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This
Agreement (“Agreement”) is made and
entered into as of January 6, 2011 (the “Effective Date”), by and among
ZIOPHARM Oncology, Inc., a Delaware corporation (the “Company”), and Intrexon
Corporation, a Virginia corporation (“Intrexon”).
A. Concurrently
with the execution of this Agreement, the Company is entering into a Channel
Partner Agreement with Intrexon (the “Channel Agreement”), pursuant
to which Intrexon is licensing the rights to certain technology to the Company;
and
B. In
partial consideration of Intrexon’s license under the Channel Agreement, the
Company has agreed to issue and sell to Intrexon certain shares of the Company’s
common stock in accordance with the terms and conditions of this
Agreement.
C. In
connection with the entry into the Channel Agreement, the Company has also
agreed to issue and sell to Intrexon, and Intrexon has agreed to purchase from
the Company, certain shares of the Company’s common stock for cash consideration
in accordance with the terms and conditions of this Agreement, namely the
Upfront Purchase Shares (as defined herein) and up to an additional $50,000,000
in shares of the Company’s common stock pursuant to the Equity Purchase
Commitment (as hereinafter defined).
D. At
the First Tranche Closing (as hereinafter defined), the parties have agreed to
enter into a Registration Rights Agreement in the form attached hereto as Exhibit A (the “Rights
Agreement”).
AGREEMENT
In
consideration of the mutual covenants contained in this Agreement and for other
good and valuable consideration, the receipt of which is hereby acknowledged,
the Company and Intrexon hereby agree as follows:
SECTION 1. Authorization
of Sale of Shares.
1.1 Authorization. Subject to the terms and
conditions of this Agreement, the Company has authorized the sale and issuance
to Intrexon of up to the following number of shares (the “Shares”) of the Company’s
common stock, par value $0.001 per share (“Common Stock”):
(a) that
number of Shares (the “First
Tranche Shares”) equal to 7.495% of the number of shares of Common Stock
issued and outstanding immediately prior to the First Tranche Closing (as
hereinafter defined and, for purpose of clarity, excluding the Upfront Purchase
Shares);
1.
(b) that
number of Shares (the “Second
Tranche Shares”) equal to the lesser of (i) the number of shares of
Common Stock comprising the First Tranche Shares (subject to appropriate
adjustment for stock splits, dividends, combinations, recapitalizations and the
like affecting the Common Stock) (ii) subject to Section 6.8
hereof, the maximum number of Shares that the Company may issue to Intrexon that
will not result in the sum of the Upfront Purchase Shares, First Tranche Shares
and Second Tranche Shares exceeding 19.99% of the number of shares of Common
Stock of the Company issued and outstanding immediately prior to the First
Tranche Closing or (iii) subject to Section 6.10 hereof, the maximum number of
Shares that the Company may issue to Intrexon and its Affiliates (as defined in
Section 405 of the Securities Act (as defined below)) that will
not result in a change of control of the Company within the meaning of and in
contravention to Rule 5635(b) of the Nasdaq Stock Market listing rules (or its
successor); and
(c) that
number of Shares (the “Upfront
Purchase Shares”) equal to 5.00% of the number of shares of Common Stock
issued and outstanding immediately prior to the First Tranche Closing (and for
purposes of clarity, excluding the First Tranche Shares).
The
number of Shares to be issued under each of subsections (a), (b) and (c) of this
Section 1.1 shall be rounded down to the nearest whole share.
1.2 Capital
Adjustments. If after the date hereof (i) the outstanding
shares of the Company’s Common Stock shall be subdivided or split into a greater
number of shares or a dividend in Common Stock shall be paid in respect of such
Common Stock or (ii) the outstanding shares of Common Stock are combined, then
all share quantities in this Agreement not yet issued shall be appropriately
adjusted to reflect such stock split, stock dividend or
conjunction. If after the date hereof (i) the Company shall pay a
dividend in securities of the Company (other than in Common Stock) or of other
property (including cash) on the Common Stock, or (ii) there shall occur any
merger, consolidation, capital reorganization or reclassification in which the
Common Stock is converted or exchanged for securities, cash or other property,
the class or series of stock constituting the Common Stock for purposes of this
Agreement, shall be appropriately adjusted to reflect such other dividend,
merger, consolidation, capital reorganization or
reclassification. After any event referenced in clauses (i) through
(ii) of the immediately preceding sentence is consummated, if applicable, all
references herein to the Company’s Common Stock shall be deemed to refer to the
capital stock or property (including cash) into or for which the Common Stock
was converted or exchanged, with the necessary changes in detail.
1.3 Company
Sale. In the event that the Company consummates a Company Sale
(as defined below) prior to the Second Tranche Closing, Intrexon shall be
entitled to receive, upon the Second Tranche Closing and as the Second Tranche
Shares, the securities, cash or other property that it would have received upon
conversion or exchange of the Second Tranche Shares if immediately prior to the
consummation of the Company Sale the Company had calculated and issued the
Second Tranche Shares to Intrexon under Sections 1.1(b) and
2.2(b).
2.
1.4 Second Tranche
Adjustment. In the event the number of Second Tranche Shares
issued by the Company at the Second Tranche Closing shall, in accordance with
Section 1.1(b), be less than the number of shares of Common Stock comprising the
First Tranche Shares (subject to appropriate adjustment for stock splits,
dividends, combinations, recapitalizations and the like affecting the Common
Stock) (with such shortfall being referred to herein as the “Second Tranche
Shortfall”), and if within 18 months subsequent to the Second Tranche Closing
the facts and circumstances applicable to such issuance have changed such that a
greater number of Second Tranche Shares would have been issuable in accordance
with Section 1.1(b) had the Second Tranche Closing occurred at a later date
within such 18 month period (including, without limitation, the receipt of
stockholder approval for such issuance in accordance with Section 6.10), then
the Company shall issue to Intrexon an additional number of shares equal to the
number of shares comprising the Second Tranche Shortfall (subject to appropriate
adjustment for stock splits, dividends, combinations, recapitalizations and the
like affecting the Common Stock) or such lesser amount as may be permitted in
accordance with Section 1.1(b), for the purchase price per share for the Second
Tranche Shares specified in Section 2.1(b).
SECTION
2. Closing
and Delivery
2.1 Sale and Purchase Price of
Shares. Subject to the
terms and conditions of this Agreement and in reliance upon the representations,
warranties and agreements contained herein, the Company will issue and sell to
Intrexon, and Intrexon will purchase from the Company, at each of the First
Tranche Closing and the Second Tranche Closing, the applicable number of Shares,
at a purchase price as follows:
(a) the
purchase price per share for the First Tranche Shares shall be equal to the par
value of each such share at such time, which price shall be deemed paid in
partial consideration for the execution and delivery by Intrexon of the Channel
Agreement;
(b) the
purchase price per share for the Second Tranche Shares shall be equal to the par
value of each such share at such time, which price shall be deemed paid in
partial consideration for the execution and delivery by Intrexon of the Channel
Agreement; and
(c) the
purchase price per share for the Upfront Purchase Shares shall be $4.80 per
share, which price shall be paid by Intrexon in cash and delivered by wire
transfer of same day funds at the First Tranche Closing to an account designated
by the Company.
2.2 Closings. The
closings of the purchase and sale of the Shares to be issued pursuant to this
Agreement shall be held at the offices of WilmerHale, 60 State Street, Boston,
Massachusetts02109 or at such other place as the Company and Intrexon may
agree, as follows:
(a) the
closing of the purchase and sale of the First Tranche Shares and the Upfront
Purchase Shares will occur, subject to the conditions set forth in Section 8
hereof and applicable to the First Tranche Closing, on the fourth business day
following the date hereof or on such other date as Intrexon and the Company may
agree upon (the “First Tranche
Closing”); and
(b) the
closing of the purchase and sale of the Second Tranche Shares will occur,
subject to the conditions set forth in Section 8 hereof and applicable to the
Second Tranche Closing, on the earlier of (i) the tenth business day following
the dosing of the first patient in any Phase II Clinical Trial conducted by the
Company of a ZIOPHARM Product (as defined in the Channel Agreement), and (ii)
such other date as Intrexon and the Company may agree (the “Second Tranche
Closing”). For the purposes of this Agreement, “Phase II Clinical Trial” shall
mean a human clinical trial of a product candidate conducted in the United
States, the principal purpose of which is to evaluate the effectiveness of such
product candidate in the target patient population, as described in 21 C.F.R. §
312.21(b), or a similar clinical study as the Company and Intrexon may mutually
agree upon that is prescribed by the applicable regulatory authority in a
country other than the United States.
3.
Each of
the First Tranche Closing and the Second Tranche Closing are collectively
hereinafter referred to as the “Closings” and individually as
a “Closing”.
2.3 Delivery of the
Shares. Promptly following a Closing, the Company shall
deliver to Intrexon a certificate representing the number of Shares purchased at
such Closing, registered in the name of Intrexon.
SECTION 3. Representations
and Warranties of the Company.
Subject
to and except as set forth in the SEC Documents or on the Schedule of Exceptions
which is arranged in sections corresponding to the sub-section numbered
provisions contained below in this Section, the Company hereby represents and
warrants to, and covenants with, Intrexon as of the date hereof as
follows:
3.1 Organization, Good Standing
and Power. The Company is a corporation duly incorporated,
validly existing and in good standing under the laws of the State of Delaware
and has the requisite corporate power to own, lease and operate its properties
and assets and to conduct its business as it is now being conducted and as
described in the reports filed by the Company with the Securities and Exchange
Commission (the “Commission”) pursuant to the
reporting requirements of the Securities Exchange Act of 1934, as amended (the
“Exchange Act”), since
the end of its most recently completed fiscal year through the date hereof,
including, without limitation, its most recent report on Form
10-Q. The Company does not have any subsidiaries. The
Company is qualified to do business as a foreign corporation and is in good
standing in every jurisdiction in which the nature of the business conducted or
property owned by it makes such qualification necessary, except for any
jurisdiction(s) (alone or in the aggregate) in which the failure to be so
qualified will not have a Material Adverse Effect. For the purposes
of this Agreement, “Material
Adverse Effect” means any effect on the business, operations, properties
or financial condition of the Company that is material and adverse to the
Company, taken as a whole, and any condition, circumstance or situation that
would prohibit the Company from entering into and performing any of its
obligations hereunder.
3.2 Authorization;
Enforcement. The Company has the requisite corporate power and
authority to enter into and perform this Agreement and to issue and sell the
Shares in accordance with the terms hereof. The execution, delivery
and performance of this Agreement by the Company and the consummation by it of
the transactions contemplated hereby have been duly and validly authorized by
all necessary corporate action, and no further consent or authorization of the
Company, its board of directors or stockholders is required, except pursuant to
Section 7. When executed and delivered by the Company, this Agreement
shall constitute a valid and binding obligation of the Company enforceable
against the Company in accordance with its terms, except as such enforceability
may be limited by applicable bankruptcy, reorganization, moratorium,
liquidation, conservatorship, receivership or similar laws relating to, or
affecting generally the enforcement of, creditor’s rights and remedies or by
other equitable principles of general application. The Company’s board of
directors, at a meeting duly called and held, adopted resolutions approving the
transactions contemplated hereby, including the issuance of the First Tranche
Shares, Second Tranche Shares and Upfront Purchase Shares in a manner consistent
with and that meets the requirements of Section 203(a)(1) of the Delaware
General Corporation Law.
4.
3.3 Issuance of
Shares. The Shares to be issued and sold hereunder have been
duly authorized by all necessary corporate action and, when paid for and issued
in accordance with the terms hereof, will be validly issued, fully paid and
nonassessable. In addition, such Shares will be free and clear of all
liens, claims, charges, security interests or agreements, pledges, assignments,
covenants, restrictions or other encumbrances created by, or imposed by, the
Company (collectively, “Encumbrances”) and rights of
refusal of any kind imposed by the Company (other than restrictions on transfer
under applicable securities laws) and the holder of such Shares shall be
entitled to all rights accorded to a holder of Common Stock. As of
the date hereof, 48,466,561 shares of the Company’s Common Stock are issued and
outstanding.
