Form 8K Current Report
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): October 18, 2006
SIGA
TECHNOLOGIES, INC.
(Exact
name of registrant as specified in its charter)
Delaware
|
0-23047
|
13-3864870
|
(State
or other jurisdiction of
incorporation
or organization)
|
(Commission
file number)
|
(I.R.S.
employer
identification
no.)
|
420
Lexington Avenue, Suite 408
New
York, New York
(Address
of principal executive offices)
|
|
10170
(Zip
code)
|
Registrant’s
telephone number, including area code: (212) 672-9100
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 (see
General
Instruction A.2. below):
r
Written
communications
pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
r
Soliciting
material
pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
r
Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))
r
Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))
Item
1.01. Entry
into a Material Definitive Agreement.
On
October 18, 2006, SIGA Technologies, Inc., a Delaware corporation (“SIGA”),
entered into a Securities Purchase Agreement (the “Securities Purchase
Agreement”), with Iroquois Master Fund Ltd., Cranshire Capital, L.P., Omicron
Master Trust, Rockmore Investment Master Fund, Ltd., and Smithfield Fiduciary
LLC (such investors, collectively, the “Investors”), for the issuance and sale
of 2,000,000 shares of SIGA’s common stock at $4.54 per share for aggregate
consideration of $9,080,000. In addition, the Investors will receive warrants
to
purchase 1,000,000 shares of SIGA’s common stock. The warrants are exercisable
at $4.99 (110% of the closing price on the closing date of the transaction)
at
any time and from time to time through and including the seventh anniversary
of
the closing date and are subject to certain anti-dilution protections as set
forth therein.
With
respect to the above described transaction, on October 18, 2006, SIGA also
entered into an Finder’s Agreement (the “Finder’s Agreement”) with Empire
Financial Group, Inc. (“Empire”). The finder’s fee under the Finder’s Agreement
includes cash compensation of 3% of the amount financed and a warrant to acquire
136,200 shares of SIGA’s common stock on substantially similar terms as the
above described Investors’ warrants. In addition and pursuant to SIGA’s existing
agreement with The Shemano Group, Inc. (the “Shemano Group”), SIGA has agreed to
(i) pay cash compensation of 4% of the amount financed and (ii) issue the
Shemano Group a warrant for 136,200 shares of SIGA’s common stock on
substantially similar terms as the above described Investors’ warrants.
A
copy of
the Securities Purchase Agreement is attached hereto as Exhibit 10.1, which
is
incorporated into this Item 1.01 by reference.
A
copy of
the Finder’s Agreement is attached hereto as Exhibit 10.2, which is incorporated
into this Item 1.01 by reference.
On
October 19, 2006, SIGA issued a press release announcing that it had entered
into the Securities Purchase Agreement. A copy of the press release is attached
hereto as Exhibit 99.1.
Item
3.02. Unregistered
Sales of Equity Securities.
See
Item
1.01 which is incorporated herein by reference.
The
common stock issued to the Investors was issued in reliance upon an exemption
provided by Section 4(2) of the Securities Act of 1933, as amended (the "Act")
and the regulations issued thereunder. Each of the Investors, Empire and the
Shemano Group represented to SIGA that they were "accredited investors" within
the meaning of the Act.
Item
9.01. Financial
Statements and Exhibits.
(c)
Exhibits
Exhibit
No.
|
Description
|
10.1
|
Securities
Purchase Agreement, dated as of October 18, 2006, between Iroquois
Master
Fund Ltd., Cranshire Capital, L.P., Omicron Master Trust, Rockmore
Investment Master Fund, Ltd, Smithfield Fiduciary LLC and
SIGA.
|
10.2
|
Finder’s
Agreement, dated as of October 18, 2006, between Empire Financial
Group,
Inc. and SIGA.
|
99.1
|
Press
Release, dated October 19, 2006.
|
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.
SIGA
TECHNOLOGIES,
INC.
By:
/s/
Thomas N.
Konatich
Name: Thomas
N.
Konatich
Title: Chief
Financial Officer
Date: October
19, 2006
Exhibit 10.1 Securities Purchase Agreement
Exhibit
10.1
SECURITIES
PURCHASE AGREEMENT
This
Securities Purchase Agreement (this “Agreement”)
is
dated as of October 18, 2006 among SIGA Technologies, Inc., a Delaware
corporation (the “Company”),
and
the purchasers identified on the signature pages hereto (each, a “Purchaser”
and
collectively, the “Purchasers”).
WHEREAS,
subject to the terms and conditions set forth in this Agreement and pursuant
to
Section 4(2) of the Securities Act of 1933, as amended (the “Securities
Act”),
the
Company desires to issue and sell to each Purchaser, and each Purchaser,
severally and not jointly, desires to purchase from the Company, certain
securities of the Company as more fully described in this
Agreement.
NOW,
THEREFORE, IN CONSIDERATION of the mutual covenants contained in this Agreement,
and for other good and valuable consideration the receipt and adequacy of which
are hereby acknowledged, the Company and each of the Purchasers, severally
and
not jointly, agree as follows:
ARTICLE
I
DEFINITIONS
1.1
Definitions.
In
addition to the terms defined elsewhere in this Agreement, the following terms
have the meanings indicated:
“Affiliate”
means
any Person that, directly or indirectly through one or more intermediaries,
controls or is controlled by or is under common control with a Person, as such
terms are used in and construed under Rule 144 under the Securities Act. With
respect to a Purchaser, any investment fund or managed account that is managed
on a discretionary basis by the same investment manager as such Purchaser will
be deemed to be an Affiliate of such Purchaser.
“Business
Day”
means
any day other than Saturday, Sunday or other day on which commercial banks
in
The City of New York are authorized or required by law to remain
closed.
“Change
of Control”
means
the occurrence of any of the following in one or a series of related
transactions: (i) an acquisition after the date hereof by an individual or
legal
entity or “group” (as described in Rule 13d-5(b)(1) under the Exchange Act) of
more than one-third of the voting rights or equity interests in the Company;
(ii) a replacement of more than one-third of the members of the Company's board
of directors that is not approved by those individuals who are members of the
board of directors on the date hereof (or other directors previously approved
by
such individuals); (iii) a merger or consolidation of the Company or any
significant Subsidiary or a sale of more than one-third of the assets of the
Company in one or a series of related transactions, unless following such
transaction or series of transactions, the holders of the Company's securities
prior to the first such transaction continue to hold at least two-thirds of
the
voting
rights and equity interests in the surviving entity or acquirer of such assets;
(iv) a recapitalization, reorganization or other transaction involving the
Company or any significant Subsidiary that constitutes or results in a transfer
of more than one-half of the voting rights or equity interests in the Company;
(v) consummation of a “Rule 13e-3 transaction” as defined in Rule 13e-3 under
the Exchange Act with respect to the Company, or (vi) the execution by the
Company or its controlling shareholders of an agreement providing for or
reasonably likely to result in any of the foregoing events.
“Closing”
means
the closing of the purchase and sale of the Shares and Warrants pursuant to
Section 2.1.
“Closing
Date”
means
the date of the Closing.
“Closing
Price”
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 an Eligible Market
or any other national securities exchange, the closing price per share of the
Common Stock for such date (or the nearest preceding date) on the primary
Eligible Market or exchange on which the Common Stock is then listed or quoted;
(b) if prices for the Common Stock are then quoted on the OTC Bulletin
Board, the closing bid price per share of the Common Stock for such date (or
the
nearest preceding date) so quoted; (c) if prices for the Common Stock are
then reported in the “Pink Sheets” published by the National Quotation Bureau
Incorporated (or a similar organization or agency succeeding to its functions
of
reporting prices), the most recent closing 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 Purchasers holding a majority of the Securities.
“Commission”
means
the Securities and Exchange Commission.
“Common
Stock”
means
the common stock of the Company, par value $0.0001 per share.
"Common
Stock Equivalents"
means,
collectively, Options and Convertible Securities.
“Company
Counsel”
means
Kramer Levin Naftalis & Frankel LLP, counsel to the Company.
"Convertible
Securities"
means
any stock or securities (other than Options) convertible into or exercisable
or
exchangeable for Common Stock.
“Effective
Date”
means
the date that the Registration Statement is first declared effective by the
Commission.
“Eligible
Market”
means
any of the New York Stock Exchange, the American Stock Exchange, the NASDAQ
Global Select Market, NASDAQ Global Market or the NASDAQ Capital
Market.
“Exchange
Act”
means
the Securities Exchange Act of 1934, as amended.
“Excluded
Stock” means
the
issuance of Common Stock (A) upon exercise or conversion of any options or
other
securities described in Schedule
3.1(f)
(provided that such exercise or conversion occurs in accordance with the terms
thereof, without amendment or modification, and that the applicable exercise
or
conversion price or ratio is described in such schedule) or otherwise pursuant
to any employee benefit plan described in Schedule
3.1(f)
or
hereafter adopted by the Company and approved by its shareholders or (B) in
connection with any issuance of shares or grant of options to employees,
officers, directors or consultants of the Company pursuant to a stock option
plan or other incentive stock plan duly adopted by the Company’s board of
directors or in respect of the issuance of Common Stock upon exercise of any
such options.
“Filing
Date”
means
the 30th
day
following the Closing Date with respect to the initial Registration Statement
required to be filed hereunder, and, with respect to any additional Registration
Statements that may be required pursuant to Section
6.1(f),
the
10th day following the date on which the Company first knows, or reasonably
should have known, that such additional Registration Statement is required
under
such Section.
“Lien”
means
any lien, charge, claim, security interest, encumbrance, right of first refusal
or other restriction.
“Losses”
means
any and all losses, claims, damages, liabilities, settlement costs and expenses,
including, without limitation, costs of preparation and reasonable attorneys’
fees.
“Options”
means
any rights, warrants or options to subscribe for or purchase Common Stock or
Convertible Securities (including all Warrants that can be issued under the
Transaction Documents).
“Person”
means
any individual or corporation, partnership, trust, incorporated or
unincorporated association, joint venture, limited liability company, joint
stock company, government (or an agency or subdivision thereof) or any court
or
other federal, state, local or other governmental authority or other entity
of
any kind.
“Per
Unit Purchase Price”
means
$4.54.
“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.
“Prospectus”
means
the prospectus included in the 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 the 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.
“Purchaser
Counsel”
has the
meaning set forth in Section
6.2(a).
“Registrable
Securities”
means
any Common Stock (including Underlying Shares) issued or issuable pursuant
to
the Transaction Documents, together with any securities issued or issuable
upon
any stock split, dividend or other distribution, recapitalization or similar
event with respect to the foregoing.
“Registration
Statement”
means
each registration statement required to be filed under Article VI, including
(in
each case) the Prospectus, amendments and supplements to such registration
statement or Prospectus, including pre- and post-effective amendments, all
exhibits thereto, and all material incorporated by reference or deemed to be
incorporated by reference in such registration statement.
“Required
Effectiveness Date”
means
(i) with respect to the initial Registration Statement required to be filed
hereunder, the 90th
day
following the Closing Date and (ii) with respect to any additional Registration
Statements that may be required pursuant to Section
6.1(f),
the
30th day following the date on which the Company first knows, or reasonably
should have known, that such additional Registration Statement is required
under
such Section.
“Rule
144,” “Rule
415,”
and
“Rule
424”
means
Rule 144, Rule 415 and Rule 424, respectively, promulgated by the Commission
pursuant to the Securities Act, as such Rules may be amended from time to time,
or any similar rule or regulation hereafter adopted by the Commission having
substantially the same effect as such Rule.
“Securities”
means
the Shares, Warrants and the Underlying Shares.
“Shares”
means
the shares of Common Stock, which are being issued and sold to the Purchasers
at
the Closing.
“Subsidiary”
means
any Person in which the Company, directly or indirectly, owns capital stock
or
holds an equity or similar interest.
“Trading
Day”
means
(a) any day on which the Common Stock is listed or quoted and traded on its
primary Trading Market, or (b) if the Common Stock is not then listed or quoted
and traded on its primary Trading Market, then a day on which trading occurs
on
an Eligible Market (or any successor thereto), or (c) if trading ceases to
occur
on an Eligible Market (or any successor thereto), any Business Day.
“Trading
Market”
means
the NASDAQ Capital Market or any other Eligible Market, or any national
securities exchange, market or trading or quotation facility on which the Common
Stock is then listed or quoted.
“Transaction
Documents”
means
this Agreement, the Warrants, the Transfer Agent Instructions and any other
documents or agreements executed in connection with the transactions
contemplated hereunder.
"Transfer
Agent Instructions"
means
the Irrevocable Transfer Agent Instructions, in the form of Exhibit
D,
executed by the Company and delivered to and acknowledged in writing by the
Company's transfer agent.
“Underlying
Shares”
means
the shares of Common Stock issuable upon exercise of the Warrants.
“Unit”
means
one Share and a Warrant to acquire 0.50 shares of Common Stock.
“Warrant”
means
each Common Stock purchase warrant in the form of Exhibit A, collectively the
“Warrants”.
ARTICLE
II
PURCHASE
AND SALE
2.1
Subject
to the terms and conditions set forth in this Agreement, at the Closing the
Company shall issue and sell to each Purchaser, and each Purchaser shall,
severally and not jointly, purchase from the Company, such number of Units
indicated below such Purchaser’s name on the signature page of this Agreement at
the Per Unit Purchase Price. The Closing shall take place at the offices of
Malhotra & Associates LLP immediately following the execution hereof, or at
such other location or time as the parties may agree.
2.2
Closing
Deliveries.
(a)
At
the
Closing, the Company shall deliver or cause to be delivered to each Purchaser
the following:
(i)
one
or
more stock certificates, free and clear of all restrictive and other legends
(except as expressly provided in Section 4.1(b) hereof), evidencing such number
of Shares equal to the number of Units indicated below such Purchaser's name
on
the signature page of this Agreement, registered in the name of such
Purchaser;
(ii)
a
Warrant, registered in the name of such Purchaser, pursuant to which such
Purchaser shall have the right to acquire such number of Underlying Shares
indicated below such Purchaser’s name on the signature page of this Agreement
under the heading “Warrant Shares”;
(iii)
a
legal
opinion of Company Counsel, in the form of Exhibit
B,
executed by such counsel and delivered to the Purchasers;
(iv)
duly
executed Transfer Agent Instructions; and
(v) a
certificate from a duly authorized officer certifying on behalf of the Company
that each of the conditions set forth in Section 5.1 has been
satisfied;
(b)
At
the
Closing, each Purchaser shall deliver or cause to be delivered an amount equal
to the Per Unit Purchase Price multiplied by the number of Units indicated
below
such Purchaser’s name on the signature page of this Agreement under the heading
"Units Purchased", in United States dollars and in immediately available funds,
by wire transfer to an account designated in writing to such Purchaser by the
Company for such purpose. The total purchase price payable by each Purchaser
shall be set forth under such Purchaser’s name on the signature page of this
Agreement under the heading “Purchase Price.”
ARTICLE
III
REPRESENTATIONS
AND WARRANTIES
3.1
Representations
and Warranties of the Company.
The
Company hereby represents and warrants to each of the Purchasers as
follows:
(a)
Subsidiaries.
The
Company has no direct or indirect Subsidiaries other than those listed in
Schedule 3.1(a). Except as disclosed in Schedule 3.1(a), the Company owns,
directly or indirectly, all of the capital stock or comparable equity interests
of each Subsidiary free and clear of any Lien and all the issued and outstanding
shares of capital stock or comparable equity interest of each Subsidiary are
validly issued and are fully paid, non-assessable and free of preemptive and
similar rights.
(b)
Organization
and Qualification.
Each of
the Company and the Subsidiaries is an entity duly organized, validly existing
and in good standing under the laws of the jurisdiction of its incorporation
or
organization (as applicable), with the requisite power and authority to own
and
use its properties and assets and to carry on its business as currently
conducted. Neither the Company nor any Subsidiary is in violation of any of
the
provisions of its respective certificate or articles of incorporation, bylaws
or
other organizational or charter documents. Each of the Company and the
Subsidiaries is duly qualified to do business and is in good standing as a
foreign corporation or other entity in each jurisdiction in which the nature
of
the business conducted or property owned by it makes such qualification
necessary, except where the failure to be so qualified or in good standing,
as
the case may be, could not, individually or in the aggregate, (i) adversely
affect the legality, validity or enforceability of any Transaction Document,
(ii) have or result in a material adverse effect on the results of operations,
assets, prospects, business or condition (financial or otherwise) of the Company
and the Subsidiaries, taken as a whole on a consolidated basis, or (iii)
adversely impair the Company's ability to perform fully on a timely basis its
obligations under any of the Transaction Documents (any of (i), (ii) or (iii),
a
“Material
Adverse Effect”).
(c)
Authorization;
Enforcement.
The
Company has the requisite corporate power and authority to enter into and to
consummate the transactions contemplated by each of the Transaction Documents
and otherwise to carry out its obligations hereunder and thereunder. The
execution and delivery of each of the Transaction Documents by the Company
and
the consummation by it of the transactions contemplated hereby and thereby
have
been duly
authorized
by all necessary action on the part of the Company and no further consent or
action is required by the Company, its Board of Directors or its shareholders.
Each of the Transaction Documents has been (or upon delivery will be) duly
executed by the Company and, assuming the due authorization, execution and
delivery by the other parties thereto, is, or when delivered in accordance
with
the terms hereof, will constitute, the valid and binding obligation of the
Company enforceable against the Company in accordance with its
terms.
(d)
No
Conflicts.
The
execution, delivery and performance of the Transaction Documents by the Company
and the consummation by the Company of the transactions contemplated hereby
and
thereby do not and will not (i) conflict with or violate any provision of the
Company’s or any Subsidiary’s certificate or articles of incorporation, bylaws
or other organizational or charter documents, (ii) conflict with, or constitute
a default (or an event that with notice or lapse of time or both would become
a
default) under, or give to others any rights of termination, amendment,
acceleration or cancellation (with or without notice, lapse of time or both)
of,
any agreement, credit facility, debt or other instrument (evidencing a Company
or Subsidiary debt or otherwise) or other understanding to which the Company
or
any Subsidiary is a party or by which any property or asset of the Company
or
any Subsidiary is bound or affected, or (iii) result in a violation of any
law,
rule, regulation, order, judgment, injunction, decree or other restriction
of
any court or governmental authority to which the Company or a Subsidiary is
subject (including federal and state securities laws and regulations and the
rules and regulations of any self-regulatory organization to which the Company
or its securities are subject), or by which any property or asset of the Company
or a Subsidiary is bound or affected.
(e)
Issuance
of the Securities.
The
Securities (including the Underlying Shares) are duly authorized and, when
issued and paid for in accordance with the Transaction Documents, will be duly
and validly issued, fully paid and nonassessable, free and clear of all Liens
and shall not be subject to preemptive rights or similar rights of shareholders.
The Company has reserved from its duly authorized capital stock the maximum
number of shares of Common Stock issuable upon exercise of the
Warrants.
(f)
Capitalization.
