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):
May
25, 2007
BIOSANTE
PHARMACEUTICALS, INC.
(Exact
name of registrant as specified in its charter)
|
Delaware
|
001-31812
|
58-2301143
|
|
(State
or other jurisdiction of incorporation)
|
(Commission
File Number)
|
(I.R.S.
Employer Identification Number)
|
|
111
Barclay Boulevard
Lincolnshire,
Illinois
|
60069
|
|
(Address
of principal executive offices)
|
(Zip
Code)
|
(847)
478-0500
(Registrant’s
telephone number, including area code)
N/A
(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))
|
Section
1 — Registrant’s Business and
Operations
Item
1.01 entry into a Material Definitive
Agreement
On
May
25, 2007, BioSante Pharmaceuticals, Inc. entered into definitive subscription
agreements with certain institutional and other accredited investors, as defined
in Rule 501 of Regulation D promulgated under the Securities Act of 1933, as
amended, pursuant to which BioSante agreed to sell in a private placement an
aggregate of 2,754,999 shares of its common stock and warrants to purchase
an aggregate of 688,750 shares of its common stock, at a purchase price of
$6.00 per unit. The warrants are exercisable for a period of three
years, beginning six months and one day from the date of issuance, at an
exercise price of $8.00 per share. The number of shares issuable upon
exercise of the warrants and the exercise price of the warrants are adjustable
in the event of stock splits, combinations and reclassifications, but not in
the
event of the issuance by BioSante of additional securities. The
private placement is expected to be completed upon approval of an Additional
Listing Application with the American Stock Exchange.
BioSante
has agreed to register the resale of the shares sold in the private placement,
including shares issuable upon exercise of the warrants, on a registration
statement to be filed by BioSante with the Securities and Exchange Commission
under the Securities Act of 1933, as amended. BioSante has agreed to use its
reasonable best efforts to file the registration statement with the SEC within
35 days after the closing of the private placement, to cause the registration
statement to be declared effective by the SEC within the earlier of 90 days
after the closing (120 days if the registration statement is reviewed by the
SEC) or the 10th business
day
following the date on which BioSante is notified by the SEC that the SEC will
not be reviewing the registration statement or that the SEC has no further
comments on the registration statement and to cause the registration statement
to remain effective for the required registration period. Pursuant to the
subscription agreements, BioSante and the investor parties thereto have made
other covenants and representations and warranties regarding matters that are
customarily included in financings of this nature. If certain of its
obligations under the subscription agreements are not met, BioSante has agreed
to make pro-rata cash payments as liquidated damages to each
investor.
The
private placement is expected to result in net proceeds to BioSante of
approximately $15.6 million, after the deduction of placement agent commissions
and estimated offering expenses. Other than with respect to the
subscription agreements, there are no material relationships between BioSante,
on the one hand, and any of the investors in the private placement, on the
other
hand.
The
foregoing description of the terms
and conditions of the subscription agreements and warrants does not purport
to
be complete and is qualified in its entirety by reference to the full text
of
the form of subscription agreement filed as Exhibit 10.1 to this Current Report
on Form 8-K and incorporated herein by reference and the form of warrant
expected to be issued by BioSante to the investors at the closing of the private
placement filed as Exhibit 10.2 to this Current Report on Form 8-K and
incorporated herein by reference. The form of subscription agreement
has been included to provide information regarding its terms and is not intended
to provide any other factual information about BioSante. Such
information can be found in BioSante’s other public filings with the SEC, which
are available without charge at www.sec.gov. A
copy of the press
release announcing the private placement is filed as Exhibit 99.1 to this
Current Report on Form 8-K.
This
report does not constitute an offer to sell or the solicitation of an offer
to
buy any securities. The shares of common stock and the underlying shares of
common stock issuable upon exercise of the warrants have not been registered
under the Securities Act of 1933, as amended, or any applicable state securities
laws and may not be offered or sold in the United States, absent registration
or
an applicable exemption from such registration requirements.
Section
3 — Securities and Trading Markets
Item
3.02 Unregistered Sale of Equity
Securities
As
described in more detail above, on May 25, 2007, BioSante entered into
definitive subscription agreements with certain institutional and other
accredited investors, as defined in Rule 501 of Regulation D promulgated under
the Securities Act of 1933, as amended, pursuant to which BioSante agreed to
sell in a private placement an aggregate of 2,754,999 shares of its common
stock and warrants to purchase an aggregate of 688,750 shares of its common
stock, at a purchase price of $6.00 per unit. The warrants are
exercisable for a period of three years, beginning six months and one day from
the date of issuance, at an exercise price of $8.00 per share. The
number of shares issuable upon exercise of the warrants and the exercise price
of the warrants are adjustable in the event of stock splits, combinations and
reclassifications, but not in the event of the issuance of additional
securities.
The
offer
of the securities was made and the sale of the securities will be made to a
limited number of institutional and other accredited investors in reliance
upon
exemptions from the registration requirements pursuant to Section 4(2) under
the
Securities Act of 1933, as amended, and Regulation D promulgated
thereunder. There was no general solicitation or advertising with
respect to the private placement and each of the purchasers provided written
representations of an intent to acquire the securities for investment only
and
not with a view to or for sale in connection with any distribution of the
securities. Appropriate legends will be affixed by BioSante to each
of the share certificates representing shares to be issued in the private
placement.
Additional
information regarding the private placement is incorporated herein by reference
to “Item 1.01. Entry into a Material Definitive Agreement” of this
Current Report on Form 8-K.
Item
9.01 Financial Statements and
Exhibits.
(d) Exhibits.
|
Exhibit
No.
|
Description
|
|
10.1
|
Form
of Subscription Agreement dated as of May 25, 2007 by and between
BioSante
Pharmaceuticals, Inc. and each of the subscribers party to the
Subscription Agreements (filed herewith)
|
|
10.2
|
Form
of Warrant expected to be issued by BioSante Pharmaceuticals, Inc.
to each
of the subscribers party to the Subscription Agreements (filed
herewith)
|
|
99.1
|
BioSante
Pharmaceuticals, Inc. News Release dated May 25, 2007 (filed
herewith)
|
SIGNATURE
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant
has
duly caused this report to be signed on its behalf by the undersigned hereunto
duly authorized.
BIOSANTE
PHARMACEUTICALS, INC.
By: /s/
Phillip B. Donenberg
Phillip
B. Donenberg
Chief
Financial Officer, Treasurer and Secretary
Dated: May
25, 2007
BIOSANTE
PHARMACEUTICALS, INC.
CURRENT
REPORT ON FORM 8-K
EXHIBIT
INDEX
|
Exhibit
No.
|
Description
|
Method
of Filing
|
|
10.1
|
Form
of Subscription Agreement dated as of May 25, 2007 by and between
BioSante
Pharmaceuticals, Inc. and each of the subscribers party to the
Subscription Agreements
|
Filed
herewith
|
|
10.2
|
Form
of Warrant expected to be issued by BioSante Pharmaceuticals, Inc.
to each
of the subscribers party to the Subscription Agreements
|
Filed
herewith
|
|
99.1
|
BioSante
Pharmaceuticals, Inc. News Release dated May 25, 2007
|
Filed
herewith
|
SUBSCRIPTION
AGREEMENT
SUBSCRIPTION
AGREEMENT (this “Agreement”) made as of the date set forth on the
signature page hereof between BioSante Pharmaceuticals, Inc., a Delaware
corporation (the “Company”) and the undersigned (the
“Subscriber”).
WITNESSETH:
WHEREAS,
the Company is offering in a private placement to accredited investors (the
“Offering”) up to a maximum of 4,702,669 shares of common stock, par
value $0.0001 per share (the “Common Stock”) at a price equal to $6.00
per share (the “Offering Price”) and warrants to purchase shares of
Common Stock equal to twenty-five percent (25%) of the total number of shares
sold to Subscribers in the Offering at an exercise price per share equal to
$8.00 (the “Warrants”). The Warrants are exercisable beginning
on the date that is six months and one day after the Closing Date and continuing
for three years thereafter. The shares of Common Stock and Warrants
offered hereby are sometimes referred to as the “Securities;”
and
WHEREAS,
the Subscriber desires to purchase that number of Securities set forth on the
signature page hereof on the terms and conditions hereinafter set forth;
and
WHEREAS,
the Company has engaged Rodman & Renshaw, LLC and, indirectly, Oppenheimer
& Co. Inc. (collectively, the “Placement Agents”) as co-placement
agents for the Offering on a “best-efforts” basis.
NOW,
THEREFORE, in consideration of the premises and the mutual representations
and
covenants hereinafter set forth, the parties hereto agree as
follows:
I. SUBSCRIPTION
FOR SECURITIES AND REPRESENTATIONS BY SUBSCRIBER
1.1 Subject
to the terms and conditions hereinafter set forth, the Subscriber hereby
irrevocably subscribes for and agrees to purchase from the Company such
Securities as is set forth upon the signature page hereof and the Company agrees
to sell such Securities to the Subscriber for said purchase price. The purchase
price is payable by wire transfer of immediately available funds
contemporaneously with the execution and delivery of this Agreement by the
Subscriber. All wires should be sent to:
LaSalle
Bank NA
ABA#
Acct.#
Account
name BioSante Pharmaceuticals
Bank
contact = Kimberly Hall 847-990-3916
Certificates
for the shares of Common Stock and the Warrants will be delivered by the Company
to the Subscriber promptly following the Closing (as herein
defined). Notwithstanding the foregoing, the Subscriber acknowledges
that, although the Company intends to file on the next business day hereafter
or
as soon as practicable hereafter a listing application with the American Stock
Exchange (“AMEX”) containing all information required by the rules and
regulations of AMEX, final approval by AMEX is required in connection with
the
listing of the Common Stock to be eligible for trading on AMEX. The
Company shall use its reasonable best efforts to cause AMEX to approve the
listing application for the Securities as soon as practicable.
1.2 The
Subscriber recognizes that the purchase of Securities involves a high degree
of
risk in that (i) the Company remains an early stage business with a limited
operating history and will require funds in addition to the proceeds of the
Offering; (ii) an investment in the Company is highly speculative and only
investors who can afford the loss of their entire investment should consider
investing in the Company; (iii) the Subscriber may not be able to liquidate
the
Subscriber’s investment in the Company; (iv) transferability of the Securities
is extremely limited; and (v) in the event of a disposition, the Subscriber
could sustain the loss of its entire investment.
1.3 The
Subscriber represents that the Subscriber is an “accredited investor” as such
term is defined in Rule 501 of Regulation D promulgated under the Securities
Act
of 1933, as amended, (the “Act”), as indicated by the responses to the
questions contained in Section VII hereof, and that the Subscriber is able
to
bear the economic risk and illiquidity of an investment in the
Securities.
1.4 The
Subscriber hereby acknowledges and represents that (i) the Subscriber has prior
investment experience, including investment in non-listed and unregistered
securities, or that the Subscriber has employed the services of an investment
advisor, attorney and/or accountant to read all of the documents furnished
or
made available by the Company both to the Subscriber and to all other
prospective investors to evaluate the merits and risks of such an investment
on
the Subscriber’s behalf; (ii) the Subscriber recognizes the highly speculative
nature of an investment in the Securities; and (iii) the Subscriber is able
to
bear the economic risk and illiquidity which the Subscriber assumes by investing
in the Securities.
1.5 The
Subscriber (i) hereby represents that the Subscriber has been furnished by
the
Company during the course of this transaction with and has carefully read the
Company’s SEC Filings (as hereafter defined), including without limitation the
Company’s Annual Report on Form 10-K for the fiscal year ended December 31,
2006, the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended
March 31, 2007, the additional risk factors specific to the Common Stock and
the
Offering contained in Schedule 1.5 (together with the SEC Filings, the
“Offering Documents”), and all other information regarding the Company
which the Subscriber has requested or desired to know; (ii) has been afforded
the opportunity to ask questions of and receive answers from duly authorized
officers or other representatives of the Company concerning the terms and
conditions of the Offering; and (iii) has received any additional information
which the Subscriber has requested.
1.6 To
the
extent necessary, the Subscriber has retained, at its own expense, and relied
upon the advice of appropriate professionals regarding the investment, tax
and
legal merits and consequences of this Agreement and its purchase of the
Securities hereunder.
1.7 The
Subscriber hereby acknowledges that the Offering has not been reviewed by the
United States Securities and Exchange Commission (the “SEC”) because of
the Company’s representations that this Offering is intended to be exempt from
the registration requirements of Section 5 of the Act pursuant to Sections
3(b),
4(2) and/or 4(6) thereof and Regulation D promulgated under the Act. The
Subscriber agrees that the Subscriber will not, directly or indirectly, offer,
sell, pledge, transfer or otherwise dispose of (or solicit any offers to buy,
purchase or otherwise acquire or take a pledge of) any of the Securities, except
in compliance with the Act and the rules and regulations promulgated
thereunder.
1.8 The
Subscriber understands that none of the Securities have been registered under
the Act by reason of a claimed exemption under the provisions of the Act which
depends, in part, upon the Subscriber’s investment intention. In this
connection, the Subscriber hereby represents that the Subscriber is purchasing
the Securities for the Subscriber’s own account for investment and not with a
view toward the resale or distribution thereof to others. The
Subscriber, if an entity, was not formed for the purpose of purchasing the
Securities. The Subscriber understands that Rule 144 promulgated
under the Act requires, among other conditions, a one-year holding period prior
to the resale (in limited amounts) of securities acquired in a non-public
offering without having to satisfy the registration requirements under the
Act.
1.9 The
Subscriber understands and hereby acknowledges that the Company is under no
obligation to register the Securities under the Act or any applicable state
securities or “blue sky” laws (collectively, “Securities
Laws”) other than as set forth in Section V. Prior to the Legend
Removal Date (as hereafter defined), the Subscriber consents that the Company
may, if it desires, permit the transfer of the Securities out of the
Subscriber’s name only when the Subscriber’s request for transfer is accompanied
by an opinion of counsel reasonably satisfactory to the Company that neither
the
sale nor the proposed transfer results in a violation of the Act or any
applicable state “blue sky” laws.
1.10 So
long
as required by Section 5.13, the Subscriber consents to the placement of a
legend on any certificate or other document evidencing the Securities indicating
that such Securities have not been registered under the Act or any state
securities or “blue sky” laws and setting forth or referring to the restrictions
on transferability and sale thereof contained in this Agreement. The Subscriber
is aware that the Company will make a notation in its appropriate records and
issue “stop transfer” instructions to its transfer agent with respect to the
restrictions on the transferability of such Securities.
1.11 The
Subscriber understands that the Company will review this Agreement and, if
such
Subscriber is an individual, hereby gives authority to the Company to call
Subscriber’s bank or place of employment (in a call in which the Placement
Agents participate) or otherwise review the financial standing of the
Subscriber; and it is further agreed that upon their mutual agreement the
Placement Agents and the Company reserve the unrestricted right, without further
documentation or agreement on the part of the Subscriber, to reject or limit
any
subscription, to accept subscriptions for Securities and to close the Offering
to the Subscriber at any time.
1.12 The
Subscriber hereby represents that the address of the Subscriber furnished by
the
Subscriber on the signature page hereof is the Subscriber’s principal residence
if the Subscriber is an individual or its principal business address if it
is a
corporation or other entity.
1.13 The
Subscriber represents that the Subscriber has full power and authority
(corporate, statutory and otherwise) to execute and deliver this Agreement
and to purchase the Securities subscribed for hereby. This Agreement
constitutes the legal, valid and binding obligation of the Subscriber,
enforceable against the Subscriber in accordance with its terms.