3.4 No Conflicts; Governmental
Approvals. The execution, delivery and performance of the
Agreement by the Company and the consummation by the Company of the transactions
contemplated hereby do not and will not (i) violate any provision of the
Company’s Amended and Restated Certificate of Incorporation or Bylaws, each as
amended to date, (ii) conflict with, or constitute a default (or an event which
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 of,
any agreement, mortgage, deed of trust, indenture, note, bond, license, lease
agreement, instrument or obligation to which the Company is a party or by which
the Company’s properties or assets are bound, or (iii) result in a violation of
any federal, state, local or foreign statute, rule, regulation, order, judgment
or decree (including federal and state securities laws and regulations)
applicable to the Company or by which any property or asset of the Company is
bound or affected, except for such conflicts, defaults, terminations,
amendments, acceleration, cancellations and violations as would not,
individually or in the aggregate, have a Material Adverse Effect. The
Company is not required under federal, state, foreign or local law, rule or
regulation to obtain any consent, authorization or order of, or make any filing
or registration with, any court or governmental agency in order for it to
execute, deliver or perform any of its obligations under this Agreement or issue
and sell the Shares in accordance with the terms hereof (other than any filings,
consents and approvals which may be required to be made by the Company under
applicable state and federal securities laws, rules or regulations prior to or
subsequent to the Closing).
5.
3.5 Commission Documents,
Financial Statements. The Common Stock of the Company is
registered pursuant to Section 12(b) of the Exchange Act. During the
two year period preceding the First Tranche Closing Date, the Company has timely
filed all reports, schedules, forms, statements and other documents required to
be filed by it with the Commission pursuant to the reporting requirements of the
Exchange Act (the “SEC
Documents”). At the times of their respective filing, all such
reports, schedules, forms, statements and other documents complied in all
material respects with the requirements of the Exchange Act and the rules and
regulations of the Commission promulgated thereunder. At the times of
their respective filings, such reports, schedules, forms, statements and other
documents did not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they were
made, not misleading. As of the date hereof, the Company meets the
“registrant eligibility” requirements set forth in the general instructions to
Form S-3 to enable the registration of its Common Stock. As of their respective
dates, the financial statements of the Company included in the Commission
Documents complied in all material respects with applicable accounting
requirements and the published rules and regulations of the Commission or other
applicable rules and regulations with respect thereto. Such financial
statements have been prepared in accordance with generally accepted accounting
principles applied on a consistent basis during the periods involved (except (i)
as may be otherwise indicated in such financial statements or the notes thereto
or (ii) in the case of unaudited interim statements, to the extent they may not
include footnotes or may be condensed or summary statements), and fairly present
in all material respects the consolidated financial position of the Company as
of 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
year-end audit adjustments).
3.6 Accountants. Caturano
and Company, Inc. (formerly Caturano and Company, P.C.) whose report on the
financial statements of the Company is filed with the SEC in the Company’s
Annual Report on Form 10-K for the year ended December 31, 2009, were, at the
time such report was issued, independent registered public accountants as
required by the Securities Act of 1933 and the rules and regulations promulgated
thereunder (together, the “Securities
Act”). Except as described in the SEC Documents and as
preapproved in accordance with the requirements set forth in Section 10A of the
Exchange Act, to the Company’s knowledge, Caturano and Company, Inc. has not
engaged in any non-audit services prohibited by subsection (g) of Section 10A of
the Exchange Act on behalf of the Company.
3.7 Internal
Controls. The Company has established and maintains a system
of internal accounting controls sufficient to provide reasonable assurances
that: (i) transactions are executed in accordance with management’s
general or specific authorization; (ii) transactions are recorded as necessary
to permit preparation of financial statements in conformity with generally
accepted accounting principles in the United States and to maintain
accountability for assets; (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 existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.
3.8 Corporate
Governance. The Company’s board of directors meets the
independence requirements of, and has established an audit committee that meets
the independence requirements of, the rules and regulations of the Commission
and the Nasdaq Capital Market. The Audit Committee has reviewed the
adequacy of its charter within the past 12 months.
3.9 Disclosure
Controls. The Company has established and maintains disclosure
controls and procedures (as such term is defined in Rules 13a-15 and 15d-15
under the Exchange Act). Since the date of the most recent evaluation
of such disclosure controls and procedures, there have been no significant
changes in internal controls or in other factors that could significantly affect
internal controls, including any corrective actions with regard to significant
deficiencies and material weaknesses. The Company is in compliance in
all material respects with all provisions currently in effect and applicable to
the Company of the Sarbanes-Oxley Act of 2002, and all rules and regulations
promulgated thereunder or implementing the provisions thereof.
6.
3.10 No Material Adverse
Change. Except as disclosed in the Commission Documents, since
December 31, 2009, the Company has not (i) experienced or suffered any Material
Adverse Effect, (ii) incurred any material liabilities, obligations, claims or
losses (whether liquidated or unliquidated, secured or unsecured, absolute,
accrued, contingent or otherwise) other than those incurred in the ordinary
course of the Company’s business or (iii) declared, made or paid any dividend or
distribution of any kind on its capital stock.
3.11 No Undisclosed Events or
Circumstances. Except as disclosed in the Commission
Documents, since December 31, 2009, except for the consummation of the
transactions contemplated herein, to the Company’s knowledge, no event or
circumstance has occurred or exists with respect to the Company or its
businesses, properties, prospects, operations or financial condition, 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.
3.12 Litigation. No
action, suit, proceeding or investigation is currently pending or, to the
knowledge of the Company, has been threatened in writing against the Company
that: (i) concerns or questions the validity of this Agreement; (ii) concerns or
questions the right of the Company to enter into this Agreement; or (iii) is
reasonably likely to have a Material Adverse Effect. The Company is
neither a party to nor subject to the provisions of any material order, writ,
injunction, judgment or decree of any court or government agency or
instrumentality. There is no action, suit, proceeding or
investigation by the Company currently pending or that the Company intends to
initiate that would have a Material Adverse Effect.
3.13 Compliance. Except
for defaults or violations which are not reasonably likely to have a Material
Adverse Effect, the Company is not (i) in default under or in violation of (and
no event has occurred that has not been waived that, with notice or lapse of
time or both, would result in a default by the Company under), nor has the
Company received notice of a claim that it is in default under or that it is in
violation of, any indenture, loan or credit agreement or any other agreement or
instrument to which it is a party or by which it or any of its properties is
bound (whether or not such default or violation has been waived), (ii) is in
violation of any order of any court, arbitrator or governmental body, or (iii)
is or has been in violation of any statute, rule or regulation of any
governmental authority, including without limitation all foreign, federal, state
and local laws, applicable to its business, except in each case for such
defaults or violations as would not have a Material Adverse Effect.
3.14 Intellectual
Property
(a) To
the best of its knowledge, the Company has entered into agreements with each of
its current and former officers, employees and consultants involved in research
and development work, including development of the Company’s products and
technology providing the Company, to the extent permitted by law, with title and
ownership to patents, patent applications, trade secrets and inventions
conceived, developed, reduced to practice by such person, solely or jointly with
other of such persons, during the period of employment by the Company except
where the failure to have entered into such an agreement would not have a
Material Adverse Effect. The Company is not aware that any of its
employees or consultants is in material violation thereof.
7.
(b) To
the Company’s knowledge, the Company owns or possesses adequate rights to use
all trademarks, service marks, trade names, domain names, copyrights, patents,
patent applications, inventions, know how (including trade secrets and other
unpatented and/or unpatentable proprietary or confidential information, systems
or procedures), and other intellectual property rights (“Intellectual Property”) as are
necessary for the conduct of its business as described in the Commission
Documents. Except as described in the Commission Documents, (i) to
the knowledge of the Company, there is no infringement, misappropriation or
violation by third parties of any such Intellectual Property; (ii) there is
no pending or, to the knowledge of the Company, threatened action, suit,
proceeding or claim by others against the Company challenging the Company’s
rights in or to any such Intellectual Property; (iii) the Intellectual
Property owned by the Company and, to the knowledge of the Company, the
Intellectual Property licensed to the Company has not been adjudged invalid or
unenforceable by a court of competent jurisdiction or applicable government
agency, in whole or in part, and there is no pending or, to the knowledge of the
Company, threatened action, suit, proceeding or claim by others challenging the
validity or scope of any such Intellectual Property; (iv) there is no pending
or, to the knowledge of the Company, threatened action, suit, proceeding or
claim by others against the Company that the Company infringes, misappropriates
or otherwise violates any Intellectual Property or other proprietary rights of
others, and the Company has not received any written notice of such claim; and
(v) to the Company’s knowledge, no employee of the Company is the subject
of any claim or proceeding involving a violation of any term of any employment
contract, patent disclosure agreement, invention assignment agreement,
non-competition agreement, non-solicitation agreement, nondisclosure agreement
or any restrictive covenant to or with a former employer where the basis of such
violation relates to such employee’s employment with the Company or actions
undertaken by the employee while employed with the Company, in each of (i)
through (v), for any instances which would not, individually or in the
aggregate, result in a Material Adverse Effect.
3.15 FDA
Compliance.
(a) Except as described in
the Commission Documents, the Company: (i) is in material compliance
with all statutes, rules or regulations applicable to the ownership, testing,
development, manufacture, packaging, processing, use, distribution, marketing,
labeling, promotion, sale, offer for sale, storage, import, export or disposal
of any product that is under development, manufactured or distributed by the
Company (“Applicable
Laws”); (ii) has not received any FDA Form 483, notice of adverse
finding, warning letter, untitled letter or other correspondence or notice from
the U.S. Food and Drug Administration (the “FDA”) or any other federal,
state, local or foreign governmental or regulatory authority alleging or
asserting material noncompliance with any Applicable Laws or any licenses,
certificates, approvals, clearances, authorizations, permits and supplements or
amendments thereto required by any such Applicable Laws (“Authorizations”), which would
not, individually or in the aggregate, result in a Material Adverse Effect;
(iii) possesses all material Authorizations necessary for the operation of its
business as described in the Commission Documents and such Authorizations are
valid and in full force and effect and the Company is not in material violation
of any term of any such Authorizations; and (iv) since January 1, 2008: (A) has
not received notice of any claim, action, suit, proceeding, hearing,
enforcement, investigation, arbitration or other action from the FDA or any
other federal, state, local or foreign governmental or regulatory authority or
third party alleging that any product operation or activity is in material
violation of any Applicable Laws or Authorizations and has no knowledge that the
FDA or any other federal, state, local or foreign governmental or regulatory
authority or third party is considering any such claim, litigation, arbitration,
action, suit, investigation or proceeding; (B) has not received notice that the
FDA or any other federal, state, local or foreign governmental or regulatory
authority has taken, is taking or intends to take action to limit, suspend,
modify or revoke any material Authorizations and has no knowledge that the FDA
or any other federal, state, local or foreign governmental or regulatory
authority is considering such action; (C) has filed, obtained, maintained or
submitted all material reports, documents, forms, notices, applications,
records, claims, submissions and supplements or amendments as required by any
Applicable Laws or Authorizations and that all such reports, documents, forms,
notices, applications, records, claims, submissions and supplements or
amendments were materially complete and correct on the date filed (or were
corrected or supplemented by a subsequent submission); and (D) has not, either
voluntarily or involuntarily, initiated, conducted, or issued or caused to be
initiated, conducted or issued, any recall, market withdrawal or replacement,
safety alert, post sale warning, “dear doctor” letter, or other notice or action
relating to the alleged lack of safety or efficacy of any product or any alleged
product defect or violation and, to the Company’s knowledge, no third party has
initiated, conducted or intends to initiate any such notice or
action.
8.
(b) Since January 1, 2008,
and except to the extent disclosed in the Commission Documents, the Company has
not received any notices or correspondence from the FDA or any other federal,
state, local or foreign governmental or regulatory authority requiring the
termination, suspension or material modification of any studies, tests or
preclinical or clinical trials conducted by or on behalf of the
Company.
3.16 General Healthcare
Regulatory Compliance.
(a) As
used in this subsection:
(i) “Governmental Entity” means any
national, federal, state, county, municipal, local or foreign government, or any
political subdivision, court, body, agency or regulatory authority thereof, and
any Person exercising executive, legislative, judicial, regulatory, taxing or
administrative functions of or pertaining to any of the foregoing.
(ii) “Law” means any federal, state,
local, national or foreign law, statute, code, ordinance, rule, regulation,
order, judgment, writ, stipulation, award, injunction, decree or arbitration
award or finding.