The
number of shares and type of all authorized, issued and outstanding capital
stock, options and other securities of the Company (whether or not presently
convertible into or exercisable or exchangeable for shares of capital stock
of
the Company), as of September 30, 2006, is set forth in Schedule 3.1(f). All
outstanding shares of capital stock are duly authorized, validly issued, fully
paid and nonassessable and have been issued in compliance with all applicable
securities laws. Except as disclosed in Schedule 3.1(f), there are no
outstanding options, warrants, script rights to subscribe to, calls or
commitments of any character whatsoever relating to, or securities, rights
or
obligations convertible into or exercisable or exchangeable for, or giving
any
Person any right to subscribe for or acquire, any shares of Common Stock, or
contracts, commitments, understandings or arrangements by which the Company
or
any Subsidiary is or may become bound to issue additional shares of Common
Stock, or securities or rights convertible or exchangeable into shares of Common
Stock. There are no anti-dilution or price adjustment provisions contained
in
any security issued by the Company (or in any agreement providing rights to
security holders) and the issue and sale of the Securities (including the
Underlying Shares) will not obligate the Company to issue shares of Common
Stock
or other securities to any Person (other than the Purchasers) and will not
result in a right of any holder of Company securities to adjust the exercise,
conversion, exchange or reset
price
under such securities. To the knowledge of the Company, except as specifically
disclosed in Schedule 3.1(f), no Person or group of related Persons beneficially
owns (as determined pursuant to Rule 13d-3 under the Exchange Act), or has
the
right to acquire, by agreement with or by obligation binding upon the Company,
beneficial ownership of in excess of 5% of the outstanding Common Stock,
ignoring for such purposes any limitation on the number of shares of Common
Stock that may be owned at any single time.
(g)
SEC
Reports; Financial Statements.
The
Company has filed all reports required to be filed by it under the Exchange
Act,
including pursuant to Section 13(a) or 15(d) thereof, for the two years
preceding the date hereof (or such shorter period as the Company was required
by
law to file such material) (the foregoing materials (together with any materials
filed by the Company under the Exchange Act, whether or not required) being
collectively referred to herein as the “SEC
Reports”
and,
together with this Agreement and the Schedules to this Agreement, the
“Disclosure
Materials”)
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. The
Company has delivered to each Purchaser true, correct and complete SEC Reports
filed by the Company within the 10 days preceding the date hereof. As of their
respective dates, the SEC Reports complied in all material respects with the
requirements of the Securities Act and the Exchange Act and the rules and
regulations of the Commission promulgated thereunder, and none of the SEC
Reports, when filed, contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary
in
order to make the statements therein, in the light of the circumstances under
which they were made, not misleading. The financial statements of the Company
included in the SEC Reports comply in all material respects with applicable
accounting requirements and the rules and regulations of the Commission with
respect thereto as in effect at the time of filing. Such financial statements
have been prepared in accordance with United States generally accepted
accounting principles applied on a consistent basis during the periods involved
(“GAAP”),
except
as may be otherwise specified in such financial statements or the notes thereto,
and fairly present in all material respects the financial position of the
Company and its consolidated subsidiaries as of and for the dates thereof and
the results of operations and cash flows for the periods then ended, subject,
in
the case of unaudited statements, to normal, immaterial, year-end audit
adjustments. All material agreements to which the Company or any Subsidiary
is a
party or to which the property or assets of the Company or any Subsidiary are
subject are included as part of or specifically identified in the SEC
Reports.
(h)
Material
Changes.
Since
the date of the latest audited financial statements included within the SEC
Reports, except as specifically disclosed in the SEC Reports or in Schedule
3.1(h), (i) there has been no event, occurrence or development that,
individually or in the aggregate, has had or that could 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 required to be disclosed in filings made with the Commission, (iii)
the
Company has not altered its method of accounting or the identity of its
auditors, except as disclosed in its SEC Reports, (iv) the Company has not
declared or made any dividend or distribution of cash or other property to
its
shareholders 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-based plans.
(i)
Absence
of Litigation.
There
is no action, suit, claim, proceeding, inquiry or investigation before or by
any
court, public board, government agency, self-regulatory organization or body
pending or, to the knowledge of the Company, threatened against or affecting
the
Company or any of its Subsidiaries that could, individually or in the aggregate,
have a Material Adverse Effect. Schedule 3.1(i) contains a complete list and
summary description of any pending or, to the knowledge of the Company,
threatened proceeding against or affecting the Company or any of its
Subsidiaries, without regard to whether it could, individually or in the
aggregate, have a Material Adverse Effect.
(j)
Compliance.
Neither
the Company nor any Subsidiary (i) is in default under or in violation of (and,
to the knowledge of the Company, no event has occurred that has not been waived
that, with notice or lapse of time or both, would result in a default by the
Company or any Subsidiary under), nor has the Company or any Subsidiary received
written notice of a claim that it is in default under or that it is in violation
of, any indenture, loan or credit agreement or any other agreement or instrument
to which it is a party or by which it or any of its properties is bound (whether
or not such default or violation has been waived), (ii) is in violation of
any
order of any court, arbitrator or governmental body, or (iii) is or has been
in
violation of any statute, rule or regulation of any governmental authority,
including without limitation all foreign, federal, state and local laws relating
to taxes, environmental protection, occupational health and safety, product
quality and safety and employment and labor matters, except in each case as
could not, individually or in the aggregate, have or result in a Material
Adverse Effect.
(k)
Title
to Assets.
The
Company and the Subsidiaries have good and marketable title in fee simple to
all
real property owned by them that is material to the business of the Company
and
the Subsidiaries and good and marketable title in all personal property owned
by
them that is material to the business of the Company and the Subsidiaries,
in
each case free and clear of all Liens, except for Liens as do not materially
affect the value of such property and do not materially interfere with the
use
made and proposed to be made of such property by the Company and the
Subsidiaries. Any real property and facilities held under lease by the Company
and the Subsidiaries are held by them under valid, subsisting and enforceable
leases of which the Company and the Subsidiaries are in compliance.
(l)
Certain
Fees.
Except
for the fees described in Schedule 3.1(l), all of which are payable to
registered broker-dealers, no brokerage or finder’s fees or commissions are or
will be payable by the Company to any broker, financial advisor or consultant,
finder, placement agent, investment banker, bank or other Person with respect
to
the transactions contemplated by this Agreement, and the Company has not taken
any action that would cause any Purchaser to be liable for any such fees or
commissions.
(m)
Private
Placement.
Neither
the Company nor any Person acting on the Company’s behalf has sold or offered to
sell or solicited any offer to buy the Securities by means of any form of
general solicitation or advertising. Neither the Company nor any of its
Affiliates nor any Person acting on the Company's behalf has, directly or
indirectly, at any time within the
past
six
months, made any offer or sale of any security or solicitation of any offer
to
buy any security under circumstances that would (i) eliminate the availability
of the exemption from registration under Regulation D under the Securities
Act
in connection with the offer and sale of the Securities as contemplated hereby
or (ii) cause the offering of the Securities pursuant to the Transaction
Documents to be integrated with prior offerings by the Company for purposes
of
any applicable law, regulation or stockholder approval provisions, including,
without limitation, under the rules and regulations of any Trading Market.
The
Company is not, and is not an Affiliate of, an “investment company” within the
meaning of the Investment Company Act of 1940, as amended. The Company is not
a
United States real property holding corporation within the meaning of the
Foreign Investment in Real Property Tax Act of 1980.
(n)
Listing
and Maintenance Requirements.
Except
as set forth in the SEC Reports, the Company has not, in the two years preceding
the date hereof, received notice (written or oral) from any Trading Market
on
which the Common Stock is or has been listed or quoted to the effect that the
Company is not in compliance with the listing or maintenance requirements of
such Trading Market. The Company is, and has no reason to believe that it will
not in the foreseeable future continue to be, in compliance with all such
listing and maintenance requirements.
(o)
Registration
Rights.
Except
as described in Schedule 3.1(o), the Company has not granted or agreed to grant
to any Person any rights (including “piggy-back” registration rights) to have
any securities of the Company registered with the Commission or any other
governmental authority that have not been satisfied.
(p)
Application
of Takeover Protections.
There
is no control share acquisition, business combination, poison pill (including
any distribution under a rights agreement) or other similar anti-takeover
provision under the Company’s charter documents or the laws of its state of
incorporation that is or could become applicable to any of the Purchasers as
a
result of the Purchasers and the Company fulfilling their obligations or
exercising their rights under the Transaction Documents, including, without
limitation, as a result of the Company's issuance of the Securities and the
Purchasers' ownership of the Securities.
(q)
Disclosure.
The
Company confirms that neither it nor any other Person acting on its behalf
has
provided any of the Purchasers or their agents or counsel with any information
that constitutes or might constitute material, nonpublic information. The
Company understands and confirms that each of the Purchasers will rely on the
foregoing representations in effecting transactions in securities of the
Company. All disclosure materials provided to the Purchasers regarding the
Company, its business and the transactions contemplated hereby, including the
Schedules to this Agreement, furnished by or on behalf of the Company are true
and correct in all material respects 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 the light of the circumstances under which
they
were made, not misleading. No event or circumstance has occurred or information
exists with respect to the Company or any of its Subsidiaries or its or their
business, properties, prospects, operations or financial conditions, which,
under applicable law, rule or regulation, requires public disclosure or
announcement by the Company but which has not been so publicly announced or
disclosed. The Company acknowledges and agrees that (i) no Purchaser makes
or
has made any representations or
warranties
with respect to the transactions contemplated hereby other than those
specifically set forth in Section 3.2 or (ii) any statement, commitment or
promise to the Company or, to its knowledge, any of its representatives which
is
or was an inducement to the Company to enter into this Agreement or otherwise.
(r)
Acknowledgment
Regarding Purchasers' Purchase of Securities.
The
Company acknowledges and agrees that each of the Purchasers is acting solely
in
the capacity of an arm's length purchaser with respect to this Agreement and
the
transactions contemplated hereby. The Company further acknowledges that no
Purchaser 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 hereby and any advice given by any Purchaser or any of their
respective representatives or agents in connection with this Agreement and
the
transactions contemplated hereby is merely incidental to the Purchasers'
purchase of the Securities. The Company further represents to each Purchaser
that the Company's decision to enter into this Agreement has been based solely
on the independent evaluation of the transactions contemplated hereby by the
Company and its representatives.
(s)
Patents
and Trademarks.
The
Company and the Subsidiaries have, or have rights to use, all patents, patent
applications, trademarks, trademark applications, service marks, trade names,
copyrights, licenses and other similar rights that are necessary or material
for
use in connection with their respective businesses as described in the SEC
Reports and which the failure to so have could have a Material Adverse Effect
(collectively, the "Intellectual
Property Rights").
Neither the Company nor any Subsidiary has received a written notice that the
Intellectual Property Rights used by the Company or any Subsidiary violates
or
infringes upon the rights of any Person. To the knowledge of the Company, all
such Intellectual Property Rights are enforceable and there is no existing
infringement by another Person of any of the Intellectual Property
Rights.
(t)
Insurance.
The
Company and the Subsidiaries are insured by insurers of recognized financial
responsibility against such losses and risks and in such amounts as are prudent
and customary in the businesses in which the Company and the Subsidiaries are
engaged. Neither the Company nor any Subsidiary has any reason to believe that
it will not be able to renew its existing insurance coverage as and when such
coverage expires or to obtain similar coverage from similar insurers as may
be
necessary to continue its business without a significant increase in
cost.
(u)
Regulatory
Permits.
The
Company and the Subsidiaries possess all certificates, authorizations and
permits issued by the appropriate federal, state, local or foreign regulatory
authorities necessary to conduct their respective businesses as described in
the
SEC Reports, except where the failure to possess such permits could not,
individually or in the aggregate, have or result in a Material Adverse Effect
(“Material
Permits”),
and
neither the Company nor any Subsidiary has received any notice of proceedings
relating to the revocation or modification of any Material Permit.
(v)
Transactions
With Affiliates and Employees.
Except
as set forth in SEC Reports filed at least ten days prior to the date hereof,
none of the officers or directors of the Company and, to the knowledge of the
Company, none of the employees of the Company is
presently
a party to any transaction with the Company or any Subsidiary (other than for
services as employees, officers and directors), including any contract,
agreement or other arrangement providing for the furnishing of services to
or
by, providing for rental of real or personal property to or from, or otherwise
requiring payments to or from any officer, director or such employee or, to
the
knowledge of the Company, any entity in which any officer, director, or any
such
employee has a substantial interest or is an officer, director, trustee or
partner.
(w)
Form
S-3 Eligibility.
The
Company is eligible to register the resale of its Common Stock for resale by
the
Purchasers under Form S-3 promulgated under the Securities Act.
(x)
Solvency.
Based
on the financial condition of the Company as of the Closing Date, (i) the
Company’s fair saleable value of its assets exceeds the amount that will be
required to be paid on or in respect of the Company’s existing debts and other
liabilities (including known contingent liabilities) as they mature; (ii) the
Company’s assets do not constitute unreasonably small capital to carry on its
business for the current fiscal year as now conducted and as proposed to be
conducted including its capital needs taking into account the particular capital
requirements of the business conducted by the Company, and projected capital
requirements and capital availability thereof; and (iii) the current cash flow
of the Company, together with the proceeds the Company would receive, were
it to
liquidate all of its assets, after taking into account all anticipated uses
of
the cash, would be sufficient to pay all amounts on or in respect of its debt
when such amounts are required to be paid. The Company does not intend to incur
debts beyond its ability to pay such debts as they mature (taking into account
the timing and amounts of cash to be payable on or in respect of its
debt).
(y)
Internal
Accounting Controls.
The
Company and the Subsidiaries maintain a system of internal accounting controls
sufficient to provide reasonable assurance that (i) transactions are executed
in
accordance with management’s general or specific authorizations, (ii)
transactions are recorded as necessary to permit preparation of financial
statements in conformity with generally accepted accounting principles and
to
maintain asset accountability, (iii) access to assets is permitted only in
accordance with management’s general or specific authorization, and (iv) the
recorded accountability for assets is compared with the existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.
(z)
Sarbanes-Oxley
Act.
The
Company is in compliance with applicable requirements of the Sarbanes-Oxley
Act
of 2002 and applicable rules and regulations promulgated by the Commission
thereunder in effect as of the date of this Agreement, except where such
noncompliance could not be reasonably expected to have, individually or in
the aggregate, a Material Adverse Effect.
3.2
Representations
and Warranties of the Purchasers.
Each
Purchaser hereby, as to itself only and for no other Purchaser, represents
and
warrants to the Company as follows:
(a)
Organization;
Authority.
Such
Purchaser is an entity duly organized, validly existing and in good standing
under the laws of the jurisdiction of its organization with the requisite
corporate or partnership power and authority to enter into and to consummate
the
transactions
contemplated by the Transaction Documents and otherwise to carry out its
obligations hereunder and thereunder. The purchase by such Purchaser of the
Shares and the Warrants hereunder has been duly authorized by all necessary
action on the part of such Purchaser. This Agreement has been duly executed
and
delivered by such Purchaser and constitutes the valid and binding obligation
of
such Purchaser, enforceable against it in accordance with its
terms.
(b)
Purchaser
Status.
At the
time such Purchaser was offered the Shares and the Warrants, it was, and at
the
date hereof it is, an “accredited investor” as defined in Rule 501(a) under the
Securities Act.
(c)
Experience
of such Purchaser.
Such
Purchaser, either alone or together with its representatives, has such
knowledge, sophistication and experience in business and financial matters
so as
to be capable of evaluating the merits and risks of the prospective investment
in the Securities, and has so evaluated the merits and risks of such investment.
Such Purchaser is able to bear the economic risk of an investment in the
Securities and, at the present time, is able to afford a complete loss of such
investment.
ARTICLE
IV
OTHER
AGREEMENTS OF THE PARTIES
4.1
Transfer
Restrictions.
(a)
Securities
may only be disposed of pursuant to an effective registration statement under
the Securities Act or pursuant to an available exemption from the registration
requirements of the Securities Act, and in compliance with any applicable state
securities laws. In connection with any transfer of Securities other than
pursuant to an effective registration statement or to the Company or pursuant
to
Rule 144(k), except as otherwise set forth herein, the Company may require
the
transferor to provide to the Company an opinion of counsel selected by the
transferor, the form and substance of which opinion shall be reasonably
satisfactory to the Company, to the effect that such transfer does not require
registration under the Securities Act. Notwithstanding the foregoing, the
Company hereby consents to and agrees to register on the books of the Company
and with its transfer agent, without any such legal opinion, any transfer of
Securities by a Purchaser to an Affiliate of such Purchaser, provided that
the
transferee certifies to the Company that it is an “accredited investor” as
defined in Rule 501(a) under the Securities Act. For so long as any Purchaser
owns Securities, the Company will not effect or publicly announce its intention
to effect any exchange, recapitalization or other transaction that effectively
requires or rewards physical delivery of certificates evidencing the Common
Stock.
(b)
The
Purchasers agree to the imprinting, so long as is required by this Section
4.1(b),
of the
following legend on any certificate evidencing Securities:
[NEITHER]
THESE SECURITIES [NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE
EXERCISABLE] HAVE [NOT] 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 COMPLIANCE WITH
APPLICABLE STATE SECURITIES LAWS OR BLUE SKY LAWS. NOTWITHSTANDING THE
FOREGOING, THESE SECURITIES AND THE SECURITIES ISSUABLE UPON EXERCISE OF THESE
SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR
OTHER
LOAN OR FINANCING ARRANGEMENT SECURED BY SUCH SECURITIES.
Certificates
evidencing Securities shall not be required to contain such legend or any other
legend (i) while a Registration Statement covering the resale of such Securities
is effective under the Securities Act, or (ii) following any sale of such
Securities pursuant to Rule 144, or (iii) if such Securities are eligible for
sale under Rule 144(k), or (iv) if such legend is not required under applicable
requirements of the Securities Act (including judicial interpretations and
pronouncements issued by the Staff of the Commission). The Company shall cause
its counsel to issue the legal opinion included in the Transfer Agent
Instructions to the Company's transfer agent on the Effective Date.
Following the Effective Date or at such earlier time as a legend is no longer
required for certain Securities, the Company will use reasonable best efforts
to
cause its transfer agent, no later than three Trading Days following the
delivery by a Purchaser to the Company or the Company’s transfer agent of a
legended certificate representing such Securities, deliver or cause to be
delivered to such Purchaser a certificate representing such Securities 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.
(c)
The
Company acknowledges and agrees that a Purchaser may from time to time pledge
or
grant a security interest in some or all of the Securities in connection with
a
bona fide margin agreement or other loan or financing arrangement secured by
the
Securities and, if required under the terms of such agreement, loan or
arrangement, such Purchaser 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 the pledgee, secured party
or
pledgor shall be required in connection therewith. Further, no notice shall
be
required of such pledge. At the appropriate Purchaser’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 the preparation and filing of any required
prospectus supplement under Rule 424(b)(3) of the Securities Act or other
applicable provision of the Securities Act to appropriately amend the list
of
Selling Stockholders thereunder.