1.14 If
the
Subscriber is a corporation, partnership, limited liability company, trust,
employee benefit plan, individual retirement account, Keogh Plan, or other
entity, then (a) it is authorized and qualified to become an investor in the
Company and the person signing this Agreement on behalf of such entity has
been
duly authorized by such entity to do so, and (b) it is duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
organization.
1.15 The
Subscriber represents and warrants that it has not engaged, consented to nor
authorized any broker, finder or intermediary to act on its behalf, directly
or
indirectly, as a broker, finder or intermediary in connection with the
transactions contemplated by this Agreement. The Subscriber shall
indemnify and hold harmless the Company from and against all fees, commissions
or other payments owing to any such person or firm acting on behalf of such
Subscriber hereunder.
1.16 The
Subscriber acknowledges that (a) the Company has engaged, consented to and
authorized the Placement Agents in connection with the transactions contemplated
by this Agreement, (b) the Company shall pay the Placement Agents a commission
and reimburse the Placement Agents’ expenses and the Company shall indemnify and
hold harmless the Subscriber from and against all fees, commissions or other
payments owing by the Company to the Placement Agents or any other person or
firm acting on behalf of the Company hereunder, (c) registered representatives
of the Placement Agents and/or its designees (including, without limitation,
registered representatives of the Placement Agents and/or its designees who
participate in the Offering and sale of the securities sold in the Offering)
will be paid a portion of the commissions paid to the Placement Agents and
(d)
the Placement Agents have not independently verified any information (financial,
legal or otherwise) and makes no representation or warranty, express or implied,
as to, and assumes no responsibility for, the accuracy or completeness of the
information contained in the Offering Documents.
1.17 The
Subscriber, whose name appears on the signature line below, shall be the
beneficial owner of the Securities for which such Subscriber
subscribes.
1.18 The
Subscriber understands, acknowledges and agrees with the Company as
follows:
(a) The
Company may terminate the Offering or reject any subscription at any time in
its
sole discretion. The execution of this Agreement by the Subscriber or
solicitation of the investment contemplated hereby shall create no obligation
on
the part of the Company or the Placement Agents to accept any subscription
or
complete the Offering.
(b) The
Subscriber hereby acknowledges and agrees that the subscription hereunder is
irrevocable by the Subscriber, and that, except as required by law, the
Subscriber is not entitled to cancel, terminate or revoke this Agreement or
any
agreements of the Subscriber hereunder and that if the Subscriber is an
individual this Agreement shall survive the death or disability of the
Subscriber and shall be binding upon and inure to the benefit of the parties
and
their heirs, executors, administrators, successors, legal representatives and
permitted assigns.
(c) No
federal or state agency or authority has made any finding or determination
as to
the accuracy or adequacy of the Offering Documents or as to the fairness of
the
terms of the Offering nor any recommendation or endorsement of the
Securities. Any representation to the contrary is a criminal
offense. In making an investment decision, the Subscriber must rely
on its own examination of the Company and the terms of the Offering, including
the merits and risks involved.
1.19 Other
than the transaction contemplated hereunder, the Subscriber has not directly
or
indirectly, nor has any Person acting on behalf of or pursuant to any
understanding with the Subscriber, executed any disposition, including “short
sales” as defined in Rule 200 of Regulation SHO under the Exchange Act, in
the securities of the Company during the period commencing from the time that
the Subscriber first received a term sheet (written or oral) from the Company
or
any other Person setting forth the material terms of the transactions
contemplated hereunder until the date hereof (the “Discussion Time”).
Notwithstanding the foregoing, in the case of a Subscriber that is a
multi-managed investment vehicle whereby separate portfolio managers manage
separate portions of such Subscriber’s assets and the portfolio managers have no
direct knowledge of the investment decisions made by the portfolio managers
managing other portions of the Subscriber’s assets, the representation set forth
above shall only apply with respect to the portion of assets managed by the
portfolio manager that made the investment decision to purchase the Securities
covered by this Agreement. Other than to other Persons party to this
Agreement, the Subscriber has maintained the confidentiality of all disclosures
made to it in connection with this transaction (including the existence and
terms of this transaction).
1.20 The
Subscriber represents that the Subscriber is not a broker-dealer or if the
Subscriber is a broker-dealer, the Subscriber represents that the Subscriber
is
purchasing the Securities in the ordinary course of business, and has no
agreements or understandings, directly or indirectly, with any person to
distribute the Securities.
1.21 The
Subscriber represents that the Subscriber did not purchase any shares of Common
Stock of the Company in the open market on May 4, 2007 or May 7,
2007.
II. REPRESENTATIONS
BY THE COMPANY
The
Company hereby represents and warrants to the Subscriber and the Placement
Agents that:
2.1 Organization
and Qualification. The Company is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware
and has full corporate power and lawful authority to conduct its business as
presently conducted. Except as set forth in Schedule 2.1, the
Company is duly qualified to do business as a foreign corporation and is in
good
standing in each jurisdiction in which the nature of the business presently
conducted by it or the properties owned, leased or operated by it, makes such
qualification or licensing necessary and where the failure to be so qualified
or
licensed would have a material adverse effect upon the business, prospects
or
financial condition of the Company (a “Material Adverse
Effect”).
2.2 Capitalization
and Voting Rights. The authorized capital stock of the Company is
as set forth in its most recent SEC Filing (as hereafter defined), 23,513,350
shares of common stock and 391,286 shares of class C special stock of which
are
issued and outstanding as of May 24, 2007. All issued and outstanding
shares of capital stock of the Company are validly issued, fully paid and
nonassessable. Except as set forth in this Agreement or in the SEC
Filings, there are no outstanding options, warrants, agreements, commitments,
convertible securities, preemptive rights or other rights to subscribe for
or to
purchase any shares of capital stock of the Company nor are there any
agreements, promises or commitments to issue any of the
foregoing. Except as set forth in the SEC Filings, in this Agreement
and as otherwise required by law, there are no restrictions upon the voting
or
transfer of the Securities pursuant to the Company's Amended and Restated
Certificate of Incorporation, as amended, (the “Certificate of
Incorporation”), By-laws or other governing documents or any agreement or
other instruments to which the Company is a party or by which the Company is
bound; provided, however, that the Securities will be subject to restrictions
on
transfer and Securities Laws (as hereafter defined) as provided
herein. No securityholder has the right to include any securities in
the Registration Statement (as hereinafter defined) or otherwise cause the
Company to effect registration of any of the Company’s securities under the Act,
except for investors in the Company’s prior private placements, which rights the
Company has to date satisfied.
2.3 Authorization;
Enforceability. The Company has all corporate right, power and authority to
enter into this Agreement and to consummate the transactions contemplated
hereby. All corporate action on the part of the Company, its
directors and stockholders necessary for the authorization, execution, delivery
and performance of this Agreement by the Company, the authorization, sale,
issuance and delivery of the Securities and the performance of the Company's
obligations hereunder has been taken. This Agreement has been duly
executed and delivered by the Company and constitutes a legal, valid and binding
obligation of the Company, enforceable against the Company in accordance with
its terms, subject to laws of general application relating to bankruptcy,
insolvency and the relief of debtors and rules of law governing specific
performance, injunctive relief or other equitable remedies, and to limitations
of public policy. The Securities and the issuance of shares of Common
Stock upon issuance of the Warrants (the “Warrant Shares”) have been duly
and validly authorized and, upon the issuance and delivery thereof and payment
therefor as contemplated by this Agreement and the terms of the Warrants, will
be free and clear of liens (other than any liens created by or imposed on the
holders thereof through no action of the Company), duly and validly authorized
and issued, fully paid and nonassessable. The Company has reserved a
sufficient number of shares of Common Stock for its authorized but unissued
shares for issuance upon exercise of the Warrants. The issuance and
sale of the Securities contemplated hereby will not give rise to any preemptive
rights or rights of first refusal on behalf of any person.
2.4 No
Conflict; Governmental Consents.
(a) The
execution and delivery by the Company of this Agreement, the consummation
of the transactions contemplated hereby and the offer and sale of the Securities
will not result in the violation of any law, statute, rule, regulation, order,
writ, injunction, judgment or decree of any court or governmental authority
to
or by which the Company is bound that would have a material adverse effect
upon
the business or financial condition of the Company, or of any provision of
the
Certificate of Incorporation or By-laws of the Company, and will not conflict
with, or result in a breach or violation of, any of the terms or provisions
of,
or constitute (with due notice or lapse of time or both) a default under, any
lease, loan agreement, mortgage, security agreement, trust indenture or other
agreement or instrument to which the Company is a party or by which it is bound
or to which any of its properties or assets is subject, nor result in the
creation or imposition of any lien upon any of the properties or assets of
the
Company that would have a material adverse effect upon the business or financial
condition of the Company.
(b) Except
as
set forth in Schedule 2.4(b), no consent, waiver, approval, authorization
or other order of any governmental authority or other third-party is required
to
be obtained by the Company in connection with the authorization, execution
and
delivery of this Agreement or with the authorization, issuance and sale of
the
Securities, except for such consents, waivers, approvals, authorizations, orders
or filings as may be required to be obtained or made, and which shall have
been
obtained or made at or prior to the required time and except for such consents,
waivers, approvals, authorizations, orders or filings that would not have a
Material Adverse Affect.
2.5 Licenses. The
Company has all licenses, permits and other governmental authorizations
currently required for the conduct of its business or ownership of properties
and is in all material respects complying therewith, except for any licenses,
permits or other governmental authorizations which would not materially
adversely affect the business, property, financial condition, or results of
operations of the Company.
2.6 Litigation. Except
as set forth in the SEC Reports, there is no action, suit, inquiry, notice
of
violation, proceeding or investigation pending or, to the knowledge of the
Company, threatened against or affecting the Company or any of its properties
before or by any court, arbitrator, governmental or administrative agency or
regulatory authority (federal, state, county, local or foreign) (collectively,
an “Action”) which (i) adversely affects or challenges the legality,
validity or enforceability of this Agreement or the Securities or (ii) could,
if
there were an unfavorable decision, have or reasonably be expected to result
in
a Material Adverse Effect. Except as set forth in the SEC Reports,
neither the Company, nor any director or officer thereof, is or has been the
subject of any action involving a claim of violation of or liability under
federal or state securities laws or a claim of breach of fiduciary
duty. Except as set forth in the SEC Reports, there has not been, and
the Company has not received any notice or indication from the SEC that there
is
pending or contemplated any investigation by the SEC involving the Company
or
any current or former director or officer of the Company. The SEC has
not issued any stop order or other order suspending the effectiveness of any
registration statement filed by the Company under the Securities Exchange Act
of
1934, as amended (the “Exchange Act”) or the Act.
2.7 Accuracy
of Report. The Company has filed all reports, schedules, forms,
statements and other documents required to be filed by it under the Act and
the
Exchange Act, including pursuant to Section 13(a) or 15(d) thereof, for the
two
years preceding the date hereof (the foregoing materials, including the exhibits
thereto and documents incorporated by reference therein, being collectively
referred to herein as the “SEC Reports”) on a timely basis or has
received a valid extension of such time of filing and has filed any such SEC
Reports prior to the expiration of any such extension. As of their
respective dates, the SEC Reports complied in all material respects with the
requirements of the Act and the Exchange Act, as applicable, and the rules
and
regulations of the Commission promulgated thereunder, as applicable, and none
of
the SEC Reports, when filed, contained any untrue statement of a material fact
or omitted to state a material fact required to be stated therein or necessary
in order to make the statements therein, in the light of the circumstances
under
which they were made, not misleading.
2.8 Investment
Company. The Company is not and, upon completion of the Offering,
will not be an “investment company” within the meaning of such term under the
Investment Company Act of 1940, as amended, and the rules and
regulations of the SEC thereunder.
2.9 Patents
and Trademarks. The Company has, or has rights to use, all
patents, patent applications, trademarks, trademark applications, service marks,
trade names, trade secrets, inventions, copyrights, licenses and other
intellectual property rights and similar rights necessary or material for use
in
connection with their respective businesses as described in the SEC Reports
and
which the failure to so have could have a Material Adverse Effect (collectively,
the “Intellectual Property Rights”). Except as set forth on
Schedule 2.9, the Company has not received a notice (written or otherwise)
that
the Intellectual Property Rights used by the Company or violates or infringes
upon the rights of any Person (as hereinafter defined). To the
knowledge of the Company, all such Intellectual Property Rights are enforceable
and there is no existing infringement by another Person of any of the
Intellectual Property Rights that could have a Material Adverse
Effect. The Company has taken reasonable security measures to protect
the secrecy, confidentiality and value of all of their intellectual properties,
except where failure to do so could not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect.
2.10 No
Material Adverse Change. Since the date of the latest audited
financial statements included within the SEC Reports, except as specifically
disclosed in a subsequent SEC Report, (i) there has been no event, occurrence
or
development that has had or that could reasonably be expected to result in
a
Material Adverse Effect, (ii) the Company has not incurred any liabilities
(contingent or otherwise) other than (A) trade payables and accrued expenses
incurred in the ordinary course of business consistent with past practice and
(B) liabilities not required to be reflected in the Company’s financial
statements pursuant to GAAP or disclosed in filings made with the SEC, (iii)
the
Company has not altered its method of accounting, except as otherwise required
pursuant to GAAP, (iv) the Company has not declared or made any dividend or
distribution of cash or other property to its stockholders or purchased,
redeemed or made any agreements to purchase or redeem any shares of its capital
stock and (v) the Company has not issued any equity securities to any officer,
director or Affiliate, except pursuant to existing Company stock
plans. Except as set forth in Schedule 2.12, the Company does
not have pending before the SEC any request for confidential treatment of
information. Except for the issuance of the Securities contemplated
by this Agreement, no event, liability or development has occurred or exists
with respect to the Company or its Subsidiaries or their respective business,
properties, operations or financial condition, that would be required to be
disclosed by the Company under applicable securities laws at the time this
representation is made that has not been publicly disclosed as of the date
of
this Agreement.
2.11 Financial
Statements. The financial statements included in the Company's
most recent Annual Report on Form 10-K for the fiscal year ended December 31,
2006 and all other reports filed by the Company with the SEC pursuant to the
Exchange Act since January 1, 2007 and prior to the date hereof (collectively,
the “SEC Filings”) present fairly and accurately in all material respects
the financial position of the Company as of the dates shown and its results
of
operations and cash flows for the periods shown, and such financial statements
have been prepared in conformity with generally accepted accounting principles
(“GAAP”) applied on a consistent basis (except as may be indicated
thereon or in the notes thereto and subject, in the case of unaudited financial
statements, to normal adjustments). The Company has accounted for all
option grants and other incentive-based stock awards in, compliance under GAAP,
as in effect on the respective date of grant or award or as otherwise required
by GAAP’s effect at the time of the SEC filing. Except as set forth
in the financial statements of the Company included in the SEC Filings filed
prior to the date hereof, to the Company's knowledge, the Company has no
liabilities, contingent or otherwise, except those which individually or in
the
aggregate are not material to the financial condition or operating results
of
the Company.