(b) The
Company has not committed any act, made any statement or failed to make any
statement that would reasonably be expected to provide a basis for the FDA or
any other Governmental Entity to invoke its policy with respect to “Fraud,
Untrue Statements of Material Facts, Bribery, and Illegal Gratuities”, or
similar policies, set forth in any applicable Laws. Neither the
Company, nor, to the knowledge of the Company, any of its officers, key
employees or agents has been convicted of any crime or engaged in any conduct
that has resulted, or would reasonably be expected to result, in debarment under
applicable Law, including, without limitation, 21 U.S.C. Section
335a. No claims, actions, proceedings or investigations that would
reasonably be expected to result in such a material debarment or exclusion are
pending, or to the knowledge of the Company, threatened, against the Company or
any of its respective officers, employees or agents.
9.
(c) Each
of the Company and, to its knowledge, its directors, officers, employees, and
agents (while acting in such capacity) is, and at all times has been, in
material compliance with all health care Laws applicable to the Company or by
which any of its properties, businesses, products or other assets is bound or
affected, including, without limitation, the federal Anti-kickback Statute (42
U.S.C. § 1320a-7b(b)), the Anti-Inducement Law (42 U.S.C.
§ 1320a-7a(a)(5)), the civil False Claims Act (31 U.S.C. §§ 3729 et seq.),
the administrative False Claims Law (42 U.S.C. § 1320a-7b(a)), the Health
Insurance Portability and Accountability Act of 1996 (42 U.S.C. § 1320d et
seq.), the exclusion laws (42 U.S.C. § 1320a-7), the Food Drug and Cosmetic Act
(21 U.S.C. §§ 301 et seq.) (collectively, “Health Care
Laws”). The Company has not received any notification,
correspondence or any other written or oral communication from any Governmental
Entity, including, without limitation, the FDA, the Centers for Medicare and
Medicaid Services, and the Department of Health and Human Services Office of
Inspector General, of potential or actual material non-compliance by, or
liability of, the Company under any Health Care Laws.
(d) The
Company is not a party to any corporate integrity agreements, monitoring
agreements, consent decrees, settlement orders, or similar agreements with or
imposed by any Governmental Entity.
3.17 Application of Takeover
Protections. The issuance of the Shares hereunder and
Intrexon’s ownership thereof is not prohibited by the business combination
statutes of the state of Delaware. The Company has not adopted any
stockholder rights plan, “poison pill” or similar arrangement that would trigger
any right, obligation or event as a result of the issuance of such Shares and
Intrexon’s ownership of such Shares and there are no similar anti-takeover
provisions under the Company's charter documents.
3.18 Listing and Maintenance
Requirements. The Company is in compliance with the
requirements of the Nasdaq Capital Market for continued listing of the Company
common stock thereon and has not received any notification that, and has no
knowledge that Nasdaq Capital Market is contemplating terminating such
listing. The issuance and sale of the Shares hereunder does not
contravene the rules and regulations of the Nasdaq Capital Market in any
material respect.
3.19 Private
Placement. Neither the Company nor its Affiliates, nor any
Person acting on its or their behalf, (i) has engaged in any form of general
solicitation or general advertising (within the meaning of Regulation D under
the Securities Act) in connection with the offer or sale of the Shares
hereunder, (ii) has, directly or indirectly, made any offers or sales of any
security or solicited any offers to buy any security, under any circumstances
that would require registration of the sale and issuance by the Company of the
First Tranche Shares, Second Tranche Shares and Upfront Purchase Shares under
the Securities Act or (iii) has issued any shares of Common Stock or shares of
any series of preferred stock or other securities or instruments convertible
into, exchangeable for or otherwise entitling the holder thereof to acquire
shares of Common Stock which would be integrated with the sale of the Shares to
Intrexon for purposes of the Securities Act or of any applicable stockholder
approval provisions, including, without limitation, under the rules and
regulations of any exchange or automated quotation system on which any of the
securities of the Company are listed or designated, nor will the Company or any
of its subsidiaries or affiliates take any action or steps that would require
registration of any of the Shares under the Securities Act or cause the offering
of the Shares to be integrated with other offerings. Assuming the
accuracy of the representations and warranties of Intrexon, the offer and sale
of the Shares by the Company to Intrexon pursuant to this Agreement will be
exempt from the registration requirements of the Securities
Act.
10.
3.20 No Manipulation of
Stock. The
Company has not taken and will not, in violation of applicable law, take, any
action outside the ordinary course of business designed to or that might
reasonably be expected to cause or result in unlawful manipulation of the price
of the Common Stock.
3.21 Brokers. Neither
the Company nor any of the officers, directors or employees of the Company has
employed any broker or finder in connection with the transaction contemplated by
this Agreement. The Company shall indemnify Intrexon from and against
any broker’s, finder’s or agent’s fees for which the Company is
responsible.
SECTION 4. Representations,
Warranties and Covenants of Intrexon.
4.1 Purchaser
Sophistication. Intrexon represents and warrants to, and
covenants with, the Company that Intrexon (a) is knowledgeable, sophisticated
and experienced in making, and is qualified to make decisions with respect to,
investments in shares presenting an investment decision like that involved in
the purchase of the Shares, including investments in securities issued by the
Company and investments in comparable companies, and has requested, received,
reviewed and considered all information it deemed relevant in making an informed
decision to purchase the Shares, (b) Intrexon, in connection with its decision
to purchase the Shares, relied only upon the SEC Documents, other publicly
available information, and the representations and warranties of the Company
contained herein. Intrexon is an "accredited investor" pursuant to
Rule 501 of Regulation D under the Securities Act, (c) Intrexon is acquiring the
Shares for its own account for investment only and with no present intention of
distributing any of such Shares or any arrangement or understanding with any
other persons regarding the distribution of such Shares; (d) Intrexon has not
been organized, reorganized or recapitalized specifically for the purpose of
investing in the Shares; (e) Intrexon will not, directly or indirectly,
offer, sell, pledge, transfer or otherwise dispose of (or solicit any offers to
buy, purchase or otherwise acquire to take a pledge of) any of the Shares except
in compliance with the Securities Act and applicable state securities laws, (f)
Intrexon understands that the Shares are being offered and sold to it in
reliance upon specific exemptions from the registration requirements of the
Securities Act and state securities laws, and that the Company is relying upon
the truth and accuracy of, and Intrexon’s compliance with, the representations,
warranties, agreements, acknowledgments and understandings of Intrexon set forth
herein in order to determine the availability of such exemptions and the
eligibility of Intrexon to acquire the Shares, (g) Intrexon understands that its
investment in the Shares involves a significant degree of risk, including a risk
of total loss of Intrexon’s investment (provided that such acknowledgment in no
way diminishes the representations, warranties and covenants made by the Company
hereunder) and (h) Intrexon understands that no United States federal or state
agency or any other government or governmental agency has passed upon or made
any recommendation or endorsement of the Shares.
11.
4.2 Authorization and
Power. Intrexon has the requisite power and authority to enter
into and perform this Agreement and to purchase the Shares being sold to it
hereunder. The execution, delivery and performance of this Agreement
by Intrexon and the consummation by it of the transactions contemplated hereby
have been duly authorized by all necessary corporate action, and no further
consent or authorization of Intrexon or its board of directors or stockholders
is required. When executed and delivered by Intrexon, this Agreement
shall constitute a valid and binding obligation of Intrexon enforceable against
Intrexon in accordance with its terms, except as such enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium,
liquidation, conservatorship, receivership or similar laws relating to, or
affecting generally the enforcement of, creditor’s rights and remedies or by
other equitable principles of general application.
4.3 No
Conflict. The execution, delivery and performance of this
Agreement by Intrexon and the consummation by Intrexon of the transactions
contemplated hereby do not and will not (i) violate any provision of Intrexon’s
charter or organizational documents, (ii) conflict with, or constitute a default
(or an event which 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 of, any agreement, mortgage, deed of trust, indenture, note, bond,
license, lease agreement, instrument or obligation to which Intrexon is a party
or by which Intrexon’s properties or assets are bound, or (iii) result in a
violation of any federal, state, local or foreign statute, rule, regulation,
order, judgment or decree (including federal and state securities laws and
regulations) applicable to Intrexon or by which any property or asset of
Intrexon are bound or affected, except, in all cases, other than violations
(with respect to federal and state securities laws) above, for such conflicts,
defaults, terminations, amendments, acceleration, cancellations and violations
as would not, individually or in the aggregate, materially and adversely affect
Intrexon’s ability to perform its obligations under the Agreement.
4.4 Restricted
Shares. Intrexon acknowledges that the First Tranche Shares,
Second Tranche Shares and Upfront Purchase Shares are restricted securities and
must be held indefinitely unless subsequently registered under the Securities
Act or the Company receives an opinion of counsel reasonably satisfactory to the
Company that such registration is not required. Intrexon is aware of
the provisions of Rule 144 promulgated under the Securities Act which permit
limited resale of stock purchased in a private placement subject to the
satisfaction of certain conditions, including, among other things, the existence
of a public market for the stock, the availability of certain current public
information about the Company, the resale occurring not less than one year after
a party has purchased and paid for the stock to be sold, the sale being through
a “broker’s transaction” or a transaction directly with a “market maker” and the
number of shares of the stock being sold during any three-month period not
exceeding specified limitations. Intrexon further acknowledges and
understands that the Company may not be satisfying the current public
information requirement of Rule 144 at the time Intrexon wishes to sell the
Shares and, if so, Intrexon would be precluded from selling the Shares under
Rule 144 even if the one year minimum holding period has been
satisfied.
12.
4.5 Ownership of Common
Stock. As of the date hereof, excluding the Shares, Intrexon
and its Affiliates beneficially own no shares of Common Stock of the
Company.
4.6 Stock
Legends. Intrexon acknowledges that certificates evidencing
the Shares shall bear a restrictive legend in substantially the following form
(and including related stock transfer instructions and record
notations):
THESE
SECURITIES 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 ACCORDANCE WITH APPLICABLE STATE
SECURITIES LAWS OR BLUE SKY LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL
REASONABLY SATISFACTORY TO THE COMPANY.
SECTION 5. Survival of
Representations, Warranties and Agreements.
Notwithstanding
any investigation made by any party to this Agreement, all representations and
warranties made by the Company and Intrexon herein shall survive the execution
of this Agreement and the issuance and sale to Intrexon of the Shares and shall
terminate two years after the First Tranche Closing, provided, however, the
representations and warranties in Sections 3.1, 3.2 and 3.3 shall survive for so
long as Intrexon continues to hold any of the Shares sold
hereunder.
SECTION 6. Covenants.
6.1 Notifications.
(a) During
the period prior to the First Tranche Closing, the Company will promptly advise
Intrexon in writing of (i) any Material Adverse Effect, or (ii) any notice or
other communication from any third person or entity alleging that the consent of
the third person is required in connection with the transactions contemplated by
this Agreement.
(b) During
the period prior to the Second Tranche Closing, each party shall promptly notify
the other of any action, suit or proceeding that is instituted or specifically
threatened in writing against such party to restrain, prohibit or otherwise
challenge the legality of any transaction contemplated by this
Agreement.
(c) Information
received by Intrexon pursuant to this Section 6.1 shall be considered
“Confidential Information” as such term is defined in the Channel Agreement and
Intrexon agrees to treat such information in accordance with the provisions of
Article 7 of the Channel Agreement.
13.
6.2 Compliance. The
Company shall use commercially reasonable best efforts to (i) cause the Common
Stock to continue to be registered under the Exchange Act, file all periodic
reports thereunder and continue the listing or trading of the Common Stock on
the Nasdaq Capital Market or any successor market in good standing and to comply
in all material respects with all applicable rules and regulations of the
Commission and all reporting requirements under the rules and regulations of the
Exchange Act and (ii) to satisfy the current public information requirement of
Rule 144, in each case for so long as and at all times during which Intrexon
holds any Shares.
6.3 Use of
Proceeds. The Company shall apply the proceeds from the sale
of the Shares hereunder to ongoing operations, or for such other uses as
determined by the Company’s board of directors.
6.4 Best
Efforts. Each party will use its reasonable best efforts to
satisfy in a timely fashion each of the conditions to be satisfied by it under
Section 8 of this Agreement.