4.2
Furnishing
of Information.
As long
as any Purchaser owns Securities, the Company covenants to timely file (or
obtain extensions in respect thereof and file within the applicable grace
period) all reports required to be filed by the Company after the date
hereof
pursuant
to the Exchange Act. Upon the request of any Purchaser, the Company shall
deliver to such Purchaser a written certification of a duly authorized officer
as to whether it has complied with the preceding sentence. As long as any
Purchaser owns Securities, if the Company is not required to file reports
pursuant to such laws, it will prepare and furnish to the Purchasers and make
publicly available in accordance with paragraph (c) of Rule 144 such information
as is required for the Purchasers to sell the Securities under Rule 144. The
Company further covenants that it will take such further action as any holder
of
Securities may reasonably request to satisfy the provisions of Rule 144
applicable to the issuer of securities relating to transactions for the sale
of
securities pursuant to Rule 144.
4.3 Integration.
The
Company shall not, and shall use its best efforts to ensure that no Affiliate
of
the Company shall, sell, offer for sale or solicit offers to buy or otherwise
negotiate in respect of any security (as defined in Section 2 of the Securities
Act) that would be integrated with the offer or sale of the Securities in a
manner that would require the registration under the Securities Act of the
sale
of the Securities to the Purchasers or that would be integrated with the offer
or sale of the Securities for purposes of the rules and regulations of any
Trading Market.
4.4 Reservation
and Listing of Securities.
The
Company shall maintain a reserve from its duly authorized shares of Common
Stock
for issuance pursuant to the Transaction Documents in such amount as may be
required to fulfill its obligations in full under the Transaction Documents.
In
the event that at any time the then authorized shares of Common Stock are
insufficient for the Company to satisfy its obligations in full under the
Transaction Documents, the Company shall promptly take such actions as may
be
required to increase the number of authorized shares. The Company shall in
the
time and manner required by its Trading Market, prepare and file with such
Trading Market an additional shares listing application covering the number
of
shares of Common Stock issuable under the Transaction Documents and shall take
all steps necessary to cause such shares of Common Stock to be approved for
listing on its Trading Market as soon as possible.
4.5 Subsequent
Placements.
(a) From
the
date hereof until the 60th
Trading
Day following the Effective Date, the Company will not, directly or indirectly,
offer, sell, grant any option to purchase, or otherwise dispose of (or announce
any offer, sale, grant or any option to purchase or other disposition of) any
of
its or the Subsidiaries’ equity or equity equivalent securities, including
without limitation any debt, preferred stock or other instrument or security
that is, at any time during its life and under any circumstances, convertible
into or exchangeable or exercisable for Common Stock or Common Stock Equivalents
(any such offer, sale, grant, disposition or announcement being referred to
as a
“Subsequent
Placement”).
(b) The
restrictions set forth in paragraph (a) of this Section 4.5 shall not apply
to
Excluded Stock.
4.6 Securities
Laws Disclosure; Publicity.
The
Company shall, on or before 8:30 a.m., New York City time on October 19, 2006,
issue a press release acceptable to the Purchasers disclosing all material
terms
of the transactions contemplated hereby. Prior to the second
business
day after the Closing Date, the Company shall file a Current Report on Form
8-K
with the Commission (the “8-K
Filing”) describing
the terms of the transactions contemplated by the Transaction Documents and
including as exhibits to such Current Report on Form 8-K this Agreement, the
form of Warrant, in the form required by the Exchange Act. Thereafter, the
Company shall timely file any filings and notices required by the Commission
or
applicable law with respect to the transactions contemplated hereby and provide
copies thereof to the Purchasers promptly after filing. Except
with respect to the 8-K Filing and the press release referenced above (a copy
of
which will be provided to the Purchasers for their review as early as
practicable prior to its filing), the
Company
shall, at least two Trading Days prior to the filing or dissemination of any
disclosure required by this paragraph that does not contain any material
non-public information, provide a copy thereof to the Purchasers for their
review. The Company and the Purchasers shall consult with each other in issuing
any press releases or otherwise making public statements or filings and other
communications with the Commission or any regulatory agency or Trading Market
with respect to the transactions contemplated hereby, and neither party shall
issue any such press release or otherwise make any such public statement, filing
or other communication without the prior consent of the other, 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, filing
or
other communication. Notwithstanding the foregoing, the Company shall not
publicly disclose the name of any Purchaser, or include the name of any
Purchaser in any filing with the Commission or any regulatory agency or Trading
Market, without the prior written consent of such Purchaser, except to the
extent such disclosure (but not any disclosure as to the controlling Persons
thereof) is required by law or Trading Market regulations, in which case the
Company shall provide the Purchasers with prior notice of such disclosure.
The
Company shall not, and shall cause each of its Subsidiaries and its and each
of
their respective officers, directors, employees and agents not to, provide
any
Purchaser with any material nonpublic information regarding the Company or
any
of its Subsidiaries from and after the filing of the 8-K Filing without the
express written consent of such Purchaser. In the event of a breach of the
foregoing covenant by the Company, any of its Subsidiaries, or any of its or
their respective officers, directors, employees and agents, in addition to
any
other remedy provided herein or in the Transaction Documents, a Purchaser shall
have the right to make a public disclosure, in the form of a press release,
public advertisement or otherwise, of such material nonpublic information
without the prior approval by the Company, its Subsidiaries, or any of its
or
their respective officers, directors, employees or agents. No Purchaser shall
have any liability to the Company, its Subsidiaries, or any of its or their
respective officers, directors, employees, shareholders or agents for any such
disclosure. Subject to the foregoing, neither the Company nor any Purchaser
shall issue any press releases or any other public statements with respect
to
the transactions contemplated hereby; provided, however, that the Company shall
be entitled, without the prior approval of any Purchaser, to make any press
release or other public disclosure with respect to such transactions (i) in
substantial conformity with the 8-K Filing and contemporaneously therewith
and
(ii) as is required by applicable law and regulations (provided that in the
case
of clause (i) each Purchaser shall be consulted by the Company in connection
with any such press release or other public disclosure prior to its release).
Each press release disseminated during the 12 months preceding the date of
this
Agreement did not at the time of release contain any untrue statement of a
material fact or omit to state a material fact required to be
stated
therein or necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading.
4.7 Use
of
Proceeds.
Except
as set forth on Schedule
4.7,
the
Company shall use the net proceeds from the sale of the Securities hereunder
for
working capital purposes and not (i) for the satisfaction of any portion of
the
Company’s debt (other than payment of trade payables and accrued expenses in the
ordinary course of the Company’s business and consistent with past practice),
(ii) to redeem any Company equity or equity-equivalent securities, or (iii)
to
settle any outstanding litigation.
4.8 Reimbursement.
If any
Purchaser or any of its Affiliates or any officer, director, partner,
controlling Person, employee or agent of a Purchaser or any of its Affiliates
(a
“Related
Person”)
becomes involved in any capacity in any Proceeding brought by or against any
Person in connection with or as a result of the transactions contemplated by
the
Transaction Documents, the Company will indemnify and hold harmless such
Purchaser or Related Person for its reasonable legal and other expenses
(including the costs of any investigation, preparation and travel) and for
any
Losses incurred in connection therewith, as such expenses or Losses are
incurred, excluding only Losses that result directly from such Purchaser’s or
Related Person’s gross negligence or willful misconduct. In addition, the
Company shall indemnify and hold harmless each Purchaser and Related Person
from
and against any and all Losses, as incurred, arising out of or relating to
any
breach by the Company of any of the representations, warranties or covenants
made by the Company in this Agreement or any other Transaction Document, or
any
allegation by a third party that, if true, would constitute such a breach.
The
conduct of any Proceedings for which indemnification is available under this
paragraph shall be governed by Section 6.4(c) below. The indemnification
obligations of the Company under this paragraph shall be in addition to any
liability that the Company may otherwise have and shall be binding upon and
inure to the benefit of any successors, assigns, heirs and personal
representatives of the Purchasers and any such Related Persons. The Company
also
agrees that neither the Purchasers nor any Related Persons shall have any
liability to the Company or any Person asserting claims on behalf of or in
right
of the Company in connection with or as a result of the transactions
contemplated by the Transaction Documents, except to the extent that any Losses
incurred by the Company result from the gross negligence or willful misconduct
of the applicable Purchaser or Related Person in connection with such
transactions.
If
the
Company breaches its obligations under any Transaction Document, then, in
addition to any other liabilities the Company may have under any Transaction
Document or applicable law, the Company shall pay or reimburse the Purchasers
on
demand for all costs of collection and enforcement (including reasonable
attorneys fees and expenses). Without limiting the generality of the foregoing,
the Company specifically agrees to reimburse the Purchasers on demand for all
costs of enforcing the indemnification obligations in this
paragraph.
4.9 Amendment
to November Purchase Agreement.
The
Company and the Purchasers entered into a Securities Purchase Agreement dated
as
of November 1, 2005 (the “November
Purchase Agreement”)
pursuant to which the Company (i) had certain participations rights under
Section
4.5
thereof
relating to Subsequent Placements, and (ii) would incur liquidated damages
under
Section
6.1(d)
thereof
upon a breach of certain events stated therein (a “Event Payments”).
The
Company and the Purchasers hereby waive their rights (i) under Section
4.5
of the
November Purchase Agreement and (ii) to receive any Event Payments in connection
with any
breach under Section
6.1(d)
of the
November Purchase Agreement.. Nothing herein shall be deemed a waiver or
amendment to any other provision of the November Purchase Agreement and such
agreement shall remain in full force.
ARTICLE
V
CONDITIONS
5.1
Conditions
Precedent to the Obligations of the Purchasers.
The
obligation of each Purchaser to acquire Securities at the Closing is subject
to
the satisfaction or waiver by such Purchaser, at or before the Closing, of
each
of the following conditions:
(a)
Representations
and Warranties.
The
representations and warranties of the Company contained herein shall be true
and
correct in all material respects as of the date when made and as of the Closing
as though made on and as of such date; and
(b)
Performance.
The
Company and each other Purchaser shall have performed, satisfied and complied
in
all material respects with all covenants, agreements and conditions required
by
the Transaction Documents to be performed, satisfied or complied with by it
at
or prior to the Closing.
(c)
No
Injunction.
No
statute, rule, regulation, executive order, decree, ruling or injunction shall
have been enacted, entered, promulgated or endorsed by any court or governmental
authority of competent jurisdiction that prohibits the consummation of any
of
the transactions contemplated by the Transaction Documents;
(d)
Adverse
Changes.
Since
the date of execution of this Agreement, no event or series of events shall
have
occurred that reasonably would be expected to have or result in a Material
Adverse Effect; and
(e)
No
Suspensions of Trading in Common Stock; Listing.
Trading
in the Common Stock shall not have been suspended by the Commission or any
Trading Market (except for any suspensions of trading of not more than three
Trading Days (whether or not consecutive) solely to permit dissemination of
material information regarding the Company) at any time since the date of
execution of this Agreement, and the Common Stock shall have been at all times
since such date listed for trading on an Eligible Market;
5.2
Conditions
Precedent to the Obligations of the Company.
The
obligation of the Company to sell Securities at the Closing is subject to the
satisfaction or waiver by the Company, at or before the Closing, of each of
the
following conditions:
(a)
Representations
and Warranties.
The
representations and warranties of the Purchasers contained herein shall be
true
and correct in all material respects as of the date when made and as of the
Closing Date as though made on and as of such date; and
(b)
Performance.
The
Purchasers shall have performed, satisfied and complied in all material respects
with all covenants, agreements and conditions required by the Transaction
Documents to be performed, satisfied or complied with by the Purchasers at
or
prior to the Closing.
ARTICLE
VI
REGISTRATION
RIGHTS
6.1
Shelf
Registration
(a)
As
promptly as possible, and in any event on or prior to the Filing Date, the
Company shall prepare and file with the Commission a “Shelf” Registration
Statement covering the resale of all Registrable Securities for an offering
to
be made on a continuous basis pursuant to Rule 415. The Registration Statement
shall be on Form S-3 (except if the Company is not then eligible to register
for
resale the Registrable Securities on Form S-3, in which case such registration
shall be on another appropriate form in accordance herewith as the Purchasers
may consent) and shall contain (except if otherwise directed by the Purchasers)
the “Plan of Distribution” attached hereto as Exhibit
C.
(b)
The
Company shall use its best efforts to cause the Registration Statement to be
declared effective by the Commission as promptly as possible after the filing
thereof, but in any event prior to the Required Effectiveness Date, and shall
use its best efforts to keep the Registration Statement continuously effective
under the Securities Act until the fifth anniversary of the Effective Date
or
such earlier date when all Registrable Securities covered by such Registration
Statement have been sold publicly (the “Effectiveness
Period”).
(c)
The
Company shall notify each Purchaser in writing promptly (and in any event within
one Trading Day) after receiving notification from the Commission that the
Registration Statement has been declared effective.
(d)
If:
(i)
any Registration Statement is not filed on or prior to the Filing Date (if
the
Company files such Registration Statement without affording the Purchasers
the
opportunity to review and comment on the same as required by Section 6.2(a)
hereof, the Company shall not be deemed to have satisfied this clause (i)),
or
(ii) the Company fails to file with the Commission a request for acceleration
in
accordance with Rule 461 promulgated under the Securities Act, within five
Trading Days after the date that the Company is notified (orally or in writing,
whichever is earlier) by the Commission that a Registration Statement will
not
be “reviewed,” or will not be subject to further review, or (iii) the Company
fails to respond to any comments made by the Commission within 10 Trading Days
after the receipt of such comments, or (iv) a Registration Statement filed
hereunder is not declared effective by the Commission by the Required
Effectiveness Date, or (v) an amendment to a Registration Statement is not
filed
by the Company with the Commission within ten Trading Days after the
Commission’s having notified the Company that such amendment is required in
order for such Registration Statement to be declared effective,(any such failure
or breach being referred to as an “Event,” and for purposes of clause (i) the
date on which such Event occurs, or for purposes of clause (ii) the date on
which such five Trading Day period is exceeded, or for purposes of clauses
(iii)
the date which such ten Trading Day-period is exceeded, , being referred to
as
“‘Event Date”), then: (x) on each such Event Date the Company shall pay to each
Purchaser an amount in cash, as partial liquidated damages and not as a penalty,
equal to 1% of the aggregate purchase price
paid
by
such
Purchaser pursuant to the Purchase Agreement; and (y) on each monthly
anniversary of each such Event Date thereof (if the applicable Event shall
not
have been cured by such date) until the applicable Event is cured, the Company
shall pay to each Purchaser an amount in cash, as partial liquidated damages
and
not as a penalty, equal to 1% of the aggregate purchase price paid by such
Purchaser pursuant to the Purchase Agreement (the “Event Payments”). Such
payments shall be in partial compensation to the Purchasers and shall not
constitute the Purchaser’s exclusive remedy for such events. If the Company
fails to pay any 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 Purchaser, accruing daily from the date such
liquidated damages are due until such amounts, plus all such interest thereon,
are paid in full. Notwithstanding anything to the contrary, the maximum amount
of Event Payments payable to a Purchaser by the Company under this Section
6.1(d)
shall
not exceed 18% of the aggregate purchase price paid by such
Purchaser.
(e)
The
Company shall not, prior to the Effective Date of the Registration Statement,
prepare and file with the Commission a registration statement relating to an
offering for its own account or the account of others (other than as
contemplated in the Transaction Documents) under the Securities Act of any
of
its equity securities.
(f)
If
the
Company issues to the Purchasers any Common Stock pursuant to the Transaction
Documents that is not included in the initial Registration Statement, then
the
Company shall file an additional Registration Statement covering such number
of
shares of Common Stock on or prior to the Filing Date and shall use its best
efforts, but in no event later than the Required Filing Date, to cause such
additional Registration Statement to become effective by the
Commission.
6.2
Registration
Procedures.
In
connection with the Company's registration obligations hereunder, the Company
shall:
(a)
Not
less
than three Trading Days prior to the filing of a Registration Statement or
any
related Prospectus or any amendment or supplement thereto (including any
document that would be incorporated or deemed to be incorporated therein by
reference), the Company shall (i) furnish to each Purchaser and any counsel
designated by any Purchaser (each, a “Purchaser
Counsel”,
and
Iroquois Master Fund Ltd. has initially designated Malhotra & Associates LLP
“LP
Counsel”)
copies
of all such documents proposed to be filed, which documents (other than those
incorporated or deemed to be incorporated by reference) will be subject to
the
review of each Purchaser and Purchaser Counsel, and (ii) cause its officers
and
directors, counsel and independent certified public accountants to respond
to
such inquiries as shall be necessary, in the reasonable opinion of respective
counsel, to conduct a reasonable investigation within the meaning of the
Securities Act. The Company shall not file a Registration Statement or any
such
Prospectus or any amendments or supplements thereto to which Purchasers holding
a majority of the Registrable Securities shall reasonably object.
(b)
(i)
Prepare and file with the Commission such amendments, including post-effective
amendments, to each Registration Statement and the Prospectus used in
connection
therewith as may be necessary to keep the Registration Statement continuously
effective as to the applicable Registrable Securities for the Effectiveness
Period and prepare and file with the Commission such additional Registration
Statements in order to register for resale under the Securities Act all of
the
Registrable Securities; (ii) cause the related Prospectus to be
amended
or supplemented by any required Prospectus supplement, and as so supplemented
or
amended to be filed pursuant to Rule 424; (iii) respond as promptly as
reasonably possible, and in any event within ten days, to any comments received
from the Commission with respect to the Registration Statement or any amendment
thereto and as promptly as reasonably possible provide the Purchasers true
and
complete copies of all correspondence from and to the Commission relating to
the
Registration Statement; and (iv) comply in all material respects with the
provisions of the Securities Act and the Exchange Act with respect to the
disposition of all Registrable Securities covered by the Registration Statement
during the applicable period in accordance with the intended methods of
disposition by the Purchasers thereof set forth in the Registration Statement
as
so amended or in such Prospectus as so supplemented
(c)
Notify
the Purchasers of Registrable Securities to be sold and Purchaser Counsel as
promptly as reasonably possible, and (if requested by any such Person) confirm
such notice in writing no later than one Trading Day thereafter, of any of
the
following events: (i) the Commission notifies the Company whether there will
be
a “review” of any Registration Statement; (ii) the Commission comments in
writing on any Registration Statement (in which case the Company shall deliver
to each Purchaser a copy of such comments and of all written responses thereto);
(iii) any Registration Statement or any post-effective amendment is declared
effective; (iv) the Commission or any other Federal or state governmental
authority requests any amendment or supplement to any Registration Statement
or
Prospectus or requests additional information related thereto; (v) the
Commission issues any stop order suspending the effectiveness of any
Registration Statement or initiates any Proceedings for that purpose; (vi)
the
Company receives notice of any suspension of the qualification or exemption
from
qualification of any Registrable Securities for sale in any jurisdiction, or
the
initiation or threat of any Proceeding for such purpose; or (vii) the financial
statements included in any Registration Statement become ineligible for
inclusion therein or any statement made in any Registration Statement or
Prospectus or any document incorporated or deemed to be incorporated therein
by
reference is untrue in any material respect or any revision to a Registration
Statement, Prospectus or other document is required so that 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
the light of the circumstances under which they were made, not
misleading.