2.12 Compliance
with Laws. Neither the Company nor, to the Company's knowledge,
any Person (as hereafter defined) acting on the Company’s behalf and in
accordance with the Company’s instructions, has conducted any general
solicitation or general advertising (as those terms are used in Regulation
D of
the Act) in connection with the offer or sale of the
Securities. Assuming the accuracy of the Subscribers’ representations
and warranties set forth in Article III, no registration under the Act is
required for the offer and sale of the Securities by the Company to the
Subscribers. Neither the Company nor any of its Affiliates (as
hereafter defined), nor, to the Company's knowledge, any Person acting on the
Company’s or on the behalf of its Affiliates and in accordance with the
Company’s instructions, has, directly or indirectly, made any offers or sales of
any security of the Company or solicited any offers to buy any security of
the
Company, under circumstances that would adversely affect reliance by the Company
on Section 4(2) of the Act for the exemption from registration for the
transactions contemplated hereby or would require registration of the Securities
under the Act. The Company is in compliance with the requirements of
AMEX for continued listing of the Common Stock thereon and has not received
any
notification that, and has no knowledge that, the AMEX is contemplating
terminating such listing nor, to the Company's knowledge, is there any basis
therefore. The transactions contemplated by this Agreement will not contravene
the rules and regulations of the AMEX, however, the approval of the AMEX will
be
required for the issuance and sale of the Shares and the Warrant Shares and
the
Company will use commercially reasonable efforts to obtain such
approval. The Company intends to file on the next
business day after the date of this Agreement or as soon as practicable
hereafter a subsequent listing application for listing the Securities on and
hereby represents and warrants to the Placement Agents and the Subscriber that
it will take any other necessary action in accordance with the rules of the
AMEX
to enable the Securities to trade on the AMEX.
2.13 Insurance. The
Company is insured by insurers of recognized financial responsibility against
such losses and risks and in such amounts as are prudent and customary in the
businesses in which the Company is engaged, including, but not limited to,
directors and officers insurance coverage in the amount of
$5,000,000. The Company has no reason to believe that it will not be
able to renew its existing insurance coverage as and when such coverage expires
or to obtain similar coverage from similar insurers as may be necessary to
continue its business without a significant increase in cost.
2.14 Sarbanes-Oxley;
Internal Accounting Controls. The Company has at all times been
and currently is in material compliance with all provisions of the
Sarbanes-Oxley Act of 2002 which are applicable to it as of the Closing
Date. The Company believes that it maintains a system of internal
accounting controls sufficient to provide reasonable assurance 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 conformity with GAAP and to maintain
asset accountability, (iii) access to assets is permitted only in accordance
with management’s general or specific authorization, and (iv) the recorded
accountability for assets is compared with the existing assets at reasonable
intervals and appropriate action is taken with respect to any differences.
The
Company has established disclosure controls and procedures (as defined in
Exchange Act Rules 13a-15(e) and 15d-15(e)) for the Company and designed such
disclosure controls and procedures to ensure that information required to be
disclosed by the Company in the reports it files or submits under the Exchange
Act is recorded, processed, summarized and reported, within the time periods
specified in the Commission’s rules and forms. The Company’s
certifying officers have evaluated the effectiveness of the Company’s disclosure
controls and procedures as of the end of the period covered by the Company’s
most recently filed periodic report under the Exchange Act (such date, the
“Evaluation Date”). The Company presented in its most recently
filed periodic report under the Exchange Act the conclusions of the certifying
officers about the effectiveness of the disclosure controls and procedures
based
on their evaluations as of the Evaluation Date. Since the Evaluation
Date, there have been no changes in the Company’s internal control over
financial reporting (as such term is defined in the Exchange Act) that has
materially affected, or is reasonably likely to materially affect, the Company’s
internal control over financial reporting.
2.15 Application
of Takeover Protections. The Company and its Board of Directors
have taken all necessary action, if any, in order to render inapplicable any
control share acquisition, business combination, poison pill (including any
distribution under a rights agreement) or other similar anti-takeover provision
under the Company’s Certificate of Incorporation (or similar charter documents)
or the laws of its state of incorporation that is or could become applicable
to
the Subscribers as a result of the Subscribers and the Company fulfilling their
obligations or exercising their rights under this Agreement and the Warrants,
including, without limitation, as a result of the Company’s issuance of the
Securities and the Subscribers’ ownership of the Securities.
2.16 Disclosure. Except
with respect to the material terms and conditions of the transactions
contemplated by this Agreement and the Warrants, the Company confirms that,
neither it nor any other Person acting on its behalf has provided any of the
Subscribers or their agents or counsel with any information that it believes
constitutes or might constitute material, non-public
information. The Company understands and confirms that the
Subscribers will rely on the foregoing representation in effecting transactions
in securities of the Company. All disclosure furnished by or on
behalf of the Company to the Subscribers regarding the Company, its business
and
the transactions contemplated hereby, including the Offering Documents, with
respect to the representations and warranties made herein are true and correct
with respect to such representations and warranties and do not contain any
untrue statement of a material fact or omit to state any material fact necessary
in order to make the statements made therein, in light of the circumstances
under which they were made, not misleading. The Company acknowledges and agrees
that no Subscriber makes or has made any representations or warranties with
respect to the transactions contemplated hereby other than those specifically
set forth in Section III hereof.
2.17 Accountants. The
Company’s accountants are set forth on Schedule 2.17. To the
knowledge of the Company, such accountants, who the Company expects will express
their opinion with respect to the financial statements to be included in the
Company’s Annual Report on Form 10-K for the year ended December 31, 2007, are a
registered public accounting firm as required by the Act.
2.18 Acknowledgment
Regarding Subscribers’ Purchase of Securities. The Company
acknowledges and agrees that each of the Subscribers is acting solely in the
capacity of an arm’s length purchaser with respect to the Transaction Documents
and the transactions contemplated thereby. The Company further
acknowledges that no Subscriber is acting as a financial advisor or fiduciary
of
the Company (or in any similar capacity) with respect to this Agreement and
the
transactions contemplated thereby and any advice given by any Subscriber or
any
of their respective representatives or agents in connection with this Agreement
and the transactions contemplated hereby is merely incidental to Subscribers’
purchase of the Securities. The Company further represents to each
Subscriber that the Company’s decision to enter into this Agreement and the
other agreements contemplated hereby has been based solely on the independent
evaluation of the transactions contemplated hereby by the Company and its
representatives.
2.19 Manipulation
of Price. The Company has not, and to its knowledge no one acting on
its behalf has, (i) taken, directly or indirectly, any action designed to cause
or to result in the stabilization or manipulation of the price of any security
of the Company to facilitate the sale or resale of any of the Securities, (ii)
sold, bid for, purchased, or, paid any compensation for soliciting purchases
of,
any of the Securities, or (iii) paid or agreed to pay to any person any
compensation for soliciting another to purchase any other securities of the
Company, other than, in the case of clauses (ii) and (iii), compensation paid
to
the Placement Agents in connection with the placement of the
Securities.
2.20 Form
S-3 Eligibility. The Company is eligible to register the resale
of the Common Stock sold hereunder and issuable upon exercise of the Warrants
for resale by the Subscriber on Form S-3 promulgated under the Securities
Act.
III. TERMS
OF SUBSCRIPTION
3.1 The
Offering is for a maximum of up to 4,702,669 shares of Common Stock and Warrants
to purchase twenty-five percent (25%) of the total number of shares of Common
Stock sold to Subscribers in the Offering. The Securities are offered
on a “best efforts” basis.
3.2 Upon
the
mutual consent of the Company and the Placement Agents, this Offering may close
(the “Closing” and the date of such Closing, the “Closing Date”)
prior to the sale of all 4,702,669 shares of Common Stock. The
purchase price is payable by wire transfer of immediately available funds as
provided in Section 1.1.
3.3 The
Subscriber hereby authorizes and directs the Company to deliver the Securities
to be issued to the Subscriber pursuant to this Agreement directly to the
Subscriber’s account maintained by the Placement Agents or, if no such account
exists, to the residential or business address indicated on the signature page
hereto.
3.4 The
Subscriber hereby authorizes and directs the Company to return any funds related
to unaccepted subscriptions to the same account from which the funds were drawn,
including any customer account maintained with the Placement
Agents.
IV. CONDITIONS
TO OBLIGATIONS OF THE SUBSCRIBERS AND THE COMPANY
4.1 The
Subscribers’ obligation to purchase the Securities at the Closing is subject to
the fulfillment on or prior to the Closing Date of the following conditions,
which conditions may be waived at the option of each Subscriber to the extent
permitted by law:
(a) Representations
and Warranties. The representations and warranties made by the Company in
Section II hereof shall be true and correct in all material respects when made,
and shall be true and correct in all material respects on the Closing Date
with
the same force and effect as if they had been made on and as of said
date.
(b) Covenants.
All covenants, agreements and conditions contained in this Agreement to be
performed by the Company on or prior to such purchase shall have been performed
or complied with in all material respects.
(c) No
Legal Order Pending. There shall not then be in effect any legal or other
order enjoining or restraining the transactions contemplated by this
Agreement.
(d) No
Law
Prohibiting or Restricting Such Sale. There shall not be in effect any law,
rule or regulation prohibiting or restricting such sale or requiring any consent
or approval of any person to issue the Securities which consent or approval
shall not have been obtained (except as may otherwise be provided in this
Agreement).
(e) Legal
Opinion. Upon the Closing, counsel to the Company shall have delivered to
the Placement Agents for the benefit of the Subscribers a legal opinion with
respect to such legal matters relating to this Agreement and the Offering as
the
Placement Agents may reasonably require.
4.2 The
Company’s obligation to sell the Securities at the Closing is subject to the
fulfillment on or prior to the Closing Date of the following conditions, which
conditions may be waived at the option of the Company to the extent permitted
by
law:
(a) Acknowledgements,
Representations and Warranties. The acknowledgements,
representations and warranties made by the Subscriber in Section I hereof shall
be true and correct in all respects when made, and shall be true and correct
in
all material respects on the Closing Date with the same force and effect as
if
they had been made on and as of said date; provided, however, that
any acknowledgement, representation or warranty made by the Subscriber that
is
not true and correct and as a result the Subscriber is not an “accredited
investor” under Rule 501 under Regulation D of the Act or the Company is not
able to rely upon a private placement exemption under Rule 506 under Regulation
D of the Act for the issuance of the Securities will automatically be deemed
to
be material. If any such representations, warranties or
acknowledgements shall not be true and accurate in any respect prior to the
Closing, the undersigned shall give immediate written notice of such fact to
the
Company, to the Placement Agents, and to his representatives, if any, specifying
which representations, warranties or acknowledgements are not true and accurate
and the reason therefor.
(b) Covenants. All
covenants, agreements and conditions contained in this Agreement to be performed
by the Subscriber on or prior to such purchase shall have been performed or
complied with in all material respects.
(c) No
Legal Order Pending. There shall not then be in effect any legal
or other order enjoining or restraining the transactions contemplated by this
Agreement.
(d) No
Law
Prohibiting or Restricting Such Sale. There shall not be in
effect any law, rule or regulation prohibiting or restricting such sale or
requiring any consent or approval of any person to issue the Securities which
consent or approval shall not have been obtained (except as may otherwise be
provided in this Agreement).
V. REGISTRATION
RIGHTS.
5.1 As
used
in this Agreement, the following terms shall have the following
meanings:
(a) “Affiliate”
shall mean, with respect to any Person (as defined below), any other Person
controlling, controlled by, or under direct or indirect common control with,
such Person (for the purposes of this definition “control,” when used with
respect to any specified Person, shall mean the power to direct the management
and policies of such person, directly or indirectly, whether through ownership
of voting securities, by contract or otherwise; and the terms “controlling” and
“controlled” shall have meanings correlative to the foregoing).
(b) “Business
Day” shall mean a day, Monday through Friday, on which banks are generally
open for business in each of New York, New York; and Chicago,
Illinois.
(c) “Holders”
shall mean the Subscriber and any person holding Registrable Securities as
defined below, or any person to whom the rights under Section V have been
transferred in accordance with Section 5.10 hereof, and who, if known by
the Company, shall be specifically named by the Company as selling stockholders
in the Registration Statement (as defined below).
(d) “Person”
shall mean any person, individual, corporation, limited liability company,
partnership, trust or other nongovernmental entity or any governmental agency,
court, authority or other body (whether foreign, federal, state, local or
otherwise).
(e) “Proceeding”
means an action, claim, suit, investigation or proceeding (including, without
limitation, an investigation or partial proceeding, such as a deposition),
whether commenced or threatened.
(f) “Prospectus”
means the prospectus included in a Registration Statement (including, without
limitation, a prospectus that includes any information previously omitted from
a
prospectus filed as part of an effective registration statement in reliance
upon
Rule 430A promulgated under the Securities Act), as amended or supplemented
by
any prospectus supplement, with respect to the terms of the offering of any
portion of the Registrable Securities covered by a Registration Statement,
and
all other amendments and supplements to the Prospectus, including post-effective
amendments, and all material incorporated by reference or deemed to be
incorporated by reference in such Prospectus.
(g) The
terms
“register,” “registered” and “registration” refer to the
registration effected by preparing and filing with the SEC a registration
statement in compliance with the Act, and the declaration or ordering by the
SEC
of the effectiveness of such registration statement.
(h) “Registrable
Securities” shall mean (i) the Common Stock, and (ii) the shares of Common
Stock issuable upon exercise of the Warrants; provided, however, that securities
shall only be treated as Registrable Securities if and only for so long as
they
(A) have not been disposed of pursuant to a registration statement declared
effective by the SEC, (B) have not been sold in a transaction exempt from the
registration and prospectus delivery requirements of the Act so that all
transfer restrictions and restrictive legends with respect thereto are removed
upon the consummation of such sale, and (C) are held by a Holder or a permitted
transferee pursuant to Section 5.10; provided that any such securities
shall cease to be Registrable Securities at such time as the Holder may sell
all
such securities of the Company then held by such Holder under Rule 144(k) under
the Act.
(i) “Registration
Expenses” shall mean all expenses incurred by the Company in complying with
Section 5.2 hereof, including, without limitation, all registration,
qualification and filing fees, printing expenses, escrow fees, fees and expenses
of counsel for the Company, blue sky fees and expenses and the expense of any
special audits incident to, or required by, any such registration (but excluding
the aggregate fees of legal counsel for all Holders).
(j) “Registration
Statement” shall have the meaning ascribed to such term in Section 5.2
(a).
(k) “Registration
Period” shall have the meaning ascribed to such term in Section 5.4
(a).
(l) “Selling
Expenses” shall mean all underwriting discounts and selling commissions
applicable to the sale of Registrable Securities and the aggregate fees and
expenses of legal counsel for all Holders.
5.2 (a) The
Company shall, as soon as reasonably practicable, but not later than thirty
(35)
days after the Closing Date (the “Filing Date”), (i) use its reasonable
best efforts to file with the SEC a shelf registration statement on Form S-3
(or
if not eligible for such form, on such other form on which the Company is
eligible) (the “Registration Statement”) with respect to the resale of
the Registrable Securities for an offering to be made on a continuous basis
pursuant to Rule 415 under the Act and cause such Registration Statement
declared effective by the SEC within the earlier of (a) 90 days from the Closing
Date (120 in the event of a review by the Commission) or (b) the tenth (10th)
business day following the date on which the Company is notified by the SEC
that
the SEC will not be reviewing the Registration Statement or that the SEC has
no
further comment on the Registration Statement (such earlier date is referred
to
as the “Effectiveness Date”) and (ii) cause such Registration Statement
to remain effective for the Registration Period. The Registration
Statement shall contain (unless otherwise directed by at least a majority in
interest of the Holders) substantially the “Plan of Distribution”
attached hereto as Annex A. The Company shall telephonically
request effectiveness of a Registration Statement as of 5:00 pm Eastern Time
on
a trading day. The Company shall immediately notify the Holders
via facsimile of the effectiveness of a Registration Statement on the same
trading day that the Company telephonically confirms effectiveness with
the SEC, which shall be the date requested for effectiveness of a
Registration Statement. The Company shall, by 9:30 am Eastern Time on
the trading day after the day the Registration Statement is declared effective
(as defined in the Subscription Agreement), file a final Prospectus with the
SEC
if required by Rule 424.
