667-8563, or e-mail at EquityProspectus@opco.com.
About VistaGen
VistaGen
Therapeutics, Inc. (NASDAQ: VTGN), is a clinical-stage
biopharmaceutical company focused on developing new generation
medicines for depression and other central nervous system (CNS)
disorders. VistaGen’s lead CNS product candidate, AV-101, is
in Phase 2 development, initially as a new generation oral
antidepressant drug candidate for major depressive disorder (MDD).
AV-101's mechanism of
action is fundamentally different from all FDA-approved
antidepressants and atypical antipsychotics used adjunctively to
treat MDD, with potential to drive a paradigm shift towards a new
generation of safer and faster-acting antidepressants. AV-101 is currently being evaluated by the U.S.
National Institute of Mental Health (NIMH) in a small Phase 2 monotherapy study in MDD being
fully funded by the NIMH and conducted by Dr. Carlos Zarate Jr.,
Chief, Section on the Neurobiology and Treatment of Mood Disorders
and Chief of Experimental Therapeutics and Pathophysiology Branch
at the NIMH. VistaGen is preparing to launch a 180-patient Phase 2
study of AV-101 as an adjunctive treatment for MDD patients with an
inadequate response to standard, FDA-approved antidepressants. Dr.
Maurizio Fava of Harvard University will be the Principal
Investigator of the Company’s Phase 2 adjunctive treatment
study. AV-101 may also have the potential to treat multiple
CNS disorders and neurodegenerative diseases in addition to MDD,
including neuropathic pain, epilepsy, Huntington’s disease,
and levodopa-induced dyskinesia associated with Parkinson’s
disease and other disorders where modulation of the NMDA receptors,
activation of AMPA pathways and/or key active metabolites of AV-101
may achieve therapeutic benefit.
For
more information, please visit www.vistagen.com and connect
with VistaGen on Twitter, LinkedIn and Facebook.
Forward-Looking Statements
The statements in this press release that are not historical facts
may constitute forward-looking statements that are based on current
expectations and are subject to risks and uncertainties that could
cause actual future results to differ materially from those
expressed or implied by such statements. Those risks and
uncertainties include, but are not limited to, risks related to the
closing of the offering and the anticipated use of proceeds, risks
related to the successful launch, continuation and results of the
NIMH’s Phase 2 (monotherapy) and/or the Company’s
planned Phase 2 (adjunctive therapy) clinical studies of AV-101 in
MDD, and other CNS diseases and disorders, including neuropathic
pain and L-DOPA-induced dyskinesia associated with
Parkinson’s disease, the potential for the Company’s
stem cell technology to produce NCEs, cellular therapies,
regenerative medicine or bone marrow stem cells to treat any
medical condition, including autoimmune disorders and cancer,
protection of its intellectual property, and the availability of
substantial additional capital to support its operations, including
the AV-101 clinical development activities described above. The
offering is subject to market and other conditions and there can be
no assurance as to whether or when the offering may be completed or
as to the actual size or terms of the offering. These and other risks and
uncertainties are identified and described in more detail in
VistaGen’s filings with the Securities and Exchange
Commission (SEC). These filings are available on the SEC’s
website at www.sec.gov.
VistaGen undertakes no obligation to publicly update or revise any
forward-looking statements.
Company Contact
Mark A. McPartland
VistaGen Therapeutics Inc.
Phone: +1 (650) 577-3600
Email: IR@vistagen.com
Investor Contact:
Valter Pinto / Allison Soss
KCSA Strategic Communications
Phone: +1 (212) 896-1254/+1 (212) 896-1267
Email: VistaGen@KCSA.com