6.5 Press
Release. The Company shall issue a press release announcing
the transaction contemplated by this Agreement and the Channel Agreement prior
to the opening of the financial markets in New York City on the business day
immediately following the date hereof. The Company shall provide
Intrexon with a reasonable opportunity to review and comment on the press
release.
6.6 Board Representation;
Observer Rights.
(a) At
or prior to the First Tranche Closing, the Company shall cause Randal J. Kirk to
be appointed a director of the Company to fill the vacancy created on the
Company’s board of directors by the resignation of George B. Abercrombie (or, if
such vacancy has otherwise been eliminated, shall create another vacancy by
increasing the authorized size of the Company’s board of directors, which
vacancy Mr. Kirk shall instead be appointed to fill). The Company shall, at each
annual or special meeting of stockholders of the Company at which directors are
to be elected, nominate and recommend for election an individual designated by
Intrexon to serve as a member of the board of directors of the Company (with Mr.
Kirk being the initial designee); provided however that the Company shall only
be obligated hereunder to nominate such individuals as the Company’s Board of
Directors determines, in its sole discretion and acting reasonably and in
accordance with its fiduciary duties, to be a suitable candidate (it being
understood and agreed that Mr. Kirk is a suitable candidate). Upon
the death, disability, retirement, resignation or other removal of the director
designated by Intrexon pursuant to this Section 6.6, the Company’s board of
directors shall as promptly as practicable elect and appoint another individual
designated by Intrexon as a director to fill the vacancy so created; provided
however that the Company shall only be obligated hereunder to nominate such
individuals as the Company’s Board of Directors determines, in its sole
discretion and acting reasonably and in accordance with its fiduciary duties, to
be a suitable candidate. If the individual designated by Intrexon and
nominated by the Company to serve as a member of the Board of Directors of the
Company is, for any reason, not elected to the Company’s Board of Directors by
the stockholders of the Company, then, at Intrexon’s election, such designee
shall be entitled to attend all meetings of the Company’s Board of Directors and
committees thereof as an observer (with no power to vote on any matter before
the board of directors) and shall be entitled to receive copies of all materials
provided to members of the Company’s Board of Directors; provided that such
designee enters into a confidentiality agreement with the Company in a form
reasonably satisfactory to the Company; and provided, further, that the Company
reserves the right to (i) exclude such designee from access to any Board of
Directors’ material or meeting or portion thereof if the Company believes that
such exclusion is reasonably necessary to preserve the attorney-client
privilege, to protect highly confidential information or for other similar
reasons, or if the Company believes in good faith that such designee has a
conflict of interest, (ii) at the discretion of the applicable
committee, exclude such designee from access to any meeting materials or meeting
(or portion thereof) of the nominating committee of the Company’s Board of
Directors, compensation committee of the Company’s Board of Directors, audit
committee of the Company’s Board of Directors and any other committee of the
Company’s Board of Directors performing similar functions or which the listing
rules of the Nasdaq Stock Market require to have such
discretion.
14.
(b) If,
and for so long as, Intrexon owns twenty percent or more of the issued and
outstanding stock of the Company, Intrexon shall have the right to designate a
second director for nomination and election to the Company’s board of directors,
provided such director shall not be an officer, director or employee of Intrexon
or Third Security, LLC and shall qualify as an “independent director” under the
listing standards of the Nasdaq Stock Market (or such other exchange on which
the Company’s stock may be listed); provided however that the Company shall only
be obligated hereunder to nominate or elect such individual as the Company’s
Board of Directors determines, in its sole discretion and acting reasonably and
in accordance with its fiduciary duties, to be a suitable candidate; and
provided further, that such right to designate a second director for nomination
and election to the Company’s board of directors shall not apply to the extent
that Intrexon’s nominees under Section 6.6(a) and (b) would constitute
nominations for more than one-third of the Company’s authorized number of
directors, it being acknowledged that nothing herein shall require
the Company to increase the size of its board of directors for such
purpose. Upon any such initial designation, the Company shall cause
such designee to be appointed a director of the Company to fill an existing
vacancy, or, if no vacancies exist on the Company’s board of directors, the
Company shall increase the authorized size of the Company’s board of directors
by one director and the Company shall then cause such designee to be appointed a
director of the Company to fill such newly created vacancy. The Company shall,
at each annual or special meeting of stockholders of the Company at which
directors are to be elected, nominate and recommend for election such second
individual designated by Intrexon to serve as a member of the board of directors
of the Company. Upon the death, disability, retirement, resignation
or other removal of the director designated by Intrexon pursuant to this Section
6.6(b), the Company’s board of directors shall as promptly as practicable elect
and appoint another individual designated by Intrexon as a director to fill the
vacancy so created.
(c) Subject
to Section 10.14, Intrexon’s rights and the Company’s obligations under this
Section 6.6 shall terminate upon the termination of the Channel
Agreement.
6.7 No Poison
Pill. The Company will not adopt any stockholder rights plan,
“poison pill” or similar arrangement, or adopt any anti-takeover provisions
under its Charter documents, that would trigger any right, obligation or event
as a result of the issuance of the Shares hereunder to Intrexon or Intrexon’s
ownership of such Shares, or the accumulation of shares of Common Stock acquired
in the market by Intrexon or its affiliates, provided that Intrexon complies
with Section 6.9 below.
15.
6.8 No Reduction in Outstanding
Number of Shares. Prior to the earlier of (i) the issuance of
the Second Tranche Shares and (ii) the fifth year anniversary of the date
hereof, the Company shall take no action that would reduce the number of its
issued and outstanding shares of Common Stock (such as a repurchase or
redemption thereof except in the context of a repurchase or forfeiture of
restricted stock issued to an employee, officer, director, consultant or
advisor) such that the sum of the First Tranche Shares, the Upfront Purchase
Shares and 7.495% of the number of shares of Common Stock issued and outstanding
immediately prior to the First Tranche Closing (which for clarity equals the
number of First Tranche Shares) (subject to appropriate adjustment for stock
splits, dividends, combinations, recapitalizations and the like affecting the
Common Stock) would, at the time of the Second Tranche Closing, exceed 19.99% of
the issued and outstanding number of shares of Common Stock of the Company,
unless the Company had first obtained the approval of its stockholders for the
issuance at the Second Tranche Closing of Shares in an amount equal to 7.495% of
the number of shares of Common Stock issued and outstanding immediately prior to
the First Tranche Closing (subject to appropriate adjustment for stock splits,
dividends, combinations, recapitalizations and the like affecting the Common
Stock) or such stockholder approval is not required under the Nasdaq Stock
Market listing requirements in order to effect such full issuance in compliance
therewith.
6.9 Standstill
Provision.
(a) Intrexon
hereby agrees that, for a period of three years from the date hereof, unless
specifically invited in writing by the Company to do so, neither Intrexon nor
any of its Affiliates will, or will cause or knowingly permit any of its or
their directors, officers, employees, investment bankers, attorneys, accountants
or other advisors or representatives to, in any manner, directly or
indirectly:
(i) effect
or seek, initiate, offer or propose (whether publicly or otherwise) to effect,
or cause or participate in or in any way advise or, assist any other person to
effect or seek, initiate, offer or propose (whether publicly or otherwise) to
effect or cause or participate in, any acquisition of any securities (or
beneficial ownership thereof) or assets of the Company; any tender or exchange
offer, merger, consolidation or other business combination involving the
Company; any recapitalization, restructuring, liquidation, dissolution or other
extraordinary transaction with respect to the Company; or any “solicitation” of
“proxies” (as such terms are used in the proxy rules of the Commission) or
consents to vote any voting securities of the Company;
(ii)
form, join or in any way participate in a “group” (as defined under
the Exchange Act, hereafter a “Group”) with respect to any securities of the
Company;
(iii) otherwise
act, alone or in concert with others, to seek to control or influence the
management, Board of Directors or policies of the Company (except as
contemplated by Section 6.6 of this Agreement, and provided further that nothing
herein shall limit the ability of the directors nominated to the Board of
Directors by Intrexon from fully exercising their rights and duties as directors
of the Company, which shall include the ability, in such capacity, to freely
communicate with the executive management of the Company and its board of
directors);
16.
(iv) take
any action which could reasonably be expected to force the Company to make a
public announcement regarding any of the types of matters set forth in this
Section 6.9; or
(v) enter
into any agreements, discussions or arrangements with any third party with
respect to any of the foregoing.
(b) Notwithstanding
the foregoing, the Company hereby agrees that the provisions of this Section 6.9
shall not apply to the following:
(i) the
purchase by Intrexon and/or its Affiliates after the date hereof (and not
pursuant to this Agreement) of up to an aggregate number of shares of Common
Stock that does not exceed 10% of the number of shares of Common Stock then
issued and outstanding;
(ii) the
exercise by Intrexon and/or its Affiliates, if applicable, of any
voting rights available to Company stockholders generally pursuant to any
transaction described Section 6.9(a)(i) above, provided that Intrexon has not
then either directly, indirectly, or as a member of a Group made, effected,
initiated or caused such transaction to occur or otherwise violated this Section
6.9;
(iii) the
exercise by Intrexon and/or its Affiliates, if applicable, of any
voting rights generally available to it or them as non-Affiliate security
holders of a third party that is a participant in an action or transaction
described in Section 6.9(a)(i) above, provided that Intrexon has not then either
directly, indirectly, or as a member of a Group made, effected, initiated or
caused such action or transaction to occur or otherwise violated this
Section 6.9;
(iv) any
activity by Intrexon after the Company has made any public
announcement of its intent to solicit or engage in any transaction which would
result in a Company Sale; and
(v)
making any communication to Company executive management on a confidential basis
solely that Intrexon would be interested in engaging in discussions with the
Company that could result in a negotiated transaction described in Section
6.9(a)(i) so long as Intrexon does not propose any such transaction or discuss
or refer to potential terms thereof without the Company’s prior
consent.
Notwithstanding
any of the foregoing provisions of this Section 6.9, the Company further agrees
that nothing herein shall limit the ability of Mr. Kirk (or, if not Mr.
Kirk, Intrexon’s designee to the Company’s board of directors pursuant to
Section 6.6(a)) to confidentially propose to the executive management of the
Company and its board of directors, and/or advocate for, any transaction between
the Company and any third party unaffiliated with Intrexon or its Affiliates to
the extent that such proposal and/or advocacy is made in his (or her) capacity
as a director of the Company and in the exercise of his (or her) rights and
duties as a director of the Company.
17.
6.10 Stockholder Approval and
Subsequent Issuance. In the event the Company determines that
a Second Tranche Shortfall will occur, then the Company shall (i) at its next
annual meeting of stockholders after the date of such determination, hold a vote
with respect to the issuance by the Company to Intrexon of an amount
of Shares equal to the number of shares comprising the Second Tranche Shortfall
(subject to appropriate adjustment for stock splits, dividends, combinations,
recapitalizations and the like affecting the Common Stock); (ii) solicit the
approval of its stockholders with respect to such issuance, (iii) recommend that
its stockholders approve such issuance and, (iv) if requisite stockholder
approval is obtained therefor in accordance with the Nasdaq Stock Market listing
rules, effect such issuance in accordance with Section 1.4.
SECTION
7. Equity
Purchase Commitment
7.1 Intrexon
Commitment. Subject to Section 7.2, if requested by the
Company, Intrexon will participate in each Qualified Financing (as
hereinafter defined) conducted by Company and will purchase as part of, or in
connection with, such Qualified Financing an amount of Common Stock or other
Company securities equal to 19.99% of the number of shares of Common Stock (or
other Company securities) issued and sold by the Company in the Qualified
Financing (excluding the securities sold pursuant to this Section 7.1) or, in
the case of a Qualified Financing that is completed following the two year
anniversary of the date of the Channel Agreement, a lesser number of shares of
Common Stock (or other Company securities) having a purchase price in such
Qualified Financing equal to 50% of the Use of Proceeds Commitment Amount (as
hereinafter defined) (collectively, the “Equity Purchase Commitment”),
provided, however, that in no event shall Intrexon have any obligation to
purchase more than a total of $50,000,000 of Common Stock or other Company
securities pursuant to this Section 7. For the purposes of this
Section 7, a “Qualified
Financing” shall mean a sale by the Company of Common Stock, or equity
securities convertible into Common Stock, in a public or private offering,
raising gross proceeds of at least $10,000,000 where the shares sold are either
registered under the Securities Act on issuance, or the Company agrees to
register such shares following the issuance of such shares. The price
per share paid by Intrexon in any such Qualified Financing shall be the same as
that paid by the other investors in such Qualified Financing, and Intrexon shall
receive securities of the same type and with the same rights, preferences and
privileges as the other investors in such Qualified Financing, including, for
example, any warrant coverage, subject to the execution by Intrexon of the
investment documents entered into by the other investors in the Qualified
Financing. In case the Qualified Financing is for convertible debt
instruments of the Company or non-convertible preferred stock of the Company and
the Company requests that Intrexon participate in the Qualified Financing, then
notwithstanding the foregoing, Intrexon shall not be required to purchase such
securities pursuant to this Section 7.1, but may, at its election, do so, and if
so elected by Intrexon, such purchase(s) shall be deemed part of the Equity
Purchase Commitment.