(d)
Use
its
best efforts to avoid the issuance of or, if issued, obtain the withdrawal
of
(i) any order suspending the effectiveness of any Registration Statement, or
(ii) any suspension of the qualification (or exemption from qualification)
of
any of the Registrable Securities for sale in any jurisdiction, as soon as
possible.
(e)
Furnish
to each Purchaser and Purchaser Counsel, without charge, at least one conformed
copy of each Registration Statement and each amendment thereto, including
financial statements and schedules, all documents incorporated or deemed to
be
incorporated therein by reference, and all exhibits to the extent requested
by
such Person (including those previously
furnished or incorporated by reference) promptly after the filing of such
documents with the Commission.
(f)
Promptly
deliver to each Purchaser and Purchaser Counsel, without charge, as many copies
of the Prospectus or Prospectuses (including each form of prospectus) and each
amendment or supplement thereto as such Persons may reasonably request.
The
Company
hereby consents to the use of such Prospectus and each amendment or supplement
thereto by each of the selling Purchasers in connection with the offering and
sale of the Registrable Securities covered by such Prospectus and any amendment
or supplement thereto.
(g)
(i) In
the time and manner required by each Trading Market, prepare and file with
such
Trading Market an additional shares listing application covering all of the
Registrable Securities; (ii) take all steps necessary to cause such Registrable
Securities to be approved for listing on each Trading Market as soon as possible
thereafter; (iii) provide to the Purchasers evidence of such listing; and (iv)
maintain the listing of such Registrable Securities on each such Trading Market
or another Eligible Market.
(h)
Prior
to
any public offering of Registrable Securities, use its reasonable best efforts
to register or qualify or cooperate with the selling Purchasers and each
applicable Purchaser Counsel in connection with the registration or
qualification (or exemption from such registration or qualification) of such
Registrable Securities for offer and sale under the securities or Blue Sky
laws
of such jurisdictions within the United States as any Purchaser requests in
writing, to keep each such registration or qualification (or exemption
therefrom) effective during the Effectiveness Period and to do any and all
other
acts or things necessary or advisable to enable the disposition in such
jurisdictions of the Registrable Securities covered by a Registration
Statement.
(i)
Cooperate
with the Purchasers to facilitate the timely preparation and delivery of
certificates representing Registrable Securities to be delivered to a transferee
pursuant to a Registration Statement, which certificates shall be free, to
the
extent permitted by this Agreement, of all restrictive legends, and to enable
such Registrable Securities to be in such denominations and registered in such
names as any such Purchasers may request.
(j)
Upon
the
occurrence of any event described in Section 6.2(c)(vii), as promptly as
reasonably possible, prepare a supplement or amendment, including a
post-effective amendment, to the Registration Statement or a supplement to
the
related Prospectus or any document incorporated or deemed to be incorporated
therein by reference, and file any other required document so that, as
thereafter delivered, neither the Registration Statement nor such Prospectus
will contain an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements therein,
in the light of the circumstances under which they were made, not
misleading.
(k)
Cooperate
with any due diligence investigation undertaken by the Purchasers in connection
with the sale of Registrable Securities, including, without limitation, by
making available any documents and information; provided that the Company will
not deliver or make available to any Purchaser material, nonpublic information
unless such Purchaser specifically requests in advance to receive material,
nonpublic information in writing.
(l)
If
Holders of a majority of the Registrable Securities being offered pursuant
to a
Registration Statement select underwriters for the offering, the Company shall
enter into and perform its obligations under an underwriting agreement, in
usual
and customary form, including, without limitation, by providing customary legal
opinions, comfort letters and indemnification and contribution
obligations.
(m)
Comply
with all applicable rules and regulations of the Commission.
6.3
Registration
Expenses.
The
Company shall pay (or reimburse the Purchasers for) all fees and expenses
incident to the performance of or compliance with this Agreement by the Company,
including without limitation (a) all registration and filing fees and expenses,
including without limitation those related to filings with the Commission,
any
Trading Market and in connection with applicable state securities or Blue Sky
laws, (b) printing expenses (including without limitation expenses of printing
certificates for Registrable Securities and of printing prospectuses requested
by the Purchasers), (c) messenger, telephone and delivery expenses, (d) fees
and
disbursements of counsel for the Company, (e) fees and expenses of all other
Persons retained by the Company in connection with the consummation of the
transactions contemplated by this Agreement, and (f) all listing fees to be
paid
by the Company to the Trading Market.
6.4
Indemnification
(a)
Indemnification
by the Company.
The
Company shall, notwithstanding any termination of this Agreement, indemnify
and
hold harmless each Purchaser, the officers, directors, partners, members,
agents, brokers (including brokers who offer and sell Registrable Securities
as
principal as a result of a pledge or any failure to perform under a margin
call
of Common Stock), investment advisors and employees of each of them, each Person
who controls any such Purchaser (within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act) and the officers, directors,
partners, members, agents and employees of each such controlling Person, to
the
fullest extent permitted by applicable law, from and against any and all Losses,
as incurred, arising out of or relating to any untrue or alleged untrue
statement of a material fact contained in the Registration Statement, any
Prospectus or any form of prospectus or in any amendment or supplement thereto
or in any preliminary prospectus, or arising out of or relating to any omission
or alleged omission of a material fact required to be stated therein or
necessary to make the statements therein (in the case of any Prospectus or
form
of prospectus or supplement thereto, in the light of the circumstances under
which they were made) not misleading, except to the extent, but only to the
extent, that (i) such untrue statements, alleged untrue statements, omissions
or
alleged omissions are based solely upon information regarding such Purchaser
furnished in writing to the Company by such Purchaser expressly for use therein,
or to the extent that such information relates to such Purchaser or such
Purchaser's proposed method of distribution of Registrable Securities and was
reviewed and expressly approved in writing by such Purchaser expressly for
use
in the Registration Statement, such Prospectus or such form of Prospectus or
in
any amendment or supplement thereto or (ii) in the case of an occurrence of
an
event of the type specified in Section 6.2(c)(v)-(vii), the use by such
Purchaser of an outdated or defective Prospectus after the Company has notified
such Purchaser in writing that the Prospectus is outdated or defective and
prior
to the receipt by such Purchaser of the Advice contemplated in Section 6.5.
The
Company shall notify the Purchasers promptly of the institution,
threat or assertion of any Proceeding of which the Company is aware in
connection with the transactions contemplated by this Agreement.
(b)
Indemnification
by Purchasers.
Each
Purchaser shall, severally and not jointly, indemnify and hold harmless the
Company, its directors, officers, agents and employees, each Person who controls
the Company (within the meaning of Section 15 of the Securities Act
and
Section 20 of the Exchange Act), and the directors, officers, agents or
employees of such controlling Persons, to the fullest extent permitted by
applicable law, from and against all Losses (as determined by a court of
competent jurisdiction in a final judgment not subject to appeal or review)
arising solely out of any untrue statement of a material fact contained in
the
Registration Statement, any Prospectus, or any form of prospectus, or in any
amendment or supplement thereto, or arising solely out of any omission of a
material fact required to be stated therein or necessary to make the statements
therein (in the case of any Prospectus or form of prospectus or supplement
thereto, in the light of the circumstances under which they were made) not
misleading to the extent, but only to the extent, that such untrue statement
or
omission is contained in any information so furnished in writing by such
Purchaser to the Company specifically for inclusion in such Registration
Statement or such Prospectus or to the extent that (i) such untrue statements
or
omissions are based solely upon information regarding such Purchaser furnished
in writing to the Company by such Purchaser expressly for use therein, or to
the
extent that such information relates to such Purchaser or such Purchaser's
proposed method of distribution of Registrable Securities and was reviewed
and
expressly approved in writing by such Purchaser expressly for use in the
Registration Statement, such Prospectus or such form of Prospectus or in any
amendment or supplement thereto or (ii) in the case of an occurrence of an
event
of the type specified in Section
6.2(c)(v)-(vii),
the use
by such Purchaser of an outdated or defective Prospectus after the Company
has
notified such Purchaser in writing that the Prospectus is outdated or defective
and prior to the receipt by such Purchaser of the Advice contemplated in
Section
6.5.
In no
event shall the liability of any selling Purchaser hereunder be greater in
amount than the dollar amount of the net proceeds received by such Purchaser
upon the sale of the Registrable Securities giving rise to such indemnification
obligation.
(c)
Conduct
of Indemnification Proceedings.
If any
Proceeding shall be brought or asserted against any Person entitled to indemnity
hereunder (an “Indemnified
Party”),
such
Indemnified Party shall promptly notify the Person from whom indemnity is sought
(the “Indemnifying
Party”)
in
writing, and the Indemnifying Party shall assume the defense thereof, including
the employment of counsel reasonably satisfactory to the Indemnified Party
and
the payment of all fees and expenses incurred in connection with defense
thereof; provided, that the failure of any Indemnified Party to give such notice
shall not relieve the Indemnifying Party of its obligations or liabilities
pursuant to this Agreement, except (and only) to the extent that it shall be
finally determined by a court of competent jurisdiction (which determination
is
not subject to appeal or further review) that such failure shall have
proximately and materially adversely prejudiced the Indemnifying
Party.
An
Indemnified Party shall have the right to employ separate counsel in any such
Proceeding and to participate in the defense thereof, but the fees and expenses
of such counsel shall be at the expense of such Indemnified Party or Parties
unless: (i) the Indemnifying Party has agreed in writing to pay such fees and
expenses; or (ii) the Indemnifying Party shall have failed promptly to assume
the defense of such Proceeding and to employ counsel reasonably satisfactory
to such Indemnified Party in any such Proceeding; or (iii) the named parties
to
any such Proceeding (including any impleaded parties) include both such
Indemnified Party and the Indemnifying Party, and such Indemnified Party shall
have been advised by counsel that a conflict of interest is likely to exist
if
the same counsel were to represent such Indemnified Party and the Indemnifying
Party (in which case, if such Indemnified Party notifies the Indemnifying Party
in writing that it elects to employ separate counsel at the expense of the
Indemnifying
Party,
the Indemnifying Party shall not have the right to assume the defense thereof
and such counsel shall be at the expense of the Indemnifying Party). The
Indemnifying Party shall not be liable for any settlement of any such Proceeding
effected without its written consent, which consent shall not be unreasonably
withheld. No Indemnifying Party shall, without the prior written consent of
the
Indemnified Party, effect any settlement of any pending Proceeding in respect
of
which any Indemnified Party is a party, unless such settlement includes an
unconditional release of such Indemnified Party from all liability on claims
that are the subject matter of such Proceeding.
All
fees
and expenses of the Indemnified Party (including reasonable fees and expenses
to
the extent incurred in connection with investigating or preparing to defend
such
Proceeding in a manner not inconsistent with this Section) shall be paid to
the
Indemnified Party, as incurred, within ten Trading Days of written notice
thereof to the Indemnifying Party (regardless of whether it is ultimately
determined that an Indemnified Party is not entitled to indemnification
hereunder; provided, that the Indemnifying Party may require such Indemnified
Party to undertake to reimburse all such fees and expenses to the extent it
is
finally judicially determined that such Indemnified Party is not entitled to
indemnification hereunder).
(d)
Contribution.
If a
claim for indemnification under Section
6.4(a)
or
(b)
is
unavailable to an Indemnified Party (by reason of public policy or otherwise),
then each Indemnifying Party, in lieu of indemnifying such Indemnified Party,
shall contribute to the amount paid or payable by such Indemnified Party as
a
result of such Losses, in such proportion as is appropriate to reflect the
relative fault of the Indemnifying Party and Indemnified Party in connection
with the actions, statements or omissions that resulted in such Losses as well
as any other relevant equitable considerations. The relative fault of such
Indemnifying Party and Indemnified Party shall be determined by reference to,
among other things, whether any action in question, including any untrue or
alleged untrue statement of a material fact or omission or alleged omission
of a
material fact, has been taken or made by, or relates to information supplied
by,
such Indemnifying Party or Indemnified Party, and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
action, 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 Section
6.4(c),
any
reasonable attorneys' or other reasonable 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
6.4(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
6.4(d), no Purchaser shall be required to contribute, in the aggregate, any
amount in excess of the amount by
which
the proceeds actually received by such Purchaser from the sale of the
Registrable Securities subject to the Proceeding exceeds the amount of any
damages that such Purchaser has otherwise been required to pay by reason of
such
untrue or alleged untrue statement or omission or alleged omission. No Person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f)
of
the Securities Act) shall be entitled to contribution from any Person who was
not guilty of such fraudulent misrepresentation.
The
indemnity and contribution agreements contained in this Section are in addition
to any liability that the Indemnifying Parties may have to the Indemnified
Parties.
6.5
Dispositions.
Each
Purchaser agrees that it will comply with the prospectus delivery requirements
of the Securities Act as applicable to it in connection with sales of
Registrable Securities pursuant to the Registration Statement. Each Purchaser
further agrees that, upon receipt of a notice from the Company of the occurrence
of any event of the kind described in Sections
6.2(c)(v),
(vi)
or
(vii),
such
Purchaser will discontinue disposition of such Registrable Securities under
the
Registration Statement until such Purchaser's receipt of the copies of the
supplemented Prospectus and/or amended Registration Statement contemplated
by
Section
6.2(j),
or
until it is advised in writing (the “Advice”)
by the
Company that the use of the applicable Prospectus may be resumed, and, in either
case, has received copies of any additional or supplemental filings that are
incorporated or deemed to be incorporated by reference in such Prospectus or
Registration Statement. The Company may provide appropriate stop orders to
enforce the provisions of this paragraph.
6.6
No
Piggyback on Registrations.
Neither
the Company nor any of its security holders (other than the Purchasers in such
capacity pursuant hereto) may include securities of the Company in the
Registration Statement other than the Registrable Securities, and the Company
shall not after the date hereof enter into any agreement providing any such
right to any of its security holders.
6.7
Piggy-Back
Registrations.
If at
any time during the Effectiveness 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 Commission a registration statement
relating to an offering for its own account or the account of others under
the
Securities Act of any of its equity securities, other than on Form S-4 or Form
S-8 (each as promulgated under the Securities 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 stock option or other employee benefit plans, then the Company
shall send to each Purchaser written notice of such determination and if, within
fifteen days after receipt of such notice, any such Purchaser shall so request
in writing, the Company shall include in such registration statement all or
any
part of such Registrable Securities such Purchaser requests to be
registered.
ARTICLE
VII
MISCELLANEOUS
7.1
Termination.
This
Agreement may be terminated by the Company or any Purchaser, by written notice
to the other parties, if the Closing has not been consummated by the
third
Trading Day following the date of this Agreement; provided that no such
termination will affect the right of any party to sue for any breach by the
other party (or parties).
7.2 Fees
and Expenses.
At the
Closing, the Company shall pay to Iroquois Master Fund Ltd. an aggregate of
$20,000 for their legal fees and expenses incurred in connection with the
preparation and negotiation of this Agreement. In lieu of the foregoing
remaining payment, Iroquois Capital LP may retain such amount at the Closing.
Except as expressly set forth in the
Transaction
Documents to the contrary, each party shall pay the fees and expenses of its
advisers, counsel, accountants and other experts, if any, and all other expenses
incurred by such party incident to the negotiation, preparation, execution,
delivery and performance of this Agreement. The Company shall pay all transfer
agent fees, stamp taxes and other taxes and duties levied in connection with
the
issuance of the Securities.
7.3 Entire
Agreement.
The
Transaction Documents, together with the Exhibits and Schedules thereto, contain
the entire understanding of the parties with respect to the subject matter
hereof and supersede all prior agreements and understandings, oral or written,
with respect to such matters, which the parties acknowledge have been merged
into such documents, exhibits and schedules. At or after the Closing, and
without further consideration, the Company will execute and deliver to the
Purchasers such further documents as may be reasonably requested in order to
give practical effect to the intention of the parties under the Transaction
Documents. Notwithstanding anything to the contrary herein, Securities may
be
assigned to any Person in connection with a bona fide margin account or other
loan or financing arrangement secured by such Company Securities.
7.4 Notices.
Any and
all notices or other communications or deliveries required or permitted to
be
provided hereunder shall be in writing and shall be deemed given and effective
on the earliest of (a) the date of transmission, if such notice or communication
is delivered via facsimile at the facsimile number specified in this Section
prior to 6:30 p.m. (New York City time) on a Trading Day, (b) the next Trading
Day after the date of transmission, if such notice or communication is delivered
via facsimile at the facsimile number specified in this Section on a day that
is
not a Trading Day or later than 6:30 p.m. (New York City time) on any Trading
Day, (c) the Trading Day following the date of deposit with a nationally
recognized overnight courier service, or (d) upon actual receipt by the party
to
whom such notice is required to be given. The addresses and facsimile numbers
for such notices and communications are those set forth on the signature pages
hereof, or such other address or facsimile number as may be designated in
writing hereafter, in the same manner, by any such Person.
7.5 Amendments;
Waivers.
No
provision of this Agreement may be waived or amended except in a written
instrument signed, in the case of an amendment, by the Company and each of
the
Purchasers or, in the case of a waiver, by the party against whom enforcement
of
any such waiver is sought. No waiver of any default with respect to any
provision, condition or requirement of this Agreement shall be deemed to be
a
continuing waiver in the future or a waiver of any subsequent default or a
waiver of any other provision, condition or requirement hereof, nor shall any
delay or omission of either party to exercise any right hereunder in any manner
impair the exercise of any such right. Notwithstanding the foregoing, a waiver
or consent to depart from the provisions hereof with respect to a matter that
relates exclusively to the rights of Purchasers under Article
VI
and that
does not directly or indirectly affect the rights of
other
Purchasers may be given by Purchasers holding at least a majority of the
Registrable Securities to which such waiver or consent relates.
7.6 Construction.
The
headings herein are for convenience only, do not constitute a part of this
Agreement and shall not be deemed to limit or affect any of the provisions
hereof. The language used in this Agreement will be deemed to be the language
chosen by the parties to express their mutual intent, and no rules of strict
construction will be applied against any party.
7.7 Successors
and Assigns.
This
Agreement shall be binding upon and inure to the benefit of the parties and
their successors and permitted assigns. The Company may not assign this
Agreement or any rights or obligations hereunder without the prior written
consent of the Purchasers. Any Purchaser may assign its rights under this
Agreement to any Person to whom such Purchaser assigns or transfers any
Securities, provided such transferee agrees in writing to be bound, with respect
to the transferred Securities, by the provisions hereof that apply to the
“Purchasers.” Notwithstanding anything to the contrary herein, Securities may be
assigned to any Person in connection with a bona fide margin account or other
loan or financing arrangement secured by such Securities.
7.8 No
Third-Party Beneficiaries.