(b) If:
(i) a Registration Statement is not filed on or prior to its Filing Date (if
the
Company files a Registration Statement without affording the Holders the
opportunity to review and comment on the same as required by Section 5.4(b)
or
(ii) a Registration Statement filed or required to be filed hereunder is not
declared effective by the Commission by its Effectiveness Date, or (iii) after
the Effectiveness Date, a Registration Statement ceases for any reason to remain
continuously effective as to all Registrable Securities for which it is required
to be effective, or the Holders are otherwise not permitted to utilize the
Prospectus therein to sell Registrable Securities at any time other than during
a Permitted Black-Out Period (as defined herein) (any such failure or breach
being referred to as an “Event”, and for purposes of clause (i) or (ii)
the date on which such Event occurs, or for purposes of clause (iii) the first
date on which the Holders are not permitted to utilize the Prospectus, being
referred to as “Event Date”), then in addition to any other rights the
Holders may have hereunder or under applicable law, on each such Event Date
and
on each monthly anniversary of each such Event Date (if the applicable Event
shall not have been cured by such date) until the applicable Event is cured,
the
Company shall pay to each Holder an amount in cash, as partial liquidated
damages and not as a penalty, equal to 1% of the aggregate purchase price paid
for the Securities held by such Holder pursuant to the Subscription Agreement
for any Registrable Securities then held by such
Holder. Notwithstanding the foregoing, the partial liquidated damages
shall not exceed a maximum of 12% of the aggregate purchase price paid for
the
Securities held by such Holder pursuant to the Subscription Agreement for any
Registrable Securities then held by such Holder. If the Company fails
to pay any partial liquidated damages pursuant to this Section in full within
seven days after the date payable, the Company will pay interest thereon at
a
rate of 18% per annum (or such lesser maximum amount that is permitted to be
paid by applicable law) to the Holder, accruing daily from the date such partial
liquidated damages are due until such amounts, plus all such interest thereon,
are paid in full. The partial liquidated damages pursuant to the terms hereof
shall apply on a daily pro-rata basis for any portion of a month prior to the
cure of an Event.
5.3 All
Registration Expenses incurred in connection with any registration,
qualification, exemption or compliance pursuant to Section 5.2 shall be borne
by
the Company. All Selling Expenses relating to the sale of securities
registered by or on behalf of Holders shall be borne by such Holders pro rata
on
the basis of the number of securities so registered.
5.4 In
the
case of the registration, qualification, exemption or compliance effected by
the
Company pursuant to this Agreement, the Company shall, upon reasonable request,
inform each Holder as to the status of such registration, qualification,
exemption and compliance. At its expense the Company
shall:
(a) use
its
reasonable best efforts to keep such registration, and any qualification,
exemption or compliance under state securities laws which the Holders reasonably
request the Company to obtain, continuously effective as to all Registrable
Securities until the earlier of: (i) the Holders having completed the
distribution of the Registrable Securities described in the Registration
Statement relating thereto; or (ii) with respect to any Holder, such time as
all
Registrable Securities then held by such Holder may be sold in compliance with
Rule 144(k) under the Act. The period of time during which the
Company is required hereunder to keep the Registration Statement effective
is
referred to herein as the “Registration Period”;
(b) The
Company shall deliver a draft of the Registration Statement or any amendment
or
supplement thereto, which changes as modifies any information regarding a
Holder, a Holder’s beneficial ownership of the Company’s securities or any
information under the caption “Plan of Distribution” to the Holders at least
five (5) business days prior to filing such Registration Statement, amendment
or
supplement. Notify the Holders of Registrable Securities to be sold
(which notice shall, pursuant to clauses (iii) through (vi) hereof, be
accompanied by an instruction to suspend the use of the Prospectus until the
requisite changes have been made) as promptly as reasonably possible (and,
in
the case of (i)(A) below, not less than one trading day prior to such filing)
and (if requested by any such Person) confirm such notice in writing no later
than one trading day following the day (i)(A) when a Prospectus or any
Prospectus supplement or post-effective amendment to a Registration Statement
is
proposed to be filed; and (B) with respect to a Registration Statement or any
post-effective amendment, when the same has become effective; (ii) of any
request by the SEC or any other Federal or state governmental authority for
amendments or supplements to a Registration Statement or Prospectus; (iii)
of
the issuance by the SEC or any other federal or state governmental authority
of
any stop order suspending the effectiveness of a Registration Statement covering
any or all of the Registrable Securities or the initiation of any Proceedings
for that purpose; (iv) of the receipt by the Company of any notification with
respect to the suspension of the qualification or exemption from qualification
of any of the Registrable Securities for sale in any jurisdiction, or the
initiation or threatening of any Proceeding for such purpose; (v) of the
occurrence of any event or passage of time that makes the financial statements
included in a Registration Statement ineligible for inclusion therein or any
statement made in a Registration Statement or Prospectus or any document
incorporated or deemed to be incorporated therein by reference untrue in any
material respect or that requires any revisions to a Registration Statement,
Prospectus or other documents so that, in the case of a Registration Statement
or the Prospectus, as the case may be, it will not contain any untrue statement
of a material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading; and (vi) the
occurrence or existence of any pending corporate development with respect to
the
Company that the Company believes may be material and that, in the determination
of the Company, makes it not in the best interest of the Company to allow
continued availability of a Registration Statement or Prospectus; provided
that
any and all of such information shall remain confidential to each Holder until
such information otherwise becomes public, unless disclosure by a Holder is
required by law; provided, further, notwithstanding each Holder’s
agreement to keep such information confidential, the Holders make no
acknowledgement that any such information is material, non-public
information;
(c) Use
its
reasonable best efforts to obtain the withdrawal of (i) any order suspending
the
effectiveness of a Registration Statement, or (ii) any suspension of the
qualification (or exemption from qualification) of any of the Registrable
Securities for sale in any jurisdiction, at the earliest reasonably practicable
moment;
(d) furnish
to each Holder, without charge, at least one copy of such Registration Statement
and any post-effective amendment or supplement thereto, including financial
statements and schedules, and, if the Holder so requests in writing, all
exhibits (excluding those incorporated by reference) in the form filed with
the
SEC;
(e) during
the Registration Period, deliver to each Holder, without charge, a reasonable
number of copies of the prospectus included in such Registration Statement
and
any amendment or supplement thereto as such Holder may reasonably request;
and
the Company consents to the use, consistent with the provisions hereof, of
the
prospectus and any amendment or supplement thereto by each of the selling
Holders of Registrable Securities in connection with the offering and sale
of
the Registrable Securities covered by the prospectus and any amendment or
supplement thereto;
(f) during
the Registration Period, deliver to each Holder, without charge, upon request,
(i) a copy of the full Registration Statement (excluding exhibits); (ii) all
exhibits excluded by the parenthetical to the immediately preceding clause
(i);
and (iii) such other documents as may be reasonably requested by the
Holder;
(g) prior
to
any public offering of Registrable Securities pursuant to the Registration
Statement, register or qualify or obtain an exemption for the offer and sale
under the securities or blue sky laws of such jurisdictions as any such Holders
reasonably request in writing, provided that the Company shall not for any
such
purpose be required to qualify generally to transact business as a foreign
corporation in any jurisdiction where it is not so qualified or to consent
to
general service of process in any such jurisdiction, and do any and all other
acts or things reasonably necessary or advisable to enable the offer and sale
in
such jurisdictions of the Registrable Securities covered by the Registration
Statement.
(h) cooperate
with the Holders to facilitate the timely preparation and delivery of
certificates representing Registrable Securities to be sold pursuant to the
Registration Statement, free of any restrictive legends to the extent not
required at such time as determined by the Company after consultation with
legal
counsel and in such denominations and registered in such names as Holders may
request;
(i) upon
the
occurrence of any event contemplated by Section 5.4(b)(v) above, the Company
shall promptly prepare a post-effective amendment to the Registration Statement
or a supplement to the related prospectus, or file any other required document
so that, as thereafter delivered to purchasers of the Registrable Securities
included therein, the prospectus will not 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;
(j) use
its
reasonable best efforts to comply in all material respects with all applicable
rules and regulations of the SEC, and make generally available to the Holders
not later than 45 days (or 90 days if the fiscal quarter is the fourth fiscal
quarter) after the end of its fiscal quarter in which the first anniversary
date
of the effective date of the Registration Statement occurs, an earnings
statement satisfying the provisions of Section 11(a) of the Act;
and
(k) Subject
to the terms of this Agreement, the Company hereby consents to the use of such
Prospectus and each amendment or supplement thereto by each of the selling
Holders in connection with the offering and sale of the Registrable Securities
covered by such Prospectus and any amendment or supplement thereto, except
after
the giving of any notice pursuant to Section 3(d).
5.5 The
Holders shall have no right to take any action to restrain, enjoin or otherwise
delay any registration pursuant to Section 5.2 hereof as a result of any
controversy that may arise with respect to the interpretation or implementation
of this Agreement.
5.6 (a) To
the extent permitted by law, the Company shall indemnify each Holder, each
underwriter of the Registrable Securities and each person controlling such
Holder and each such underwriter within the meaning of Section 15 of the Act,
with respect to which any registration, qualification or compliance has been
sought pursuant to this Agreement, against all claims, losses, expenses, costs,
damages and liabilities (or action in respect thereof), including any of the
foregoing incurred in settlement of any litigation, commenced or threatened
(subject to Section 5.6(c) below), arising out of or based on (i) any untrue
statement (or alleged untrue statement) of a material fact contained in any
registration statement, prospectus or offering circular, or any amendment or
supplement thereof, incident to any such registration, qualification or
compliance, or based on any 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 light of the circumstances in which they were made,
or
(ii) any violation or alleged violation by the Company of the Act, the Exchange
Act, or any rule or regulation promulgated under the Act or the Exchange Act,
and shall reimburse each Holder, each underwriter of the Registrable Securities
and each person controlling such Holder and each such underwriter, for
reasonable legal and other expenses, in connection with investigating or
defending any such claim, loss, damage, liability or action as and when
incurred; provided that the Company shall not be liable in any such case to
the
extent that any untrue statement or omission thereof is made in reliance upon
and in conformity with written information furnished to the Company by or on
behalf of such Holder or underwriter and stated to be specifically for use
in
preparation of such registration statement, prospectus or offering circular;
provided that the Company shall not be liable in any such case where the claim,
loss, damage or liability arises out of or is related to the failure of the
Holder to comply with the covenants and agreements contained in Section 5.7
hereof, and except that the foregoing indemnity agreement is subject to the
condition that, insofar as it relates to any such untrue statement or alleged
untrue statement or omission made in the preliminary prospectus but eliminated
or remedied in the amended prospectus on file with the SEC at the time the
registration statement becomes effective or in the amended prospectus filed
with
the SEC pursuant to Rule 424(b) of the Act or in the prospectus subject to
completion under Rule 434 of the Act, which together meet the requirements
of
Section 10(a) of the Act (the “Final Prospectus”), such indemnity
agreement shall not inure to the benefit of any such Holder, any such
underwriter or any such controlling person, with respect to any Losses relating
to a sale made after the date of the final Prospectus if, and only if, (x)
the
Company complied with Section 5.4(b) and (y) if a copy of the Final Prospectus
furnished by the Company to the Holder for delivery was not furnished to the
person or entity asserting the loss, liability, claim or damage at or prior
to
the time such furnishing is required by the Act and the Final Prospectus would
have cured the defect giving rise to such loss, liability, claim or
damage. Notwithstanding any provision herein to the contrary, the
Company shall reimburse each Holder, upon such Holder's demand, for all
reasonably necessary expenses and costs which are incurred, as and when
incurred, by such Holder as a result of the indemnification claims described
in
this Section 5.6(a). Such demand may be made from time to time prior
to resolution of the claim. In no event shall the Company be liable
for the expenses and costs of more than one counsel on behalf of the Holders
unless in the reasonable judgment of a Holder, based upon written
advice of its counsel, a conflict of interest exists between the Holders with
respect to such claims, in which case the Company shall reimburse the Holders
for additional attorneys.
(b) Each
Holder will severally, if Registrable Securities held by such Holder are
included in the securities as to which such registration, qualification or
compliance is being effected, indemnify the Company, each of its directors
and
officers, each underwriter of the Registrable Securities and each person who
controls the Company and each underwriter of the Registrable Securities within
the meaning of Section 15 of the Act, against all claims, losses, expenses,
costs, damages and liabilities (or actions in respect thereof), including any
of
the foregoing incurred in settlement of any litigation, commenced or threatened
(subject to Section 5.6(c) below), arising out of or based on (i) such Holder’s
failure to comply with the prospectus delivery requirements of the 1933 Act
or
(ii) any untrue statement of a material fact contained in any registration
statement, prospectus or offering circular, or any amendment or supplement
thereof, incident to any such registration, qualification or compliance or
based
on any omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading in light of the
circumstances in which they were made, and will reimburse the Company, such
directors and officers, each underwriter of the Registrable Securities and
each
person controlling the Company and each underwriter of the Registrable
Securities for reasonable legal and any other expenses or costs reasonably
incurred in connection with investigating or defending any such claim, loss,
damage, liability or action as incurred, in each case to the extent, but only
to
the extent, that such untrue statement or omission thereof is made in reliance
upon, and in conformity with, written information furnished to the Company
by or
on behalf of the Holder and stated to be specifically for use in preparation
of
such registration statement, prospectus or offering circular; provided that
the
indemnity shall not apply to the extent that such claim, loss, damage or
liability results from the fact that a current copy of the prospectus was not
made available to the Holder and such current copy of the prospectus would
have
cured the defect giving rise to such loss, claim, expense, costs, damage or
liability. Notwithstanding the foregoing, in no event shall a Holder
be liable for any such claims, losses, expenses, costs, damages or liabilities
in excess of the proceeds received by such Holder in that offering, except
in
the event of fraud by such Holder.
(c) Each
party entitled to indemnification under this Section 5.6 (the “Indemnified
Party”) shall give notice to the party required to provide indemnification
(the “Indemnifying Party”) promptly after such Indemnified Party has
actual knowledge of any claim as to which indemnity may be sought, and shall
permit the Indemnifying Party to assume the defense of any such claim or any
litigation resulting therefrom, provided that counsel for the Indemnifying
Party, who shall conduct the defense of such claim or litigation, shall be
approved by the Indemnified Party (whose approval shall not unreasonably be
withheld), and the Indemnified Party may participate in such defense with its
own counsel at such Indemnified Party’s expense unless the named parties to any
proceeding covered hereby (including any impleaded parties) include both the
Company or any others the Company may designate and one or more Indemnified
Persons, and representation of the Indemnified Persons and such other parties
by
the same counsel would be inappropriate due to actual or potential differing
interests between them, and provided further that the failure of any Indemnified
Party to give notice as provided herein shall not relieve the Indemnifying
Party
of its obligations under this Agreement, except to the extent such failure
is
materially prejudicial to the Indemnifying Party in defending such claim or
litigation. An Indemnifying Party shall not be liable for any
settlement of an action or claim effected without its written consent (which
consent will not be unreasonably withheld).