In the event that the Qualified
Financing is a public offering made pursuant to a registration statement filed
with the Commission pursuant to the Securities Act:
18.
(a) Upon
receipt of the prospectus and other offering documents prepared by the Company
in connection with such public offering, Intrexon shall be under no obligation
to participate in such public offering but may, at its election, do so
up to the Equity Purchase Commitment calculated based on the amount
raised in such public offering. Upon such election, and subject to
Section 7.1(b), the Company shall permit Intrexon to participate in such public
offering in the amount elected by Intrexon in accordance with the preceding
sentence.
(b) Unless
Intrexon elects to participate in such public offering in the full amount of its
Equity Purchase Commitment (calculated based on the amount raised in such public
offering) and/or counsel to the Company or counsel to any underwriter in such
public offering advises the Company that such inclusion is not permissible under
and in compliance with applicable securities laws (including without limitation
Section 5 of the Securities Act), the offering and sale of securities to
Intrexon pursuant to this Section 7 shall be made by the Company in a concurrent
private placement and not in such public offering. In any such
private placement: (i) the offer of the securities in such private
placement shall be made on the same terms and conditions as the offer of the
securities in the public offering, (ii) the closing of the private placement
shall occur concurrently with the closing of the Qualified Financing, (iii) the
securities offered and sold to Intrexon in the private placement shall be deemed
to have been issued in such Qualified Financing for the purpose of calculating
Intrexon’s purchase obligation, and (iv) the Company shall provide registration
rights similar to those provided in the Rights Agreement with respect to the
securities purchased in the private placement.
7.2 Conditions Precedent to
Equity Purchase Commitment. Notwithstanding the foregoing,
Intrexon shall not be obligated to purchase shares of the Company’s Common Stock
pursuant to this Section 7 (a) unless the Company shall then be in substantial
compliance with its obligations under the Channel Agreement, and such agreement
shall not have been terminated, and (b) with respect to a Qualified Financing
that is completed following the one year anniversary of the date of the Channel
Agreement, the Company shall have confirmed in writing to Intrexon the Company’s
intent that an amount equal to 40% of the net proceeds (the “Use of Proceeds Commitment
Amount”) from the Qualified Financing shall have been spent, or in the
next year will be spent, by the Company under the Channel
Agreement.
SECTION 8. Conditions
to Closing.
8.1 The
obligation hereunder of the Company to issue and sell Shares to Intrexon at each
Closing is subject to the satisfaction or waiver, at or before the Closing of
the conditions set forth below. These conditions are for the
Company’s sole benefit and may be waived by the Company at any time in its sole
discretion.
(a) Accuracy of Intrexon’s
Representations and Warranties. The representations and
warranties of Intrexon shall be true and correct as of the date when made and as
of the Closing Date as though made at that time, except for representations and
warranties that are expressly made as of a particular date, which shall be true
and correct as of such date.
(b) 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 which
prohibits the consummation of any of the transactions contemplated by this
Agreement.
19.
(c) Delivery of Purchase
Price. With respect only to the Company’s obligation to issue
and sell the Upfront Purchase Shares, the cash purchase price for the Upfront
Purchase Shares shall have been delivered to the Company on the Closing
Date.
(d) Performance by
Intrexon. Intrexon shall have performed, satisfied and
complied in all material respects with all covenants, agreements and conditions
required by this Agreement to be performed, satisfied or complied by Intrexon at
or prior to the Closing Date.
(e) Channel Partnership
Agreement. The Channel Agreement shall have been entered into
by the Company and Intrexon and shall be in full force and effect.
(f) No Proceedings or
Litigation. No action, suit or proceeding before any
arbitrator or any governmental authority shall have been commenced, and no
investigation by any governmental authority shall have been threatened in
writing against Intrexon or any of the officers, directors or Affiliates of
Intrexon seeking to restrain, prevent or change the transactions contemplated by
this Agreement, or seeking damages in connection with such
transactions.
8.2 The
obligation hereunder of Intrexon to purchase Shares and consummate the
transactions contemplated by this Agreement is subject to the satisfaction or
waiver, at or before each Closing, of each of the conditions set forth
below. These conditions are for Intrexon’s sole benefit and may be
waived by Intrexon at any time in its sole discretion.
(a) Accuracy of the Company’s
Representations and Warranties. Each of the representations
and warranties of the Company in this Agreement shall be true and correct as of
the Closing Date, except for representations and warranties that speak as of a
particular date, which shall be true and correct as of such date.
(b) Performance by the
Company. The Company shall have performed, satisfied and
complied in all material respects with all covenants, agreements and conditions
required by this Agreement to be performed, satisfied or complied with by the
Company at or prior to the Closing Date.
(c) Channel Partnership
Agreement. The Channel Agreement shall have been entered into
by the Company and Intrexon and shall be in full force and effect.
(d) No Suspension,
Etc. Trading in the common stock shall not have been suspended
by the Commission or the Nasdaq Capital Market.
(e) 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 which
prohibits the consummation of any of the transactions contemplated by this
Agreement.
(f) No Proceedings or
Litigation. No action, suit or proceeding before any
arbitrator or any governmental authority shall have been commenced, and no
investigation by any governmental authority shall have been threatened in
writing against the Company or any of the officers, directors or Affiliates of
the Company seeking to restrain, prevent or change the transactions contemplated
by this Agreement, or seeking damages in connection with such
transactions.
20.
(g) Execution of Rights
Agreement. On the First Tranche Closing Date, each party shall
have delivered its signature to the Rights Agreement to the other party, and
such agreement shall be in full force and effect as of the Closing
Date.
(h) Opinion. Counsel
for the Company shall have delivered to Purchaser opinion letters containing
legal opinions substantially in the form attached hereto as Exhibit
B.
(i) Officer’s
Certificate. On each Closing, the Company shall have delivered
to Intrexon a certificate signed by the chief executive officer on behalf of the
Company (the “Officer’s
Certificate”), dated as of such Closing, confirming on behalf of the
Company the conditions precedent set forth in paragraphs (a), (b), (d), (e),
(f), (j) and (k) of this Section 8.2 as of such Closing, and attaching and
certifying a copy of the resolutions of the Company’s board of directors
referred to in the last sentence of Section 3.2.
(j) No Material Adverse
Effect. Since the date of this Agreement, there shall not have
occurred any Material Adverse Effect.
(k) Board
Appointment. With respect to the First Tranche Closing, the
authorized size of the Company’s board of directors shall have been set at a
membership not exceeding nine (9) in number and Randal J. Kirk shall have been
appointed a director of the Company.
SECTION 9. Notices.
All
notices or other communications which are required or permitted hereunder shall
be in writing and addressed as follows:
or to
such other address as the party to whom notice is to be given may have furnished
to the other party in writing in accordance herewith. Any such
communication shall be deemed to have been given when delivered if personally
delivered or sent by facsimile (provided that the party providing such notice
promptly confirms receipt of such transmission with the other party by
telephone), on the business day after dispatch if sent by a
nationally-recognized overnight courier and on the third business day following
the date of mailing if sent by certified mail, postage prepaid, return receipt
requested.
SECTION 10.
Miscellaneous.
10.1 Fees and
Expenses. Each party shall pay the fees and expenses of its
advisors, 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.
10.2 Waivers and
Amendments. Neither this Agreement nor any provision hereof
may be changed, waived, discharged, terminated, modified or amended except upon
the written consent of the parties hereto.
10.3 Headings. The
headings of the various sections of this Agreement have been inserted for
convenience of reference only and shall not be deemed to be part of this
Agreement.
10.4 Severability. If
any provision hereof should be held invalid, illegal or unenforceable in any
respect, then, to the fullest extent permitted by law, (a) all other provisions
hereof shall remain in full force and effect and shall be liberally construed in
order to carry out the intentions of the Parties as nearly as may be possible
and (b) the parties shall use their best efforts to replace the invalid, illegal
or unenforceable provision(s) with valid, legal and enforceable provision(s)
which, insofar as practical, implement the purposes of such provision(s) in this
Agreement.
10.5 Governing
Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York as applied to contracts
entered into and performed entirely in the State of New York by New York
residents, without regard to conflicts of law principles.
22.
10.6 Counterparts. This
Agreement may be executed in two or more counterparts, each of which shall
constitute an original, but all of which, when taken together, shall constitute
but one instrument, and shall become effective when one or more counterparts
have been signed by each party hereto and delivered to the other
parties.
10.7 Successors and
Assigns. Except as otherwise expressly provided herein, the
provisions hereof shall inure to the benefit of, and be binding upon, the
successors, assigns, heirs, executors and administrators of the parties hereto,
provided that Intrexon shall not assign its rights or obligations hereunder
unless Intrexon assigns such rights in whole and not in part to an assignee of
such rights and obligations which shall agree in writing with the Company to be
bound by this Agreement and that Intrexon’s rights under Sections 6.7, 6.8 and
6.9 and obligations under Section 7 shall not be assignable.
10.8 No Third Party
Beneficiaries. This Agreement is intended for the benefit of
the parties hereto and their respective permitted successors and assigns and is
not for the benefit of, nor may any provision hereof be enforced by, any other
person.
10.9 Expenses. Each
party shall pay all costs and expenses that it incurs with respect to the
negotiation, execution, delivery and performance of this Agreement.
10.10 Entire
Agreement. This Agreement (including the Schedule of
Exceptions), the Channel Agreement, the Rights Agreement and other documents
delivered pursuant hereto and thereto, including the exhibits, constitute the
full and entire understanding and agreement between the parties with regard to
the subjects hereof and thereof.
10.11 Publicity. Except
as otherwise provided herein, no party shall issue any press releases or
otherwise make any public statement with respect to the transactions
contemplated by this Agreement without the prior written consent of the other
party, except as may be required by applicable law or regulations, in which case
such party shall provide the other parties with reasonable notice of such
publicity and/or opportunity to review such disclosure.
10.12 Waiver of Rule of
Construction. Each Party has had the
opportunity to consult with counsel in connection with the review, drafting and
negotiation of this Agreement. Accordingly, the rule of construction
that any ambiguity in this Agreement shall be construed against the drafting
Party shall not apply.
10.13 Further
Assurances. From and after the date of this Agreement, upon
the reasonable request of Intrexon or the Company, the Company and Intrexon
shall execute and deliver such instruments, documents and other writings as may
be reasonably necessary or desirable to confirm and carry out and to effectuate
fully the intent and purposes of this Agreement.
23.
10.14 Company
Sale. Upon the consummation of a Company Sale, the Company’s
obligations under Sections 1.4, 6 and 7 shall terminate and be of no further
force or effect. For purposes of this Agreement, a “Company Sale”
shall mean a merger or consolidation in which (i) the Company is a constituent
party, or (ii) a subsidiary of the Company is a constituent party and the
Company issues shares of its capital stock pursuant to such merger or
consolidation, except in the case of either clause (i) or (ii) any such merger
or consolidation involving the Company or a Company subsidiary in which the
shares of capital stock of the Company outstanding immediately prior to such
merger or consolidation continue to represent, or are converted into or
exchanged for shares of capital stock which represent, immediately following
such merger or consolidation, more than 50% by voting power of the capital stock
of (A) the surviving or resulting corporation or (B) if the surviving or
resulting corporation is a wholly owned subsidiary of another corporation
immediately following such merger or consolidation, the parent corporation of
such surviving or resulting corporation.