This
Agreement is intended for the benefit of the parties hereto and their respective
successors and permitted assigns and is not for the benefit of, nor may any
provision hereof be enforced by, any other Person, except that each Related
Person is an intended third party beneficiary of Section 4.8 and each
Indemnified Party is an intended third party beneficiary of Section 6.4 and
(in
each case) may enforce the provisions of such Sections directly against the
parties with obligations thereunder.
7.10 Governing
Law; Venue; Waiver Of Jury Trial.
ALL
QUESTIONS CONCERNING THE CONSTRUCTION, VALIDITY, ENFORCEMENT AND INTERPRETATION
OF THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK. THE COMPANY AND PURCHASERS HEREBY
IRREVOCABLY SUBMIT TO THE EXCLUSIVE JURISDICTION OF THE STATE AND FEDERAL COURTS
SITTING IN THE CITY OF NEW YORK, BOROUGH OF MANHATTAN FOR THE ADJUDICATION
OF
ANY DISPUTE BROUGHT BY THE COMPANY OR ANY PURCHASER HEREUNDER, IN CONNECTION
HEREWITH OR WITH ANY TRANSACTION CONTEMPLATED HEREBY OR DISCUSSED HEREIN
(INCLUDING WITH RESPECT TO THE ENFORCEMENT OF ANY OF THE TRANSACTION DOCUMENTS),
AND HEREBY IRREVOCABLY WAIVE, AND AGREE NOT TO ASSERT IN ANY SUIT, ACTION OR
PROCEEDING BROUGHT BY THE COMPANY OR ANY PURCHASER, ANY CLAIM THAT IT IS NOT
PERSONALLY SUBJECT TO THE JURISDICTION OF ANY SUCH COURT, OR THAT SUCH SUIT,
ACTION OR PROCEEDING IS IMPROPER. EACH PARTY HEREBY IRREVOCABLY WAIVES PERSONAL
SERVICE OF PROCESS AND CONSENTS TO PROCESS BEING SERVED IN ANY SUCH SUIT, ACTION
OR PROCEEDING BY MAILING A COPY THEREOF VIA REGISTERED OR CERTIFIED MAIL OR
OVERNIGHT DELIVERY (WITH EVIDENCE OF DELIVERY) TO SUCH PARTY AT THE ADDRESS
IN
EFFECT FOR NOTICES TO IT UNDER THIS AGREEMENT AND AGREES THAT SUCH SERVICE
SHALL
CONSTITUTE GOOD AND SUFFICIENT SERVICE OF PROCESS AND NOTICE THEREOF.
NOTHING CONTAINED HEREIN SHALL BE DEEMED TO LIMIT IN ANY WAY ANY RIGHT TO SERVE
PROCESS IN ANY MANNER PERMITTED BY LAW. THE COMPANY AND PURCHASERS HEREBY WAIVE
ALL RIGHTS TO A TRIAL BY JURY.
7.10 Survival.
The
representations, warranties, agreements and covenants contained herein shall
survive the Closing and the delivery and/or exercise of the Securities, as
applicable.
7.11 Execution.
This
Agreement may be executed in two or more counterparts, all of which when taken
together shall be considered one and the same agreement and shall become
effective when counterparts have been signed by each party and delivered to
the
other party, it being understood that both parties need not sign the same
counterpart. In the event that any signature is delivered by facsimile
transmission, such signature shall create a valid and binding obligation of
the
party executing (or on whose behalf such signature is executed) with the same
force and effect as if such facsimile signature page were an original
thereof.
7.12 Severability.
If any
provision of this Agreement is held to be invalid or unenforceable in any
respect, the validity and enforceability of the remaining terms and provisions
of this Agreement shall not in any way be affected or impaired thereby and
the
parties will attempt to agree upon a valid and enforceable provision that is
a
reasonable substitute therefor, and upon so agreeing, shall incorporate such
substitute provision in this Agreement.
7.13 Rescission
and Withdrawal Right.
Notwithstanding anything to the contrary contained in (and without limiting
any
similar provisions of) the Transaction Documents, whenever any Purchaser
exercises a right, election, demand or option under a Transaction Document
and
the Company does not timely perform its related obligations within the periods
therein provided, then such Purchaser may rescind or withdraw, in its sole
discretion from time to time upon written notice to the Company, any relevant
notice, demand or election in whole or in part without prejudice to its future
actions and rights.
7.14 Replacement
of Securities.
If any
certificate or instrument evidencing any Securities is mutilated, lost, stolen
or destroyed, the Company shall issue or cause to be issued in exchange and
substitution for and upon cancellation thereof, or in lieu of and substitution
therefor, a new certificate or instrument, but only upon receipt of evidence
reasonably satisfactory to the Company of such loss, theft or destruction and
customary and reasonable indemnity, if requested. The applicants for a new
certificate or instrument under such circumstances shall also pay any reasonable
third-party costs associated with the issuance of such replacement
Securities.
7.15 Remedies.
In
addition to being entitled to exercise all rights provided herein or granted
by
law, including recovery of damages each of the Purchasers and the Company will
be entitled to specific performance under the Transaction Documents. The parties
agree that monetary damages may not be adequate compensation for any loss
incurred by reason of any breach of obligations described in the foregoing
sentence and hereby agrees to waive in any action for specific performance
of
any such obligation the defense that a remedy at law would be
adequate.
7.16 Payment
Set Aside.
To the
extent that the Company makes a payment or payments to any Purchaser hereunder
or pursuant to the Warrants or any Purchaser enforces or exercises its rights
hereunder or thereunder, and such payment or payments or the proceeds of such
enforcement or exercise or any part thereof are subsequently invalidated,
declared to be fraudulent or preferential, set aside, recovered from, disgorged
by or are required to be refunded, repaid or otherwise restored to the Company
by a trustee, receiver or any other Person under any law (including, without
limitation, any bankruptcy law, state or federal law, common law or equitable
cause of action), then to the extent of any such restoration the obligation
or
part thereof
originally
intended to be satisfied shall be revived and continued in full force and effect
as if such payment had not been made or such enforcement or setoff had not
occurred.
7.17 Adjustments
in Share Numbers and Prices.
In the
event of any stock split, subdivision, dividend or distribution payable in
shares of Common Stock (or other securities or rights convertible into, or
entitling the holder thereof to receive directly or indirectly shares of Common
Stock), combination or other similar recapitalization or event occurring after
the date hereof, each reference in any Transaction Document to a number of
shares or a price per share shall be amended to appropriately account for such
event.
7.18
Independent
Nature of Purchasers' Obligations and Rights.
The
obligations of each Purchaser under any Transaction Document are several and
not
joint with the obligations of any other Purchaser, and no Purchaser shall be
responsible in any way for the performance of the obligations of any other
Purchaser under any Transaction Document. The decision of each Purchaser to
purchase Securities pursuant to this Agreement has been made by such Purchaser
independently of any other Purchaser and independently of any information,
materials, statements or opinions as to the business, affairs, operations,
assets, properties, liabilities, results of operations, condition (financial
or
otherwise) or prospects of the Company or of the Subsidiary which may have
been
made or given by any other Purchaser or by any agent or employee of any other
Purchaser, and no Purchaser or any of its agents or employees shall have any
liability to any other Purchaser (or any other Person) relating to or arising
from any such information, materials, statements or opinions. Nothing contained
herein or in any Transaction Document, and no action taken by any Purchaser
pursuant thereto, shall be deemed to constitute the Purchasers as a partnership,
an association, a joint venture or any other kind of entity, or create a
presumption that the Purchasers are in any way acting in concert or as a group
with respect to such obligations or the transactions contemplated by the
Transaction Document. The Company hereby confirms that it understands that
the
Purchasers are not acting as a “group” as that term is used in Section 13(d) of
the Exchange Act. Each Purchaser acknowledges that no other Purchaser has acted
as agent for such Purchaser in connection with making its investment hereunder
and that no other Purchaser will be acting as agent of such Purchaser in
connection with monitoring its investment hereunder. Each Purchaser shall be
entitled to independently protect and enforce its rights, including without
limitation the rights arising out of this Agreement or out of the other
Transaction Documents, and it shall not be necessary for any other Purchaser
to
be joined as an additional party in any proceeding for such purpose. Each
Purchaser represents that it has been represented by its own separate legal
counsel in its review and negotiations of this Agreement and the Transaction
Documents and each party represents and confirms that Malhotra & Associates
LLP represents only Iroquois Master Fund Ltd. in connection with this Agreement
and the other Transaction Documents.
[SIGNATURE
PAGES TO FOLLOW]
30
IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed by their respective authorized signatories as of the date first
indicated above.
SIGA
Technologies,
Inc.
By: /s/
Thomas
N. Konatich
Name: Thomas
N.
Konatich
Title: Vice
President and Chief Financial Officer
Address
for
Notice:
420
Lexington
Avenue
Suite
408
New
York, NY
10170
Facsimile
No.: (212)
697-3130
Telephone
No.: (212)
672-9100
Attn:
Thomas N.
Konatich
With
a
copy to:
Kramer
Levin Naftalis & Frankel LLP
1177
Avenue of the
Americas
New
York, NY
10036
Facsimile
No.: (212)
715-8000
Telephone
No.: (212)
715-9100
Attn:
James A.
Grayer, Esq.
[REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK
SIGNATURE
PAGES FOR PURCHASERS FOLLOW]
IROQUOIS
MASTER FUND
LTD.
By: /s/
Joshua Silverman
Name: Joshua
Silverman
Title: Authorized
Signatory
Purchase
Price
$4.54
Units
Purchased: 477,974
Warrant
Shares:
238,987
Address
for
Notice:
Iroquois
Master Fund
Ltd.
641 Lexington Ave, 26th
Floor
New
York, NY
10022
Facsimile
No.: (212)
207-3452
Telephone
No.: (212)
974-3070
Attn:
Joshua
Silverman
With
a
copy to:
Malhotra
& Associates LLP
11 Penn Plaza, 5th
Floor
New
York, New York
10001
Facsimile
No.: (212)
504-0863
Telephone
No.: (212)
593-2284
Attn:
Gary Malhotra,
Esq.
Cranshire
Capital,
L.P.
(Name
of
Purchaser)
By: /s/
Mitchell Kopin
Name: Mitchell
Kopin
Title: President
- Downsview Capital
The
General Partner
Purchase
Price $2,170,002
Units
Purchased: 477,974
Warrant
Shares:
238,987
Address
for
Notice:
3100
Dundee
Road
Suite
703
Northbrook,
IL
60062
Facsimile
No.:
847-562-9031
Telephone
No.:
847-562-9030
Attn:
Mitchell
Kopin
Omicron
Master
Trust
(Name
of
Purchaser)
OMICRON
MASTER TRUST
By:
Omicron Capital L.P., as adviser
By:
Omicron Capital Inc.,
its
general partner
By: /s/
Olivier Morali
Name: Olivier
Morali
Title: Authorized
Signatory
Purchase
Price
$4.54
Units
Purchased: 88,104
Warrant
Shares:
44,052
Address
for
Notice:
c/o
Omicron Capital,
L.P.
650
Fifth
Ave.
24th
Fl
New
York, NY
10019
Facsimile
No.:
212-246-9409
Telephone
No.:
212-246-9406
Attn:
Olivier
Morali
Rockmore
Investment Master Fund, Ltd.
By: /s/
Bruce Bernstein
Name: Bruce
Bernstein
Title: Managing
Partner
Purchase
Price
$4.54
Units
Purchased: 477,974
Warrant
Shares:
238,987
Address
for
Notice:
150
East
58th
Street
28th
Fl
New
York, NY
10155
Facsimile
No.:
212-258-2315
Telephone
No.:
212-258-2301
Attn:
Anya
Sigalow
SMITHFIELD
FIDUCIARY LLC
By: /s/
Adam J. Chill
Name: Adam
J.
Chill
Title: Authorized
Signatory
Purchase
Price $2,170,002
Units
Purchased: 477,974
Warrant
Shares:
238,987
Address
for
Notice:
c/o
Highbridge
Capital Management, LLC
9
West 57th
Street,
27th
Floor
New
York, New York
10019
Facsimile
No.: (212)
751-0755
Telephone
No.: (212)
287-4720
Attn:
Ari J.
Storch/Adam J. Chill
Exhibits:
A Form
of
Warrant
B Form
of
Opinion of Company Counsel
C Plan
of
Distribution
D Form
of
Transfer Agent Instructions
EXHIBIT
A
NEITHER
THESE SECURITIES NOR THE SECURITIES FOR WHICH THESE SECURITIES ARE EXERCISABLE
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 COMPLIANCE WITH APPLICABLE STATE
SECURITIES OR BLUE SKY LAWS. THESE SECURITIES AND THE SECURITIES ISSUABLE UPON
EXERCISE OF THESE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE
MARGIN ACCOUNT OR OTHER LOAN SECURED BY SUCH SECURITIES.
SIGA
TECHNOLOGIES, INC.
WARRANT
Warrant
No. [ ] Dated:
October 19, 2006
SIGA
Technologies, Inc., a Delaware corporation (the “Company”),
hereby certifies that, for value received, [Name of Holder] or its registered
assigns (the “Holder”),
is
entitled to purchase from the Company up to a total of [ ]1
shares
of common stock, $0.0001 par value 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 $4.99 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 the date hereof (the “Initial
Exercise Date”) and through and including the seventh anniversary of the date
hereof (the “Expiration
Date”),
and
subject to the following terms and conditions. This Warrant (this “Warrant”)
is one
of a series of similar warrants issued pursuant to that certain Securities
Purchase Agreement, dated as of the date hereof, by and among the Company and
the Purchasers identified therein (the “Purchase
Agreement”).
All
such warrants are referred to herein, collectively, as the “Warrants.”
1.
Definitions.
In
addition to the terms defined elsewhere in this Warrant, capitalized terms
that
are not otherwise defined herein have the meanings given to such terms in 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
-----------------------
1
Equal to
50% (aggregate) warrant coverage
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.
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 Transfer Agent or 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
and Duration of Warrants.
Subject
to Section 11:
(a)
This
Warrant shall be exercisable by the registered Holder at any time and from
time
to time on or after the date hereof 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;
provided that, if the average of the Closing Prices for the five Trading Days
immediately prior to (but not including) the Expiration Date exceeds the
Exercise Price on the Expiration Date, then this Warrant shall be deemed to
have
been exercised in full (to the extent not previously exercised) on a “cashless
exercise” basis at 6:30 P.M. New York City time on the Expiration Date if a
“cashless exercise” may occur at such time pursuant to Section 10 below.
Notwithstanding anything to the contrary herein, the Expiration Date shall
be
extended for each day following the Effective Date that the Registration
Statement is not effective.
(b)
A
Holder
may exercise this Warrant by delivering to the Company (i) an exercise notice,
in the form attached hereto (the “Exercise
Notice”),
appropriately completed and duly signed, and (ii) payment of the Exercise
Price for the number of Warrant Shares as to which this Warrant is being
exercised (which may take the form of a “cashless exercise” if so indicated in
the Exercise Notice and if a “cashless exercise” may occur at such time pursuant
to this Section 10 below), and the date such items are delivered to the Company
(as determined in accordance with the notice provisions hereof) is an
“Exercise
Date.”
The
Holder shall not be required to deliver the original Warrant in order to effect
an exercise hereunder. Upon the execution and delivery of the Exercise Notice,
the Company shall issue a New Warrant to the Holder evidencing the right to
purchase the remaining number of Warrant Shares.
5.
Delivery
of Warrant Shares.
(a)
Upon
exercise of this Warrant, the Company shall promptly (but in no event later
than
three Trading Days after the Exercise Date) issue or cause to be issued and
cause to be delivered to or upon the written order of the Holder and in such
name or names as the Holder may designate, a certificate for the Warrant Shares
issuable upon such exercise, free of restrictive
legends unless a registration statement covering the resale of the Warrant
Shares and
naming
the Holder as a selling stockholder thereunder is not then effective and the
Warrant Shares are not freely transferable without volume restrictions pursuant
to Rule 144 under the Securities Act. The Holder, or any Person so designated
by
the Holder to receive Warrant Shares, shall be deemed to have become holder
of
record of such Warrant Shares as of the Exercise Date. The Company shall, upon
request of the Holder, use its best efforts to deliver Warrant Shares hereunder
electronically through the Depository Trust Corporation or another established
clearing corporation performing similar functions.
(b)
This
Warrant is exercisable, either in its entirety or, from time to time, for a
portion of the number of Warrant Shares. Upon surrender of this Warrant
following one or more partial exercises, the Company shall issue or cause to
be
issued, at its expense, a New Warrant evidencing the right to purchase the
remaining number of Warrant Shares.
(c)
In
addition to any other rights available to a Holder, if the Company fails to
deliver to the Holder a certificate representing Warrant Shares by the third
Trading Day after the date on which delivery of such certificate is required
by
this Warrant, and if after such third Trading Day the Holder purchases (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 that the Holder
anticipated receiving from the Company (a “Buy-In”),
then
the Company shall, within three Trading Days after the Holder’s request and in
the Holder's discretion, either (i) pay cash to the Holder in an amount equal
to
the Holder’s total purchase price (including brokerage commissions, if any) for
the shares of Common Stock so purchased (the “Buy-In
Price”),
at
which point the Company’s obligation to deliver such certificate (and to issue
such Common Stock) shall terminate, or (ii) promptly honor its obligation to
deliver to the Holder a certificate or certificates representing such Common
Stock and pay cash to the Holder in an amount equal to the excess (if any)
of
the Buy-In Price over the product of (A) such number of shares of Common Stock,
times (B) the Closing Price on the date of the event giving rise to the
Company’s obligation to deliver such certificate.
(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 or an Affiliate thereof. 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 bond or indemnity, 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.
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. The Company will take all such actions as may be necessary to
assure that such shares of Common Stock may be issued as provided herein without
violation of any applicable law or regulation, or of any requirements of any
securities exchange or automated quotation system upon which the Common Stock
may be listed.
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.
(b) Pro
Rata Distributions.
If the
Company, at any time while this Warrant is outstanding, distributes to all
holders of Common Stock (i) evidences of its indebtedness, (ii) any
security
(other than a distribution of Common Stock covered by the preceding paragraph),
(iii) rights or warrants to subscribe for or purchase any security, or (iv)
any other asset (in each case, “Distributed
Property”),
then
in each such case the Exercise Price in effect immediately prior to the record
date fixed for determination of stockholders entitled to receive such
distribution shall be adjusted (effective on such record date) to equal the
product of such Exercise Price times a fraction of which the denominator shall
be the average of the Closing Prices for the five Trading Days immediately
prior
to (but not including) such record date and of which the numerator shall be
the
average of the Closing Prices for the five Trading Days immediately after (but
not including) such record date. As an alternative to the foregoing adjustment
to the Exercise Price, at the request of the Holder delivered no later than
three days prior to such distribution, the Company will deliver to such Holder
on the effective date of such distribution, the Distributed Property that such
Holder would have been entitled to receive in respect of the Warrant Shares
for
which this Warrant could have been exercised immediately prior to such record
date. If such Distributed Property is not delivered to a Holder pursuant to
the
preceding sentence, then upon expiration of or any exercise of the Warrant
that
occurs after such record date, such Holder shall remain entitled to receive,
in
addition to the Warrant Shares otherwise issuable upon such exercise (if
applicable), such Distributed Property.