(d) If
the
indemnification provided for in this Section 5.6 is held by a court of competent
jurisdiction to be unavailable to an Indemnified Party with respect to any
loss,
liability, claim, damage, cost or expense referred to therein, then the
Indemnifying Party, in lieu of indemnifying such Indemnified Party thereunder,
shall contribute to the amount paid or payable by such Indemnified Party as
a
result of such loss, liability, claim, damage, cost or expense in such
proportion as is appropriate to reflect the relative fault of the Indemnifying
Party on the one hand and of the Indemnified Party on the other in connection
with the statements or omissions which resulted in such loss, liability, claim,
damage, cost or expense as well as any other relevant equitable
considerations. The relative fault of the Indemnifying Party and of
the Indemnified Party shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission to state a material fact relates to information supplied or which
should have been supplied by the Indemnifying Party or by the Indemnified Party
and the parties’ relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission. The
amount paid or payable by a party as a result of any Losses shall be deemed
to
include, subject to the limitations set forth in this Agreement, any reasonable
attorneys’ or other fees or expenses incurred by such party in connection with
any Proceeding to the extent such party would have been indemnified for such
fees or expenses if the indemnification provided for in this Section was
available to such party in accordance with its terms.
The
parties hereto agree that it would not be just and equitable if contribution
pursuant to this Section 5.6(d) were determined by pro rata allocation or by
any
other method of allocation that does not take into account the equitable
considerations referred to in the immediately preceding
paragraph. Notwithstanding the provisions of this Section 5.6(d), no
Holder shall be required to contribute, in the aggregate, any amount in excess
of the amount by which the net proceeds actually received by such Holder from
the sale of the Registrable Securities subject to the Proceeding exceeds the
amount of any damages that such Holder has otherwise been required to pay by
reason of such untrue statement or omission, except in the case of fraud or
willful misconduct by such Holder.
(e) The
indemnity and contribution agreements contained in this Section are in addition
to any liability that the Indemnifying Parties may have to the Indemnified
Parties.
5.7 (a) Subject
to the limitations set forth in Section 5.7(b) below, upon receipt of any notice
from the Company of the happening of any event requiring the preparation of
a
supplement or amendment to a prospectus relating to Registrable Securities
so
that, as thereafter delivered to the Holders, such prospectus will not contain
an untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements therein not
misleading, each Holder shall forthwith discontinue disposition of Registrable
Securities pursuant to the registration statement contemplated by Section 5.2
until its receipt of copies of the supplemented or amended prospectus from
the
Company and, if so directed by the Company, each Holder shall deliver to the
Company all copies, other than permanent file copies then in such Holder’s
possession, of the prospectus covering such Registrable Securities current
at
the time of receipt of such notice.
(b) Any
Holder of the Company’s outstanding Common Stock shall suspend, upon request of
the Company, any disposition of Registrable Securities pursuant to the
Registration Statement and prospectus contemplated by Section 5.2 during
any period, not to exceed two 30-day periods within any 12-month period (each,
a
“Permitted Black-Out Period”), when the Company determines in good faith
that offers and sales pursuant thereto should not be made by reason of the
presence of material undisclosed circumstances or developments with respect
to
which the disclosure that would be required in such a prospectus is premature
because it would have an adverse effect on the Company. The period of
time in which the disposition of Registrable Securities pursuant to the
Registration Statement and prospectus is so suspended shall be referred to
as a
“Black-Out Period.” The Company agrees to so advise the
Holders promptly of the commencement and termination of any such Black-Out
Period, and the Holders agree to keep the fact of such Black-Out Period
confidential.
(c) As
a
condition to the inclusion of its Registrable Securities, each Holder shall
furnish to the Company such information regarding the securities of the Company
owned beneficially or of record by such Holder and the distribution proposed
by
such Holder as the Company may request in writing because it is required in
connection with any registration, qualification or compliance referred to in
this Section V. Any sale of any Registrable Securities by any Holder
shall constitute a representation and warranty by such Holder that the required
information relating to such Holder’s beneficial ownership of the Company’s
securities and its plan of distribution is as set forth in the prospectus
delivered by such Holder in connection with such disposition, that such
prospectus does not as of the time of such sale contain any untrue statement
of
a material fact relating to such Holder or its plan of distribution and that
such prospectus does not as of the time of such sale omit to state any material
fact relating to such Holder’s beneficial ownership of the Company’s securities
or its plan of distribution necessary to make the statements in such prospectus,
in the light of the circumstances under which they were made, not
misleading.
(d) With
respect to any sale of Registrable Securities pursuant to a Registration
Statement filed pursuant to this Section V, each Holder hereby covenants with
the Company not to make any sale of the Registrable Securities without
effectively causing the prospectus delivery requirements under the Act to be
satisfied.
(e) Each
Holder acknowledges and agrees that the Registrable Securities sold pursuant
to
the Registration Statement described in this Section are not transferable on
the
books of the Company unless the stock certificate submitted to the transfer
agent evidencing such Registrable Securities is accompanied by a certificate
reasonably satisfactory to the Company to the effect that (i) the
Registrable Securities have been sold in accordance with such Registration
Statement and (ii) the requirement of delivering a current prospectus has
been satisfied.
(f) Each
Holder shall not take any action with respect to any distribution deemed to
be
made pursuant to such registration statement, which would constitute a violation
of Regulation M under the Exchange Act or any other applicable rule, regulation
or law.
(g) At
the
end of the Registration Period, the Holders of Registrable Securities included
in the Registration Statement shall discontinue sales of shares pursuant to
such
Registration Statement upon receipt of notice from the Company of its intention
to remove from registration the shares covered by such Registration Statement
which remain unsold.
5.8 With
a
view to making available to the Holders the benefits of certain rules and
regulations of the SEC which at any time permit the sale of the Registrable
Securities to the public without registration, the Company shall use its
reasonable best efforts:
(a) to
make
and keep public information available, as those terms are understood and defined
in Rule 144 under the Act, at all times;
(b) to
file
with the SEC in a timely manner all reports and other documents required of
the
Company under the Exchange Act; and
(c) so
long
as a Holder owns any Registrable Securities, to furnish to such Holder upon
any
reasonable request a written statement by the Company as to its compliance
with
Rule 144 under the Act, and of the Exchange Act, and a copy of the most
recent annual or quarterly report of the Company, and such other reports and
documents of the Company as such Holder may reasonably request in availing
itself of any rule or regulation of the SEC allowing a Holder to sell any such
securities without registration.
5.9 With
the
written consent of the Company and the Holders holding a majority of the
Registrable Securities that are then outstanding, any provision of this Section
V may be waived (either generally or in a particular instance, either
retroactively or prospectively and either for a specified period of time or
indefinitely) or amended. Upon the effectuation of each such waiver
or amendment, the Company shall promptly give written notice thereof to the
Holders, if any, who have not previously received notice thereof or consented
thereto in writing.
5.10 The
rights and obligations of the Holders under this Section V may not be assigned
or transferred to or assumed by any transferee or assignee except (i) to a
transferee that acquires at least 20% of such Holder's Registrable Securities
or
(ii) to an Affiliate or limited or general partner of a Holder; provided that
such transfer was not in violation of this Agreement or the Securities Laws;
and
provided, further, that any person to whom the rights under this Section V
have
been transferred in accordance with this Section 5.10 has assumed the
obligations of a Holder hereunder and a copy of such written assignment and
assumption is provided to the Company.
5.11 No
Piggyback on Registrations. Neither the Company nor any of its
security holders (other than the Holders in such capacity pursuant hereto)
may
include securities of the Company in the Registration Statement other than
the
Registrable Securities. The Company shall not file any other
registration statements until the Registration Statement is filed by the Company
with the SEC or permit any other registration statement filed by the Company
to
be declared effective until the Registration Statement is declared effective
by
the SEC, provided that this Section 5.11 shall not prohibit the Company from
filing amendments to registration statements already filed or registration
statements on Form S-8 or S-4 (or their then equivalent).
5.12 Piggy-Back
Registrations. If at any time during the Registration Period
there is not an effective Registration Statement covering all of the Registrable
Securities and the Company shall determine to prepare and file with the SEC
a
registration statement relating to an offering for its own account or the
account of others under the Act of any of its equity securities, other than
on
Form S-4 or Form S-8 (each as promulgated under the Act) or their then
equivalents relating to equity securities to be issued solely in connection
with
any acquisition of any entity or business or equity securities issuable in
connection with the stock option or other employee benefit plans, then the
Company shall send to each Holder a written notice of such determination and,
if
within fifteen (15) days after the date of such notice, any such Holder shall
so
request in writing, the Company shall include in such registration statement
all
or any part of such Registrable Securities such Holder requests to be
registered.
5.13 Legend
Removal.
(a) The
Company acknowledges and agrees that a Subscriber may from time to time pledge
pursuant to a bona fide margin agreement with a registered broker-dealer or
grant a security interest in some or all of the Securities to a financial
institution that is an “accredited investor” as defined in Rule 501(a) under the
Act and who agrees to be bound by the provisions of this Agreement and, if
required under the terms of such arrangement, such Subscriber may transfer
pledged or secured Securities to the pledgees or secured
parties. Such a pledge or transfer would not be subject to approval
of the Company and no legal opinion of legal counsel of the pledgee, secured
party or pledgor shall be required in connection therewith. Further,
no notice shall be required of such pledge. At the appropriate
Subscriber’s expense, the Company will execute and deliver such reasonable
documentation as a pledgee or secured party of Securities may reasonably request
in connection with a pledge or transfer of the Securities, including, if the
Securities are subject to registration pursuant to this Agreement, the
preparation and filing of any required prospectus supplement under Rule
424(b)(3) under the Securities Act or other applicable provision of the
Securities Act to appropriately amend the list of Selling Stockholders
thereunder.
(b) Certificates
evidencing the Shares and Warrant Shares shall not contain any legend (including
the legends referred to in Section 1.16), (i) while a Registration Statement
(as
defined below) covering the resale of the Shares and the Warrant Shares is
effective under the 1933 Act, (ii) following any sale of such Shares or Warrant
Shares pursuant to Rule 144 or pursuant to an effective Registration Statement,
or (iii) if such Shares or Warrant Shares are eligible for sale under Rule
144(k), or (iv) if such legend is not required under applicable requirements
of
the Act (including judicial interpretations and pronouncements issued by the
staff of the Commission. The Company shall cause its counsel to issue
a legal opinion to the Company’s transfer agent promptly after such time as the
legend is no longer required pursuant to this Section if required by the
Company’s transfer agent to effect the removal of the legend
hereunder. The Company agrees that following such time as such legend
is no longer required under this Section 4.1(b), it will, no later than three
trading days following the delivery by a Subscriber to the Company or the
Company’s transfer agent of a certificate representing Shares or Warrant Shares,
as the case may be, issued with a restrictive legend (such third trading day,
the “Legend Removal Date”), deliver or cause to be delivered to such
Subscriber a certificate representing such shares that is free from all
restrictive and other legends. The Company may not make any notation
on its records or give instructions to any transfer agent of the Company that
enlarge the restrictions on transfer set forth in this
Section. Certificates for Securities subject to legend removal
hereunder shall be transmitted by the transfer agent of the Company to the
Subscribers by crediting the account of the Subscriber’s prime broker with the
Depository Trust Company System.
(c) The
Subscriber, severally and not jointly with the other Subscribers, agrees that
such Subscriber will sell any Shares and Warrant Shares pursuant to either
the
registration requirements of the 1933 Act, including any applicable prospectus
delivery requirements, or an exemption therefrom, and that if Shares and Warrant
Shares are sold pursuant to a Registration Statement, they will be sold in
compliance with the plan of distribution set forth therein, and acknowledges
that the removal of the restrictive legend from certificates representing
Securities as set forth in this Section 5.13 is predicated upon the Company’s
reliance upon this understanding.
5.14 Securities
Laws Disclosure; Publicity. The Company shall, by 9:15 a.m. (New
York City time) on the trading day immediately following the date hereof, issue
a press release disclosing the material terms of the transactions contemplated
hereby and within 1 Trading Day following the date hereof file a Current Report
on Form 8-K, disclosing the material terms of the transactions contemplated
hereby, and filing this Agreement and the form of Warrant as exhibits
thereto. The Company and Rodman & Renshaw, LLC shall consult with
each other in issuing any other press releases with respect to the transactions
contemplated hereby, and neither the Company nor any Subscriber shall issue
any
such press release or otherwise make any such public statement without the
prior
consent of the Company, with respect to any press release of any Subscriber,
or
without the prior consent of Rodman & Renshaw, LLC, with respect to any
press release of the Company, which consent shall not unreasonably be withheld
or delayed, except if such disclosure is required by law, in which case the
disclosing party shall promptly provide the other party with prior notice of
such public statement or communication. Notwithstanding the
foregoing, the Company shall not publicly disclose the name of any Subscriber,
or include the name of any Subscriber in any filing with the SEC or any
regulatory agency or trading market, without the prior written consent of such
Subscriber, except (i) as required by federal securities law in connection
with
(A) any registration statement contemplated by this agreement and (B) the filing
of final documents entered hereunder (including signature pages thereto) with
the SEC and (ii) to the extent such disclosure is required by law or trading
market regulations, in which case the Company shall provide the Subscribers
with
prior notice of such disclosure permitted under this clause (ii).
5.15 Non-Public
Information. Except with respect to the material terms and
conditions of the transactions contemplated by this Agreement, the Company
covenants and agrees that neither it nor any other person acting on its behalf
will provide any Subscriber or its agents or counsel with any information that
the Company believes constitutes material non-public information, unless prior
thereto such Subscriber shall have executed a written agreement regarding the
confidentiality and use of such information. The Company understands
and confirms that each Subscriber shall be relying on the foregoing covenant
in
effecting transactions in securities of the Company.
5.16 Reservation
of Common Stock. As of the date hereof, the Company has reserved and the
Company shall continue to reserve and keep available at all times a sufficient
number of shares of Common Stock for the purpose of enabling the Company to
issue shares pursuant to any exercise of the Warrants.
VI. MISCELLANEOUS
6.1 From
the
date hereof until 120 days after the date the Registration Statement is declared
effective, except as otherwise provided below, the Company shall not issue
shares of Common Stock or any options, warrants, rights or other securities
convertible into or exchangeable for Common Stock. The restriction on
issuance by the Company of securities under this Section 6.1 shall not apply
to: (i) the issuance of any shares of Common Stock upon the exercise
of any options or warrants outstanding as of the Closing Date; (ii) the issuance
of any shares of Common Stock upon the conversion of any shares
of class C special stock of the Company; (iii) the grant of any
options with an exercise price no less than the mean between the reported high
and low sale prices of the Common Stock on the date of grant pursuant to the
Company’s Amended and Restated 1998 Stock Plan; (iv) any rights offering of
securities, including rights to purchase Common Stock, by the Company to all
of
its stockholders; (v) the issuance of any shares of Common Stock or other equity
securities to Paladin Labs as described in Schedule 2.2 to this Agreement;
(vi)
the issuance of any shares of Common Stock or any options, warrants, rights
or
other securities convertible into or exchangeable for Common Stock by way of
stock split or stock dividend or similar capital modification; (vii) the
issuance of any shares of Common Stock or any options, warrants, rights or
other
securities convertible into or exchangeable for Common Stock in connection
with
any merger, acquisition or other reorganization; or (viii) the issuance of
any
shares of Common Stock or any options, warrants, rights or other securities
convertible into or exchangeable for Common Stock upon authorization of the
Board of Directors of the Company in connection with strategic alliances or
business conducted by the Company with vendors, lessors or financial
institutions.