[Remainder
of page intentionally left blank.]
24.
In Witness
Whereof, the parties hereto have caused this Stock Purchase Agreement to
be executed by their duly authorized representatives as of the day and year
first above written.
This
Registration Rights Agreement (this “Agreement”) is made and
entered into as of ______________, 201__, by and among ZIOPHARM Oncology, Inc.,
a Delaware corporation (the “Company”), and Intrexon
Corporation, a Virginia corporation (“Intrexon”).
This
Agreement is being entered into pursuant to the Stock Purchase Agreement between
the Company and Intrexon dated as of January 6, 2011 (the “Purchase
Agreement”).
The
Company and Intrexon hereby agree as follows:
1.
Definitions.
Capitalized
terms used and not otherwise defined herein shall have the meanings given such
terms in the Purchase Agreement. As used in this Agreement, the
following terms shall have the following meanings:
“Affiliate” means, with respect
to any Person, any other Person that directly or indirectly controls or is
controlled by or under common control with such Person. For the
purposes of this definition, “control,” when used with
respect to any Person, means the possession, directly or indirectly, of the
power to direct or cause the direction of the management and policies of such
Person, whether through the ownership of voting securities, by contract or
otherwise; and the terms of “affiliated,” “controlling” and “controlled” have meanings
correlative to the foregoing.
“Business Day” means any day
except Saturday, Sunday and any day which shall be a legal holiday or a day on
which banking institutions in the state of Delaware generally are authorized or
required by law or other government actions to close.
“Closing Date” means the date
of the closing of the purchase and sale of the Shares pursuant to the Purchase
Agreement.
“Commission” means the
Securities and Exchange Commission.
“Common Stock” means the
Company’s Common Stock, par value $0.001 per share.
“Effectiveness Period” shall
have the meaning set forth in Section 2.
“Exchange Act” means the
Securities Exchange Act of 1934, as amended.
“Filing Date” means [120 days
from date of this Agreement], 2011.
“Holder” or “Holders” means the holder or
holders, as the case may be, from time to time of Registrable
Securities.
“Indemnified Party” shall have
the meaning set forth in Section 5(c).
“Indemnifying Party” shall have
the meaning set forth in Section 5(c).
“Losses” shall have the meaning
set forth in Section 5(a).
“Person” means an individual or
a corporation, partnership, trust, incorporated or unincorporated association,
joint venture, limited liability company, joint stock company, government (or an
agency or political subdivision thereof) or other entity of any
kind.
“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 in such
Prospectus.
“Registrable Securities” means
the First Tranche Shares, Second Tranche Shares and Up Front Purchase Shares (as
such terms are defined in the Purchase Agreement) issued or issuable to Intrexon
and any securities issued with respect to, or in exchange for or in replacement
of such shares of Common Stock upon any stock split, stock dividend,
recapitalization, subdivision, merger or similar event; provided, however, that
the applicable Holder has completed and delivered to the Company a Selling
Stockholder Questionnaire; and provided further that such securities shall no
longer be deemed Registrable Securities if such securities have been sold
pursuant to a Registration Statement, or (ii) such shares have been sold in
compliance with Rule 144 or all such shares may be sold without limitation
pursuant to Rule 144.
“Registration Statement” means
the registration statements and any additional registration statements
contemplated by Section 2, 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 in such registration statement.
“Rule 144” means Rule 144
promulgated by the Commission pursuant to the Securities Act, as such Rule may
be amended from time to time, or any similar rule or regulation hereafter
adopted by the Commission having substantially the same effect as such
Rule.
“Rule 415” means Rule 415
promulgated by the Commission pursuant to the Securities Act, as such Rule may
be amended from time to time, or any similar rule or regulation hereafter
adopted by the Commission having substantially the same effect as such
Rule.
2
“Securities Act” means the
Securities Act of 1933, as amended.
“Selling Stockholder
Questionnaire” means a questionnaire in the form attached as Annex B
hereto, or such other form of questionnaire as may reasonably be requested by
the Company from time to time.
2. Registration Obligations;
Filing Date Registration. On or prior to the Filing Date the
Company shall prepare and file with the Commission a Registration Statement
covering the resale of the Registrable Securities as would permit or facilitate
the sale and distribution of all the Registrable Securities in the manner
reasonably requested by the Holder; provided, however, that if the Filing Date
falls on a day that is not a Business Day, such deadline shall be extended to
the next Business Day. 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 with the Securities Act and the rules
promulgated thereunder and the Company shall undertake to register the
Registrable Securities on Form S-3 as soon as practicable following the
availability of such form, provided that the Company shall use reasonable best
efforts to maintain the effectiveness of the Registration Statement then in
effect until such time as a Registration Statement on Form S-3 covering the
Registrable Securities has been declared effective by the
Commission). The Registration Statement shall contain the “Plan of
Distribution” section in substantially the form attached hereto as Annex
A. The Company shall use reasonable best efforts to cause the
Registration Statement to be declared effective under the Securities Act as
promptly as practicable after the filing thereof, and, subject to Section 3(j)
hereof, to keep such Registration Statement continuously effective under the
Securities Act until such date as is the earlier of (x) the date when all
Registrable Securities covered by such Registration Statement have been sold
under such Registration Statement; or (y) the date on which the Registrable
Securities may be sold pursuant to Rule 144, without limitations, as determined
by the counsel to the Company pursuant to a written opinion letter, addressed to
the Company’s transfer agent to such effect (the “Effectiveness Period”). By
9:30 am Eastern Time on the Business Day following the Effective Date, the
Company shall file with the Commission in accordance with Rule 424 under the
Securities Act the final prospectus to be used in connection with sales pursuant
to such Registration Statement. Intrexon acknowledges and agrees that
securities other than the Registrable Securities may be included in the
Registration Statement.
(a) Prepare
and file with the Commission on or prior to the Filing Date, a Registration
Statement on Form S-3 (or if the Company is not then eligible to register for
resale the Registrable Securities on Form S-3 such registration shall be on
another appropriate form in accordance with the Securities Act and the rules and
regulations promulgated thereunder) in accordance with the method or methods of
distribution thereof as described on Annex A hereto (except if otherwise
directed by all of the Holders), and use reasonable best efforts to cause the
Registration Statement to become effective and remain effective as provided
herein.
3
(b) Prepare
and file with the Commission such amendments, including post-effective
amendments, to the Registration Statement as may be necessary to keep the
Registration Statement continuously effective (subject to Section 3(l)) as to
the applicable Registrable Securities for the Effectiveness Period and prepare
and file with the Commission such additional Registration Statements, if
necessary, 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 (or any similar provisions then in
force) promulgated under the Securities Act; (iii) respond promptly to any
comments received from the Commission with respect to the Registration Statement
or any amendment thereto and promptly provide the Holders 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 Holders thereof set forth in the Registration Statement as so
amended or in such Prospectus as so supplemented.
(c) Promptly
notify the Holders of Registrable Securities (i)(A) when a Prospectus or any
Prospectus supplement or post-effective amendment to the Registration Statement
is filed; (B) when the Commission notifies the Company whether there will be a
“review” of such Registration Statement and whenever the Commission comments in
writing on such Registration Statement, and if requested by such Holders,
furnish to them a copy of such comments and the Company’s responses thereto and
(C) with respect to the Registration Statement or any post-effective amendment,
when the same has become effective; (ii) of any request by the Commission or any
other Federal or state governmental authority for amendments or supplements to
the Registration Statement or Prospectus or for additional information; (iii) of
the issuance by the Commission of any stop order suspending the effectiveness of
the Registration Statement covering any or all of the Registrable Securities or
the initiation of any Proceedings for that purpose; (iv) of the receipt by the
Company of any notification with respect to the suspension of the qualification
or exemption from qualification of any of the Registrable Securities for sale in
any jurisdiction, or the initiation or threatening of any Proceeding for such
purpose; and (v) of the occurrence of any event that makes any statement made in
the Registration Statement or Prospectus or any document incorporated or deemed
to be incorporated therein by reference untrue in any material respect or that
requires any revisions to the Registration Statement, Prospectus or other
documents so that, in the case of the Registration Statement or the Prospectus,
as the case may be, it will not contain any untrue statement of a material fact
or omit to state any material fact required to be stated therein or necessary to
make the statements therein, in the light of the circumstances under which they
were made, not misleading.
(d) Use
reasonable best efforts to avoid the issuance of, or, if issued, obtain the
withdrawal of, (i) any order suspending the effectiveness of the Registration
Statement or (ii) any suspension of the qualification (or exemption from
qualification) of any of the Registrable Securities for sale in
any U.S. jurisdiction.
4
(e) If
requested by the Holders of a majority of the Registrable Securities, (i)
promptly incorporate in a Prospectus supplement or post-effective amendment to
the Registration Statement such information as the Company reasonably agrees
should be included therein and (ii) make all required filings of such Prospectus
supplement or such post-effective amendment as soon as practicable after the
Company has received notification of the matters to be incorporated in such
Prospectus supplement or post-effective amendment.
(f) Furnish
to each Holder, without charge and upon request, at least one conformed copy of
each Registration Statement and each amendment thereto, including financial
statements and schedules, and, to the extent requested by such Person, all
documents incorporated or deemed to be incorporated therein by reference, and
all exhibits (including those previously furnished or incorporated by reference)
promptly after the filing of such documents with the Commission.
(g) Promptly
deliver to each Holder, 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; and the Company
hereby consents to the use of such Prospectus and each amendment or supplement
thereto by each of the selling Holders in connection with the offering and sale
of the Registrable Securities covered by such Prospectus and any amendment or
supplement thereto.
(h) Prior
to any public offering of Registrable Securities, use commercially reasonable
efforts to register or qualify or cooperate with the selling Holders 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 Holder reasonably 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; provided, however, the Company
shall in no event be required to (x) qualify to do business in any state where
it is not then qualified or (y) take any action that would subject it to tax or
to the general service of process in any such state where it is not then
subject, or (z) comply with state securities or “blue sky” laws of any state for
which registration by coordination is unavailable to the Company.
(i) Cooperate
with the Holders to facilitate the timely preparation and delivery of
certificates representing Registrable Securities to be sold pursuant to a
Registration Statement.
(j) Upon
the occurrence of any event contemplated by Section 3(c)(v), promptly 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.
5
(k) Use
commercially reasonable efforts to cause all Registrable Securities relating to
the Registration Statement to be listed on the Nasdaq Stock Market or any
subsequent securities exchange, quotation system or market, if any, on which
similar securities issued by the Company are then listed or traded.
(l) The
Company may require each selling Holder to furnish to the Company information
regarding such Holder and the distribution of such Registrable Securities as is
required by law to be disclosed in the Registration Statement, and the Company
may exclude from such registration the Registrable Securities of any such Holder
who fails to furnish such information within fifteen (15) days after receiving
such request.
Each
Holder covenants and agrees that (i) it will not sell any Registrable Securities
under the Registration Statement until it has received copies of the Prospectus
as then amended or supplemented as contemplated in Section 3(g) and notice from
the Company that such Registration Statement and any post-effective amendments
thereto have become effective as contemplated by Section 3(c) and (ii) it and
its officers, directors or Affiliates, if any, will comply with the prospectus
delivery requirements of the Securities Act as applicable to them in connection
with sales of Registrable Securities pursuant to the Registration
Statement.
Each
Holder agrees by its acquisition of such Registrable Securities that, upon
receipt of a notice from the Company of the occurrence of any event of the kind
described in Section 3(c)(ii), 3(c)(iii), 3(c)(iv), 3(c)(v) or 3(m), such Holder
will forthwith discontinue disposition of such Registrable Securities under the
Registration Statement until such Holder’s receipt of the copies of the
supplemented Prospectus and/or amended Registration Statement contemplated by
Section 3(j), or until it is advised in writing 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.
(m) If
(i) there is material non-public information regarding the Company which the
Board reasonably determines not to be in the Company’s best interest to disclose
and which the Company is not otherwise required to disclose, or (ii) there is a
significant business opportunity (including, but not limited to, the acquisition
or disposition of assets (other than in the ordinary course of business) or any
merger, consolidation, tender offer or other similar transaction) available to
the Company which the Board reasonably determines not to be in the Company’s
best interest to disclose, then the Company may postpone or suspend filing or
effectiveness of a registration statement for a period not to exceed thirty (30)
consecutive days, provided that the Company may not postpone or suspend its
obligation under this Section 3(m) for more than sixty (60) days in the
aggregate during any 12 month period; provided, however, that no such
postponement or suspension shall be permitted for consecutive thirty (30) day
periods, arising out of the same set of facts, circumstances or
transactions.