(c)
Fundamental
Transactions.
If, at
any time while this Warrant is outstanding, (i) the Company effects any merger
or consolidation of the Company with or into another Person, (ii) the Company
effects any sale of all or substantially all of its assets in one or a series
of
related transactions, (iii) 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 (iv) 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
(other than as a result of a subdivision or combination of shares of Common
Stock covered by Section 9(a) above) (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”).
The
aggregate Exercise Price for this Warrant will not be affected by any such
Fundamental Transaction, but the Company shall apportion such aggregate 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. In the event
of
a Fundamental Transaction, the Company or the successor or purchasing Person,
as
the case may be, shall execute with the Holder a written agreement providing
that:
(x)
this
Warrant shall thereafter entitle the Holder to purchase the Alternate
Consideration in accordance with this section 9(c),
(y) in
the
case of any such successor or purchasing Person, upon such consolidation,
merger, statutory exchange, combination, sale or conveyance such successor
or
purchasing Person shall be jointly and severally liable with the Company for
the
performance of all of the Company's obligations under this Warrant and the
Purchase Agreement, and
(z) if
registration or qualification is required under the Exchange Act or applicable
state law for the public resale by the Holder of shares of stock and other
securities so issuable upon exercise of this Warrant, all rights applicable
to
registration of the Common Stock issuable upon exercise of this Warrant shall
apply to the Alternate Consideration.
If,
in
the case of any Fundamental Transaction, the Alternate Consideration includes
shares of stock, other securities, other property or assets of a Person other
than the Company or any such successor or purchasing Person, as the case may
be,
in such Fundamental Transaction, then such written agreement shall also be
executed by such other Person and shall contain such additional provisions
to
protect the interests of the Holder as the Board of Directors of the Company
shall reasonably consider necessary by reason of the foregoing. At the Holder’s
request, any successor to the Company or surviving entity in such Fundamental
Transaction shall issue to the Holder a new warrant 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 (c) and insuring that the Warrant (or any
such
replacement security) will be similarly adjusted upon any subsequent transaction
analogous to a Fundamental Transaction. If any Fundamental Transaction
constitutes or results in a Change of Control, the Company (or any such
successor or surviving entity) will purchase the Warrant from the Holder for
a
purchase price, payable in cash within five Trading Days after such request
(or,
if later, on the effective date of the Fundamental Transaction), equal to the
Black-Scholes value of the remaining unexercised portion of this Warrant on
the
date of such request.
(d)
Subsequent
Equity Sales.
(i) If,
at
any time while this Warrant is outstanding, the Company or any Subsidiary issues
additional shares of Common Stock or rights, warrants, options or other
securities or debt convertible, exercisable or exchangeable for shares of Common
Stock or otherwise entitling any Person to acquire shares of Common Stock
(collectively, “Common
Stock Equivalents”)
at an
effective net price to the Company per share of Common Stock (the “Effective
Price”)
less
than the Exercise Price (as adjusted hereunder to such date), then the Exercise
Price shall be reduced to equal the Effective Price. If, at any time while
this
Warrant is outstanding, the Company or any Subsidiary issues Common Stock or
Common Stock Equivalents at an Effective Price greater than the
Exercise Price (as adjusted hereunder to such date) but less than the average
Closing Price over the five Trading Days prior to such issuance (the
“Adjustment
Price”),
then
the Exercise Price shall be reduced to equal the product of (A) the Exercise
Price in effect
immediately
prior to such issuance of Common Stock or Common Stock Equivalents times (B)
a
fraction, the numerator of which is the sum of (1) the number of shares of
Common Stock outstanding immediately prior to such issuance, plus (2) the number
of shares of Common Stock which the aggregate Effective Price of the Common
Stock issued (or deemed to be issued) would purchase at the Adjustment Price,
and the denominator of which is the aggregate number of shares of Common Stock
outstanding or deemed to be outstanding immediately after such issuance. For
purposes of this paragraph, in connection with any issuance of any Common Stock
Equivalents, (A) the maximum number of shares of Common Stock potentially
issuable at any time upon conversion, exercise or exchange of such Common Stock
Equivalents (the “Deemed
Number”)
shall
be deemed to be outstanding upon issuance of such Common Stock Equivalents,
(B)
the Effective Price applicable to such Common Stock shall equal the minimum
dollar value of consideration payable to the Company to purchase such Common
Stock Equivalents and to convert, exercise or exchange them into Common Stock
(net of any discounts, fees, commissions and other expenses), divided by the
Deemed Number, and (C) no further adjustment shall be made to the Exercise
Price
upon the actual issuance of Common Stock upon conversion, exercise or exchange
of such Common Stock Equivalents. The Effective Price of Common Stock or Common
Stock Equivalents issued in any transaction in which more than one type of
securities are issued shall give effect to the allocation by the Company of
the
aggregate amount paid for such securities issued in such
transaction.
(ii) If,
at
any time while this Warrant is outstanding, the Company or any Subsidiary issues
Common Stock Equivalents with an Effective Price or a number of underlying
shares that floats or resets or otherwise varies or is subject to adjustment
based (directly or indirectly) on market prices of the Common Stock (a
“Floating
Price Security”),
then
for purposes of applying the preceding paragraph in connection with any
subsequent exercise, the Effective Price will be determined separately on each
Exercise Date and will be deemed to equal the lowest Effective Price at which
any holder of such Floating Price Security is entitled to acquire Common Stock
on such Exercise Date (regardless of whether any such holder actually acquires
any shares on such date).
(iii) Notwithstanding
the foregoing, no adjustment will be made under this paragraph in respect of
any
Excluded Stock.
(e)
Number
of Warrant Shares.
Simultaneously with any adjustments to the Exercise Price pursuant to paragraphs
(a), (b) or (d) 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 increased or decreased number of Warrant Shares shall
be the same as the aggregate Exercise Price in effect immediately prior to
such
adjustment.
(f)
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.
(g)
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.
(h)
Notice
of Corporate Events.
If the
Company (i) declares a dividend or any other distribution of cash, securities
or
other property in respect of its Common Stock, including without limitation
any
granting of rights or warrants to subscribe for or purchase any capital stock
of
the Company or any Subsidiary, (ii) authorizes or approves, enters into any
agreement contemplating or solicits stockholder approval for any Fundamental
Transaction or (iii) authorizes the voluntary dissolution, liquidation or
winding up of the affairs of the Company, then the Company shall deliver to
the
Holder a notice describing the material terms and conditions of such
transaction, at least 20 calendar days prior to the applicable record or
effective date on which a Person would need to hold Common Stock in order to
participate in or vote with respect to such transaction, and the Company will
take all steps reasonably necessary in order to insure that the Holder is given
the practical opportunity to exercise this Warrant prior to such time so as
to
participate in or vote with respect to such transaction; provided, however,
that
the failure to deliver such notice or any defect therein shall not affect the
validity of the corporate action required to be described in such notice.
10.
Payment
of Exercise Price.
The
Holder shall pay the Exercise Price in immediately available funds; provided,
however, if at anytime after the Required Effectiveness Date 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 satisfy
its
obligation to pay the Exercise Price through a “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 arithmetic average of the Closing Prices for the five Trading
Days
immediately prior to (but not including) 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 pursuant to the Purchase Agreement.
11.
Limitation
on Exercise.
(a)
Notwithstanding anything to the contrary contained herein, the
number of shares of Common Stock that may be acquired by the Holder upon any
exercise of this Warrant (or otherwise in respect hereof) shall be limited
to
the extent necessary to insure that, following such exercise (or other
issuance), the total number of shares of Common Stock then beneficially owned
by
such Holder and its Affiliates and any other Persons whose beneficial ownership
of Common Stock would be aggregated with the Holder’s for purposes of Section
13(d) of the Exchange Act, does not exceed 4.999% (the “Threshold
Percentage”)
or
9.999% (the “Maximum
Percentage”)
of the
total number of issued and outstanding shares of Common Stock (including for
such purpose the shares of Common Stock issuable upon such
exercise).
For such
purposes, beneficial ownership shall be determined in accordance with Section
13(d) of the Exchange Act and the rules and regulations promulgated thereunder.
Each delivery of an Exercise Notice hereunder will constitute a representation
by the Holder that it has evaluated the limitations set forth in this paragraph
and determined that issuance of the full number of Warrant Shares requested
in
such Exercise Notice is permitted under this paragraph. The Company’s obligation
to issue shares of Common Stock in excess of the limitation referred to in
this
Section shall be suspended (and shall not terminate or expire notwithstanding
any contrary provisions hereof) until such time, if any, as such shares of
Common Stock may be issued in compliance with such limitation. By written notice
to the Company, the Holder shall have the right (x) at any time and from time
to
time to reduce its Maximum Percentage immediately upon notice to the Company
in
the event and only to the extent that Section 16 of the Exchange Act or the
rules promulgated thereunder (or any successor statute or rules) is changed
to
reduce the beneficial ownership percentage threshold thereunder to a percentage
less than 9.999% and (y) at any time and from time to time, to waive the
provisions of this Section insofar as they relate to the Threshold Percentage
or
to increase or decrease its Threshold Percentage (but not in excess of the
Maximum Percentage) unless the Holder shall have, by written instrument
delivered to the Company, irrevocably waived its rights to so increase or
decrease its Threshold Percentage, but (i) any such waiver, increase or decrease
will not be effective until the 61st day after such notice is delivered to
the
Company, (ii) any such waiver or increase or decrease will apply only to the
Holder and not to any other holder of Warrants, and (iii) in no event shall
the
Holder own, directly or beneficially, more than 19.99% of the outstanding shares
of Common Stock unless the Company obtains shareholder approval in accordance
with the rules and regulations of the NASDAQ Stock Market.
(b) Notwithstanding
anything to the contrary contained herein the maximum number of shares of Common
Stock that the Company may issue pursuant to the Transaction Documents at an
effective purchase price less than the Closing Price on the Trading Day
immediately preceding the Closing Date equals 19.99% of the outstanding shares
of Common Stock immediately preceding the Closing Date (the “Issuable
Maximum”),
unless the Company obtains shareholder approval in accordance with the rules
and
regulations of the NASDAQ Stock Market. If, at the time any Holder requests
an
exercise of any of the Warrants, the Actual Minimum (excluding any shares issued
or issuable at an effective purchase price in excess of the Closing Price on
the
Trading Day immediately preceding the Closing Date) exceeds the Issuable
Maximum
(and if the Company has not previously obtained the required shareholder
approval), then the Company shall issue to the Holder requesting such exercise
a
number of shares of
Common
Stock not exceeding such Holder’s pro-rata portion of the Issuable Maximum
(based on such Holder’s share (vis-à-vis other Holders) of the aggregate
purchase price paid under the Purchase Agreement and taking into account any
Warrant Shares previously issued to such Holder). For the purposes hereof,
“Actual
Minimum”
shall
mean, as of any date, the maximum aggregate number of shares of Common Stock
then issued or potentially issuable in the future pursuant to the Transaction
Documents, including any Underlying Shares issuable upon exercise in full of
all
Warrants, without giving effect to any limits on the number of shares of Common
Stock that may be owned by a Holder at any one time.
12.
Fractional
Shares.
The
Company shall not be required to issue or cause to be issued fractional Warrant
Shares on the exercise of this Warrant. If any fraction of a Warrant Share
would, except for the provisions of this Section, be issuable upon exercise
of
this Warrant, the number of Warrant Shares to be issued will be rounded up
to
the nearest whole share.
13.
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 Trading Day, (ii)
the
next Trading 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 Trading Day or later than 6:30 p.m. (New York City time)
on
any Trading Day, (iii) the Trading 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 address for such
notices or communications shall be as set forth in the Purchase
Agreement.
14.
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.
15.
Miscellaneous.
(a)
Subject
to the restrictions on transfer set forth on the first page hereof, this Warrant
may be assigned by the Holder. This Warrant may not be assigned by the Company
except to a successor in the event of a Fundamental Transaction. 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.
(b)
The
Company will not, by amendment of its governing documents or through any
reorganization, transfer of assets, consolidation, merger, dissolution, issue
or
sale of securities or any other voluntary action, avoid or seek to avoid the
observance or performance of any of the terms of this Warrant, but will at
all
times in good faith assist in the carrying out of all such terms and in the
taking of all such action as may be necessary or appropriate in order to protect
the rights of the Holder against impairment. Without limiting the generality
of
the foregoing, the Company (i) will not increase the par value of any Warrant
Shares above the amount payable therefor on such exercise, (ii) will take all
such action as may be reasonably necessary or appropriate in order that the
Company may validly and legally issue fully paid and nonassessable Warrant
Shares on the exercise of this Warrant, and (iii) will not close its shareholder
books or records in any manner which interferes with the timely exercise of
this
Warrant.
(c)
GOVERNING LAW; VENUE; WAIVER OF JURY TRIAL.
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 AGREES THAT ALL LEGAL
PROCEEDINGS CONCERNING THE INTERPRETATIONS, ENFORCEMENT AND DEFENSE OF
THE
TRANSACTIONS CONTEMPLATED BY ANY OF THE TRANSACTION DOCUMENTS (WHETHER
BROUGHT
AGAINST A PARTY HERETO OR ITS RESPECTIVE AFFILIATES, DIRECTORS, OFFICERS,
SHAREHOLDERS, EMPLOYEES OR AGENTS) SHALL BE COMMENCED EXCLUSIVELY IN THE
STATE
AND FEDERAL COURTS SITTING IN THE CITY OF NEW YORK, BOROUGH OF MANHATTAN.
EACH
PARTY HERETO HEREBY IRREVOCABLY SUBMITS TO THE EXCLUSIVE JURISDICTION OF
THE
STATE AND FEDERAL COURTS SITTING IN THE CITY OF NEW YORK, BOROUGH OF MANHATTAN
FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION HEREWITH
OR WITH
ANY TRANSACTION CONTEMPLATED HEREBY OR DISCUSSED HEREIN (INCLUDING WITH
RESPECT
TO THE ENFORCEMENT OF ANY OF THIS WARRANT), AND HEREBY IRREVOCABLY WAIVES,
AND
AGREES NOT TO ASSERT IN ANY SUIT, ACTION OR PROCEEDING, ANY CLAIM THAT
IT IS NOT
PERSONALLY SUBJECT TO THE JURISDICTION OF ANY SUCH COURT, THAT SUCH SUIT,
ACTION
OR PROCEEDING IS IMPROPER. EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES
PERSONAL
SERVICE OF PROCESS AND CONSENTS TO PROCESS BEING SERVED IN ANY SUCH SUIT,
ACTION
OR PROCEEDING BY MAILING A COPY THEREOF VIA REGISTERED OR CERTIFIED MAIL
OR
OVERNIGHT DELIVERY (WITH EVIDENCE OF DELIVERY) TO SUCH PARTY AT THE ADDRESS
IN
EFFECT FOR NOTICES TO IT UNDER THIS WARRANT AND AGREES THAT SUCH SERVICE
SHALL
CONSTITUTE GOOD AND SUFFICIENT SERVICE OF PROCESS AND NOTICE THEREOF. NOTHING
CONTAINED HEREIN SHALL BE DEEMED TO LIMIT IN ANY WAY ANY RIGHT TO SERVE
PROCESS
IN ANY MANNER PERMITTED BY LAW. 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 ANY
OF THE TRANSACTION DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY OR
THEREBY.
IF EITHER PARTY SHALL COMMENCE AN ACTION OR PROCEEDING TO ENFORCE ANY PROVISIONS
OF THIS WARRANT OR ANY TRANSACTION DOCUMENT, THEN THE PREVAILING PARTY
IN SUCH
ACTION OR PROCEEDING SHALL BE REIMBURSED BY THE OTHER PARTY FOR ITS REASONABLE
ATTORNEYS FEES AND OTHER REASONABLE COSTS AND EXPENSES INCURRED WITH THE
INVESTIGATION, PREPARATION AND PROSECUTION OF SUCH ACTION OR
PROCEEDING.
(d)
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.
(e)
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.
(f) Except
as
set forth in Section 9, as applicable, the holder of this Warrant shall have
no
rights as a stockholder of the Company by virtue of holding this
Warrant.
[REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK,
SIGNATURE
PAGE FOLLOWS]
12
IN
WITNESS WHEREOF, the Company has caused this Warrant to be duly executed by
its
authorized officer as of the date first indicated above.
|
60; SIGA
TECHNOLOGIES, INC.
|
|
|
By:_______________________________
|
Name:_____________________________
|
Title:______________________________
|
FORM
OF
EXERCISE NOTICE
(To
be
executed by the Holder to exercise the right to purchase shares of Common Stock
under the foregoing Warrant)
To:
SIGA
Technologies, Inc.
The
undersigned is the Holder of Warrant No. _______ (the “Warrant”)
issued
by SIGA Technologies, Inc., a Delaware corporation (the “Company”).
Capitalized terms used herein and not otherwise defined have the respective
meanings set forth in the Warrant.
1.
|
The
Warrant is currently exercisable to purchase a total of ______________
Warrant Shares.
|
2.
|
The
undersigned Holder hereby exercises its right to purchase
_________________ Warrant Shares pursuant to the
Warrant.
|
3.
|
The
Holder intends that payment of the Exercise Price shall be made as
(check
one):
|
____ “Cash
Exercise” under Section 10
____ “Cashless
Exercise” under Section 10 (if permitted)
4.
|
If
the holder has elected a Cash Exercise, the holder shall pay the
sum of
$____________ to the Company in accordance with the terms of the
Warrant.
|
5.
|
Pursuant
to this exercise, the Company shall deliver to the holder _______________
Warrant Shares in accordance with the terms of the
Warrant.
|
6. The
Holder hereby certifies to the Company (and acknowledges that the Company and
its counsel will rely upon this certification for purposes of determining
compliance with the registration provisions of the Securities Act of 1933,
as
amended ("The Act")) that the Holder is an "accredited investor" as that term
is
defined in Rule 501 under The Act.
7. Following
this exercise, the Warrant shall be exercisable to purchase a total of
______________ Warrant Shares.
|
|
|
Dated:___________
,
_______
|
|
Name
of Holder:
|
|
|
|
|
|
(Print)____________________________
|
|
|
|
|
|
By:______________________________
|
|
|
Name:____________________________
|
|
|
Title:_____________________________
|
|
|
|
|
|
(Signature
must conform in all respects to name of holder as specified on the
face of
the Warrant)
|
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 within Warrant
to
purchase ____________ shares of Common Stock of SIGA Technologies, Inc. to
which
the within Warrant relates and appoints ________________ attorney to transfer
said right on the books of SIGA Technologies, Inc. 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:
|
|
|
|
_____________________________ |
|
|
|
K
R A M E
R L
E V I
N N
A F T A
L I S &
F
R A N K
E L LLP
EXHIBIT
B
October
__,
2006
Purchasers
set forth on Annex A
Ladies
and Gentlemen:
We
have
acted as counsel to SIGA Technologies, Inc., a Delaware corporation (the
“Company”),
in
connection with the Securities Purchase Agreement, dated as of October 18,
2006,
by and among the Company and the Purchasers named therein (the “Purchasers”)
(the
“Purchase Agreement”).