6.2 From
the
date hereof until the one year anniversary of the Closing Date, the Company
shall be prohibited from effecting or entering into an agreement to effect
any
subsequent financing involving a “Variable Rate Transaction”. The
term “Variable Rate Transaction” shall mean a transaction in which the
Company issues or sells (i) any debt or equity securities that are convertible
into, exchangeable or exercisable for, or include the right to receive
additional shares of Common Stock either (A) at a conversion, exercise or
exchange rate or other price that is based upon and/or varies with the trading
prices of or quotations for the shares of Common Stock at any time after the
initial issuance of such debt or equity securities, or (B) with a conversion,
exercise or exchange price that is subject to being reset at some future date
after the initial issuance of such debt or equity security or upon the
occurrence of specified or contingent events directly or indirectly related
to
the business of the Company or the market for the Common Stock or (ii) enters
into any agreement, including, but not limited to, an equity line of credit,
whereby the Company may sell securities at a future determined
price. Any Subscriber shall be entitled to obtain injunctive relief
against the Company to preclude any such issuance, which remedy shall be in
addition to any right to collect damages.
6.3 Any
notice or other communication given hereunder shall be deemed sufficient in
writing and sent by (a) telecopy or facsimile at the address or number
designated below (if delivered on a business day during normal business hours
where such notice is to be received); or (b) registered or certified mail,
return receipt requested, or delivered by hand against written receipt therefor,
addressed to BioSante Pharmaceuticals, Inc., 111 Barclay Boulevard,
Lincolnshire, Illinois 60069, Facsimile: (847) 478-9260, Attention: Stephen
M.
Simes, President and Chief Executive Officer. Notices shall be deemed
to have been given or delivered on the date of mailing, except notices of change
of address, which shall be deemed to have been given or delivered when
received.
6.4 Except
as
set forth in Section 5.9 and except with respect to Sections 6.1 and 6.2 (which
Sections may be amended with the written consent of the Company and the Holders
holding at least a majority of the Registrable Securities that are then
outstanding), this Agreement shall not be changed, modified or amended except
by
a writing signed by the parties to be charged, and this Agreement may not be
discharged except by performance in accordance with its terms or by a writing
signed by the party to be charged.
6.5 Upon
the
execution and delivery of this Agreement by the Subscriber, this Agreement
shall
become a binding obligation of the Subscriber with respect to the purchase
of
Securities as herein provided, subject to acceptance by the Company and the
Placement Agents; subject, however, to the right hereby reserved to the Company
to enter into the same agreements with other subscribers and to add and/or
delete other persons as subscribers.
6.6 In
the
event of a breach by the Company or by a Holder, of any of their respective
obligations under this Agreement, each Holder or the Company, as the case may
be, in addition to being entitled to exercise all rights granted by law and
under this Agreement, including recovery of damages, will be entitled to
specific performance of its rights under this Agreement. The Company
and each Holder agree that monetary damages would not provide adequate
compensation for any losses incurred by reason of a breach by it of any of
the
provisions of this Agreement and hereby further agrees that, in the event of
any
action for specific performance in respect of such breach, it shall not assert
or shall waive the defense that a remedy at law would be adequate.
6.7 Notwithstanding
the place where this Agreement may be executed by any of the parties hereto,
the
parties expressly agree that all the terms and provisions hereof shall be
construed in accordance with and governed by the laws of the State of Delaware
without regard to principles of conflicts of law.
6.8 The
holding of any provision of this Agreement to be invalid or unenforceable by
a
court of competent jurisdiction shall not affect any other provision of this
Agreement, which shall remain in full force and effect. If any provision of
this
Agreement shall be declared by a court of competent jurisdiction to be invalid,
illegal or incapable of being enforced in whole or in part, such provision
shall
be interpreted so as to remain enforceable to the maximum extent permissible
consistent with applicable law and the remaining conditions and provisions
or
portions thereof shall nevertheless remain in full force and effect and
enforceable to the extent they are valid, legal and enforceable, and no
provisions shall be deemed dependent upon any other covenant or provision unless
so expressed herein.
6.9 It
is
agreed that a waiver by either party of a breach of any provision of this
Agreement shall not operate, or be construed, as a waiver of any subsequent
breach by that same party.
6.10 The
parties agree to execute and deliver all such further documents, agreements
and
instruments and take such other and further action as may be necessary or
appropriate to carry out the purposes and intent of this Agreement.
6.11 This
Agreement may be executed in two or more counterparts each of which shall be
deemed an original, but all of which shall together constitute one and the
same
instrument.
6.12 The
Subscriber agrees not to issue any public statement with respect to the
Subscriber’s investment or proposed investment in the Company or the terms of
any agreement or covenant between them and the Company without the Company’s
prior written consent, except such disclosures as may be required under
applicable law or under any applicable order, rule or regulation.
6.13 Nothing
in this Agreement shall create or be deemed to create any rights in any person
or entity not a party to this Agreement, except for the Placement Agents and
the
holders of Registrable Securities.
6.14 Any
pronoun herein shall include all genders and/or the plural or singular as
appropriate from the context.
**************
|
SIGNATURE
PAGE
|
Date
Signed: May __ , 2007
|
|
|
Number
of shares:
|
||
|
Multiplied
by Offering Price per share:
|
x
|
$____
|
|
Equals
subscription amount:
|
=
|
Warrants
(multiply the number of shares
by
25%): _______________
“INVESTOR”
(Name in which securities should be issued)
By:
Print
Name:
Title:
Address
City,
State and Zip Code
Telephone-Business
Facsimile-Business
__
Tax
ID #
or Social Security
#
*The
attached Certificate of Signatory must also be
completed.
This
Subscription Agreement is agreed to and accepted as of ____________,
2007.
BIOSANTE
PHARMACEUTICALS, INC.
By:
____________________________________
Name:
Title:
CERTIFICATE
OF SIGNATORY
(To
be
completed if Securities are being subscribed for by an entity)
I,______________________________,
am the____________________________
of
_____________________________________________ (the
“Entity”).
I
certify
that I am empowered and duly authorized by the Entity to execute and carry
out
the terms of the Subscription Agreement and to purchase and hold the Securities,
and certify further that the Subscription Agreement has been duly and validly
executed on behalf of the Entity and constitutes a legal and binding obligation
of the Entity.
IN
WITNESS WHEREOF, I have set my hand this___ day of ____, 2007.
_______________________________________
(Signature)
ANNEX
A
Plan
of Distribution
Each
Selling Stockholder (the “Selling Stockholders”) of the common stock and
any of their pledgees, assignees and successors-in-interest may, from time
to
time, sell any or all of their shares of common stock on the American Stock
Exchange or any other stock exchange, market or trading facility on which the
shares are traded or in private transactions. These sales may be at
fixed or negotiated prices. A Selling Stockholder may use any one or
more of the following methods when selling shares:
|
·
|
ordinary
brokerage transactions and transactions in which the broker-dealer
solicits purchasers;
|
|
·
|
block
trades in which the broker-dealer will attempt to sell the shares
as agent
but may position and resell a portion of the block as principal to
facilitate the transaction;
|
|
·
|
purchases
by a broker-dealer as principal and resale by the broker-dealer for
its
account;
|
|
·
|
an
exchange distribution in accordance with the rules of the applicable
exchange;
|
|
·
|
privately
negotiated transactions;
|
|
·
|
settlement
of short sales entered into after the effective date of the registration
statement of which this prospectus is a
part;
|
|
·
|
broker-dealers
may agree with the Selling Stockholders to sell a specified number
of such
shares at a stipulated price per
share;
|
|
·
|
through
the writing or settlement of options or other hedging transactions,
whether through an options exchange or
otherwise;
|
|
·
|
a
combination of any such methods of sale;
or
|
|
·
|
any
other method permitted pursuant to applicable
law.
|
The
Selling Stockholders may also sell shares under Rule 144 under the Securities
Act of 1933, as amended (the “Securities Act”), if available, rather than
under this prospectus.
Broker-dealers
engaged by the Selling Stockholders may arrange for other brokers-dealers to
participate in sales. Broker-dealers may receive commissions or
discounts from the Selling Stockholders (or, if any broker-dealer acts as agent
for the purchaser of shares, from the purchaser) in amounts to be negotiated,
but, except as set forth in a supplement to this Prospectus, in the case of
an
agency transaction not in excess of a customary brokerage commission in
compliance with NASDR Rule 2440; and in the case of a principal transaction
a
markup or markdown in compliance with NASDR IM-2440.
In
connection with the sale of the common stock or interests therein, the Selling
Stockholders may enter into hedging transactions with broker-dealers or other
financial institutions, which may in turn engage in short sales of the Common
Stock in the course of hedging the positions they assume. The Selling
Stockholders may also sell shares of the common stock short and deliver these
securities to close out their short positions, or loan or pledge the common
stock to broker-dealers that in turn may sell these securities. The
Selling Stockholders may also enter into option or other transactions with
broker-dealers or other financial institutions or the creation of one or more
derivative securities which require the delivery to such broker-dealer or other
financial institution of shares offered by this prospectus, which shares such
broker-dealer or other financial institution may resell pursuant to this
prospectus (as supplemented or amended to reflect such
transaction).
The
Selling Stockholders and any broker-dealers or agents that are involved in
selling the shares may be deemed to be “underwriters” within the meaning of the
Securities Act in connection with such sales. In such event, any
commissions received by such broker-dealers or agents and any profit on the
resale of the shares purchased by them may be deemed to be underwriting
commissions or discounts under the Securities Act. Each Selling
Stockholder has informed the Company that it does not have any written or oral
agreement or understanding, directly or indirectly, with any person to
distribute the Common Stock. In no event shall any broker-dealer receive fees,
commissions and markups which, in the aggregate, would exceed eight percent
(8%).
The
Company is required to pay certain fees and expenses incurred by the Company
incident to the registration of the shares. The Company has agreed to
indemnify the Selling Stockholders against certain losses, claims, damages
and
liabilities, including liabilities under the Securities Act.
Because
Selling Stockholders may be deemed to be “underwriters” within the meaning of
the Securities Act, they will be subject to the prospectus delivery requirements
of the Securities Act including Rule 172 thereunder. In addition, any
securities covered by this prospectus which qualify for sale pursuant to Rule
144 under the Securities Act may be sold under Rule 144 rather than under this
prospectus. There is no underwriter or coordinating broker acting in
connection with the proposed sale of the resale shares by the Selling
Stockholders.
We
agreed
to keep this prospectus effective until the earlier of (i) the date on which
the
shares may be resold by the Selling Stockholders without registration and
without regard to any volume limitations by reason of Rule 144(k) under the
Securities Act or any other rule of similar effect or (ii) all of the shares
have been sold pursuant to this prospectus or Rule 144 under the Securities
Act
or any other rule of similar effect. The resale shares will be sold
only through registered or licensed brokers or dealers if required under
applicable state securities laws. In addition, in certain states, the resale
shares may not be sold unless they have been registered or qualified for sale
in
the applicable state or an exemption from the registration or qualification
requirement is available and is complied with.
Under
applicable rules and regulations under the Exchange Act, any person engaged
in
the distribution of the resale shares may not simultaneously engage in market
making activities with respect to the common stock for the applicable restricted
period, as defined in Regulation M, prior to the commencement of the
distribution. In addition, the Selling Stockholders will be subject
to applicable provisions of the Exchange Act and the rules and regulations
thereunder, including Regulation M, which may limit the timing of purchases
and
sales of shares of the common stock by the Selling Stockholders or any other
person. We will make copies of this prospectus available to the
Selling Stockholders and have informed them of the need to deliver a copy of
this prospectus to each purchaser at or prior to the time of the
sale.
NEITHER
THESE SECURITIES NOR THE SECURITIES ISSUABLE UPON EXERCISE OF THESE SECURITIES
HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE
SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES
ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN
AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE
SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR
TO
SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE
COMPANY. THESE SECURITIES AND THE SECURITIES ISSUABLE UPON EXERCISE
OF THESE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT
SECURED BY SUCH SECURITIES.
BIOSANTE
PHARMACEUTICALS, INC.
WARRANT
Warrant
No. «Number»
Date
of
Original Issuance: May __, 2007
BioSante
Pharmaceuticals, Inc., a Delaware corporation (the
“Company”), hereby certifies that, for value received,
«Name» or its registered assigns (the
“Holder”), is entitled to purchase from the Company up to a
total of «Shares» shares of common stock, par value $0.0001 per share (the
“Common Stock”), of the Company (each such share, a
“Warrant Share” and all such shares, the “Warrant
Shares”) at an exercise price equal to $8.00 per share (as adjusted
from time to time as provided in Section 9, the “Exercise
Price”), at any time and from time to time from and after [date
that is 6 months and 1 Day from Closing] (the “Initial Exercise
Date”) and through and including [date that is 6 months and 1 day
from the third anniversary of the Closing] (the “Expiration
Date”), and subject to the following terms and conditions:
1. Definitions. In
addition to the terms defined elsewhere in this Warrant, capitalized terms
that
are not otherwise defined herein shall have the meanings given to such terms
in
the Subscription Agreement of even date herewith to which the Company and the
original Holder are parties (the “Purchase
Agreement”).
2. Registration
of Warrant. The Company shall register this Warrant, upon records
to be maintained by the Company for that purpose (the “Warrant
Register”), in the name of the record Holder hereof from time to
time. The Company may deem and treat the registered Holder of this
Warrant as the absolute owner hereof for the purpose of any exercise hereof
or
any distribution to the Holder, and for all other purposes, absent actual notice
to the contrary.
3. Registration
of Transfers. Except as otherwise provided below, the Company
shall register the transfer of any portion of this Warrant in the Warrant
Register, upon surrender of this Warrant, with the Form of Assignment attached
hereto duly completed and signed, to the Company at its address specified
herein. Upon any such registration or transfer, a new Warrant to
purchase Common Stock, in substantially the form of this Warrant (any such
new
Warrant, a “New Warrant”), evidencing the portion of this
Warrant so transferred shall be issued to the transferee and a New Warrant
evidencing the remaining portion of this Warrant not so transferred, if any,
shall be issued to the transferring Holder. The acceptance of the New Warrant
by
the transferee thereof shall be deemed the acceptance by such transferee of
all
of the rights and obligations of a holder of a Warrant.
4. Exercise
of Warrants.
(a) This
Warrant shall be exercisable by the registered Holder at any time and from
time
to time on or after the Initial Exercise Date to and including the Expiration
Date. At 6:30 p.m., New York City time on the Expiration Date, the
portion of this Warrant not exercised prior thereto shall be and become void
and
of no value. The Company may not call or redeem all or any portion of this
Warrant without the prior written consent of the Holder.