6
(n) Any
legend indicating, directly or indirectly, that the Registrable Securities
constitute “restricted securities” (as such term is defined in Rule 144) stamped
on a certificate evidencing the Registrable Securities, and the related stock
transfer instructions and record notations with respect to such Registrable
Securities, shall be removed and the Company shall approve the issuance of a
certificate without such legend to the holder of such Securities if the Holder
thereof provides the Company with reasonable assurances that such securities can
be sold pursuant to Rule 144. Following the receipt by the Company of
such assurances, the Company will, no later than five trading days following the
delivery by a holder to the Company or the Company’s transfer agent of a
legended certificate representing such securities, deliver or cause to be
delivered to such Holder a certificate representing such securities that is free
from all restrictive and other legends.
4. Registration
Expenses.
All
reasonable fees and expenses incident to the performance of or compliance with
this Agreement by the Company (excluding underwriters’ discounts and commissions
and all fees and expenses of legal counsel, accountants and other advisors for
any Holder except as specifically provided below), except as and to the extent
specified in this Section 4, shall be borne by the Company whether or not the
Registration Statement is filed or becomes effective and whether or not any
Registrable Securities are sold pursuant to the Registration
Statement. The fees and expenses referred to in the foregoing
sentence shall include, without limitation, (i) all registration and filing fees
(including, without limitation, fees and expenses (A) with respect to filings
required to be made with the Nasdaq Stock Market and each other securities
exchange or market on which Registrable Securities are required hereunder to be
listed, (B) with respect to filings required to be made with the Financial
Industry Regulatory Authority and (C) in compliance with state securities or
Blue Sky laws, (ii) messenger, telephone and delivery expenses, (iii) fees and
disbursements of counsel for the Company, (iv) Securities Act liability
insurance, if the Company so desires such insurance, and (v) fees and expenses
of all other Persons retained by the Company in connection with the consummation
of the transactions contemplated by this Agreement, including, without
limitation, the Company’s independent public accountants. In
addition, the Company shall be responsible for all of its internal expenses
incurred in connection with the consummation of the transactions contemplated by
this Agreement (including, without limitation, all salaries and expenses of its
officers and employees performing legal or accounting duties), the expense of
any annual audit, the fees and expenses incurred in connection with the listing
of the Registrable Securities on any securities exchange as required
hereunder.
7
5. Indemnification.
(a) Indemnification by the
Company. The Company shall, notwithstanding any termination of
this Agreement, indemnify and hold harmless each Holder, its permitted
assignees, officers, directors, 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), underwriters, investment
advisors and employees, each Person who controls any such Holder or permitted
assignee (within the meaning of Section 15 of the Securities Act or Section 20
of the Exchange Act) and the officers, directors, agents and employees of each
such controlling Person, and the respective successors, assigns, estate and
personal representatives of each of the foregoing, to the fullest extent
permitted by applicable law, from and against any and all claims, losses,
damages, liabilities, penalties, judgments, costs (including, without
limitation, costs of investigation) and expenses (including, without limitation,
reasonable attorneys’ fees and expenses) (collectively, “Losses”), arising out of or
relating to any untrue or alleged untrue statement of a material fact contained
in the Registration Statement, any Prospectus, as supplemented or amended, if
applicable, 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 (i) to the extent, but only to the extent, that
such untrue statements or omissions are based upon information regarding such
Holder furnished in writing to the Company by such Holder expressly for use in
the Registration Statement, such Prospectus or such form of Prospectus or in any
amendment or supplement thereto (it being understood that each Holder
has approved Annex A hereto for this purpose); (ii) as a result of the failure
of such Holder to deliver a Prospectus, as amended or supplemented, to a
purchaser in connection with an offer or sale; or (iii) in the case of an
occurrence of an event of the type specified in Section 3(c)(ii)-(v), the use by
a Holder of an outdated or defective Prospectus after the Company has notified
such Holder in writing that the Prospectus is outdated or defective and prior to
the receipt by such Holder of notice that use of the applicable prospectus may
be resumed (and, if applicable, receipt of additional or supplemental filings
that are incorporated or deemed to be incorporated by referenced in such
Prospectus or Registration Statement), but only if and to the extent that
following such receipt the misstatement or omission giving rise to such Loss
would have been corrected; provided, however, that the indemnity agreement
contained in this Section 5(a) shall not apply to amounts paid in settlement of
any Losses if such settlement is effected without the prior written consent of
the Company, which consent shall not be unreasonably withheld. The
Company shall notify such Holder 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. Such indemnity shall
remain in full force and effect regardless of any investigation made by or on
behalf of an Indemnified Party (as defined in Section 5(c) hereof) and shall
survive the transfer of the Registrable Securities by the Holder.
(b) Indemnification by
Holders. Each Holder and its permitted assignees 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, and the respective successors, assigns, estate and personal
representatives of each of the foregoing, to the fullest extent permitted by
applicable law, from and against 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, as supplemented or amended, if
applicable, 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 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 or omitted from any information regarding such Holder furnished in
writing to the Company by such Holder expressly for use in therein, and that
such information was reasonably relied upon by the Company for use therein, or
to the extent that such information relates to such Holder or such Holder’s
proposed method of distribution of Registrable Securities and was furnished in
writing by such Holder expressly for use therein (it being understood that each
Holder has approved Annex A hereto for this purpose). Notwithstanding
anything to the contrary contained herein, in no event shall the liability of
any Purchaser under this Section 5(b) exceed the net proceeds to such Purchaser
as a result of the sale of Registrable Securities pursuant to a Registration
Statement in connection with which the untrue or alleged untrue statement or
material omission was provided.
8
(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 promptly shall 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: (1) the Indemnifying Party has agreed in writing to pay such fees and
expenses; or (2) 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 (3) 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 (which shall be reasonably acceptable to the Indemnifying Party) 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, the
Indemnifying Party shall be responsible for reasonable fees and expenses of no
more than one counsel for the Indemnified Parties). 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 or
delayed. 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 twenty (20) Business 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).
9
(d) Contribution. If
a claim for indemnification under Section 5(a) or 5(b) is unavailable to an
Indemnified Party because of a failure or refusal of a governmental authority to
enforce such indemnification in accordance with its terms (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 5(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 5(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. 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. Notwithstanding anything to the contrary contained herein,
the Holders shall be liable under this Section 5(d) for only that amount as does
not exceed the aggregate amount invested by such Holder under the Purchase
Agreement.
6. Rule
144.
As long
as any Holder owns any Registrable Securities, the Company covenants to use its
commercially reasonable efforts 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 Section 13(a) or 15(d) of
the Exchange Act. As long as any Holder owns any Registrable
Securities, if the Company is not required to file reports pursuant to Section
13(a) or 15(d) of the Exchange Act, it will prepare and furnish to the Holders
and make publicly available in accordance with Rule 144 annual and quarterly
financial statements, together with a discussion and analysis of such financial
statements in form and substance substantially similar to those that would
otherwise be required to be included in reports required by Section 13(a) or
15(d) of the Exchange Act, as well as any other information required thereby, in
the time period that such filings would have been required to have been made
under the Exchange Act. The Company further covenants that it will
take such further action as any Holder may reasonably request, all to the extent
required from time to time to enable such Person to sell the Shares without
registration under the Securities Act within the limitation of the exemptions
provided by Rule 144 promulgated under the Securities Act, including providing
any legal opinions relating to such sale pursuant to Rule 144. Upon
the request of any Holder, the Company shall deliver to such Holder a written
certification of a duly authorized officer as to whether it has complied with
such requirements.
10
7. Miscellaneous.
(a) Remedies. In
the event of a breach by the Company or by a Holder, of any of their obligations
under this Agreement, each Holder or the Company, as the case may be, in
addition to being entitled to exercise all rights granted by law and under this
Agreement, including recovery of damages, will be entitled to specific
performance of its rights under this Agreement. The
Company and each Holder agree that monetary damages would not provide adequate compensation
for any losses incurred by reason of a breach by it of any of the provisions of
this Agreement and hereby further agrees that, in the event of any action for
specific performance in respect of such breach, it shall waive the defense that
a remedy at law would be adequate.
(b) Entire Agreement;
Amendment. This Agreement and the Purchase Agreement contain
the entire understanding and agreement of the parties with respect to the
matters covered hereby and, except as specifically set forth herein or in the
Purchase Agreement, neither the Company nor any Holder make any representation,
warranty, covenant or undertaking with respect to such matters, and they
supersede all prior understandings and agreements with respect to said subject
matter, all of which are merged herein. No provision of this
Agreement may be waived or amended other than by a written instrument signed by
the Company and the Holders of at least a majority of all Registrable Securities
then outstanding. Any amendment or waiver effected in accordance with
this Section 7(b) shall be binding upon each Holder (and their permitted
assigns) and the Company.
(c) Notices. Any
notice, demand, request, waiver or other communication required or permitted to
be given hereunder shall be in writing and shall be deemed to have been given
when delivered if personally delivered or sent by facsimile (provided that the
party providing such notice promptly confirms receipt of such transmission with
the other party by telephone), on the business day after dispatch if sent by a
nationally-recognized overnight courier and on the third business day following
the date of mailing if sent by certified mail, postage prepaid, return receipt
requested. The addresses for such communications shall
be:
Any party
hereto may from time to time change its address for notices by giving written
notice of such changed address to the other party hereto.
(d) Waivers. No
waiver by either party 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 other provision, condition or requirement hereof,
nor shall any delay or omission of any party to exercise any right hereunder in
any manner impair the exercise of any such right accruing to it
thereafter.
(e) Successors and
Assigns. This Agreement shall be binding upon and inure to the
benefit of the parties and their successors and permitted assigns and shall
inure to the benefit of each Holder and its successors and
assigns. The Company may not assign this Agreement or any of its
rights or obligations hereunder without the prior written consent of each
Holder.
(f) Assignment of Registration
Rights. The rights of each Holder hereunder, including the
right to have the Company register for resale Registrable Securities in
accordance with the terms of this Agreement, shall be assignable by each Holder
of all or a portion of the Registrable
Securities if: (i) the Holder agrees in writing with the transferee
or assignee to assign such rights, and a copy of such agreement is furnished to
the Company within a reasonable time after such assignment, (ii) the Company is,
within a reasonable time after such transfer or assignment, furnished with
written notice of (a) the name and address of such transferee or assignee, and
(b) the securities with respect to which such registration rights are being
transferred or assigned, (iii) following such transfer or assignment the further
disposition of such securities by the transferee or assignees is restricted
under the Securities Act and applicable state securities laws, and (iv) at or
before the time the Company receives the written notice contemplated by clause
(ii) of this Section, the transferee or assignee agrees in writing with the
Company to be bound by all of the provisions of this Agreement. The
rights to assignment shall apply to the Holders (and to subsequent) successors
and assigns.
12
(g) Counterparts. This
Agreement may be executed in any number of counterparts, each of which when so
executed shall be deemed to be an original and, all of which taken together
shall constitute one and the same Agreement. In the event that any
signature is delivered by facsimile transmission, such signature shall create a
valid binding obligation of the party executing (or on whose behalf such
signature is executed) the same with the same force and effect as if such
facsimile signature were the original thereof.
(h) Termination. This
Agreement shall terminate on the earlier of (i) the date on which all remaining
Registrable Securities may be sold without restriction pursuant to Rule 144 of
the Securities Act or (ii) the date when all Registrable Securities have been
sold pursuant to a Registration Statement.
(i) Governing
Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York, without regard to principles
of conflicts of law thereof.
(j) Cumulative
Remedies. The remedies provided herein are cumulative and not
exclusive of any remedies provided by law.
(k) Severability. The
provisions of this Agreement are severable and, in the event that any court of
competent jurisdiction shall determine that any one or more of the provisions or
part of the provisions contained in this Agreement shall, for any reason, be
held to be invalid, illegal or unenforceable in any respect, such invalidity,
illegality or unenforceability shall not affect any other provision or part of a
provision of this Agreement and this Agreement shall be reformed and construed
as if such invalid or illegal or unenforceable provision, or part of such
provision, had never been contained herein, so that such provisions would be
valid, legal and enforceable to the maximum extent possible.