This
opinion is delivered pursuant to Section 2.2 (a)(iii) of the Purchase Agreement.
Capitalized terms used herein but not otherwise defined herein have the meanings
assigned to them in the Purchase Agreement.
In
rendering this opinion, we have examined executed copies of the following
documents:
(A) the
Purchase Agreement; and
(B) the
Warrant Agreement, dated the date hereof, by the Company in favor of the
Purchasers.
We
have
also reviewed such other documents and made such other investigations as we
have
deemed appropriate. As to various questions of fact material to this opinion,
we
have relied upon the representations and warranties of the Company contained
in
the Transaction Documents (as defined below) and upon the statements,
representations and certificates of officers or representatives of the Company,
public officials and others. We have not independently verified the facts so
relied on.
Based
on
the foregoing, and subject to the qualifications, limitations and assumptions
set forth herein, we are of the opinion that:
1.
|
The
Company is validly existing and in good standing under the laws of
the
State of Delaware and has the corporate power to own its properties
and to
conduct its business as now conducted (all as described in the Company’s
Annual Report on Form 10-K for its fiscal ended December 31,
2005).
|
2.
|
The
Company has the corporate power necessary to execute, deliver and
perform
its obligations under the Purchase Agreement and the Warrant Agreement
(collectively, the “Transaction
Documents”).
|
KRAMER
LEVIN NAFTALIS & FRANKEL LLP
Purchasers
set forth on Annex A
October
__, 2006
Page
2
3.
|
The
Transaction Documents have been duly authorized, executed and delivered
by
the Company and constitute the legal, valid and binding obligation
of the
Company, enforceable against the Company in accordance with their
terms.
|
4.
|
The
shares of common stock of the Company to be issued pursuant to the
Transaction Documents have been duly authorized and will be validly
issued, fully paid and nonassessable when such shares have been duly
delivered against payment therefore as contemplated by the Transaction
Documents.
|
5.
|
Assuming
that each Purchaser of Shares is an “accredited investor” within the
meaning of Rule 501(a) of Regulation D promulgated under the Act,
that
there have been no sales of any securities of the Company during
the past
six months, that no general solicitation or advertising (within the
meaning of Rule 502(c) of Regulation D) was used in connection with
the
sale of the Shares by the Company to the Purchasers thereof and that
the
representations and warranties of the Purchasers contained in Sections
3.2
of the Purchase Agreement are true and correct, no registration under
the
Act is required in connection with the sale and issuance of the Shares
to
the Purchasers.
|
6.
|
The
execution and delivery by the Company of the Transaction Documents
and the
consummation by the Company of the transactions contemplated thereby
do
not (a) result in a violation of the certificate of incorporation
or
by-laws of the Company or (b) result in violation of any Relevant
Law (as
defined herein).
|
7.
|
To
our knowledge without the searching of any docket and except as otherwise
disclosed pursuant to the Purchase Agreement or any SEC Report, there
is
no claim, action, suit, proceeding, arbitration, investigation or
inquiry,
pending before any court or governmental or administrative body or
agency,
against the Company.
|
8.
|
The
execution and delivery by the Company of the Transaction Documents
to
which the Company is a party, and the consummation by the Company
of the
transactions contemplated thereby, do not require approval from or
any
filings with any governmental authority under any Relevant Law (as
hereinafter defined).
|
9.
|
The
Company is not an “investment company” within the meaning of the
Investment Company Act of 1940, as
amended.
|
The
opinion set forth herein is subject to and limited by the following:
|
a)
|
With
respect to the opinion expressed in paragraph 1, we have relied solely
on
certificates of good standing and bring-down good standing telegrams,
copies of which have been furnished to
you.
|
KRAMER
LEVIN NAFTALIS & FRANKEL LLP
Purchasers
set forth on Annex A
October
__, 2006
Page
3
|
b) |
The
opinion set forth in paragraph 3 is qualified (i) by the effects
of
applicable laws relating to bankruptcy, insolvency, fraudulent conveyance
or transfer, and other similar laws relating to or affecting the
rights
and remedies of creditors generally, (ii) with respect to the remedies
of
specific performance and injunctive and other forms of equitable
relief,
by the availability of equitable defenses and the discretion of the
court
before which any enforcement thereof may be brought and (iii) by
general
principles of equity, including, without limitation, concepts of
materiality, reasonableness, good faith and fair dealing (regardless
of
whether considered in a proceeding in equity or at
law).
|
|
c)
|
We
express no opinion as to the validity, binding effect or enforceability
of
(i) provisions that purport to establish evidentiary standards, (ii)
provisions relating to severability, indemnity, contribution, set
off,
delay or omission of enforcement of rights or remedies, (iii) provisions
purporting to waive rights or defenses, (iv) provisions that purport
to
restrict available remedies or establish remedies, (v) provisions
relating
to consent to jurisdiction, choice of forum or choice of law, or
(vi) any
provision if and to the extent that such provision (x) is a liquidated
damages provision or (y) provides a remedy for breach that may be
deemed
to be disproportionate to actual damages or may be deemed to be a
penalty.
|
|
d)
|
We
have assumed that each party to the Transaction Documents (other
than the
Company): (i) has the requisite power to execute, deliver and perform
their respective obligations under the Transaction Documents to which
it
is a party; and (ii) has duly authorized, executed and delivered
each of
the Transaction Documents to which it is a party; and (iii) each
of the
Transaction Documents constitutes the valid and binding obligation
of such
party, enforceable against such party in accordance with its terms.
|
|
e)
|
As
used in this opinion letter, “to our knowledge,” or “known to us” or any
phrase or similar import shall mean the current, actual knowledge
(without
independent investigation or verification) of those attorneys in
our firm
who are currently members or associates of, or counsel to, our firm
who
have directly participated in this engagement.
|
We
express no opinion as to any laws other than the laws of the State of New York,
the General Corporation Law of the State of Delaware, and the federal laws
of
the United States of America, that in each case, in our experience, we recognize
are normally applicable to transactions of the type contemplated by the
Transaction Documents and are not applicable as a result of the particular
business, identity or ownership of any of the parties (the “Relevant
Laws”).
Without limiting the foregoing, we express no opinion with respect to federal
or
state securities laws or antitrust laws, except with respect to the opinion
expressed in paragraph 5.
KRAMER
LEVIN NAFTALIS & FRANKEL LLP
Purchasers
set forth on Annex A
October
__, 2006
Page
4
The
opinion expressed herein is based upon the Relevant Laws and interpretations
thereof in effect on the date hereof, and the facts and circumstances in
existence on the date hereof, and we assume no obligation to revise or
supplement this opinion letter should any such law or interpretation be changed
by legislative action, judicial decision or otherwise or should there be any
change in such facts or circumstances.
This
opinion letter is being delivered to you in connection with the transactions
described in the Transaction Documents and may not be relied on or otherwise
used by any other Person or by you for any other purpose.
Very
truly
yours,
KRAMER
LEVIN NAFTALIS & FRANKEL LLP
Purchasers
set forth on Annex A
October
__, 2006
Page
5
ANNEX
“A”
Cranshire
Capital, L.P.
Iroquois
Master Fund LTD.
Omicron
Master Trust
Rockmore
Investment Master Fund, Ltd.
Smithfield
Fiduciary LLC
Exhibit
C
Plan
of Distribution
The
selling stockholders may, from time to time, sell any or all of their shares
of
common stock on any 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. The selling stockholders 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;
|
· |
broker-dealers
may agree with the selling stockholders to sell a specified number
of such
shares at a stipulated price per share;
|
· |
a
combination of any such methods of sale;
and
|
· |
any
other method permitted pursuant to applicable
law.
|
The
selling stockholders may also sell shares under Rule 144 under the Securities
Act, if available, rather than under this prospectus.
The
selling stockholders may also engage in short sales against the box, puts
and
calls and other transactions in our securities or derivatives of our securities
and may sell or deliver shares in connection with these trades.
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. The
selling stockholders do not expect these commissions and discounts to exceed
what is customary in the types of transactions involved. Any profits on the
resale of shares of common stock by a broker-dealer acting as principal might
be
deemed to be underwriting discounts or commissions under the Securities Act.
Discounts, concessions, commissions and similar selling expenses, if any,
attributable to the sale of shares will be borne by a selling stockholder.
The
selling stockholders may agree to indemnify any agent, dealer or broker-dealer
that participates in transactions involving sales of the shares if liabilities
are imposed on that person under the Securities Act.
The
selling stockholders may from time to time pledge or grant a security interest
in some or all of the shares of common stock owned by them and, if they default
in the performance of their secured obligations, the pledgees or secured
parties
may offer and sell the shares of common stock from time to time under this
prospectus after we have filed an amendment to this prospectus under Rule
424(b)(3) or other applicable provision of the Securities Act of 1933 amending
the list of selling stockholders to include the pledgee, transferee or other
successors in interest as selling stockholders under this
prospectus.
The
selling stockholders also may transfer the shares of common stock in other
circumstances, in which case the transferees, pledgees or other successors
in
interest will be the selling beneficial owners for purposes of this prospectus
and may sell the shares of common stock from time to time under this prospectus
after we have filed an amendment to this prospectus under Rule 424(b)(3)
or
other applicable provision of the Securities Act of 1933 amending the list
of
selling stockholders to include the pledgee, transferee or other successors
in
interest as selling stockholders under this prospectus.
The
selling stockholders and any broker-dealers or agents that are involved in
selling the shares of common stock 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 of common stock purchased by them may be deemed to be
underwriting commissions or discounts under the Securities Act.
We
are
required to pay all fees and expenses incident to the registration of the
shares
of common stock. We have agreed to indemnify the selling stockholders against
certain losses, claims, damages and liabilities, including liabilities under
the
Securities Act.
The
selling stockholders have advised us that they have not entered into any
agreements, understandings or arrangements with any underwriters or
broker-dealers regarding the sale of their shares of common stock, nor is
there
an underwriter or coordinating broker acting in connection with a proposed
sale
of shares of common stock by any selling stockholder. If we are notified
by any
selling stockholder that any material arrangement has been entered into with
a
broker-dealer for the sale of shares of common stock, if required, we will
file
a supplement to this prospectus. If the selling stockholders use this prospectus
for any sale of the shares of common stock, they will be subject to the
prospectus delivery requirements of the Securities Act.
The
anti-manipulation rules of Regulation M under the Securities Exchange Act
of
1934 may apply to sales of our common stock and activities of the selling
stockholders.
EXHIBIT
D
IRREVOCABLE
TRANSFER AGENT INSTRUCTIONS
American
Stock Transfer & Trust Company
6201
15th
Avenue
Brooklyn,
NY 11219
Ladies
and Gentlemen:
Reference
is made to the Securities Purchase Agreement (the “Purchase Agreement”), dated
as of October 18, 2006, among SIGA Technologies, Inc., a Delaware corporation
(the “Company”) and the purchasers named therein (the “Holders”) pursuant to
which the Company is issuing the Company’s common stock, par value $0.0001 per
share (the “Common Stock”).
The
Company has agreed with the Holders that it will instruct you to: (A) issue
the
Common Stock free of all restrictive and other legends if, at the time of such
issue, (i) a registration statement covering the resale of such Common Stock
has
been declared and is effective by the Commission under the Securities Act,
(ii)
such Common Stock are eligible for sale under Rule 144(k) or (iii) such legend
is not required under applicable requirements of the Securities Act (including
judicial interpretations and pronouncements issued by the Staff of the
Commission); or (B) reissue the Common Stock (if such shares were originally
issued with a restrictive legend) free of all restrictive and other legends
(i)
upon the effectiveness of a registration statement covering the resale of the
Common Stock or (ii) following any sale of such Common Stock pursuant to Rule
144 or (iii) such Common Stock are eligible for sale under Rule 144(k) or (iv)
if such legend is not required under applicable requirements of the Securities
Act (including judicial interpretations and pronouncements issued by the Staff
of the Commission).
In
furtherance of this instruction, upon the effectiveness of the Registration
Statement (as defined in the Purchase Agreement) we have instructed our counsel
to deliver to you their opinion letter in the form attached hereto as
Exhibit
I
to the
effect that the Registration Statement has been declared effective by the
Commission and that Common Stock are freely transferable by the Holders and
accordingly may be issued (or reissued, as applicable) and delivered to the
Holders free of all restrictive and other legends.
You
need
not require further letters from us or our counsel to effect any future issuance
or reissuance of shares of Common Stock to the Holders as contemplated by the
Purchase Agreement and this letter. This letter shall serve as our standing
irrevocable instructions with regard to this matter.
Please
be
advised that the Holders have relied upon this instruction letter as an
inducement to enter into the Purchase Agreement. Please execute this letter
in
the space indicated to acknowledge your agreement to act in accordance with
these instructions.
Very
truly
yours,
SIGA
TECHNOLOGIES,
INC.
By:
_____________________________________
Name:
__________________________________
Title:
___________________________________
2
Exhibit
I
K
R A M E
R L
E V I
N N
A F T A
L I S & F
R A N K
E L LLP
__________________,
2006
American
Stock Transfer & Trust Company
6201
15th
Avenue
Brooklyn,
NY 11219
|
Re:
|
SIGA
Technologies, Inc.
|
Dear
Ladies and Gentlemen:
We
are
counsel to SIGA Technologies, Inc., a Delaware corporation (the “Company”). We
are writing to inform you that the Company’s Registration Statement on Form S-3,
File No. 333-________ (the “Registration Statement”), was declared effective by
the Securities and Exchange Commission at _________ on ___________ 2006. The
Registration Statement registers the resale of (a) certain outstanding shares
of
the Company’s common stock, .0001 per value per share (the “Common Stock”), and
(b) shares of Common Stock issuable upon the exercise of certain outstanding
warrants to purchase shares of Common Stock.
Upon
(a)
the sale by any stockholder listed in the first column of Schedule
I
attached
hereto of shares of Common Stock listed in the second column of Schedule
I
in
accordance with the section entitled “Plan of Distribution” in the then current
prospectus (the “Prospectus”) forming a part of the Registration Statement (a
copy of the current Prospectus is enclosed with this letter), (b) delivery
of a
copy of the Prospectus to the purchaser of such shares, and (c) delivery to
you
of a certificate in the form attached to this letter as Annex
A
certifying to the foregoing executed by such stockholder, you may then issue
one
or more certificates representing the shares of Common Stock so sold in
accordance with the instructions of such stockholder without any restrictive
legend.
However,
any certificates re-issued in the name of such stockholder representing any
unsold shares must have affixed thereto any legend that appears on the
certificate delivered to you for transfer.
Very
truly
yours,
Kramer
Levin Naftalis
& Frankel LLP
cc: Thomas
Konatich
SCHEDULE
I
|
Number
of Shares of
Common
Stock Offered
Pursuant
to Registration
|
Name
of Beneficial Owner
|
Statement
|
|
|
|
|
4
CERTIFICATE
OF SELLING STOCKHOLDER
SIGA
Technologies, Inc.
420
Lexington Avenue, Suite 408
New
York,
NY 10170
-and-
American
Stock Transfer and Trust Company
6201
15th
Avenue
Brooklyn,
NY 11219
The
undersigned does hereby certify that the undersigned is listed as a selling
securityholder under the Registration Statement on Form S-3 (Registration No.
333-______) (the “Registration
Statement”),
of
SIGA Technologies, Inc., a Delaware corporation (the “Company”)
and
that Kramer Levin Naftalis & Frankel LLP is entitled to rely upon this
Certificate in rendering an opinion to the transfer agent for the Company with
respect to my sale of shares (the “Shares”)
of the
Company’s common stock, .0001 per value per share (“Common
Stock”),
covered by the Registration Statement.
The
undersigned does hereby further certify that:
1. The
undersigned has sold ____________________ Shares and is delivering herewith
to
the Company one or more certificates representing such Shares.
2. The
undersigned has delivered a copy of the prospectus dated _________, 2006 forming
a part of the Registration Statement (the “Prospectus”)
to
each person to whom the undersigned sold such Shares.
3. The
undersigned sold the Shares in compliance with the section entitled “Plan of
Distribution” in the Prospectus.
4. The
undersigned shall notify the Company immediately of any occurrence which would
render the foregoing statements inaccurate.
5. If
this
Certificate is executed on behalf of an entity, the undersigned is the duly
appointed representative of such entity and, as such, has all requisite power
and authority to execute this Certificate of behalf of, and to bind, such
entity.
The
Company and its agents and representatives (including, without limitation,
the
Company’s respective counsel) may rely on this representation letter. The
undersigned will indemnify all such persons and hold them harmless from and
against any and all loss, damage, claim, liability and expense resulting from
the breach of any representation herein.
5
IN
WITNESS WHEREOF,
the
undersigned has duly executed this Certificate as of ___________________,
200___.
Name
of Selling
Stockholder:
Signature:_____________________
Title
(if
applicable):
Total
Number of
Shares
Sold:___________________
6
Exhibit 10.2 Finder's Agreement
60; Exhibit
10.2
FINDER'S
AGREEMENT
This
Finder's Agreement (this "Agreement") is made as of October 18, 2006 between
SIGA Technologies, Inc., a Delaware corporation (the "Company"), and Empire
Financial Group, Inc., a Florida corporation (the "Finder"). The Finder and
the
Company agree:
|
1.
|
Engagement
of Finder:
The Company hereby engages the Finder, and the Finder hereby accepts
such
engagement, to act as the Company's Finder with respect to sales
by the
Company in a private placement transaction (the “Offering”) of up to $10
million aggregate principal amount of Equity, Equity-Related or Debt
Securities (the “Securities”) of the Company to the investors during the
term of this Agreement as set forth in Section
5.
|
|
2.
|
Offering
Procedures:
The Finder will introduce the Company to investors who the Finder
reasonably believes to be "accredited investors," as that term is
defined
in Rule 501 of Regulation D promulgated under the Securities Act
of 1933,
as amended (the “1933
Act”),
with whom the Finder has a pre-existing substantive relationship
(the
“Offerees”).
|
3. |
Finder's
Compensation:
In consideration for the services rendered by the Finder hereunder,
the
Company shall pay to the Finder, or cause the Finder to be paid,
compensation as provided in this section within 3 days of the Company's
receipt of funds from the Offerees.
|
(a) |
Cash
Compensation: The
Company shall pay to the Finder cash compensation equal to three
percent
(3%) of the gross Offering funds received in the Offering. For
purposes of clarity, the parties understand and agree that such cash
compensation is only related to funds received at the initial investment
and not on the exercise of any warrant or option.
|
(b) |
Warrants:
The Finder shall receive one and a half percent (1.5%) warrant
compensation. The warrant calculation
translates to 15,000 warrants per $1 million raised. The warrant’s strike
shall equal the strike, expiration and registration rights of any
warrants
sold to Offerees in the Offering, and if the Offering does not provide
for
the issuance of warrants, then the warrants issued to the Finder
shall
have a strike price equal to the Offering price of any Equity or
Equity-Related Securities sold, have a five-year term and cashless
exercise after one year if the underlying shares are not then registered.