(b) The
Company shall not effect any exercise of this Warrant, and a Holder
shall not have the right to exercise any portion of this Warrant, pursuant
to
Section 4 or otherwise, to the extent that after giving effect to such issuance
after exercise as set forth on the applicable Notice of Exercise, such Holder
(together with such Holder’s Affiliates (as defined in the Purchase Agreement),
and any other person or entity acting as a group together with such Holder
or
any of such Holder’s Affiliates), as set forth on the applicable Notice of
Exercise, would beneficially own in excess of the Beneficial Ownership
Limitation (as hereinafter defined). For purposes of the foregoing
sentence, the number of shares of Common Stock beneficially owned by such Holder
and its Affiliates shall include the number of shares of Common Stock issuable
upon exercise of this Warrant with respect to which such determination is being
made, but shall exclude the number of shares of Common Stock which would be
issuable upon (A) exercise of the remaining, nonexercised portion of this
Warrant beneficially owned by such Holder or any of its Affiliates and (B)
exercise or conversion of the unexercised or nonconverted portion of any other
securities of the Company (including, without limitation, any other Warrants)
subject to a limitation on conversion or exercise analogous to the limitation
contained herein beneficially owned by such Holder or any of its
affiliates. Except as set forth in the preceding sentence, for purposes of
this Section 4(b), beneficial ownership shall be calculated in accordance with
Section 13(d) of the Exchange Act and the rules and regulations promulgated
thereunder, it being acknowledged by a Holder that the Company is not
representing to such Holder that such calculation is in compliance with Section
13(d) of the Exchange Act and such Holder is solely responsible for any
schedules required to be filed in accordance therewith. To the extent
that the limitation contained in this Section 4(b) applies, the determination
of
whether this Warrant is exercisable (in relation to other securities owned
by
such Holder together with any Affiliates) and of which a portion of this Warrant
is exercisable shall be in the sole discretion of a Holder, and the submission
of an Exercise shall be deemed to be each Holder’s determination of whether this
Warrant is exercisable (in relation to other securities owned by such Holder
together with any Affiliates) and of which portion of this Warrant is
exercisable, in each case subject to such aggregate percentage limitation,
and
the Company shall have no obligation to verify or confirm the accuracy of such
determination. In addition, a determination as to any group
status as contemplated above shall be determined in accordance with Section
13(d) of the Exchange Act and the rules and regulations promulgated
thereunder. For purposes of this Section 2(d), in determining the
number of outstanding shares of Common Stock, a Holder may rely on the number
of
outstanding shares of Common Stock as reflected in (x) the Company’s most recent
Form 10-Q or Form 10-K, as the case may be, (y) a more recent public
announcement by the Company or (z) any other notice by the Company or the
Company’s transfer agent setting forth the number of shares of Common Stock
outstanding. Upon the written or oral request of a Holder, the Company
shall within two trading days confirm orally and in writing to such Holder
the
number of shares of Common Stock then outstanding. In any case, the number
of outstanding shares of Common Stock shall be determined after giving effect
to
the conversion or exercise of securities of the Company, including this Warrant,
by such Holder or its Affiliates since the date as of which such number of
outstanding shares of Common Stock was reported. The
“Beneficial Ownership Limitation” shall be 4.99% of the number
of shares of the Common Stock outstanding immediately after giving effect to
the
issuance of shares of Common Stock issuable upon exercise of this
Warrant. The Beneficial Ownership Limitation provisions of this
Section 4(b) may be waived by such Holder, at the election of such Holder,
upon
not less than 61 days’ prior notice to the Company to change the Beneficial
Ownership Limitation to 9.99% of the number of shares of the Common Stock
outstanding immediately after giving effect to the issuance of shares of Common
Stock upon exercise of this Warrant, and the provisions of this Section 4(b)
shall continue to apply. Upon such a change by a Holder of the
Beneficial Ownership Limitation from such 4.99% limitation to such 9.99%
limitation, the Beneficial Ownership Limitation may not be further waived by
such Holder. The provisions of this paragraph shall be construed and
implemented in a manner otherwise than in strict conformity with the terms
of
this Section 4(b) to correct this paragraph (or any portion hereof) which may
be
defective or inconsistent with the intended Beneficial Ownership Limitation
herein contained or to make changes or supplements necessary or desirable to
properly give effect to such limitation. The limitations contained in this
paragraph shall apply to a successor holder of this Warrant.
5. Delivery
of Warrant Shares.
(a) To
effect
exercises hereunder, the Holder shall not be required to physically surrender
this Warrant unless the aggregate Warrant Shares represented by this Warrant
is
being exercised. Upon delivery of the Exercise Notice to the Company
(with the attached Warrant Shares Exercise Log) at its address for notice set
forth herein and upon payment of the Exercise Price multiplied by the number
of
Warrant Shares that the Holder intends to purchase hereunder, the Company shall
promptly (but in no event later than five business days after the Date of
Exercise (as defined herein)) issue and deliver to the Holder, a certificate
for
the Warrant Shares issuable upon such exercise, which, unless otherwise required
by the Purchase Agreement, shall be free of restrictive
legends. Certificates for Warrant Shares purchased hereunder shall be
transmitted by the transfer agent of the Company to the Holder by crediting
the
account of the Holder’s prime broker with the Depository Trust Company through
its Deposit Withdrawal Agent Commission (“DWAC”) system
if the Company or its transfer agent is a participant in such system and if
the
Holder makes certain representations as set forth in the Exercise Notice and
otherwise by physical delivery to the address specified by the Holder in the
Exercise Notice within 3 trading days from the delivery to the Company of the
Exercise Date (as hereinafter defined) and surrender of this Warrant (if
required) (“Warrant Share Delivery
Date”). This Warrant shall be deemed to have been
exercised on the date the Exercise Price is received by the
Company. The Warrant Shares shall be deemed to have been issued, and
Holder or any other person so designated to be named therein shall be deemed
to
have become a holder of record of such shares for all purposes, as of the date
the Warrant has been exercised by payment to the Company of the Exercise Price
(or by cashless exercise). A “Date of Exercise”
means the date on which the Holder shall have delivered to
Company: (i) the
Exercise Notice (with the Warrant Exercise Log attached to it), appropriately
completed and duly signed and (ii) if such Holder is not utilizing the cashless
exercise provisions set forth in this Warrant, payment of the Exercise Price
for
the number of Warrant Shares so indicated by the Holder to be
purchased.
(b) If
by the
fifth business day after a Date of Exercise the Company fails to deliver the
required number of Warrant Shares in the manner required pursuant to Section
5(a), then the Holder will have the right to rescind such exercise.
(c) In
addition to any other rights available to the Holder, if the Company fails
to
cause its transfer agent to transmit to the Holder a certificate or certificates
representing the Warrant Shares pursuant to an exercise on or before the second
business day following the Warrant Share Delivery Date, and if after such date
the Holder is required by its broker to purchase (in an open market transaction
or otherwise) shares of Common Stock to deliver in satisfaction of a sale by
the
Holder of the Warrant Shares which the Holder anticipated receiving upon such
exercise (a “Buy-In”), then the Company shall (1) pay in
cash to the Holder the amount by which (x) the Holder’s total purchase price
(including brokerage commissions, if any) for the shares of Common Stock so
purchased exceeds (y) the amount obtained by multiplying (A) the number of
Warrant Shares that the Company was required to deliver to the Holder in
connection with the exercise at issue times (B) the price at which the sell
order giving rise to such purchase obligation was executed, and (2) at the
option of the Holder, either reinstate the portion of the Warrant and equivalent
number of Warrant Shares for which such exercise was not honored or deliver
to
the Holder the number of shares of Common Stock that would have been issued
had
the Company timely complied with its exercise and delivery obligations
hereunder. For example, if the Holder purchases Common Stock having a
total purchase price of $11,000 to cover a Buy-In with respect to an attempted
exercise of shares of Common Stock with an aggregate sale price giving rise
to
such purchase obligation of $10,000, under clause (1) of the immediately
preceding sentence the Company shall be required to pay the Holder $1,000.
The
Holder shall provide the Company written notice indicating the amounts payable
to the Holder in respect of the Buy-In and, upon request of the Company,
evidence of the amount of such loss. Nothing herein shall limit a
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 shares of Common Stock upon exercise of the Warrant
as
required pursuant to the terms hereof.
(d) The
Company’s obligations to issue and deliver Warrant Shares in accordance with the
terms 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, or any breach or alleged breach by the Holder or any other
Person of any obligation to the Company or any violation or alleged violation
of
law by the Holder or any other Person, and irrespective of any other
circumstance which might otherwise limit such obligation of the Company to
the
Holder in connection with the issuance of Warrant Shares. Nothing
herein shall limit a 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 shares of Common Stock
upon
exercise of the Warrant as required pursuant to the terms hereof.
6. Charges,
Taxes and Expenses. Issuance and delivery of certificates for
shares of Common Stock upon exercise of this Warrant shall be made without
charge to the Holder for any issue or transfer tax, withholding tax, transfer
agent fee or other incidental tax or expense in respect of the issuance of
such
certificates, all of which taxes and expenses shall be paid by the Company;
provided, however, that the Company shall not be required to pay any tax which
may be payable in respect of any transfer involved in the registration of any
certificates for Warrant Shares or Warrants in a name other than that of the
Holder. The Holder shall be responsible for all other tax liability
that may arise as a result of holding or transferring this Warrant or receiving
Warrant Shares upon exercise hereof.
7. Replacement
of Warrant. If this Warrant is mutilated, lost, stolen or
destroyed, the Company shall issue or cause to be issued in exchange and
substitution for and upon cancellation hereof, or in lieu of and substitution
for this Warrant, a New Warrant, but only upon receipt of evidence reasonably
satisfactory to the Company of such loss, theft or destruction and customary
and
reasonable indemnity (which shall not include a surety bond), if
requested. Applicants for a New Warrant under such circumstances
shall also comply with such other reasonable regulations and procedures and
pay
such other reasonable third-party costs as the Company may
prescribe. If a New Warrant is requested as a result of a mutilation
of this Warrant, then the Holder shall deliver such mutilated Warrant to the
Company as a condition precedent to the Company’s obligation to issue the New
Warrant.
8. Reservation
of Warrant Shares. The Company covenants that it will at all
times reserve and keep available out of the aggregate of its authorized but
unissued and otherwise unreserved Common Stock, solely for the purpose of
enabling it to issue Warrant Shares upon exercise of this Warrant as herein
provided, the number of Warrant Shares which are then issuable and deliverable
upon the exercise of this entire Warrant, free from preemptive rights or any
other contingent purchase rights of persons other than the Holder (taking into
account the adjustments and restrictions of Section 9). The Company
covenants that all Warrant Shares so issuable and deliverable shall, upon
issuance and the payment of the applicable Exercise Price in accordance with
the
terms hereof, be duly and validly authorized, issued and fully paid and
nonassessable.
9. Certain
Adjustments. The Exercise Price and number of Warrant Shares
issuable upon exercise of this Warrant are subject to adjustment from time
to
time as set forth in this Section 9.
(a) Stock
Dividends and Splits. If the Company, at any time while this
Warrant is outstanding, (i) pays a stock dividend on its Common Stock or
otherwise makes a distribution on any class of capital stock that is payable
in
shares of Common Stock, (ii) subdivides outstanding shares of Common Stock
into
a larger number of shares, or (iii) combines outstanding shares of Common Stock
into a smaller number of shares, then in each such case the Exercise Price
shall
be multiplied by a fraction of which the numerator shall be the number of shares
of Common Stock outstanding immediately before such event and of which the
denominator shall be the number of shares of Common Stock outstanding
immediately after such event. Any adjustment made pursuant to clause
(i) of this paragraph shall become effective immediately after the record date
for the determination of stockholders entitled to receive such dividend or
distribution, and any adjustment pursuant to clause (ii) or (iii) of this
paragraph shall become effective immediately after the effective date of such
subdivision or combination. If any event requiring an adjustment under this
paragraph occurs during the period that an Exercise Price is calculated
hereunder, then the calculation of such Exercise Price shall be adjusted
appropriately to reflect such event.
(b) Fundamental
Transactions. If, at any time while this Warrant is outstanding,
(1) the Company effects any merger or consolidation of the Company with or
into
another Person, (2) the Company effects any sale of all or substantially all
of
its assets in one or a series of related transactions, (3) any tender offer
or
exchange offer (whether by the Company or another Person) is completed pursuant
to which holders of Common Stock are permitted to tender or exchange their
shares for other securities, cash or property, or (4) the Company effects any
reclassification of the Common Stock or any compulsory share exchange pursuant
to which the Common Stock is effectively converted into or exchanged for other
securities, cash or property (in any such case, a “Fundamental
Transaction”), then the Holder shall have the right thereafter to
receive, upon exercise of this Warrant, the same amount and kind of securities,
cash or property as it would have been entitled to receive upon the occurrence
of such Fundamental Transaction if it had been, immediately prior to such
Fundamental Transaction, the holder of the number of Warrant Shares then
issuable upon exercise in full of this Warrant (the “Alternate
Consideration”). For purposes of any such exercise, the
determination of the Exercise Price shall be appropriately adjusted to apply
to
such Alternate Consideration based on the amount of Alternate Consideration
issuable in respect of one share of Common Stock in such Fundamental
Transaction, and the Company shall apportion the Exercise Price among the
Alternate Consideration in a reasonable manner reflecting the relative value
of
any different components of the Alternate Consideration. If holders
of Common Stock are given any choice as to the securities, cash or property
to
be received in a Fundamental Transaction, then the Holder shall be given the
same choice as to the Alternate Consideration it receives upon any exercise
of
this Warrant following such Fundamental Transaction. Any successor to
the Company or surviving entity in such Fundamental Transaction shall issue
to
the Holder a new warrant substantially in the form of this Warrant and
consistent with the foregoing provisions and evidencing the Holder’s right to
purchase the Alternate Consideration for the aggregate Exercise Price upon
exercise thereof. The terms of any agreement pursuant to which a Fundamental
Transaction is effected shall include terms requiring any such successor or
surviving entity to comply with the provisions of this paragraph (b) and
insuring that the Warrant (or any such replacement security) will be similarly
adjusted upon any subsequent transaction analogous to a Fundamental
Transaction.
(c) Number
of Warrant Shares. Simultaneously with any adjustment to the
Exercise Price pursuant to paragraph (a) of this Section, the number of Warrant
Shares that may be purchased upon exercise of this Warrant shall be increased
or
decreased proportionately, so that after such adjustment the aggregate Exercise
Price payable hereunder for the adjusted number of Warrant Shares shall be
the
same as the aggregate Exercise Price in effect immediately prior to such
adjustment.
(d) Calculations. All
calculations under this Section 9 shall be made to the nearest cent or
the nearest 1/100th of a share,
as
applicable. The number of shares of Common Stock outstanding at any
given time shall not include shares owned or held by or for the account of
the
Company, and the disposition of any such shares shall be considered an issue
or
sale of Common Stock.
(e) Notice
of Adjustments. Upon the occurrence of each adjustment pursuant
to this Section 9, the Company at its expense will promptly compute such
adjustment in accordance with the terms of this Warrant and prepare a
certificate setting forth such adjustment, including a statement of the adjusted
Exercise Price and adjusted number or type of Warrant Shares or other securities
issuable upon exercise of this Warrant (as applicable), describing the
transactions giving rise to such adjustments and showing in detail the facts
upon which such adjustment is based. Upon written request, the
Company will promptly deliver a copy of each such certificate to the Holder
and
to the Company’s transfer agent.
(f) Notice
to Allow Exercise by Holder. If (A) the Company shall declare a dividend (or
any other distribution in whatever form) on the Common Stock; (B) the Company
shall declare a special nonrecurring cash dividend on or a redemption of the
Common Stock; (C) the Company shall authorize the granting to all holders of
the
Common Stock rights or warrants to subscribe for or purchase any shares of
capital stock of any class or of any rights; (D) the approval of any
stockholders of the Company shall be required in connection with any
reclassification of the Common Stock, any consolidation or merger to which
the
Company is a party, any sale or transfer of all or substantially all of the
assets of the Company, of any compulsory share exchange whereby the Common
Stock
is converted into other securities, cash or property; (E) the Company shall
authorize the voluntary or involuntary dissolution, liquidation or winding
up of
the affairs of the Company; then, in each case, the Company shall cause to
be
mailed to the Holder at its last address as it shall appear upon the warrant
register of the Company, at least 10 calendar days prior to the applicable
record or effective date hereinafter specified, a notice stating (x) the date
on
which a record is to be taken for the purpose of such dividend, distribution,
redemption, rights or warrants, or if a record is not to be taken, the date
as
of which the holders of the Common Stock of record to be entitled to such
dividend, distributions, redemption, rights or warrants are to be determined
or
(y) the date on which such reclassification, consolidation, merger, sale,
transfer or share exchange is expected to become effective or close, and the
date as of which it is expected that holders of the Common Stock of record
shall
be entitled to exchange their shares of the Common Stock for securities, cash
or
other property deliverable upon such reclassification, consolidation, merger,
sale, transfer or share exchange; provided that the failure to mail such notice
or any defect therein or in the mailing thereof shall not affect the validity
of
the corporate action required to be specified in such notice.