(l) Headings. The
headings herein are for convenience only, do not constitute a part of this
Agreement and shall not be deemed to limit or affect any of the provisions
hereof.
13
IN
WITNESS WHEREOF, the parties hereto have caused this Registration Rights
Agreement to be duly executed by their respective authorized officers as of the
date first above written.
The
Selling Stockholders and any of their pledgees, donees, transferees, assignees
or other successors-in-interest may, from time to time, sell, transfer or
otherwise dispose of any or all of their shares of Common Stock or interests in
shares of Common Stock on any stock exchange, market or trading facility on
which the shares are traded or in private transactions. These dispositions
may be at fixed prices, at prevailing market prices at the time of sale, at
prices related to the prevailing market price, at varying prices determined at
the time of sale, or at negotiated prices. The Selling Stockholders
may use one or more of the following methods when disposing of the shares or
interests therein:
•
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;
•
through
the writing or settlement of options, swaps, derivatives or other hedging
transactions, whether through an options exchange or
otherwise;
•
broker-dealers
may agree with the Selling Stockholders to sell a specified number of such
shares at a stipulated price per
share;
•
in
the over the counter market;
•
a
combination of any such methods of disposition;
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.
Broker-dealers
engaged by the Selling Stockholders may arrange for other broker-dealers to
participate in sales. Broker-dealers may receive commissions or discounts
from the Selling Stockholders (or, if any broker-dealer acts as agent for the
purchaser of shares, from the purchaser) in amounts to be negotiated, but,
except as set forth in a supplement to this prospectus, in the case of an agency
transaction will not be in excess of a customary brokerage commission in
compliance with FINRA Rule 2440; and in the case of a principal transaction a
markup or markdown in compliance with FINRA IM-2440 or the successor to such
FINRA rules.
A-1
The
Selling Stockholders may from time to time pledge or grant a security interest
in some or all of the Shares owned by them and, if they default in the
performance of their secured obligations, the pledgees or secured parties may
offer and sell shares of Common Stock from time to time under the prospectus, or
under an amendment to the prospectus under Rule 424(b) or other applicable
provision of the Securities Act of 1933, as amended (the “Securities Act”),
amending the list of selling stockholders to include the pledgee, transferee or
other successors in interest as selling stockholders under the prospectus. The
Selling Stockholders do not expect these commissions and discounts to exceed
what is customary in the types of transactions involved.
There can
be no assurance that any Selling Stockholder will sell any or all of the shares
of Common Stock pursuant to the registration statement, of which this prospectus
forms a part.
The Selling Stockholders may enter into
option or other transactions with broker-dealers or other financial institutions
or the creation of one or more derivative securities which require the delivery
to such broker-dealer or other financial institution of shares offered by the
prospectus, which shares such broker-dealer or other financial institution may
resell pursuant to the prospectus (as supplemented or amended to reflect such
transaction).
The
Selling Stockholders and any broker-dealer 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 Common Stock purchased by them may be deemed to be underwriting
commissions or discounts under the Securities Act. . In no
event shall any broker-dealer receive fees, commission and markups which, in the
aggregate, would exceed eight percent (8%). Each Selling Stockholder has
informed the Company that it does not have any written or oral agreement or
understanding, directly or indirectly, with any person to distribute the Common
Stock.
We have
advised each Selling Stockholder that it may not use shares registered on the
registration statement of which this prospectus is a part to cover short sales
of Common Stock made prior to the date on which the registration statement shall
have been declared effective by the Securities and Exchange
Commission. If a Selling Stockholder uses this prospectus for any
sale of shares of our Common Stock, it will be subject to the prospectus
delivery requirements of the Securities Act. The Selling Stockholders and any
other person participating in such distribution will be subject to applicable
provisions of the Securities Exchange Act of 1934, as amended, and the rules and
regulations promulgated thereunder, including, without limitation, Regulation M
of the Exchange Act, which may limit the timing of purchases and sales of any of
the shares of Common Stock by the Selling Stockholders and any other
participating person. Regulation M may also restrict the ability of
any person engaged in the distribution of the shares of Common Stock to engage
in market-making activities with respect to the shares of Common
Stock. All of the foregoing may affect the marketability of the
shares of Common Stock and the ability of any person or entity to engage in
market-making activities with respect to the shares of Common
Stock.
A-2
We may indemnify the Selling
Stockholders against certain liabilities, including some liabilities under the
Securities Act, in accordance with an agreement between us and the Selling
Stockholders. We may be indemnified by the Selling Stockholders
against civil liabilities, including liabilities under the Securities Act, that
may arise from any written information furnished to us by the Selling
Stockholders specifically for use in this prospectus, in accordance with the
related registration rights agreement, or we may be entitled to
contribution.
A-3
Annex
B
ZIOPHARM
Oncology, Inc.
Selling Stockholder Notice
and Questionnaire
The
undersigned beneficial owner of common stock, $0.001 par value per share (the
“Common
Stock”), of ZIOPHARM Oncology, Inc. (the “Company”), (the
“Registrable
Securities”) understands that the Company has filed or intends to file
with the Securities and Exchange Commission (the “Commission”) a
registration statement (the “Registration
Statement”) for the registration and resale under Rule 415 of the
Securities Act of 1933, as amended (the “Securities Act”), of
the Registrable Securities, in accordance with the terms of the Registration
Rights Agreement, dated as of ____________, 201___ (the “Registration Rights
Agreement”), among the Company and the Purchasers named
therein. The purpose of this Questionnaire is to facilitate the
filing of the Registration Statement under the Act that will permit you to
resell the Registrable Securities in the future. The information
supplied by you will be used in preparing the Registration
Statement. All capitalized terms not otherwise defined herein shall
have the meanings ascribed thereto in the Registration Rights
Agreement.
Certain
legal consequences arise from being named as a selling stockholder in the
Registration Statement and the related Prospectus. Accordingly,
holders and beneficial owners of Registrable Securities are advised to consult
their own securities law counsel regarding the consequences of being named or
not being named as a selling stockholder in the Registration Statement and the
related Prospectus.
NOTICE
The
undersigned beneficial owner (the “Selling Stockholder”)
of Registrable Securities hereby elects to include the Registrable Securities
owned by it and listed below in Item 3 (unless otherwise specified under such
Item 3) in the Registration Statement.
QUESTIONNAIRE
1.
Name.
(a)
Full
Legal Name of Selling Stockholder
(b)
Full
Legal Name of Registered Holder (if not the same as (a) above) through
which Registrable Securities Listed in Item 3 below are
held:
(c)
Full
Legal Name of Natural Control Person (which means a natural person who
directly or indirectly alone or with others has power to vote or dispose
of the securities covered by the
questionnaire):
E-mail
address of Contact
Person:___________________________________________________________
3. Beneficial
Ownership of Registrable Securities:
(a)
Type
and Number of Registrable Securities beneficially
owned:
4. Broker-Dealer
Status:
(a)
Are
you a broker-dealer?
Yes ¨ No ¨
Note:
If
yes, the Commission’s staff has indicated that you should be identified as
an underwriter in the Registration
Statement.
(b)
Are
you an affiliate of a
broker-dealer?
Yes ¨ No ¨
Note:
If
yes, provide a narrative explanation
below:
(c)
If
you are an affiliate of a broker-dealer, do you certify that you bought
the Registrable Securities in the ordinary course of business, and at the
time of the purchase of the Registrable Securities to be resold, you had
no agreements or understandings, directly or indirectly, with any person
to distribute the Registrable
Securities?
Yes ¨ No ¨
Note:
If
no, the Commission’s staff has indicated that you should be identified as
an underwriter in the Registration
Statement.
B-2
5. Beneficial
Ownership of Other Securities of the Company Owned by the Selling
Stockholder.
Except
as set forth below in this Item 5, the undersigned is not the beneficial or
registered owner of any securities of the Company other than the Registrable
Securities listed above in Item 3.
(a)
As
of ___________, 201___, the Selling Stockholder owned outright (including
shares registered in Selling Stockholder's name individually or jointly
with others, shares held in the name of a bank, broker, nominee,
depository or in "street name" for its account), _________ shares of the
Company's capital stock (excluding the Registrable
Securities). If “zero,” please so
state.
(b)
In
addition to the number of shares Selling Stockholder owned outright as
indicated in Item 5(a) above, as of ________________, 201___, the Selling
Stockholder had or shared voting power or investment power, directly or
indirectly, through a contract, arrangement, understanding, relationship
or otherwise, with respect to ______________ shares of the Company's
capital stock (excluding the Registrable Securities). If
“zero,” please so state.
If
the answer to Item 5(b) is not “zero,” please complete the following
tables:
Sole
Voting Power:
Number of Shares
Nature of Relationship Resulting in Sole
Voting Power
Shared
Voting Power:
Number of Shares
With Whom
Shared
Nature of
Relationship
Sole
Investment power:
Number of Shares
Nature of Relationship Resulting in Sole
Investment power
Shared
Investment power:
Number of Shares
With Whom
Shared
Nature of
Relationship
B-3
(c)
As
of _____________, 201___, the Selling Stockholder had the right to acquire
the following shares of the Company's common stock pursuant to the
exercise of outstanding stock options, warrants or other rights (excluding
the Registrable Securities). Please describe the number, type
and terms of the securities, the method of ownership, and whether the
undersigned holds sole or shared voting and investment
power. If “none”, please so
state.
Except
as set forth below, neither the undersigned nor any of its affiliates, officers,
directors or principal equity holders (owners of 5% of more of the equity
securities of the undersigned) has held any position or office or has had any
other material relationship with the Company (or its predecessors or affiliates)
during the past three years.
State any
exceptions here:
7. Plan
of Distribution:
The
undersigned has reviewed the form of Plan of Distribution attached as Annex A to the
Registration Rights Agreement, and hereby confirms that, except as set forth
below, the information contained therein regarding the undersigned and its plan
of distribution is correct and complete.
State any
exceptions here:
***********
The
undersigned agrees to promptly notify the Company of any inaccuracies or changes
in the information provided herein that may occur subsequent to the date hereof
and prior to the effective date of any applicable Registration Statement filed
pursuant to the Registration Rights Agreement.
By
signing below, the undersigned consents to the disclosure of the information
contained herein in its answers to Items 1 through 7 and the inclusion of such
information in each Registration Statement filed pursuant to the Registration
Rights Agreement and each related Prospectus. The undersigned
understands that such information will be relied upon by the Company in
connection with the preparation or amendment of any such Registration Statement
and the related Prospectus.
B-4
By
signing below, the undersigned acknowledges that it understands its obligation
to comply, and agrees that it will comply, with the provisions of the Exchange
Act and the rules and regulations thereunder, particularly Regulation M. The
undersigned also acknowledges that it understands that the answers to this
Questionnaire are furnished for use in connection with Registration Statements
filed pursuant to the Registration Rights Agreement and any amendments or
supplements thereto filed with the Commission pursuant to the Securities
Act.
The
undersigned hereby acknowledges and is advised of the following Interpretation
A.65 of the July 1997 SEC Manual of Publicly Available Telephone Interpretations
regarding short selling:
“An
Issuer filed a Form S-3 registration statement for a secondary offering of
common stock which is not yet effective. One of the selling
shareholders wanted to do a short sale of common stock “against the box” and
cover the short sale with registered shares after the effective date. The issuer
was advised that the short sale could not be made before the registration
statement become effective, because the shares underlying the short sale are
deemed to be sold at the time such sale is made. There would,
therefore, be a violation of Section 5 if the shares were effectively sold prior
to the effective date.”
By
returning this Questionnaire, the undersigned will be deemed to be aware of the
foregoing interpretation.
I confirm
that, to the best of my knowledge and belief, the foregoing statements
(including without limitation the answers to this Questionnaire) are
correct.
IN
WITNESS WHEREOF the undersigned, by authority duly given, has caused this
Questionnaire to be executed and delivered either in person or by its duly
authorized agent.
Dated:
Beneficial
Owner:
By:
Name:
Title:
B-5
Dates Referenced Herein and Documents Incorporated by Reference