The warrant shares shall be subject to equitable adjustment for stock
splits, stock dividends and similar events. The warrant shares shall
have
“piggyback” registration rights.
|
(c) |
If,
at any time prior to one year following the end of the Offering (the
“Term”) the Company directly or indirectly sells, in a private
transaction, any type of security to an investor with whom negotiations
were initiated by the Finder during the Term, the Company shall pay
the
Finder the compensation
|
to
which it would be entitled under paragraph 3 if
the transaction had occurred during the Term.
Certain
Matters Relating to Finder’s Duties:
(a) |
The
Finder’s responsibilities shall be limited to introducing potential
investors to the Company, and the Finder shall not have authority
to offer
or sell the Securities to any potential investor. Finder shall not
use any
general solicitation or general advertising within the meaning of
the
applicable securities laws in connection with any offering. The Finder
shall have no responsibility to participate or assist in any negotiations
between any potential investor and the Company. The Finder will have
no
responsibility to act, and the parties contemplate that the Finder
will
not act, as a broker or dealer with respect to the offer or sale
of the
Securities. Further, the Finder shall have no responsibility for
fulfilling any SEC reporting or filing requirements as relates to
the
Company provided however, Finder agrees to provide Company with reasonable
assistance related to any registration, qualification or other
requirements of applicable securities laws and other regulatory matters,
upon request of the Company.
|
(b) |
The
Finder agrees to introduce the Company to Offerees only in states
in which
the Finder has been advised by the Company that offers and sales
of
Securities can be legally made by the
Company.
|
(c) |
The
Finder shall perform its duties under this Agreement in a manner
consistent with the instructions of the Company. Such performance
shall
include, but not be limited to, the delivery to each Offeree a current
copy of the Private Placement Memorandum, Subscription Agreement
and any
Offering Questionnaire and/or similar documents provided to the Finder
by
the Company, as such documents may be amended from time to time by
the
Company and delivered to the Finder. The Finder shall consecutively
number
each copy of the Private Placement Memorandum (which will include
the
first letter of the Finder’s name or other identifying mark sufficient to
designate an Offeree introduced by the Finder); keep a log of when
and to
whom each copy of the Private Placement Memorandum is given, with
the
Private Placement Memorandum numbers; maintain a copy of any written
information the Finder obtains regarding the suitability of each
Offeree;
and only use the Private Placement Memorandum in introducing Offerees
to
the Company. The Finder shall provide this log and all such written
information to the Company at any time and promptly upon request
of the
Company at the termination of this Agreement. The Company shall,
promptly
following execution of this Agreement, provide the Finder with a
written
list of prospective Offerees that the Company does not want the Finder
to
contact. The Finder agrees to not contact the persons on such list,
and
the Finder shall not be entitled to the compensation set forth in
Section
3 with respect to any investment made by such person in the Company’s
Securities.
|
(d) |
The
Finder is and will hereafter act as an independent contractor and
not as
an employee of the Company and nothing in this Agreement shall be
interpreted or construed to create any employment, partnership, joint
venture, or other relationship between the Finder and the Company.
The
Finder will not hold itself out as having, and will not state to
any
person that the Finder has, any relationship with the Company other
than
as an independent contractor. The Finder shall have no right or power
to
find or create any liability or obligation for or in the name of
the
Company or to sign any documents on behalf of the
Company.
|
4. |
Right
of First Refusal.
In consideration for the Finder acting as the finder in connection
with
the proposed offering, the Company hereby grants the Finder a right
of
first refusal to serve as the Company’s exclusive financial advisor and
investment banker in connection with any financial transaction for
a
period of 1 year from the closing of the transaction. In the event
the
company advises the Finder that it desires to effect any financial
transaction, the Company and the Finder will negotiate in good faith
the
terms of the Finder’s engagement in a separate agreement which would set
forth, among other matters, compensation for the Finder based upon
customary fees for the services provided.
|
5. |
Termination
of Agreement.
Either party may terminate this Agreement by notifying the other
party in
writing upon a material breach by that other party, unless such breach
is
curable and is in fact cured within 15 days after such notice. This
Agreement will otherwise terminate upon completion or termination
of the
Offering. The Company may terminate this Agreement following ninety
(90)
days after the date hereof upon written notice. Notwithstanding the
foregoing, all provisions of this Agreement other than section 1,
2 and 3
shall survive the termination of this Agreement with respect to Offerees
who the Finder introduces to the Company prior to any termination
with
respect to the Offering. The Finder shall be entitled to compensation
under section 3 based on investments made by such Offerees prior
to the
termination of this Agreement or at any time within one year
thereafter.
|
6. |
Indemnification.
The Company and the Finder each shall indemnify and defend the other
and
the other’s affiliates, directors, officers, employees, agents,
consultants, attorneys, accountants, and other representatives (each
an
“Indemnified
Person”)
and shall hold each Indemnified Person harmless, to the fullest extent
permitted by law, from and against any and all claims, liabilities,
losses, damages and expenses (including reasonable attorney’s fees and
costs), as they are incurred, in connection with the Offering, resulting
from the indemnifying party’s negligence, bad faith or willful misconduct
in connection with the Offering, any violation by the indemnifying
party
(not caused by an Indemnified Person) of Federal or state securities
laws
in connection with the Offering, or any breach by the indemnifying
party
of this Agreement. In case any litigation or proceeding shall be
brought
against any Indemnified Person under this section, the indemnifying
party
shall be entitled to assume the defense of such litigation or proceeding
with counsel of the indemnifying party’s choice at its expense (in which
case the indemnifying party shall not be responsible for the fees
and
expenses of any separate counsel retained by such Indemnified Person,
except in the limited circumstances described below in this section);
provided, however, that such counsel shall be reasonably satisfactory
to
the
|
Indemnified
Person. Notwithstanding the indemnifying
party’s election to assume the defense of such litigation or proceeding (a) such
Indemnified Person shall have the right to employ separate counsel and to
participate in the defense of such litigation or proceeding, and (b) the
indemnifying party shall bear the reasonable fees, costs and expenses of
separate counsel if (but only if) the use of counsel selected by the
indemnifying party to represent such Indemnified Person would present such
counsel with a conflict of interest under applicable laws or rules of
professional conduct.
7. |
Confidentiality
of Offeree Information.
The Company acknowledges that the identity of the Offerees, and all
confidential information about Offerees received by the Company from
an
Offeree or the Finder, is confidential information of the Finder
and may
not be shared with any other person without the consent of the
Finder.
|
8. |
Notices.
Any notice, consent, authorization or other communication to be given
hereunder shall be in writing and shall be deemed duly given and
received
when delivered personally, when transmitted by fax, three days after
being
mailed by first class mail, or one day after being sent by a nationally
recognized overnight delivery service, charges and postage prepaid,
properly addressed to the party to receive such notice, at the following
address or fax number for such party (or at such other address or
fax
number as shall hereafter be specified by such party by like
notice):
|
(a) If
to the
Company,
to:
Thomas
N.
Konatich
Chief
Financial Officer
420
Lexington Ave.
Suite
408
New
York,
NY 10170
Phone: (212)
672-9100
Fax: (212)
697-3130
(b)
If
to the
Finder,
to:
Bill
Corbett
Managing
Director
150
California Street, 21st
Floor
San
Francisco, CA 94111
Phone: (415)
956-4253
Fax: (415)
956-4192
E-Mail: bcorbett@empirenow.com
9. |
Company
to Control Transactions.
The
prices, terms and conditions under which the Company shall offer
or sell
any Securities shall be determined by the Company
in
|
its
sole discretion. The Company shall have the
authority to control all discussions and negotiations regarding any proposed
or
actual offering or sale of Securities. Nothing in this Agreement shall obligate
the Company to actually offer or sell any Securities or consummate any
transaction. The Company may terminate any negotiations or discussions at any
time and reserves the right not to proceed with any offering or sale of
Securities. Compensation pursuant to this Agreement shall only be paid to the
Finder in the event of an actual Closing of the Offering to an Offeree
introduced by Finder.
10. |
Confidentiality
of Company Information.
The Finder, and its officers, directors, employees and agents shall
maintain in strict confidence and not copy, disclose or transfer
to any
other party (1) all confidential business and financial information
regarding the Company and its affiliates, including without limitation,
projections, business plans, marketing plans, product development
plans,
pricing, costs, customer, vendor and supplier lists and identification,
channels of distribution, and terms of identification of proposed
or
actual contracts and (2) all confidential technology of the Company.
In
furtherance of the foregoing, the Finder agrees that it shall not
transfer, transmit, distribute, download or communicate, in any
electronic, digitized or other form or media, any of the confidential
technology of the Company. The foregoing is not intended to preclude
the
Finder from utilizing, subject to the terms and conditions of this
Agreement, the Private Placement Memorandum and/or other documents
prepared or approved by the Company for use in the
Offering.
|
All
communications regarding any possible transactions, requests for due diligence
or other information, requests for facility tours, product demonstrations or
management meetings, will be submitted or directed to the Company, and the
Finder shall not contact any employees, customers, suppliers or contractors
of
the Company or its affiliates without express permission. Nothing in this
Agreement shall constitute a grant of authority to the Finder or any
representatives thereof to remove, examine or copy any particular document
or
types of information regarding the Company, and the Company shall retain control
over the particular documents or items to be provided, examined or copied.
If
the Offering is not consummated, or if at any time the Company so requests,
the
Finder and its representatives will return to the Company all copies of
information regarding the Company in their possession.
The
provisions of this Section shall survive any termination of this
Agreement.
11. |
Press
Releases, Etc.
The Company shall control all press releases or announcements to
the
public, the media or the industry regarding any offering, placement,
transaction or business relationship involving the Company or its
affiliates. Except for communication to Offerees in furtherance of
this
Agreement and the provision of the Private Placement Memorandum,
the
Finder will not disclose the fact that discussions or negotiations
are
taking place concerning a possible transaction involving the Company,
or
the status or terms and conditions thereof.
Notwithstanding
the foregoing, the Company agrees to issue a press release prior
to the
opening of the market on the business day following the Company’s receipt
of executed agreements binding Offerees to purchase Securities in
at least
the amount of
|
the
minimum Offering (if there is any such minimum)
setting forth the material terms of the Offering.
12. |
Due
Diligence:
Neither
the Company, nor any of its directors, officers or shareholders,
should,
in any way rely on the Finder to perform any due diligence with respect
to
the Company. It is expressly understood and agreed that to the extent
due
diligence is conducted; it will be conducted by the
investors.
|
13. |
Expenses,
Etc.
The Finder shall be exclusively responsible for any compensation,
fees,
commissions or payments of its employees, agents representatives,
co-Finders or other persons or entities utilized by it in connection
with
its activities on behalf of the Company, and the Finder will indemnify
and
hold harmless the Company and its affiliates from the claims of any
such
persons or entities.
|
14. |
Compliance
with Laws.
The Finder represents and warrants that it is a duly registered
broker/dealer and in good standing with the SEC, NASD and the State
of
California and has and shall maintain such registrations as well
as all
other necessary licenses and permits to conduct its activities under
this
Agreement, which it shall conduct in compliance with applicable federal
and state laws relating to a private placement under Regulation D
of the
1933 Act. The Finder represents that it is not a party to any other
agreement, which would conflict with or interfere with the terms
and
conditions of this Agreement.
|
15. |
Assignment
Prohibited.
No assignment of this Agreement shall be made without the prior written
consent of the other party.
|
16. |
Amendments.
Neither party may amend this Agreement or rescind any of its existing
provisions without the prior written consent of the other
party.
|
17. |
Governing
Law.
This Agreement shall be deemed to have been made in the State of
California and shall be construed, and the rights and liabilities
determined, in accordance with the law of the State of California,
without
regard to the conflicts of laws rules of such
jurisdiction.
|
18. |
Waiver.
Neither Finder’s nor the Company’s failure to insist at any time upon
strict compliance with this Agreement or any of its terms nor any
continued course of such conduct on their part shall constitute or
be
considered a waiver by Finder or the Company of any of their respective
rights or privileges under this
Agreement.
|
19. |
Severability.
If any provision herein is or should become inconsistent with any
present
or future law, rule or regulation of any sovereign government or
regulatory body having jurisdiction over the subject matter of this
Agreement, such provision shall be deemed to be rescinded or modified
in
accordance with such law, rule or regulation. In all other respects,
this
Agreement shall continue to remain in full force and effect.
|
20. |
Counterparts.
This Agreement may be executed in one or more counterparts, each
of which
shall be deemed an original, and will become effective and binding
upon
the parties at such time as all of the signatories hereto have signed
a
counterpart of this Agreement. All counterparts so executed shall
constitute one Agreement binding on all of the parties hereto,
notwithstanding that all of the parties are not signatory to the
same
counterpart. Each of the parties hereto shall sign a sufficient number
of
counterparts so that each party will receive a fully executed original
of
this Agreement.
|
21. |
Entire
Agreement.
This Agreement and all other agreements and documents referred herein
constitutes the entire agreement between the Company and the Finder.
No
other agreements, cove-nants, representations or warranties, express
or
implied, oral or written, have been made by any party hereto to any
other
party concerning the subject matter hereof. All prior and contemporaneous
conversations, negotiations, possible and alleged agreements,
representations, covenants and warranties concerning the subject
matter
hereof are merged herein. This is an integrated
Agreement.
|
22. |
Arbitration.
The parties agree that this Agreement and all controversies which
may
arise between the Finder and the Company, whether occurring prior,
on or
subsequent to the date of this Agreement, will be determined by
arbitration. The parties understand
that:
|
(a) |
Arbitration
is final and binding on the
parties.
|
(b) |
The
parties are waiving their right to seek remedies in court, including
the
right to a jury trial.
|
(c) |
Pre-arbitration
discovery is generally more limited than and different from court
proceedings.
|
(d) |
The
arbitrators’ award is not required to include factual findings or legal
reasoning and any party’s right to appeal or to seek modification or
rulings by the arbitrators is strictly
limited.
|
(e) |
The
panel of arbitrators will typically include a minority of arbitrators
who
were or are affiliated with the securities
industry.
|
The
parties agree that any arbitration under this Agreement will be held at the
facilities of and before an Arbitration Panel appointed by the National
Association of Securities Dealers, Inc. (“NASD”), or if the NASD refuses to
accept jurisdiction, then before JAMS/ENDISPUTE in San Francisco, California.
The award of the arbitrators, or of the majority of them, will be final, and
judgments upon the award may be entered in any court, state or federal, having
jurisdiction. The parties hereby submit themselves and their personal
representatives to the jurisdiction of any state or federal court for the
purpose of such arbitration and entering such judgment.
Any
forbearance to enforce an agreement to arbitrate will not constitute a waiver
of
any rights under this Agreement except to the extent stated herein.
THIS
AGREEMENT IS GOVERNED BY A PRE-DISPUTE ARBITRATION CLAUSE CONTAINED IN PARAGRAPH
23 OF THIS AGREEMENT
Empire
Financial Group, Inc.
(the
“Finder”)
By:
/s/
Bill Corbett
Bill
Corbett
Title:
Managing Director
SIGA
Technologies, Inc.
(the
“Company”)
By:
/s/
Thomas N. Konatich
Thomas
N.
Konatich
Title: Chief Financial Officer
Page
8
Exhibit 99.1 Press Release
Exhibit
99.1
Contact:
Tom
Konatich
SIGA
Technologies, Inc.
Chief
Financial Officer & Acting CEO
(212)
672-9100
SIGA
ANNOUNCES $9.0 MILLION PRIVATE PLACEMENT
New
York,
NY, October 19, 2006 -- SIGA
Technologies, Inc.
(NASDAQ:
SIGA) announced today that on October 18, 2006 it entered into a Securities
Purchase Agreement for the issuance and sale to institutional investors of
2,000,000 shares of the company’s common stock at $4.54 per share and warrants
to purchase 1,000,000 shares of the company’s common stock. The warrants are
exercisable at any time and from time to time through and including the seventh
anniversary of the closing date at an exercise price equal to 110% of the
closing price of the company’s common stock on October 18, 2006.
The
sale
of common stock and warrants to purchase common stock was placed by, Empire
Financial Group (EFH: AMEX) and The Shemano Group, institutional brokerage
firms
in San Francisco, CA.
About
SIGA Technologies, Inc.
SIGA
Technologies is applying viral and bacterial genomics and sophisticated
computational modeling in the design and development of novel products for
the
prevention and treatment of serious infectious diseases, with an emphasis on
products for biological warfare defense. SIGA believes that it is a leader
in
the development of pharmaceutical agents and vaccines to fight potential
biowarfare pathogens. In
addition to smallpox, SIGA has antiviral programs targeting other Category
A
pathogens, including arenaviruses (Lassa
fever, Junin, Machupo, Guanarito, Sabia, and lymphocytic choriomeningitis),
dengue virus, and the filoviruses (Ebola and Marburg). SIGA's
product development programs also emphasize the increasingly serious problem
of
drug resistant bacteria.
For
more
information about SIGA, please visit SIGA's Web site at www.siga.com.
Forward-looking
Statements
This
Press Release contains or implies certain "forward-looking statements'' within
the meaning of the Private Securities Litigation Reform Act of 1995, as amended,
including statements regarding the efficacy of potential products, the timelines
for bringing such products to market and the availability of funding sources
for
continued development of such products. Forward-looking statements are based
on
management's estimates, assumptions and projections, and are subject to
uncertainties, many of which are beyond the control of SIGA. Actual results
may
differ materially from those anticipated in any forward-looking statement.
Factors that may cause such differences include the risks that
(a) potential products that appear promising to SIGA or its collaborators
cannot be shown to be efficacious or safe in subsequent pre-clinical or clinical
trials, (b) SIGA or its collaborators will not obtain appropriate or
necessary governmental approvals to market these or other potential products,
(c) SIGA may not be able to obtain anticipated funding for its development
projects or other needed funding, (d) SIGA may not be able to secure
funding from anticipated government contracts and grants, (e) SIGA may not
be
able to secure or enforce adequate legal protection, including patent protection
for its products and (f) regulatory approval for SIGA’s products may
require further or additional testing that will delay or prevent approval.
More
detailed information about SIGA and risk factors that may affect the realization
of forward-looking statements, including the forward-looking statements in
this
Press Release, is set forth in SIGA's filings with the Securities and Exchange
Commission, including SIGA's Annual Report on Form 10-K for the fiscal year
ended December 31, 2005, and in other documents that SIGA has filed with the
Commission. SIGA urges investors and security holders to read those documents
free of charge at the Commission's Web site at http://www.sec.gov. Interested
parties may also obtain those documents free of charge from SIGA.
Forward-looking statements speak only as to the date they are made, and, except
for any obligation under the U.S. federal securities laws, SIGA undertakes
no
obligation to publicly update any forward-looking statement as a result of
new
information, future events or otherwise.
###