10. Payment
of
Exercise Price.
The
Holder
may pay the Exercise Price in one of the following manners:
(a) Cash
Exercise. The Holder may deliver immediately available funds;
or
(b) Cashless
Exercise. If at any time after one year from the date of the
Purchase Agreement there is no effective registration statement registering,
or
no current prospectus available for, the resale of the Warrant Shares by the
Holder, the Holder may notify the Company, during any such periods, in an
Exercise Notice of its election to utilize cashless exercise, in which event
the
Company shall issue to the Holder the number of Warrant Shares determined as
follows:
X
= Y
[(A-B)/A]
where:
X
= the
number of Warrant Shares to be issued to the Holder.
Y
= the
number of Warrant Shares with respect to which this Warrant is being
exercised.
A
= the
VWAP on the trading day immediately prior to the Exercise Date.
B
= the
Exercise Price.
For
purposes of Rule 144 promulgated under the Securities Act, it is intended,
understood and acknowledged that the Warrant Shares issued in a cashless
exercise transaction shall be deemed to have been acquired by the Holder, and
the holding period for the Warrant Shares shall be deemed to have commenced,
on
the date this Warrant was originally issued.
“VWAP”
means, for any date, the price determined by the first of the following clauses
that applies: (a) if the Common Stock is then listed or quoted on the American
Stock Exchange (“AMEX”), Nasdaq or another national securities exchange, the
daily volume weighted average price of the Common Stock for such date (or the
nearest preceding date) on AMEX, Nasdaq or another national securities exchange
on which the Common Stock is then listed or quoted for trading as reported
by
Bloomberg Financial L.P. (based on a trading day from 9:30 a.m. (New York City
time) to 4:02 p.m. (New York City time); (b) if the Common Stock is not so
listed or quoted for trading, the volume weighted average price of the Common
Stock for such date (or the nearest preceding date) on the OTC Bulletin Board;
(c) if the Common Stock is not then quoted for trading on the OTC Bulletin
Board
and if prices for the Common Stock are then reported in the “Pink Sheets”
published by Pink Sheets, LLC (or a similar organization or agency succeeding
to
its functions of reporting prices), the most recent bid price per share of
the
Common Stock so reported; or (d) in all other cases, the fair market value
of a share of Common Stock as determined by an independent appraiser selected
in
good faith by the Holder and reasonably acceptable to the Company.
11. No
Fractional Shares. No fractional shares of Warrant Shares will be
issued in connection with any exercise of this Warrant. In lieu of
any fractional shares which would, otherwise be issuable, the Company shall
pay
cash equal to the product of such fraction multiplied by the closing price
of
one Warrant Share as reported by the American Stock Exchange or such other
national exchange on which the Common Stock is then traded on the date of
exercise.
12. Notices. Any
and all notices or other communications or deliveries hereunder (including,
without limitation, any Exercise Notice) shall be in writing and shall be deemed
given and effective on the earliest of (i) the date of transmission, if such
notice or communication is delivered via facsimile at the facsimile number
specified in this Section prior to 6:30 p.m. (New York City time) on a business
day, (ii) the next business day after the date of transmission, if such notice
or communication is delivered via facsimile at the facsimile number specified
in
this Section on a day that is not a business day or later than 6:30 p.m. (New
York City time) on any business day, (iii) the business day following the date
of mailing, if sent by nationally recognized overnight courier service, or
(iv)
upon actual receipt by the party to whom such notice is required to be
given. The addresses for such communications shall be: (i)
if to the Company, to BioSante Pharmaceuticals, Inc., Attn: Chief Financial
Officer, Facsimile No.: (847) 478-9263, or (ii) if to the Holder, to the address
or facsimile number appearing on the Warrant Register or such other address
or
facsimile number as the Holder may provide to the Company in accordance with
this Section.
13. Warrant
Agent. The Company shall serve as warrant agent under this
Warrant. Upon 30 days’ notice to the Holder, the Company may appoint
a new warrant agent. Any corporation into which the Company or any
new warrant agent may be merged or any corporation resulting from any
consolidation to which the Company or any new warrant agent shall be a party
or
any corporation to which the Company or any new warrant agent transfers
substantially all of its corporate trust or shareholders services business
shall
be a successor warrant agent under this Warrant without any further
act. Any such successor warrant agent shall promptly cause notice of
its succession as warrant agent to be mailed (by first class mail, postage
prepaid) to the Holder at the Holder’s last address as shown on the Warrant
Register.
14. Miscellaneous.
(a) This
Warrant does not entitle the Holder to any voting or other rights as a
stockholder of the Company prior to exercise and payment for the Warrant Price
in accordance with the terms hereof.
(b) Any
notice, request or other document required or permitted to be given or delivered
to the Holder by the Company shall be delivered in accordance with the notice
provisions of the Purchase Agreement.
(c) No
provision hereof, in the absence of any affirmative action by Holder to exercise
this Warrant to purchase Warrant Shares, and no enumeration herein of the rights
or privileges of Holder, shall give rise to any liability of Holder for the
purchase price of any Common Stock or as a stockholder of the Company, whether
such liability is asserted by the Company or by creditors of the
Company.
(d) The
Holder, in addition to being entitled to exercise all rights granted by law,
including recovery of damages, will be entitled to specific performance of
its
rights under this Warrant. The Company agrees that monetary damages
would not be adequate compensation for any loss incurred by reason of a breach
by it of the provisions of this Warrant and hereby agrees to waive and not
to
assert the defense in any action for specific performance that a remedy at
law
would be adequate.
(e) This
Warrant shall be binding on and inure to the benefit of the parties hereto
and
their respective successors and assigns. Subject to the preceding
sentence, nothing in this Warrant shall be construed to give to any Person
other
than the Company and the Holder any legal or equitable right, remedy or cause
of
action under this Warrant. This Warrant may be amended only in
writing signed by the Company and the Holder and their successors and
assigns.
(f) All
questions concerning the construction, validity, enforcement and interpretation
of this Warrant shall be governed by and construed and enforced in accordance
with the internal laws of the State of New York, without regard to the
principles of conflicts of law thereof. Each party hereto hereby
irrevocably waives, to the fullest extent permitted by applicable law, any
and
all right to trial by jury in any legal proceeding arising out of or relating
to
this Warrant or the transactions contemplated hereby. If either party
shall commence a proceeding to enforce any provisions of this Warrant, then
the
prevailing party in such proceeding shall be reimbursed by the other party
for
its attorney’s fees and other costs and expenses incurred with the
investigation, preparation and prosecution of such Proceeding.
(g) The
headings herein are for convenience only, do not constitute a part of this
Warrant and shall not be deemed to limit or affect any of the provisions
hereof.
(h) In
case
any one or more of the provisions of this Warrant shall be invalid or
unenforceable in any respect, the validity and enforceability of the remaining
terms and provisions of this Warrant shall not in any way be affected or
impaired thereby and the parties will attempt in good faith to agree upon a
valid and enforceable provision which shall be a commercially reasonable
substitute therefor, and upon so agreeing, shall incorporate such substitute
provision in this Warrant.
[REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK,
SIGNATURE
PAGE FOLLOWS]
IN
WITNESS WHEREOF, the Company has caused this Warrant to be duly executed by
its
authorized officer as of the date first indicated above.
|
|
BIOSANTE
PHARMACEUTICALS, INC.
|
By:
Name: Phillip
B. Donenberg
Title: Chief
Financial Officer
BIOSANTE
PHARMACEUTICALS, INC.
WARRANT
ORIGINALLY ISSUED [ ],
2007
WARRANT
NO. [ ]
EXERCISE
NOTICE
To BIOSANTE
PHARMACEUTICALS, INC.:
(1) The
undersigned hereby elects to purchase ________ Warrant Shares of the Company
pursuant to the terms of the attached Warrant (only if exercised in full),
and
tenders herewith payment of the exercise price in full, together with all
applicable transfer taxes, if any.
(2) Payment
shall take the form of (check applicable box):
[ ]
in lawful money of the United States; or
[
] [if
permitted] the cancellation of such number of Warrant Shares as is necessary,
in
accordance with the formula set forth in subsection 10(b), to exercise this
Warrant with respect to the maximum number of Warrant Shares purchasable
pursuant to the cashless exercise procedure set forth in subsection
10(b).
(3) Please
issue a certificate or certificates representing said Warrant Shares in the
name
of the undersigned or in such other name as is specified below:
_______________________________
The
Warrant Shares shall be delivered to the following DWAC Account Number or by
physical delivery of a certificate to:
_______________________________
_______________________________
_______________________________
(4) Accredited
Investor. The undersigned is an “accredited investor” as defined
in Regulation D promulgated under the Securities Act of 1933, as
amended.
(5) The
undersigned hereby agrees that it will sell the Warrant Shares issuable in
connection with this Notice of Exercise pursuant to either the registration
requirements of the Securities Act of 1933, as amended, including any applicable
prospectus delivery requirements, or an exemption therefrom, and that if Warrant
Shares are sold pursuant to a Registration Statement, they will be sold in
compliance with the plan of distribution set forth therein, and the undersigned
hereby acknowledges that the removal of the restrictive legend from certificates
representing the Warrant Shares is predicated upon the Company's reliance upon
this understanding and representation.
[SIGNATURE
OF HOLDER]
Name
of
Investing Entity:
Signature
of Authorized Signatory of Investing Entity:
Name
of
Authorized Signatory:
Title
of
Authorized Signatory:
Date:
Warrant
Shares Exercise Log
|
Date
|
Number
of Warrant Shares Available to be Exercised
|
Number
of Warrant Shares Exercised
|
Number
of Warrant Shares Remaining to be Exercised
|
BIOSANTE
PHARMACEUTICALS, INC.
WARRANT
ORIGINALLY ISSUED [ ],
2007
WARRANT
NO. [ ]
FORM
OF ASSIGNMENT
[To
be
completed and signed only upon transfer of Warrant]
FOR
VALUE
RECEIVED, the undersigned hereby sells, assigns and transfers unto
________________________________ the right represented by the above-captioned
Warrant to purchase ____________ shares of Common Stock to which such
Warrant relates and appoints ________________ attorney to transfer said right
on
the books of the Company with full power of substitution in the
premises.
Dated: _______________,
____
_______________________________________
(Signature
must conform in all respects to name of holder as specified on the face of
the
Warrant)
_______________________________________
Address
of Transferee
_______________________________________
_______________________________________
In
the
presence of:
__________________________
BioSante
Pharmaceuticals, Inc.
111
Barclay Boulevard
Lincolnshire,
Illinois 60069
www.biosantepharma.com
FOR
IMMEDIATE
RELEASE
Amex:
BPA
BioSante
Pharmaceuticals Announces $16.5 Million
Private
Placement of Common Stock
LINCOLNSHIRE,
Illinois (May 25, 2007) -- BioSante Pharmaceuticals, Inc. (Amex: BPA) today
announced that it has entered into definitive agreements with institutional
and
other accredited investors with respect to the private placement of 2,754,999
million shares of its common stock at a purchase price of $6.00 per share,
for
expected gross proceeds of approximately $16.5 million, before payment of
placement agent commissions and offering expenses. Investors also
will receive warrants to purchase 688,750 shares of common stock at an exercise
price of $8.00 per share. Rodman & Renshaw, LLC is serving as
lead placement agent with Oppenheimer & Co. Inc. serving as an additional
placement agent for the transaction. The transaction is expected to
be completed upon approval of an additional listing application by the American
Stock Exchange.
"We
are
pleased with this private placement, and are gratified to welcome new
institutional investors to BioSante," said Stephen M. Simes, BioSante's
president and chief executive officer. “We limited the private
placement to the amount raised to minimize dilution to our existing
stockholders, while adding to our cash balance”.
The
expected net proceeds of approximately $15.6 million will be used to continue
and expand BioSante’s previously announced Phase III clinical program of
LibiGel® for
treatment of female sexual dysfunction (FSD). The first of two Phase III
safety
and efficacy studies was initiated in December 2006. Based on its current
cash
balance and commitments, BioSante believes that with the net proceeds from
this
private placement, it should be able to maintain its current planned development
activities and the corresponding level of expenditures through the end of
2008,
although no assurance can be given that it will not need additional cash
prior
to such time.
The
securities offered in this placement have not been registered under the
Securities Act of 1933, as amended, or state securities laws, and cannot
be
offered or sold in the United States absent registration with the Securities
and
Exchange Commission (SEC) or an applicable exemption from the registration
requirements. As part of the transaction, the company has agreed to
file a registration statement with the SEC covering the resale of the shares
of
common stock to be issued in the offering, including the shares of common
stock
issuable upon exercise of the warrants. This news release is neither
an offer to sell nor a solicitation of an offer to buy any of the securities
discussed herein and is being issued under Rule 135c of the Securities Act
of
1933.
About
BioSante Pharmaceuticals, Inc.
BioSante
is developing a pipeline of hormone therapy products to treat both men and
women. These hormone therapy products are gel formulations for
transdermal administration that deliver bio-identical estradiol and
testosterone. BioSante's lead products include Elestrin™ (estradiol
gel), developed through U.S. Food and Drug Administration (FDA) approval
by
BioSante, indicated for the treatment of moderate-to-severe vasomotor symptoms
associated with menopause, and LibiGel® (transdermal
testosterone gel) in Phase III development for the treatment of female sexual
dysfunction (FSD). The current market in the U.S. for estrogen and
testosterone products is approximately $2.5 billion. The company also
is developing its calcium phosphate nanotechnology (CaP) for novel vaccines,
including hepatitis B, avian flu and biodefense vaccines for toxins such
as
anthrax, as well as a system for delivering drugs via alternative routes
of
administration. Additional information is available online
at: www.biosantepharma.com.
This
news release contains forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995. The statements
regarding BioSante contained in this news release that are not
historical in nature, particularly those that utilize terminology such as
“may,”
“will,” “should,” “likely,” “expects,” “anticipates,” “estimates,” “believes,”
“plans,” “hopes,” or comparable terminology, are forward-looking
statements. Forward-looking statements are based on current
expectations and assumptions, and entail various risks and uncertainties
that
could cause actual results to differ materially from those expressed in such
forward-looking statements. Important factors known to BioSante that
cause actual results to differ materially from those expressed in such
forward-looking statements are the difficulty of developing pharmaceutical
products, the success of clinical testing, obtaining regulatory and other
approvals and achieving market acceptance, and other factors identified and
discussed from time to time in BioSante's filings with the Securities and
Exchange Commission, including those factors discussed in BioSante's most
recent
Forms 10-K and 10-Q, which discussion also is incorporated herein by
reference. All forward-looking statements speak only as of the date
of this news release. BioSante undertakes no obligation to update or
revise any forward-looking statement, whether as a result of new information,
future events or otherwise.
For
more
information, please contact:
Phillip
B. Donenberg, CFO
847-478-0500
ext 101
donenber@biosantepharma.com